Court approves Amalgamation Scheme transferring assets, liabilities. Compliance with Tax Act, Accounting Standards ensured.

The court sanctioned the Scheme of Amalgamation between two companies, with assets and liabilities transferring to the Transferee Company. Procedural requirements were met, and compliance with the Income Tax Act and Accounting Standards was ensured. Concerns about deposits from individuals other than directors and the carry forward/set off of losses were addressed through affidavits. The court found the appointment of an internal auditor unnecessary due to company size, and the petition was disposed of with the Transferee Company agreeing to deposit a sum in the Common Pool Fund Account voluntarily.

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Issues:
- Sanctioning of Scheme of Amalgamation
- Compliance with procedural requirements
- Acceptance of deposits from persons other than directors
- Carry forward and set off of losses
- Provision for internal audit system

Sanctioning of Scheme of Amalgamation:
The petition sought approval for the Scheme of Amalgamation between two companies. The Board of Directors of both companies had already approved the scheme. Meetings of equity shareholders and creditors were dispensed with by court order. The report indicated overwhelming support for the scheme from shareholders. The court, after considering all relevant facts, reports, and compliance with procedural requirements, sanctioned the Scheme of Amalgamation. The assets and liabilities of the Transferor Company would vest in the Transferee Company, with the former being dissolved without winding up.

Compliance with Procedural Requirements:
The court ensured that all procedural requirements under the law and relevant rules were met before sanctioning the amalgamation scheme. The Transferee Company was directed to comply with conditions stipulated under the Income Tax Act and Accounting Standards issued by the Institute of Chartered Accountants of India. The Scheme was declared binding on both companies, their shareholders, creditors, and all concerned parties.

Acceptance of Deposits and Carry Forward/Set Off of Losses:
The Official Liquidator raised concerns regarding the acceptance of deposits from individuals other than directors and the carry forward/set off of losses. The Regional Director highlighted non-compliance with Accounting Standard-14. In response, directors of the Transferee Company filed affidavits undertaking compliance with Accounting Standard-14 and the Income Tax Act regarding losses. Additional affidavits were filed to address objections raised by the Official Liquidator regarding deposits, stating compliance with relevant provisions, which led to the objections being resolved.

Provision for Internal Audit System:
The Official Liquidator also raised the issue of the provision for an internal audit system in the company. However, considering the assets, turnover, loans, and deposits of the company were below the prescribed thresholds, the court found that the appointment of an internal auditor was not required. The petition was disposed of, with the Transferee Company agreeing to deposit a sum in the Common Pool Fund Account of the Official Liquidator voluntarily.

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