2019 (12) TMI 1383 - 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 - 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 the 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. Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act 2013 and therefore it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules. The petitioner companies have filed an affidavit confirming that no objection has been received against the Scheme from any party or from any person interested in the Scheme in any manner - It has also been affirmed in the petition that Scheme is in the interest of all the Transferor Companies and the transferee company including their shareholders creditors employees and all concerned. Upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme and the report filed by the Regional Director Northern Region Ministry of Corporate Affairs official liquidator and in the absence of any objection against the Scheme 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:
Petition for approval of Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.

Analysis:
The petition was filed for approval of the Scheme of Amalgamation of multiple transferor companies with a transferee company. The transferor companies were private and public companies incorporated under the Companies Act, 1956. The transferee company was also a public company incorporated under the same Act. The petitioners complied with the necessary procedures, including dispensing with meetings of equity shareholders, secured creditors, and unsecured creditors. The petitioners published notices in newspapers, served relevant authorities, and obtained necessary approvals. The Regional Director and Official Liquidator did not raise significant objections to the Scheme. However, the Income Tax Department did not respond, and it was clarified that they could still recover pending dues from the petitioner companies.

The petition affirmed that no proceedings were pending against the petitioner companies under the Companies Act, 2013 or the Companies Act, 1956. The statutory auditors confirmed that the proposed Accounting Treatment in the Scheme was in line with Accounting Standards. The Tribunal emphasized that it does not interfere with corporate decisions approved by shareholders and creditors unless there are legal violations or public interest compromises. Referring to a previous case, the Tribunal highlighted its role in ensuring the fairness, justness, and reasonableness of the Scheme without acting as an appellate authority.

The Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013, after considering member and creditor approvals, reports from authorities, and the absence of objections. The petitioners were directed to comply with statutory requirements, and any deficiencies or violations would not protect individuals from legal actions. The order did not exempt the Scheme from stamp duty, taxes, or other charges. The Tribunal ordered the dissolution of transferor companies without winding-up, transfer of assets, rights, and liabilities to the transferee company, continuation of pending proceedings, and seamless transition of employees to the transferee company.

The Tribunal further ordered the delivery of a certified copy of the order for registration, dissolution of transferor companies, consolidation of documents with the Registrar of Companies, and allowed interested parties to seek necessary directions. The petition was disposed of accordingly, and the order was to be served to the parties involved.