2021 (1) TMI 654 - Tri - Companies Law

Sanction of scheme of Amalgamation - sections 230-232 and other applicable provisions of the Companies Act, 2013, read with Companies (Compromises, Arrangements, Amalgamations) Rules 2016 - HELD THAT - It could be seen that the Transferor Companies are directly or indirectly, wholly owned subsidiaries of the Transferee Company, accordingly, upon the Scheme becoming effective, all the equity shares held by the Transferee Company in the Transferor Companies either by itself or through its subsidiaries/nominess shall stand cancelled and extinguihed. Therefore, there will be no issue and allotment of shares as consideration by the Transferee Company to the shareholders of the Transferor Companies upon coming effect of the Scheme. The Applicant Companies have filed compliance affidavit vide Special Diary No. 135 dated 18.06.2020. The Provisional Balance Sheets of all the Applicant Companies as on 31.03.2020 along with the Board Resolutions in Osram Lighting Ltd (unsecured creditor in Applicant Company 2), DSM India Pvt Ltd (unsecured creditor in Applicant Company 2), Minda Industries Ltd (unsecured creditor in Applicant Company 6), Siemens Financial services Pvt Ltd(secured creditor in Applicant Company 9) and Mahadhyuta Automotive Pvt Ltd( unsecured creditor in Applicant Company 9) are all part and parcel of Special Diary No. 135 dated 18.06.2020. The Affidavit of Mr Rajat Kumar Singh (who has deposed the consent affidavit on behalf of M/s Bajaj Finance Ltd., a secured creditor in Applicant Company 4) clarifying that his name has wrongly being stated in the previous consent affidavit as Mr Rajat Singh is annexed as Annexure E with the above compliance. The statutory auditors of the Applicant Companies have furnished certificate at Annexures B-8, C-9, D-9, E-9, F-9, G-9, H-9, I-9, J-9 and K-8 respectively, stating that the accounting treatment proposed in the Scheme is in compliance with Accounting Standards prescribed under Section 133 of the Companies Act, 2013 - It is also stated in Para 94 of the application that neither the Transferor Companies nor the Transferee Company is governed by any sectoral regulator. The meetings of the equity shareholders of all the Applicant Companies are dispensed with as their consent by way of affidavits have been received. Since there are no Secured Creditors in Applicant Companies 1, 7, 8 10, therefore, there is nothing to convene their meetings. Also, there are no Unsecured Creditors in Applicant Company 1 10 and therefore, there is nothing to convene their meetings as well. The meetings of Secured Creditors in Applicant Companies No.2, 3, 4, 5, 6 and 9 and Unsecured Creditors in Applicant Companies No.2, 3, 4, 5, 6, 7, 8 and 9 is dispensed with as their consent affidavits have been received. However, Rule 8 of the Rules requires the notice of the meetings to be sent to the statutory authorities in Form CAA 3. Since the calling and convening of the meetings are being dispensed with, the applicants shall have to make a specific prayer while moving the second motion petition to issue the notice to the statutory authorities - Application allowed.

Summary

Issues Involved:
1. Approval of the proposed Scheme of Amalgamation.
2. Dispensation of meetings of equity shareholders, secured creditors, and unsecured creditors.
3. Compliance with statutory requirements and procedural directions.

Detailed Analysis:

1. Approval of the Proposed Scheme of Amalgamation:
The judgment pertains to a joint First Motion application filed by multiple applicant companies under Sections 230-232 of the Companies Act, 2013, for sanctioning a proposed Scheme of Amalgamation. The Scheme aims for the merger of nine transferor companies with one transferee company. The Board of Directors of all applicant companies approved the Scheme unanimously in meetings held on 13.11.2019 and 14.11.2019. The Scheme is intended to achieve benefits such as optimum utilization of resources, synchronization of synergies, and cost savings from operational efficiencies.

2. Dispensation of Meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors:
The applicant companies sought orders to dispense with the meetings of equity shareholders, secured creditors, and unsecured creditors. The Tribunal noted that all equity shareholders of the applicant companies had given their consents via affidavits. Specific details were provided for each company regarding the number of shareholders, secured and unsecured creditors, and their consents. For instance, Applicant Company 1 had seven equity shareholders who consented to the Scheme, and it had no secured or unsecured creditors. Similarly, other applicant companies provided consent affidavits from their respective shareholders and creditors, meeting the required thresholds for dispensation.

3. Compliance with Statutory Requirements and Procedural Directions:
The Tribunal required compliance with procedural directions, including the submission of provisional balance sheets and specific Board Resolutions. During the hearing on 26.05.2020, the Tribunal directed the applicant companies to file missing documents, such as provisional balance sheets as of 31.03.2020 and Board Resolutions from certain creditors. The applicant companies complied with these directions by filing the necessary documents through a compliance affidavit.

The Tribunal also noted that the Scheme provided for the interests of employees, ensuring their employment terms and conditions would not be less favorable post-merger. The statutory auditors certified that the accounting treatment proposed in the Scheme complied with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.

Conclusion:
The Tribunal dispensed with the meetings of equity shareholders, secured creditors, and unsecured creditors based on the consents received. The Tribunal allowed the First Motion Application and granted liberty to the applicant companies to file a Second Motion Petition. The Tribunal directed the applicant companies to make specific prayers for sending notices to statutory authorities, including the Central Government, Registrar of Companies, Income Tax Authorities, and Official Liquidator, in the Second Motion Petition. The applicant companies were also directed to file an affidavit confirming the absence of any sectoral regulator governing them.