Tribunal Approves Shriram Chits Companies Amalgamation Scheme with Compliance and Efficiency

The Tribunal sanctioned the scheme of amalgamation under Sections 230 to 232 of the Companies Act, 2013, involving multiple Shriram Chits companies for consolidation and operational efficiency. The objections raised by the Regional Director were addressed, including compliance with statutory requirements and accounting standards. The Tribunal noted the petitioner's efforts to rectify issues and approved the scheme as fair and reasonable. The appointed date for the scheme was set as April 1, 2017, with directions for compliance with procedural formalities and filings with regulatory authorities. The dissolution of the transferor company without winding up was contingent on final approval by the National Company Law Tribunal.

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Issues Involved:
1. Sanction of the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and objections raised by the Regional Director.
3. Adherence to Accounting Standards (AS-14).
4. Compliance with Section 13 of the Companies Act, 2013 for changes in the registered office and name of the transferee company.
5. Tax liabilities and pending appeals.
6. Procedural compliances and filings with regulatory authorities.

Issue-wise Detailed Analysis:

1. Sanction of the Scheme of Amalgamation:
The Tribunal was convened through video conferencing and heard the counsel for the petitioner-company and the representative of the Regional Director. The petition sought the Tribunal's sanction under Sections 230 to 232 of the Companies Act, 2013, for a scheme of amalgamation involving several Shriram Chits companies. The rationale for the scheme was to enable consolidation, efficient utilization of capital, better cash flow, and streamlined operations. The board of directors and equity shareholders of the petitioner/transferor company No. 2 approved the scheme unanimously.

2. Compliance with Statutory Requirements and Objections Raised by the Regional Director:
The Regional Director's report raised several objections, including the need for serving notices to concerned authorities, submission of documents, and compliance with accounting standards. The petitioner responded with clarifications and undertakings to comply with these requirements. The Tribunal noted that the petitioner had addressed the objections, including obtaining a No Objection Certificate (NOC) from the Registrar of Chits, Maharashtra.

3. Adherence to Accounting Standards (AS-14):
The Regional Director objected to the proposed accounting treatment of adjusting differences between assets and liabilities in the general reserve instead of the capital reserve. The petitioner argued that the treatment was in consonance with Ind AS-14 and cited judgments supporting deviations in accounting treatment. However, the Tribunal emphasized that post-amendment to AS-14 (March 30, 2016), the treatment prescribed in the scheme cannot override the provisions of AS-14. The Tribunal refrained from expressing an opinion on this matter, as it falls within the jurisdiction of the National Company Law Tribunal, Bengaluru Bench.

4. Compliance with Section 13 of the Companies Act, 2013:
The Regional Director raised concerns about compliance with Section 13 for changes in the registered office and name of the transferee company. The Tribunal acknowledged that schemes of arrangement are a complete code in themselves, and separate procedures under other provisions of the Companies Act are not required if they are part of the scheme. The petitioner undertook to comply with procedural requirements, which the Tribunal recorded.

5. Tax Liabilities and Pending Appeals:
The Income-tax authority demanded Rs. 2.81 crores from the petitioner. The petitioner filed an appeal against this demand, which is pending. The scheme provides that all liabilities of the transferor companies will transfer to the transferee company, which will handle all legal proceedings, including the tax appeal. The Tribunal noted that the transferee company would have sufficient net worth to cover the tax liability.

6. Procedural Compliances and Filings with Regulatory Authorities:
The petitioner undertook to comply with all statutory requirements under the Companies Act, 2013, and file necessary forms for increasing the authorized share capital. The Tribunal accepted this undertaking and directed the petitioner to file copies of the order and the scheme with the concerned Registrar of Companies and the Superintendent of Stamps within specified timeframes.

Conclusion:
The Tribunal found the scheme of amalgamation to be fair, reasonable, and not violative of any law or public policy. The scheme was sanctioned with an appointed date of April 1, 2017. The petitioner/transferor company No. 2 was directed to comply with procedural requirements and file necessary documents with regulatory authorities. The petitioner/transferor company No. 2 shall be dissolved without winding up upon the scheme's final sanction by the jurisdictional benches of the National Company Law Tribunal.

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