2021 (1) TMI 449 - Tri - Companies Law

Tribunal grants relief in Scheme of Amalgamation case

The Tribunal granted relief to the Applicant Companies in C.A. (CAA) No. 27/BB/2020, dispensing with meetings for Shareholders and Secured Creditors, and ... Approval of Composite scheme of amalgamation - seeking to dispense the meetings of the Shareholders and Secured Creditors of the Applicant Companies - seeking direction to convene the meeting of the Unsecured Creditors of the Applicant Company No. 1 ,2 & 3 for considering the composite scheme of Amalgamation - Sections 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 R/w Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT:- The Companies have followed extant provisions of Companies Act in framing the Scheme in question, which are duly approved by the Board of Directors of the Companies involved. The Statutory Auditor/Chartered Accountants of the Applicant Companies have issued Certificate dated 09th June, 2020 by inter-alia certifying that accounting treatment as prescribed U/s 133 of the Companies Act, 2013 with reference to the Scheme in question is complied with. The Applicant Companies have disclosed all material facts relating to the Scheme in question and filed necessary documents along with the Application. Therefore, we are convinced with the case as made out by the Applicants so as to grant relief as sought for, by dispensing the meeting of the Shareholders and Secured Creditors of the Applicant Companies and to order to convene the meeting of the Unsecured Creditors of the Applicant Companies by appointing the Chairperson and Scrutinizer for convening the meeting by fixing venue, time, quorum etc. Various directions regarding holding and dispensation of various meetings, issued - application allowed. Issues Involved:1. Dispensation of meetings of Shareholders and Secured Creditors.2. Convening meetings of Unsecured Creditors.3. Approval and adoption of the Scheme of Amalgamation.4. Compliance with statutory requirements and accounting standards.5. Directions for convening meetings and appointing Chairperson and Scrutinizer.6. Filing of reports and subsequent legal steps.Detailed Analysis:1. Dispensation of Meetings of Shareholders and Secured Creditors:The Applicant Companies sought to dispense with the meetings of their Shareholders and Secured Creditors. The Tribunal noted that the Chartered Accountants had certified the existing Shareholders and confirmed that there were no Secured Creditors in the Applicant Companies as of 31.03.2020. The Tribunal was satisfied with the evidence provided, including affidavits from Shareholders consenting to the Scheme and the dispensation of meetings. Consequently, the Tribunal ordered the dispensation of the meetings of Shareholders and Secured Creditors.2. Convening Meetings of Unsecured Creditors:The Applicant Companies requested to convene meetings of their Unsecured Creditors to consider the proposed Scheme of Amalgamation. The Tribunal directed that these meetings be held on 14.08.2020 at specified times and locations for each Applicant Company. The Tribunal appointed Dr. K.S. Ravichandran as Chairperson and Mr. R. Ramachanderan as Scrutinizer for these meetings, with specified remuneration for their roles. The quorum for these meetings was set at 30% of the total value of Unsecured Creditors, either in person or through a representative.3. Approval and Adoption of the Scheme of Amalgamation:The Board of Directors of the Applicant Companies had approved and adopted the Scheme of Amalgamation in their respective meetings held on 03.06.2020. The rationale for the Scheme was to enhance customer experience, stimulate R&D efforts, and improve organizational capability and leadership. The Tribunal noted that the Scheme was made in the best interests of the Applicant Companies and their respective Shareholders.4. Compliance with Statutory Requirements and Accounting Standards:The Tribunal observed that the Applicant Companies had followed the extant provisions of the Companies Act, 2013, in framing the Scheme. The Statutory Auditors/Chartered Accountants had issued a Certificate dated 09.06.2020, certifying that the accounting treatment in the Scheme complied with Section 133 of the Companies Act, 2013. The Applicant Companies had disclosed all material facts and filed necessary documents along with the Application.5. Directions for Convening Meetings and Appointing Chairperson and Scrutinizer:The Tribunal directed the Applicant Companies to convene the meetings of Unsecured Creditors as specified and appointed Dr. K.S. Ravichandran as Chairperson and Mr. R. Ramachanderan as Scrutinizer. The Tribunal also directed that the Notice of the meetings be published in English Daily 'The Hindu' and Kannada Daily 'Udayavani.' The Applicant Companies and the appointed officials were instructed to follow all extant provisions of the Companies Act, 2013, and related Rules in convening these meetings.6. Filing of Reports and Subsequent Legal Steps:The Chairperson and Scrutinizer were directed to file their respective reports with the Tribunal within ten days from the conclusion of the meetings. The Applicant Companies were granted two weeks thereafter to file an appropriate Company petition to seek sanction of the Scheme, subject to all statutory compliances. The Tribunal also provided that any aggrieved person/company/institution could approach the Tribunal by filing Interim Applications seeking appropriate directions.Conclusion:The Tribunal disposed of C.A. (CAA) No. 27/BB/2020 by granting the relief sought by the Applicant Companies, including the dispensation of meetings for Shareholders and Secured Creditors, and directed the convening of meetings for Unsecured Creditors with appointed officials and specified procedures. The Tribunal emphasized compliance with statutory provisions and allowed for subsequent legal steps to sanction the Scheme.