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TMI Blog2024 (8) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... t the scheme is not in public interest or in the interest of the creditors, notwithstanding no objections having come from the Registrar or the Official Liquidator or each of the companies involved in the merger of filing of declaration of solvency with the Registrar and the scheme having been approved by majority representing nine-tenths in value of the creditors or class of creditors of respective companies indicated in the meeting convened by the company. On a conjoint reading of sub-sections (2), (3), (4) and (5), the phrase may used in sub-section (5) will have to be construed as mandatory. It is said so because if the Government is of the view that the scheme is not in the public interest or in the interest of the creditors then same is to be decided by the Tribunal. If the phrase may in sub-section (5) is used as optional then company involved in the amalgamation scheme would be at the mercy of the Central Government if the scheme is rejected without any adjudication. It is, therefore, mandatory for the Central Government to make an application before the Tribunal and get adjudication on said issue. In the instant case, the declaration of solvency has been filed. The scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proposed amalgamation submitted an application dated 26th April 2018 for approval of scheme of amalgamation under Section 233 (2) of the Companies Act in the Form prescribed being Form No.CAA.11 as per Rule 25(4) of the said Rules. Relevant documents were annexed. Copy was also submitted to the Official Liquidator as well as the Registrar of Companies. Petitioners also submitted vide communication dated 28th September 2018 to respondent no.2 additional documents. 8. Respondent no.2, by an order dated 12th November 2018, which is impugned in this petition, rejected the application of petitioners submitted under Section 233 of the Companies Act for the scheme of amalgamation on the sole ground that petitioner nos.2 to 5 are not solvent as per the balance sheet as on 31st March 2017. 9. Mr. Petkar submitted that the order has been passed by respondent no.2 without any authority of law because under Section 233 of the Companies Act, the Regional Director, viz., Respondent no.2 could not have passed the order of rejection. Mr. Petkar submitted that if respondent no.2, after receiving any objection/suggestion or for any reason, is of the opinion that such a scheme is not in the public in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be prescribed, with the Central Government, Registrar and the Official Liquidator where the registered office of the company is situated. (3) On the receipt of the scheme, if the Registrar or the Official Liquidator has no objections or suggestions to the scheme, the Central Government shall register the same and issue a confirmation thereof to the companies. (4) If the Registrar or Official Liquidator has any objections or suggestions, he may communicate the same in writing to the Central Government within a period of thirty days: Provided that if no such communication is made, it shall be presumed that he has no objection to the scheme. (5) If the Central Government after receiving the objections or suggestions or for any reason is of the opinion that such a scheme is not in public interest or in the interest of the creditors, it may file an application before the Tribunal within a period of sixty days of the receipt of the scheme under sub-section (2) stating its objections and requesting that the Tribunal may consider the scheme under section 232. (6) On receipt of an application from the Central Government or from any person, if the Tribunal, for reasons to be recorded in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the case at hand, the only document is the impugned order dated 12th November 2018. The short order reads as under : Sir, With reference to the subject cited above, I am to draw your kind attention towards Rule 25(2) of the Companies (Compromises, Arrangements Amalgamations) Rules, 2016 which provides as follows : For the purpose of clause (c) of sub-section (1) of section233 of the Act the declaration of solvency shall be filed by each of the companies involved in the scheme merger or amalgamation in Form No. CAA 10 alongwith the fee as provided in the Companies (Registration Offices and Fees) Rules, 2014 before convening the meeting of members and creditors for approval of the scheme. It is observed that Transferor Company 1, 2, 3 and 4 are not solvent as per Balance Sheet as at 31/03/2017 schedule filed with the Application. As such, Competent Authority have decided to reject the Application with liberty to file fresh as per Law. 15. Even assuming for the sake of arguments, the observation mentioned in paragraph 3 of the quoted portion of the impugned order amounts to forming an opinion, still respondent no.2 could not have rejected the application but instead should have f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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