Tribunal approves Amalgamation Scheme enhancing shareholder value & organizational capabilities

The Tribunal sanctioned the Scheme of Amalgamation between M/s. Mandala Wellness Private Limited and M/s. Phasorz Technologies Private Limited. The Scheme aimed to maximize shareholder value, improve financial positions, and enhance organizational capabilities. Despite objections from the Regional Director regarding the appointed date, the Tribunal accepted it. With no objections from other statutory authorities, the Tribunal found the Scheme beneficial, approved it, and outlined various orders including property transfer, liability transfer, employee transfer, and compliance requirements.

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Issues Involved:
1. Jurisdiction and procedural compliance.
2. Rationale and benefits of the Scheme of Amalgamation.
3. Statutory authorities' response and observations.
4. Valuation report and accounting treatment.
5. Tribunal's observations and final order.

Detailed Analysis:

1. Jurisdiction and Procedural Compliance:
The Petition was conducted via video conferencing. The proposed Scheme of Amalgamation involves M/s. Mandala Wellness Private Limited (Transferor Company) and M/s. Phasorz Technologies Private Limited (Transferee Company). The registered office of the Transferor Company is in Bangalore, under the jurisdiction of NCLT Bangalore Bench, where a related petition is pending. The Transferee Company approved the Scheme in a Board meeting on 23rd December 2019. The First Motion Application (CA/343/CAA/2020) sought directions for meetings of shareholders and creditors, which were dispensed with by the Tribunal's order dated 04.02.2021.

2. Rationale and Benefits of the Scheme:
The Scheme aims to maximize shareholder value, improve financial positions, enhance organizational capabilities through pooling of human capital, and achieve efficient use of infrastructure and resources. It also seeks to pool technical, managerial, financial, and human resources for productive utilization and operational efficiency.

3. Statutory Authorities' Response and Observations:
- Regional Director (RD): The RD's report dated 12.11.2021 noted the protection of employees' interests and compliance with statutory returns up to 31.03.2020. The RD objected to the appointed date (01.09.2019) as it was ante-dated beyond a year, not in accordance with Sec. 232(6) of the Companies Act, 2013. The Tribunal, considering the MCA Circular dated 21 August 2019, accepted the appointed date.
- Income Tax Department: Despite notice, there was no representation from the Income Tax Department. The Tribunal presumed no objection under section 230(5) of the Companies Act, 2013. The Tribunal referenced NCLT New Delhi's precedent ensuring the right of the IT Department to recover tax dues.
- Other Statutory Authorities: No objections were raised by other statutory authorities, and the Tribunal presumed no objections to the Scheme.

4. Valuation Report and Accounting Treatment:
The Valuation Report by Kusumadevi R H, dated 23.12.2019, specified the share exchange ratio. The Statutory Auditor certified compliance with Section 230 (7)/Section 232 (3) and applicable Indian Accounting Standards.

5. Tribunal's Observations and Final Order:
The Tribunal found the Scheme beneficial and not detrimental to shareholders. With no further objections and statutory compliances fulfilled, the Tribunal sanctioned the Scheme, subject to NCLT Bangalore Bench's approval for the Transferor Company. The Tribunal clarified that the order does not exempt payment of stamp duty, taxes, or other charges due under the law.

Final Orders:
1. Transfer of properties, rights, and interests of the Transferor Company to the Transferee Company.
2. Transfer of liabilities, powers, engagements, obligations, and duties to the Transferee Company.
3. Appointed date for the Scheme is 1st September 2019.
4. Continuation of pending proceedings by or against the Transferee Company.
5. Transfer of employees to the Transferee Company without interruption.
6. Allotment of shares to members of the Transferor Company as per the Scheme.
7. Filing of revised Memorandum and Articles of Association and payment of differential fees by the Transferee Company.
8. Delivery of a certified copy of the order to the Registrar of Companies within thirty days, leading to the dissolution of the Transferor Company.
9. Liberty for interested persons to apply for necessary directions.

Conclusion:
The Company Petition stands allowed, with the Scheme of Amalgamation sanctioned as per the terms and conditions outlined.

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