2021 (12) TMI 529 - Tri - Companies Law

Approval of the Scheme of Amalgamation - 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 - Certificates of respective Statutory auditors of all the petitioner companies, have been placed on record to the effect that Accounting Treatment proposed in the Scheme of Amalgamation is in conformity with the Accounting Standard notified by the Central Government as specified under the provisions of Section 133 of the Companies Act, 2013. 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 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. 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, Northern Region, Ministry of Corporate Affairs and the report of official liquidator, 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. Application allowed.

Summary

Issues:
Approval of Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.

Detailed Analysis:

1. Background and Filing of Application: The applicant companies filed an application under Sections 230 to 232 of the Companies Act, 2013, along with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and the National Company Law Tribunal Rules, 2016, seeking approval for the Scheme of Amalgamation of Transferor Companies into the Transferee Company. The Scheme was submitted for consideration.

2. Details of Companies Involved: The Transferor Companies, including A.K.S. Finstock Private Limited, Ashirwad Fincap Private Limited, and Shorewala & Co. Private Limited, were incorporated under the Companies Act 1956. The Transferee Company, Shorewala Investment and Properties Private Limited, was also incorporated under the Companies Act 1956.

3. Procedural Compliance: The Applicant Companies sought dispensation from convening meetings of shareholders and creditors, which was approved by the Tribunal earlier. Public notices were published, and relevant authorities like the Regional Director, RoC, and Official Liquidator participated in the proceedings and submitted their reports.

4. Reports by Regulatory Authorities: The Regional Director, RoC, and Official Liquidator submitted their reports, with observations related to the financial status and compliance of the companies involved. The Income Tax Department also provided reports regarding tax assessments and outstanding demands against the companies.

5. Compliance and Clarifications: The Transferor Companies clarified outstanding charges and tax demands, including payments made under relevant tax schemes. They affirmed no pending legal proceedings or investigations against them. Statutory auditors confirmed the accounting treatment in the Scheme complied with relevant standards.

6. Approval of Scheme: The Tribunal considered the approval accorded by members and creditors of the companies, along with reports from regulatory authorities. Finding no impediment, the Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013.

7. Operative Directions: The Tribunal ordered dissolution of Transferor Companies without winding-up, transfer of assets, rights, liabilities, and duties to the Transferee Company, continuation of proceedings, and seamless transition of employees. The Petitioner companies were directed to comply with statutory requirements and deliver a certified copy of the order for registration within thirty days.

8. Final Disposition: The Tribunal disposed of the petition with the mentioned directions, allowing interested parties to seek necessary directions. The order was to be served to the concerned parties for compliance.

This detailed analysis covers the key aspects of the judgment, including the background, compliance, regulatory reports, clarifications, approval process, and operative directions issued by the Tribunal.