2020 (10) TMI 780 - Tri - Companies Law

Companies Act Amalgamation Scheme Approved by Court

Titanium Imports and Exports Private Limited and Ors. Versus Shalimar Corp Limited

The court approved the Scheme of Amalgamation under Sections 230 and 232 of the Companies Act, 2013, involving Transferor Company No. 1, Transferor ... Approval of the Scheme of Amalgamation - Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016 - HELD THAT:- Upon considering the approval accorded by the members and creditors of the Petitioner company to the proposed Scheme, and the report filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, report filed by the official liquidator and also as no objection from any quarter against the Scheme has been received; there appears to be no impediment in sanctioning the present Scheme - sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013 in respect of the Petitioner Company. The scheme is approved - application allowed. Issues:1. Approval of Scheme of Amalgamation under Sections 230 and 232 of the Companies Act, 2013.2. Compliance with statutory requirements and objections against the Scheme.3. Reports from Regional Director, Official Liquidator, and Department of Income Tax.4. Decision-making authority of shareholders and interference by the Tribunal.5. Legal provisions and jurisdiction of the Company Court.6. Dissolution of Petitioner Transferor Company No. 1 and transfer of rights, liabilities, and employees to the transferee company.Issue 1: Approval of Scheme of Amalgamation under Sections 230 and 232 of the Companies Act, 2013:The petition filed by the Petitioner Transferor Company No. 1 sought approval of the Scheme of Amalgamation with Transferor Company No. 2 into the Transferee Company under Sections 230 and 232 of the Companies Act, 2013. The Scheme was placed on record, and compliance with statutory provisions was emphasized.Issue 2: Compliance with statutory requirements and objections against the Scheme:The Petitioner complied with the Tribunal's orders regarding publication and service of notices to relevant authorities. Reports from the Regional Director and Official Liquidator indicated no material objections to the Scheme. The Department of Income Tax did not respond within the stipulated time, implying no objections. The Scheme was affirmed to be in the interest of all stakeholders.Issue 3: Reports from Regional Director, Official Liquidator, and Department of Income Tax:Reports from the Regional Director and Official Liquidator did not raise substantial objections to the Scheme. The Department of Income Tax did not provide a response within the specified period, leading to the presumption of no objections. However, the Income Tax Department retained the right to recover pending dues.Issue 4: Decision-making authority of shareholders and interference by the Tribunal:The Tribunal acknowledged that shareholders are best placed to judge their interests and market trends. The Tribunal's role is limited to ensuring fairness, justness, and reasonableness of the Scheme, without interfering with corporate decisions approved by shareholders and creditors.Issue 5: Legal provisions and jurisdiction of the Company Court:The Tribunal granted sanction to the Scheme under Sections 230 to 232 of the Companies Act, 2013, considering approval from members and creditors, along with the absence of objections. The Petitioner was directed to comply with statutory requirements, and any deficiency or violation could lead to legal action against responsible individuals.Issue 6: Dissolution of Petitioner Transferor Company No. 1 and transfer of rights, liabilities, and employees to the transferee company:The Tribunal ordered the dissolution of Petitioner Transferor Company No. 1 without winding-up procedures. It directed the transfer of property, rights, powers, liabilities, duties, and employees to the transferee company. Compliance with the order and registration with the Registrar of Companies was mandated for dissolution. Interested parties were granted the liberty to seek necessary directions from the Tribunal.The judgment approved the Scheme of Amalgamation, highlighting compliance with legal provisions, lack of objections, and shareholder autonomy. It emphasized the limited role of the Tribunal in assessing the Scheme's fairness and legality. The order included directives for dissolution, transfer of rights and liabilities, and employee continuity to the transferee company, subject to compliance and further approval by the Mumbai Bench of NCLT.