High Court approves Amalgamation Scheme over Central Govt objections, stresses timely implementation for Corporate Debt Restructuring

The High Court of Calcutta sanctioned the Scheme of Amalgamation despite objections raised by the Central Government, which were addressed by the petitioners. The court granted approval for the scheme, emphasizing the need for timely implementation to facilitate the Corporate Debt Restructuring Package. The petitioners were instructed to cover the costs of the Central Government Advocate, and the case was concluded with a requirement for the submission of a computerized printout of the scheme and asset schedule for verification.

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Issues:
1. Sanctioning of the Scheme of Amalgamation
2. Objections raised by the Central Government regarding the Scheme

Analysis:
The High Court of Calcutta dealt with an application for the sanctioning of a Scheme of Amalgamation. The Central Government raised three objections during the proceedings. The first objection pertained to a specific clause in the Scheme, which the petitioners agreed to modify as per the Central Government's suggestion. The second objection raised by the Central Government concerned pending scrutiny proceedings by the Income Tax Department, which had previously objected to the scheme. However, the petitioners clarified that assessment orders had been passed subsequently, removing any impediment to the scheme. The third objection highlighted by the Central Government related to the share application money pending for allotment as per the Balance Sheets of the transferor companies. The petitioners responded by providing evidence of share allotments in the previous years and revised valuation reports to address this concern.

Furthermore, the petitioners had undergone a restructuring process and submitted a proposal for "Merger-cum-Restructuring" before the Consortium of Banks/Financial Institutions, following all prescribed procedures. The Corporate Debt Restructuring Cell of the Reserve Bank of India had granted provisional approval to the restructuring proposal, emphasizing the necessity of sanctioning the scheme without further delay to implement the Corporate Debt Restructuring Package effectively. The Court, after considering the arguments and submissions, ordered in favor of the petitioners, granting sanction to the Scheme of Amalgamation as per the prayers mentioned in the petition. The petitioners were directed to pay costs to the Central Government Advocate, and the case was disposed of, with a provision for the petitioners to supply a computerized printout of the scheme and asset schedule for verification.

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