2019 (12) TMI 1526 - Tri - Companies Law

Sanction of Scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 - HELD THAT - The objections/observations to the Scheme have been received only from Official Liquidator, Regional Director, Registrar of Companies and the shareholder P.P. Jibi Jose, Dlip Kumar Surana Hanuman Share and Stock Brokers P. Ltd. and their objections/observations are adequately replied to by the Petitioner Companies and hence there is no impediment in the sanction of the Scheme. Therefore, the Scheme (Annexure P-1) is approved. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes or any other charges, if any, and payment in accordance with law or granting permission. It is directed that the Petitioner Companies shall comply with the provisions of FEMA/RBI Act. With the sanction of the Scheme, the Transferor Company shall stand dissolved without undergoing the process of winding up resulting in increase in the share capital of the Transferee Company as per the terms of Scheme. Application disposed off.

Summary

Issues Involved:
1. Maintainability of the joint petition under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with procedural requirements for the meetings of shareholders and creditors.
3. Objections raised by shareholders and authorities.
4. Reduction of share capital of the Transferee Company.
5. Valuation of shares and fairness of the Scheme.
6. Transfer of liabilities and employees from Transferor to Transferee Company.

Detailed Analysis:

1. Maintainability of the Joint Petition:
The joint petition under Sections 230 to 232 of the Companies Act, 2013, filed by the Petitioner-Companies for the sanction of the Scheme of Amalgamation was deemed maintainable as per Rule 3(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

2. Compliance with Procedural Requirements:
The First Motion Application was disposed of with directions to hold meetings of equity shareholders and unsecured creditors of the Transferee Company, while meetings for the Transferor Company were dispensed with. Compliance with these directions was confirmed through affidavits and newspaper publications. The Scheme was approved by 99.87% of equity shareholders and 100% of unsecured creditors of the Transferee Company.

3. Objections Raised by Shareholders and Authorities:
Objections were received from three shareholders and addressed in detail. The Tribunal directed individual notices to these shareholders and statutory authorities. The objections included concerns about the reduction of share capital, fairness of the valuation, and compliance with Sections 66 and 236 of the Companies Act. The Tribunal found that the objections did not meet the minimum threshold prescribed under Section 230(4) of the Act and thus lacked validity.

4. Reduction of Share Capital of the Transferee Company:
The Scheme involved the reduction of the share capital of the Transferee Company by cancelling and extinguishing certain shares held by non-promoter shareholders. The Tribunal found that the reduction was permissible under Sections 230-232 of the Act and upheld by relevant judicial precedents. The reduction was approved as fair and equitable by the majority of shareholders.

5. Valuation of Shares and Fairness of the Scheme:
The valuation of shares was determined by an independent valuer and found to be reasonable. The Tribunal referred to judicial precedents, emphasizing that valuation is not an exact science and should not be interfered with unless it is ex-facie unreasonable. The valuation report by SSPA & Co. was accepted, and no specific objections were raised against it.

6. Transfer of Liabilities and Employees:
The Scheme provided for the transfer of all property, rights, powers, liabilities, and duties of the Transferor Company to the Transferee Company, including the transfer of employees. The Tribunal directed that the Transferor Company be dissolved without undergoing the process of winding up, and its authorized share capital be cancelled and extinguished.

Conclusion:
The Tribunal approved the Scheme of Amalgamation, finding no impediments in its sanction. The objections raised were adequately addressed, and the Scheme was deemed fair, just, and reasonable. The order included specific directions for compliance with statutory requirements and the transfer of assets and liabilities.