Tribunal approves Scheme of Amalgamation for two companies, ensuring fair process and creditor protection

The Tribunal allowed the application concerning the Scheme of Amalgamation of two companies, directing the convening of meetings for equity shareholders, secured creditors, and unsecured creditors. The Scheme was approved by the Board of Directors and statutory auditors, with a fair equity share exchange ratio determined. The Scheme did not impact creditors adversely, and compliance with procedural requirements, including notice provisions, quorum, and voting procedures, was ensured. The Tribunal directed reporting of meeting results and service of notices to statutory authorities. The application was disposed of with directions for compliance, as per CA (CAA) No. 52/KB/2021.

---

---

Issues Involved:
1. Conduct of meetings for equity shareholders, secured creditors, and unsecured creditors concerning the Scheme of Amalgamation.
2. Approval and certification of the Scheme by the Board of Directors and statutory auditors.
3. Valuation report and fair equity share exchange ratio.
4. Impact of the Scheme on creditors.
5. Directions for convening and conducting meetings.
6. Notice requirements and quorum for meetings.
7. Voting procedures and scrutiny of votes.
8. Reporting of meeting results to the Tribunal.
9. Service of notice to statutory authorities.
10. Compliance with procedural requirements.

Issue-wise Detailed Analysis:

1. Conduct of Meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors:
The application was filed for orders and directions regarding the conduct of meetings of equity shareholders, secured creditors, and unsecured creditors in connection with the Scheme of Amalgamation of Jupiter Wagons Limited with Commercial Engineers & Body Builders Co. Limited. The meetings are to consider the Scheme under section 230(1) read with section 232(1) of the Companies Act, 2013.

2. Approval and Certification of the Scheme by the Board of Directors and Statutory Auditors:
The Board of Directors of the Applicant Company approved the Scheme in a meeting held on 28th September 2020. The statutory auditors certified that the accounting treatment proposed in the scheme conforms to the Indian Accounting Standard prescribed under section 133 of the Companies Act, 2013.

3. Valuation Report and Fair Equity Share Exchange Ratio:
The Applicant Company obtained a Valuation Report from TR Chaddha & Co. LLP, Independent Chartered Accountants, and Mr. Dhwanit Kashyap Vaidya, Registered Valuer, recommending the fair equity share exchange ratio for the Proposed Amalgamation.

4. Impact of the Scheme on Creditors:
The Scheme does not contemplate any compromise or arrangement with the creditors and does not provide for any variation in their rights. The creditors are not adversely or prejudicially affected by the Scheme. The Amalgamated Company will have a positive net worth post-effectiveness of the Scheme.

5. Directions for Convening and Conducting Meetings:
The Tribunal directed the convening of meetings of equity shareholders, secured creditors, and unsecured creditors through videoconferencing or other audio-visual modes or physically on 16th August 2021. The meetings are to consider and, if thought fit, approve the arrangements embodied in the Scheme.

6. Notice Requirements and Quorum for Meetings:
Notices for the meetings, along with all required documents, are to be sent to the equity shareholders and creditors at least thirty clear days before the meetings. The quorum for the meetings of equity shareholders shall be determined per section 103 of the Companies Act, 2013, and for secured and unsecured creditors, it shall be one person.

7. Voting Procedures and Scrutiny of Votes:
Persons entitled to vote may do so by remote e-voting or e-voting at the meeting. The votes cast shall be scrutinized by the appointed Scrutinizer, and the results shall be consolidated and reported by the Chairperson.

8. Reporting of Meeting Results to the Tribunal:
The Chairperson shall report the results of the meetings to the Tribunal within two weeks from the date of the conclusion of the meetings. The report shall be in Form CAA. 4 of the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016, verified by affidavit.

9. Service of Notice to Statutory Authorities:
Notices under section 230(5) of the Companies Act, 2013, along with all accompanying documents, shall be served on the Central Government, Registrar of Companies, Official Liquidator, and Income Tax Department. Representations, if any, should be filed within thirty days from the date of receipt of the notice.

10. Compliance with Procedural Requirements:
The Applicant Company is directed to file an affidavit proving service of notices of meetings, publication of advertisements, and compliance with all directions at least seven days before the dates fixed for the meetings.

Conclusion:
The Tribunal allowed the application and directed the convening of meetings as specified, ensuring compliance with statutory requirements and procedural rules. The application CA (CAA) No. 52/KB/2021 was disposed of accordingly. Certified copies of the order may be issued upon compliance with requisite formalities.

---