2022 (1) TMI 18 - Tri - Companies Law

Sanction of scheme of arrangement and amalgamation - sections 230 to 232 and other applicable provisions of the Companies Act, 2013 - HELD THAT - From the material on record, the scheme appears to be fair and reasonable and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, petition is made absolute in terms of prayer clause of the company petition. The transferor companies are ordered to be dissolved without winding up. Application allowed.

Issues Involved:
1. Sanction of the scheme of arrangement and amalgamation under sections 230 to 232 of the Companies Act, 2013.
2. Compliance with applicable accounting standards and statutory provisions.
3. Conversion of equity shares into preference shares.
4. Pending inquiry by the Registrar of Companies.
5. Observations and objections raised by the Regional Director.
6. Filing of necessary documents and compliance with procedural requirements.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Arrangement and Amalgamation:
The Tribunal was convened via video conferencing to hear the petition for the sanction of the scheme of arrangement and amalgamation involving Protrans Supply Chain Management P. Ltd., Ag-Vet Genetics P. Ltd., and Baramati Agro Ltd. The scheme was proposed to benefit the companies and their stakeholders by creating synergy, providing greater financial strength, achieving economies of scale, and maximizing shareholder returns. The petitioner-companies approved the scheme in their respective board meetings held on February 25, 2019, and filed a joint petition in compliance with the Tribunal's order dated June 11, 2020.

2. Compliance with Applicable Accounting Standards and Statutory Provisions:
The Regional Director's report emphasized the need for compliance with AS-14 (Ind AS-103) and other applicable accounting standards. The petitioner-companies undertook to pass necessary accounting entries and comply with all statutory requirements under the Companies Act, 2013. The Tribunal accepted the petitioners' undertaking to comply with these requirements.

3. Conversion of Equity Shares into Preference Shares:
The scheme proposed converting certain A class equity shares into 9% non-cumulative optionally convertible redeemable preference shares. The Regional Director raised concerns about this conversion, citing ongoing litigation and the different rights associated with equity and preference shares. The petitioner-companies argued that such conversion is permissible under section 61 of the Companies Act, 2013, as it amounts to reorganization of share capital. They cited various judicial precedents to support their position. The Tribunal accepted the petitioner-companies' explanation and interpretation of the law.

4. Pending Inquiry by the Registrar of Companies:
The Regional Director's report mentioned a pending inquiry against Baramati Agro Ltd., referred by SEBI. The petitioner-companies clarified that this inquiry is related to the transferee company, which will continue to exist post-amalgamation. They undertook to provide all necessary information and explanations to complete the inquiry. The Tribunal accepted this undertaking.

5. Observations and Objections Raised by the Regional Director:
The Regional Director's report included several observations, such as compliance with section 232(3)(i) of the Companies Act, 2013, and the inclusion of the main objects of the transferor companies in the transferee company's memorandum of association. The petitioner-companies provided satisfactory explanations and undertakings for each observation. The Tribunal accepted these clarifications and undertakings.

6. Filing of Necessary Documents and Compliance with Procedural Requirements:
The Tribunal directed the petitioners to file a certified copy of the order along with the scheme with the concerned Registrar of Companies electronically in e-form INC-28 within 30 days. Additionally, the petitioners were instructed to lodge a copy of the order with the concerned Superintendent of Stamps for stamp duty adjudication within 60 working days. The Tribunal also noted that no objections were received from the jurisdictional Income-tax Department and that all tax issues arising from the scheme would be addressed in accordance with the law.

Conclusion:
The Tribunal found the scheme to be fair, reasonable, and not contrary to public policy. It ordered the dissolution of the transferor companies without winding up and directed the petitioners to comply with the necessary procedural requirements. The petition was made absolute in terms of the prayer clause, and any interested person was granted liberty to apply to the Tribunal for necessary directions.

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