2020 (9) TMI 362 - Tri - Companies Law

Dispensation of meetings of the Secured Creditors of the Applicant Nos. 1 and 2 and Unsecured Creditors in the Applicant Companies Merger of Companies - scheme of arrangement - transfer of shares - HELD THAT - Considering the fact that there are a large number of Creditors, it would be appropriate to issue notices to them. It is ordered as follows a. The Applicant Company shall serve the notice upon (i) Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai; (ii) Registrar of Companies, Maharashtra, Mumbai; (iii) Income Tax Authority within whose jurisdiction the Applicant Companies' assessments are made, complete with PAN of the Company concerned i.e. for Applicant No. 1 (PAN No AAACI7165B) and for Applicant No. 2, (PAN No AACCE6013C) Circle 14(1)(2), Mumbai; for Applicant No. 3 (PAN No AABCK6887D) Circle 12(3)(1), Mumbai; and for Applicant No. 4 (PAN No. AACCE2954N) Ward 14 (1)(4), Mumbai; pursuant to section 230(5) of the Act and as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. If no response is received by the Tribunal within 30 days of the date of receipt of the notice it will be presumed that the Authorities have no objection to the Scheme. b. The Applicant No. 1, Applicant No. 2 and Applicant No. 3 shall serve notice of Application along with a copy of the Scheme upon the Official Liquidator, High Court, Bombay pursuant to Section 230(5) of the Act. The Tribunal hereby appoints M/s. K. K. Naulakha Co., Chartered Accountants having address at 101, Yusuf Building, 43, M. G. Road, Flora Fountain, Fort, Mumbai-400001, Contact 022-22852300/10/20, Email [email protected] with remuneration of ₹ 2,00,000/- (Rupees Two lakh only) to assist the Official Liquidator in scrutinizing the books of Accounts of the Applicant No. 1, Applicant No. 2 and Applicant No. 3. The Official Liquidator shall submit its report/ representation to this Tribunal. If no response is received by the Tribunal from the Official Liquidator within a period of thirty (30) days, it would be presumed that the Official Liquidator has no objection to proposed Scheme as per Rule 8 of the Rules. c. The Applicant Companies shall issue notice to all the Secured Creditors of Applicant Nos. 1 and 2 and Unsecured Creditors of the Applicant Companies by Courier/Registered Post/Speed Post/Hand Delivery at their last known address or through their registered Email Such Creditors may submit their representations to the Tribunal, if any, within a period of thirty (30) days from the date of receipt of such notice. It shall be the responsibility of the Applicant Companies to ensure that all the Creditors as indicated above are put on notice regarding the Scheme, so that they may take informed decision thereon. d. The Applicant Companies shall file compliance report with the Registry on the directions given in this Order in lieu of customary affidavit of service, due to the prevailing lockdown, for proving service of notice on the regulatory authorities and the Creditors as stated above.

Issues Involved:
1. Scheme of Arrangement and Amalgamation between multiple companies.
2. Approval of the scheme by the Board of Directors.
3. Consent obtained from Equity Shareholders, Preferential Shareholders, and Creditors.
4. Dispensation of meetings of Equity Shareholders and Preferential Shareholders.
5. Notice issuance to Regulatory Authorities and Creditors.
6. Appointment of Official Liquidator for scrutiny of accounts.
7. Compliance report filing.

Detailed Analysis:

1. Scheme of Arrangement and Amalgamation:
The judgment discusses a Scheme of Arrangement and Amalgamation between four companies, involving the consolidation of business operations. The scheme aims at merging Transferor Companies into the Transferee Company for achieving business objectives efficiently. It highlights the rationale behind the scheme, emphasizing benefits like leveraging combined assets, reducing managerial overlaps, enhancing cash management, and creating better value for shareholders.

2. Approval of the Scheme:
The Board of Directors of the Applicant Companies approved the scheme in meetings held on 19th June 2020. The appointed date for the scheme is fixed as 5th September 2019. The judgment details the business activities of each Applicant Company and the ultimate goal of acquiring ongoing businesses to form a consolidated entity.

3. Consent Obtained from Shareholders and Creditors:
Consent affidavits agreeing to the scheme were procured from Equity Shareholders, Preferential Shareholders, and Creditors of the Applicant Companies. The judgment mentions the number of Equity Shareholders and Creditors for each Applicant Company, highlighting the unanimity in consent obtained to dispense with the meetings of Equity Shareholders and Preferential Shareholders.

4. Notice Issuance and Compliance:
The judgment orders the Applicant Companies to serve notices to Regulatory Authorities and Creditors, seeking their response within a specified timeframe. It emphasizes the importance of notifying all Creditors to enable them to make informed decisions regarding the scheme. Additionally, compliance reports are to be filed with the Registry in lieu of customary affidavits of service due to the prevailing lockdown situation.

5. Appointment of Official Liquidator:
An Official Liquidator is appointed to assist in scrutinizing the books of accounts of the Applicant Companies. The Official Liquidator is required to submit a report to the Tribunal within a specified period. If no response is received within the designated time, it will be presumed that the Official Liquidator has no objection to the proposed scheme.

6. Compliance Report Filing:
The judgment directs the Applicant Companies to file a compliance report with the Registry regarding the directions given in the order. This is to prove the service of notices on regulatory authorities and Creditors, considering the challenges posed by the prevailing lockdown situation.

In summary, the judgment comprehensively addresses the various aspects of the Scheme of Arrangement and Amalgamation, ensuring transparency, consent from stakeholders, and compliance with legal procedures for the successful implementation of the scheme.

← Previous Next →