2023 (7) TMI 1559 - Tri - Companies Law

NCLT sanctions composite scheme of amalgamation and arrangement under Sections 230, 232, and 66 of Companies Act 2013

In Re: Max Ventures and Industries Limited & Max Estates Limited

The NCLT Chandigarh sanctioned a composite scheme of amalgamation and arrangement under Sections 230, 232, and 66 of the Companies Act, 2013. The tribunal ... Sanction of Scheme of Amalgamation - Sections 230 & 232 of the Companies Act, 2013, read with Section 66 of the Companies Act, 2013 - HELD THAT:- The proposed Scheme contemplated between the Petitioner Companies, appears to be prima facie in compliance with all the requirements stipulated under the relevant Sections of the Companies Act, 2013. As the representation from the Statutory Authorities has been duly addressed by the Petitioner Companies and since all the requisite statutory compliance have been fulfilled, this Tribunal sanctions the proposed Composite Scheme of Amalgamation and Arrangement appended as Annexure-A1 of the Petition. The scheme is sanctioned - petition allowed. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment include:Whether the Scheme of Amalgamation between the Petitioner Companies complies with Sections 230 and 232 of the Companies Act, 2013.Whether the procedural requirements for convening and dispensing meetings of shareholders and creditors have been duly followed.Whether the statutory authorities, including the Registrar of Companies, Official Liquidator, Income Tax Department, and Real Estate Regulatory Authority, have any objections or observations concerning the proposed Scheme.Whether the rights of the Income Tax Department and other authorities are preserved post-amalgamation.Whether the Scheme meets the requirements of applicable Indian Accounting Standards and other Generally Accepted Accounting Principles.ISSUE-WISE DETAILED ANALYSISCompliance with Sections 230 and 232 of the Companies Act, 2013The Tribunal assessed whether the Scheme of Amalgamation complied with the relevant sections of the Companies Act, 2013, which govern compromises, arrangements, and amalgamations. The Tribunal found that the procedural and substantive requirements under these sections had been satisfied. The Scheme was prima facie in compliance with all stipulated requirements, and no objections were raised by statutory authorities.Procedural Requirements for MeetingsThe Tribunal considered whether the procedural requirements for convening and dispensing with meetings of shareholders and creditors were met. The Tribunal had previously issued directions regarding the meetings, which were duly complied with by the Petitioner Companies. The Chairperson's reports indicated overwhelming approval of the Scheme by the shareholders and creditors, with 99.9992% approval from the Equity Shareholders of Applicant Company No. 1 and 100% approval from the Secured Creditors of Applicant Company No. 2.Observations from Statutory AuthoritiesThe Tribunal reviewed reports from various statutory authorities:Registrar of Companies (ROC) and Regional Director (RD): The RD and ROC had observations concerning fees payable by the Transferee Company on its authorized capital post-amalgamation. The Petitioner Companies undertook to comply with these observations, and no adverse conclusions were drawn.Official Liquidator: The Official Liquidator did not raise any objections and provided information on the Transferor Company's incorporation, capital structure, and financial highlights.Income Tax Department: The Department reported no pending tax demands against the Transferor Company, with proceedings pending before the CIT(Appeal). The Tribunal preserved the Department's rights to recover any lawful dues.Real Estate Regulatory Authority (RERA): RERA reported no pending proceedings against the Petitioner Companies and did not require representation on the Scheme.Preservation of Rights of Income Tax DepartmentThe Tribunal ensured that the rights of the Income Tax Department to recover lawful dues were preserved. The Scheme included provisions for liabilities, allowing the Department to proceed against the companies if any amounts were found due and payable.Compliance with Accounting StandardsThe Tribunal reviewed the certificate from the Statutory Auditors, confirming that the accounting treatment proposed in the Scheme complied with applicable Indian Accounting Standards and other Generally Accepted Accounting Principles.Treatment of Competing ArgumentsNo competing arguments were presented, as all statutory authorities either supported the Scheme or did not raise objections. The Tribunal considered all representations and ensured compliance with legal and procedural requirements.ConclusionsThe Tribunal concluded that the proposed Scheme of Amalgamation complied with all legal requirements and statutory compliances. The Scheme was sanctioned, subject to the preservation of rights for statutory authorities to recover any dues and compliance with any other legal requirements.SIGNIFICANT HOLDINGSThe Tribunal sanctioned the Scheme of Amalgamation, establishing several core principles:The properties, rights, and powers of the Transferor Company shall be transferred to the Transferee Company without further act or deed, as per Sections 230 to 232 of the Companies Act, 2013.The liabilities and duties of the Transferor Company shall be transferred to the Transferee Company.All benefits, entitlements, and concessions available to the Transferor Company shall be transferred to the Transferee Company.The employees of the Transferor Company shall be transferred to the Transferee Company as per the Scheme.The appointed date for the Scheme is set as 01.04.2022.The rights of statutory authorities to recover dues are preserved, and the Scheme does not exempt payment of stamp duty, taxes, or other charges.The Transferee Company must file revised articles of association with the Registrar of Companies for the enhancement of authorized capital.The Transferor Company shall be dissolved without winding up upon delivery of the Tribunal's order to the Registrar of Companies.The Tribunal's order does not preclude action against the companies for any statutory violations.