2020 (10) TMI 396 - Tri - Companies Law

Approval of the Scheme of Amalgamation - Sections 230 and 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 - 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 - It has also been affirmed in the petition that the Scheme is in the interest of the transferor company and also the transferee company including their shareholders, creditors, employees and all concerned. 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, report filed by the official liquidator and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme - sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The scheme is approved.

Issues Involved:
1. Approval of the Scheme of Amalgamation under Sections 230 and 232 of the Companies Act, 2013.
2. Compliance with procedural requirements including meetings of shareholders and creditors.
3. Observations and objections raised by the Regional Director.
4. Compliance with statutory requirements and no objections from regulatory authorities.
5. Sanction and implementation of the Scheme.

Detailed Analysis:

1. Approval of the Scheme of Amalgamation:
The joint application was filed under Sections 230 and 232 of the Companies Act, 2013, seeking approval of the Scheme of Amalgamation between the Transferor Company and the Transferee Company. The Tribunal reviewed the Scheme placed on record and considered the procedural compliance and statutory requirements.

2. Compliance with Procedural Requirements:
The First Motion application sought dispensation from convening meetings of shareholders and creditors. The Tribunal, vide order dated 17.10.2018, dispensed with meetings of Equity Shareholders and Secured Creditors of both companies and the Unsecured Creditors of the Transferor Company. The meeting of Unsecured Creditors of the Transferee Company was held on 20.12.2018, and the Scheme was unanimously approved.

3. Observations and Objections by the Regional Director:
The Regional Director's report highlighted two main observations:
- Compliance with Section 232(3)(i) regarding the fee payable on revised authorized share capital.
- Reclassification of authorized share capital as per Clause 5 of the Scheme, which is not allowed under the Companies Act, 2013.

The petitioners responded, asserting compliance with Section 232(2)(i) and undertaking to pay additional fees if required. They also clarified that the alteration of authorized share capital would become effective upon the Scheme's approval, and shareholders' consent was already obtained.

4. Compliance with Statutory Requirements and No Objections:
The petitioners confirmed compliance with publication requirements and service of notices to relevant authorities. Despite notice, the Income Tax Department did not file any response, leading to the presumption of no objections. The Official Liquidator's report raised no material objections, and no complaints were received against the Scheme.

5. Sanction and Implementation of the Scheme:
The Tribunal, considering the approval by members and creditors, reports from the Regional Director and Official Liquidator, and absence of objections, found no impediment in sanctioning the Scheme. The Tribunal granted sanction under Sections 230-232 of the Companies Act, 2013, and clarified that the order does not exempt payment of stamp duty, taxes, or other charges.

Orders Issued:
- The Transferor Company shall stand dissolved without winding-up.
- All property, rights, powers, liabilities, and duties of the Transferor Company shall transfer to the Transferee Company.
- Pending proceedings by or against the Transferor Company shall continue against the Transferee Company.
- Employees of the Transferor Company shall become employees of the Transferee Company without break or interruption in service.
- Certified copy of the order to be delivered to the Registrar of Companies within thirty days, leading to the dissolution of the Transferor Company and consolidation of files.

The petition was disposed of with liberty to apply for further directions if necessary.

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