Amalgamation sanction and NBFC classification test confirm no RBI permission was needed for the scheme.
A scheme of amalgamation was sanctioned because the required member and creditor approvals had been obtained, notices were duly issued and served, and no substantive stakeholder objection or public interest prejudice was found. The Official Liquidator reported no material objection, and remaining compliance concerns did not create a legal bar to approval, subject to continuing statutory compliance. The companies were also found not to be NBFCs under the principal business test, as the financial-assets and income thresholds were not met, so RBI registration and prior written permission were not required. The transferor companies' assets and liabilities were ordered to vest in the transferee, and the transferors were directed to stand dissolved without winding up.
Issues: (i) Whether the Scheme of Amalgamation deserved sanction under the applicable company law framework; (ii) Whether the companies were required to be treated as NBFCs so as to attract RBI registration and prior written permission for the scheme.
Issue (i): Whether the Scheme of Amalgamation deserved sanction under the applicable company law framework.
Analysis: The requisite approvals of the members and creditors had been obtained, notices had been duly published and served, and no substantive objection was received from stakeholders. The Official Liquidator reported no prejudice to members, creditors or public interest. The remaining corporate compliance objections were treated as not creating any legal impediment to approval of the scheme, subject to continued compliance with statutory requirements.
Conclusion: The Scheme of Amalgamation was sanctioned in favour of the petitioners.
Issue (ii): Whether the companies were required to be treated as NBFCs so as to attract RBI registration and prior written permission for the scheme.
Analysis: The Tribunal applied the principal business test, namely whether financial assets constituted more than fifty per cent of total assets and whether income from financial assets exceeded fifty per cent of gross income. On the materials placed, the companies were not treated as falling within the NBFC category. As a result, RBI registration and prior written permission for the scheme were held not to be necessary, though the companies remained bound by their undertaking and by all other statutory obligations.
Conclusion: The companies were not required to be registered as NBFCs and RBI prior permission was not for the scheme.
Final Conclusion: The amalgamation was approved, the assets and liabilities of the transferor companies stood transferred to the transferee company, and the transferor companies were directed to stand dissolved without winding up in accordance with the sanctioned scheme.
Ratio Decidendi: A scheme of amalgamation may be sanctioned where the statutory approvals and notices are complete, no substantive stakeholder prejudice is shown, and the court finds no legal bar such as an applicable NBFC registration or RBI-approval requirement.
TaxTMI 
AI Drafter ✕
TaxTMI 
