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2020 (9) TMI 1085 - Tri - Companies LawApproval of the Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT - The shareholders of the applicant companies are the best Judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by the Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme of which sanction is sought under Section 230-232 of the Companies Act of 2013 will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors - Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules. Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs and no Objections of BSE and NSE and also in the absence of any objection against the Scheme; there appears to be no impediment in sanctioning the present Scheme - Scheme is approved - application allowed.
Issues:
Approval of Scheme of Arrangement under Sections 230-232 of the Companies Act, 2013 Detailed Analysis: 1. The Joint petition filed by the Petitioner Companies sought approval of the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013, along with relevant rules. The Scheme involved the demerged company and the resulting company. 2. The Demerged Company, Sharda Motor Industries Limited, and the Resulting Company, NDR Auto Components Limited, were incorporated under the Companies Act, with registered offices in New Delhi. 3. Initially, the meetings of Shareholders and Creditors were dispensed with based on a joint application under Sections 230-232 of the Companies Act, 2013. Subsequently, meetings were convened, and the Scheme was unanimously approved. 4. The Petitioners complied with the Tribunal's orders regarding publication in newspapers and serving notices to relevant authorities. Affidavits were filed affirming compliance with the orders. 5. The Regional Director confirmed that the companies had filed required documents and no prosecution or investigation was pending against them. However, no response was received from the Income Tax Department within the stipulated time. 6. Affidavits were filed by both the Demerged and Resulting Companies detailing the considerations and compliance with the Income Tax Act post the Scheme's sanction. 7. The Scheme's interest was affirmed to be in the best interest of the companies, shareholders, creditors, and employees, with no pending proceedings against the Petitioner Companies. 8. Statutory auditors' certificates confirmed that the proposed Accounting Treatment in the Scheme was in conformity with the Accounting Standards notified by the Central Government. 9. The Tribunal emphasized that it does not interfere with corporate decisions approved by shareholders and creditors unless fairness, justness, or reasonableness of the Scheme is compromised. 10. Citing legal precedents, the Tribunal's jurisdiction was limited to ensuring the Scheme's fairness and compliance with laws, not to act as an appellate authority. 11. The Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013, considering the approvals received and the absence of objections, with a reminder to comply with statutory requirements. 12. The order clarified that it did not exempt the companies from stamp duty, taxes, or other charges, and any deficiencies or violations would be subject to legal action. 13. Specific directions were issued regarding the transfer of property, rights, liabilities, duties, employees, and shares between the Demerged and Resulting Companies, with a requirement to deliver a certified copy of the order to the Registrar of Companies for registration. 14. The order concluded by allowing interested parties to seek necessary directions from the Tribunal and instructing the service of the order copy to the parties involved.
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