2019 (2) TMI 1756 - Tri - Companies Law

Approval of Amalgamation Scheme by Tribunal: Fair & Effective from 01.04.2017

The Tribunal approved the Scheme of Amalgamation, finding it fair, reasonable, and not contrary to public policy or law. The scheme was to be effective ... Sanctioning of proposed scheme of amalgamation - petitioner Company submitted that the rational of the scheme of Amalgamation is that the combined entity after the amalgamation would have the necessary size and bandwidth with large chit business across the country - HELD THAT:- The scheme is in conformity with applicable accounting standards. The scheme of Amalgamation will not prejudicially affect the interests of any stakeholders. The Appointed date of the Scheme is 01.04.2017 - On perusal of scheme of Amalgamation it appears to be fair and reasonable, not contrary to public policy and not in violation of any provisions of law. All the statutory compliances have been made under the Companies Act, 2013. The Scheme is not opposed to public interest and hence the Scheme can be approved - Scheme approved with certain conditions imposed. Issues Involved:1. Sanctioning of the proposed scheme of Amalgamation.2. Compliance with statutory requirements and observations from regulatory authorities.3. Preservation of books of accounts and records.4. Transfer of liabilities and duties.5. Compliance with tax implications and accounting standards.Issue-wise Detailed Analysis:1. Sanctioning of the proposed scheme of Amalgamation:The petition was filed under Section 230 of the Companies Act, 2013, seeking approval for the amalgamation of M/S. Shriram Chits Private Limited (Transferor Company 1), M/S. Shriram Chits (Maharashtra) Limited (Transferor Company 2), and M/S. Shriram Chits Tamil Nadu Private Limited (Transferor Company 3) with M/S. Shriram Chits (Karnataka) Private Limited (Transferee Company). The rationale for the amalgamation included consolidation for efficient capital utilization, administrative and operational rationalization, and enhanced business operations across the country. The scheme proposed shifting the registered office of the Transferee Company from Karnataka to Tamil Nadu and renaming it to Shriram Chits [India] Private Ltd.2. Compliance with statutory requirements and observations from regulatory authorities:The Tribunal ordered notices to the Regional Director, Registrar of Companies, Official Liquidator, and Income Tax Department. The Regional Director's affidavit suggested ensuring statutory compliance and preserving records. The Official Liquidator's report highlighted the need for documentary evidence regarding settlement of secured loans and details of liabilities. The Petitioner Companies provided undertakings to comply with the observations, and no opposition to the scheme was received from the public.3. Preservation of books of accounts and records:The Tribunal directed the Petitioner Company to preserve its books of accounts and records and not to dispose of them without prior permission from the Central Government, in accordance with Section 239 of the Companies Act, 2013. The Transferor Company was also instructed to hand over possession of its books of accounts and relevant documents to the Transferee Company after the amalgamation process.4. Transfer of liabilities and duties:The Tribunal ordered that all properties, rights, powers, liabilities, and duties of the Transferor Company be transferred to the Transferee Company without further act or deed, pursuant to Section 232 of the Companies Act, 2013. This included the continuation of any pending proceedings by or against the Transferor Company.5. Compliance with tax implications and accounting standards:The Tribunal clarified that the order should not be construed as granting exemption from payment of stamp duty, taxes, or other charges. The tax implications arising from the scheme are subject to the final decision of the concerned tax authorities. The Petitioner Company was directed to comply with the Accounting Treatment Standards prescribed under Section 133 of the Companies Act, 2013.Conclusion:The Tribunal approved the Scheme of Amalgamation, finding it fair, reasonable, and not contrary to public policy or law. The scheme was to be effective from 01.04.2017, binding on all members, employees, and creditors. The approval was subject to compliance with statutory observations and the approval of concerned NCLT Benches for the other involved companies.