2021 (1) TMI 1027 - Tri - Companies Law

Approval of Scheme of Merger by Absorption - Sections 230-232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. In view of the foregoing, upon considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Ministry of Corporate Affairs, the reports of the official Liquidator etc., there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under Sections 230 to 232 of the Companies Act, 2013. The Petitioners shall however, remain bound to comply with the statutory requirements in accordance with law. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. The Transferor Companies stand dissolved from the date of this Order without following the process of winding-up - That all the property, rights and powers of the Transferor Companies be transferred without further act or deed, to the Transferee Company and accordingly the same shall pursuant to Section 232 of the Act, be transferred to and vest in the Transferee Company for all the estates and interests of the Transferor Companies therein but subject nevertheless to all the charges not affecting the same.

Issues Involved:
1. Sanction of the Scheme of Merger by Absorption.
2. Compliance with statutory requirements and guidelines.
3. Observations and objections by the Regional Director.
4. Undertakings and clarifications by the Petitioners.
5. Approval of the Scheme and its implications.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Merger by Absorption:
The petitioners sought the Tribunal's sanction for a Scheme of Merger by Absorption under Sections 230-232 of the Companies Act, 2013. The Scheme involved the merger of Danta Enterprises Private Limited (Transferor Company 1) and Glebe Trading Private Limited (Transferor Company 2) with Siddeshwari Tradex Private Limited (Transferee Company). The Scheme was approved by the Board of Directors of the respective companies on 5th February 2019. The rationale for the Scheme included simplifying the group structure, reducing overheads, and enabling the group to leverage combined assets for raising funds and attracting investments.

2. Compliance with Statutory Requirements and Guidelines:
The Regional Director, North-Western Region, Ministry of Corporate Affairs, Ahmedabad, filed a report highlighting the need for compliance with Section 232(3)(i) of the Companies Act, 2013, regarding the payment of fees on enhanced authorized capital. The Regional Director also raised concerns about compliance with FEMA and RBI guidelines due to the presence of foreign shareholders in the petitioner companies. The statutory auditors emphasized the need for the amalgamated company to register as a "Core Investment Company" with the RBI under Section 45-IA of the RBI Act, 1934.

3. Observations and Objections by the Regional Director:
The Regional Director's report included several observations:
- The capital clause of the transferee company needed to be amended, and the difference in fees for the enhanced authorized capital had to be paid.
- Compliance with FEMA and RBI guidelines regarding foreign shareholders was necessary.
- The statutory auditors' emphasis on the need for registration as a "Core Investment Company" with the RBI.

4. Undertakings and Clarifications by the Petitioners:
In response to the Regional Director's report, the petitioners filed affidavits and provided the following undertakings:
- The transferee company would comply with Section 232(3)(i) and pay the required fees for the enhanced authorized capital.
- The transferee company would comply with FEMA and RBI guidelines concerning foreign shareholders.
- The transferee company would apply for registration as a "Core Investment Company" with the RBI upon the Scheme's implementation.

5. Approval of the Scheme and its Implications:
The Tribunal found the Scheme to be fair, reasonable, and not violative of any law or public policy. Consequently, the Scheme was sanctioned under Sections 230-232 of the Companies Act, 2013. The Tribunal's order included several provisions:
- The Transferor Companies were dissolved without winding-up.
- All property, rights, powers, liabilities, and duties of the Transferor Companies were transferred to the Transferee Company.
- Pending legal proceedings involving the Transferor Companies would continue with the Transferee Company.
- Employees of the Transferor Companies would become employees of the Transferee Company without any break in service.
- Compliance with FEMA and RBI guidelines was mandated.
- The Transferee Company was required to apply for registration as a "Core Investment Company" with the RBI.

The Tribunal clarified that the order did not exempt the companies from paying any applicable stamp duty, taxes, or other charges. The petitioners were directed to deliver a certified copy of the order to the Registrar of Companies for registration within thirty days. The case was disposed of with no order as to costs, and urgent certified copies of the order were made available upon request.

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