2017 (8) TMI 1324 - Tri - Companies Law

Amalgamation Scheme Dismissed for NBFC Activities - Compliance Concerns & Costs Imposed

In Re: Avenir Finvest & Leasing Private Limited and Ors.

In Re: Avenir Finvest & Leasing Private Limited and Ors. - [2019] 213 Comp Cas 174 (NCLT [Pr B]) Issues:Approval of scheme of arrangement for amalgamation of companies, dispensation of meetings of equity shareholders and creditors, compliance with Companies Act, 2013, observations by Regional Director and Registrar of Companies, requirement of RBI approval for NBFC activities.Detailed Analysis:1. Scheme of Amalgamation Approval:The petition sought approval for the amalgamation of several companies with a transferee company. The High Court initially dispensed with the requirement of convening meetings of equity shareholders and creditors, as consents were obtained. The joint petitions for sanction were filed subsequently under the Companies Act, 1956.2. Transfer to National Company Law Tribunal:The High Court transferred the case to the National Company Law Tribunal following the notification vesting powers to consider such schemes with the Tribunal. The petition was taken up for final consideration after compliance with publication and notice requirements.3. Compliance with High Court Orders:The petitioners complied with High Court orders by effecting paper publication, issuing notices to concerned authorities, and filing necessary documents. Affidavits from Official Liquidator and Regional Director indicated no objections to the scheme.4. Observations by Regional Director and Registrar of Companies:The Regional Director raised concerns regarding compliance with Companies Act, 2013, and the nature of activities of the companies involved. The Registrar of Companies highlighted discrepancies in paid-up capital and potential NBFC activities of the transferee company.5. Petitioner's Response to Observations:The petitioner responded to observations, clarifying the paid-up capital and asserting that the transferee company was not engaged in NBFC activities. They argued against the alleged violations of the Companies Act, 2013, and the necessity of RBI approval for the scheme.6. RBI Approval Requirement for NBFC Activities:The Regional Director's report indicated that the transferee company was engaged in NBFC activities without RBI approval. The Tribunal emphasized the mandatory requirement of RBI approval for such activities and dismissed the petition due to the lack of RBI approval, imposing costs payable to the Prime Minister National Relief Fund.In conclusion, the judgment addressed various issues surrounding the approval of an amalgamation scheme, compliance with legal requirements, and the necessity of RBI approval for NBFC activities, ultimately leading to the dismissal of the petition due to non-compliance.