AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (12) TMI 967
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....as filed by the Appellant Companies under Section 230-232 of the Act read with Companies (Compromise, Arrangement and Amalgamation) Rules, 2016 (hereinafter referred to as the 'Rules'), whereby and whereunder the Appellant Company sought dispensation of the meeting of the Equity Shareholders, Secured Creditors and Unsecured Creditors, in respect of the Scheme of merger by absorption Wholly Owned Subsidiary ('Transferor Company') with its holding Company namely M/s. Patel Engineering Ltd. ('Transferee Company') and their respective Shareholders ('the Scheme'). The Transferor Appellant Company and the Transferee Appellant Company are collectively referred to as the 'Appellant Companies'. 3. By the Impugned Order, NCLT has directed the Appellant Transferee Company as follows:- "20. Further, the Consent Affidavits of the Secured Creditors of Rs. 1881.81 crore of the Transferee Company have also been provided by the Transferee Company as detailed above. The condition of Consent Affidavit of the Secured Creditors has since been complied. 21. The Transferee Company has not submitted the list of Equity Shareholders and Unsecured Creditors. As far as the Meeting/Consent Affidavit of th....
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....lue of 90% at the time of filing of Company Petition. 25. Further, the Bench has observed that since there are 7 (seven) IBC proceedings pending against the Applicant Companies, the list of which has been filed by the Applicant Companies vide Additional Affidavit dated 11.06.2021 annexed as Annexure "C", the Applicant Companies are directed to issue notice of Scheme by Registered Post-Ad/ Speed Post and Email upon the Petitioners who have filed the Insolvency Proceedings against the Applicant Companies and specific consents of these Petitioners of the IBC Proceedings is to be submitted at the time of filing of Company Petition. 26. The Applicant Companies to file affidavit of service and compliance within 10 working days after serving the notices to all the Regulatory Authorities as stated above and do report to this Tribunal that the directions regarding the issue of notices have been duly complied with." 4. The Appellant had sought dispensation from the requirement of holding Equity Shareholders and Creditors Meetings of the 7th Appellant/Transferee Company from the Tribunal, as no new shares are being issued by the Transferee Appellant Company and the 'Scheme' would not res....
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.... a compromise or arrangement is proposed- (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them, the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator 2[appointed under this Act or under the Insolvency and Bankruptcy Code, 2016, as the case may be,] order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such a manner as the Tribunal directs. Explanation.-For the purposes of this sub-section, arrangement includes a reorganization of the company's share capital by the consolidation of shares of different classes or by the division of shares into share of different classes, or by both of those methods. (2) The company or any other person, by whom an application is made under subsection (1), shall disclose to the Tribunal by affidavit- (a) all material facts relating to the company, such as the latest financial position of the company, the latest auditor's report on the accounts of the company and the....
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....free of charge from the registered office of the company. (4) A notice under sub-section (3) shall provide that the persons to whom the notice is sent may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice: Provided that any objection to the compromise or arrangement shall be made only by persons holding not less than ten per cent of the shareholding or having outstanding debt amounting to not less than five per cent of the total outstanding debt as per the latest audited financial statement. (5) A notice under sub-section (3) along with all the documents in such form as may be prescribed shall also be sent to the Central Government, the income-tax authorities, the Reserve Bank of India, the Securities and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the competition commission of India established under sub-section (1) of section 7 of the Competition Act, 2002 (12 of 2003), if necessary, and such other sect oral regulators or authorities which are likely to be affected by the compromise or arrangement an....
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....The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the order. (9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety per cent value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement. (10) No compromise or arrangement in respect of any buy-back of securities under this section shall be sanctioned by the Tribunal unless such buy-back is in accordance with the provisions of section 68.] (11) Any compromise or arrangement may include takeover offer made in such manner as may be prescribed: Provided that in case of listed companies, takeover offer shall be as per the regulations framed by the Securities and Exchange Board. (12) An aggrieved party may make an application to the Tribunal in the event of any grievances with respect ot the takeover offer of companies other than listed companies in such manner as may be prescribed and the Tribunal may, on application, pass such order as it may deem fit. Explanation.-For the removal of doubts, it is hereby declared that the p....
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.... Tribunal, after satisfying itself that the procedure specified in sub sections (1) and (2) has been complied with, may, by order, sanction the compromise or arrangement or by a subsequent order.' 'Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 G.S.R.1134(E).- In exercise of the powers conferred by sub-sections (1) and (2) of section 469 read with sections 230 to 233 and sections 235 to 240 of the Companies Act, 2013 (18 of 2013), THE Central Government hereby makes the following rules, namely:- 1. Short Title and Commencement.- (1) These rules may be called the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. (2) They shall come into force with effect from 15th December, 2016. 3. Application for order of a meeting.- (1) An application under sub-section (1) of section 230 of the Act may be submitted in Form no. NCLT-1 (appended in the National Company Law Tribunal Rules, 2016) alongwith:- (i) a notice of admission in Form No. NCLT-2 (appended in the National Company Law Tribunal Rules, 2016); (ii) an affidavit in Form No. NCLT-6 (appended in the National Company Law Tribunal Rules, 2016); (iii) a copy of scheme of comprom....
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....oting in person or by proxy or by postal ballot or by voting through electronic means;' 7. It is seen from the record that the Transferor Company being a Wholly Owned Subsidiary of the Applicant Transferee Company, no shares are required to be issued or allotted as consideration from the proposed amalgamation. The rights of the Shareholders of the Transferee Company are not affected as no new shares are being issued to the Shareholders of the Transferor Companies and the proposed Scheme does not involve any reorganization of the share capital. In a similar case, this Tribunal in 'Ambuja Cements Limited' (Supra) dispensed with the meeting of the Equity Shareholders, Secured and Unsecured Creditors of the Appellant Company and remanded the matter back to NCLT for further consideration. We also find force in the contention of the Learned Counsel for the Appellants that the manner and mode of issuance of Notice for conducting General Meetings issued by MCA vide circular dated 08.04.2021, is applicable. 8. This Tribunal in the matter of 'DLF Phase IV, Commercial Developers Limited and Ors.' (Supra) set aside the direction of NCLT for convening meetings of the Equity Shareholders, Secu....
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....id citations that the High Courts have exercised this discretion dispensing with the requirement of convening the meetings, if the Bench is satisfied in all respects. Section 232 is a specific provision carved out by the Legislature when both conditions maintained in clauses (a) and (b) of sub-Section (1) of Section 232 are met. In the instant case the amalgamation sought for is between a Wholly Owned Subsidiary and the Holding Company. The point which needs to be noted is whether such an arrangement alters the rights of the Stakeholders of the Company; whether such an amalgamation has any bearing internally on Creditors/Members of both the Companies; whether not holding the subject meeting would amount to violation of any of the provisions of the Companies Act, 2013; whether the Tribunal can exercise their discretion when the 'Transferor Company' is a Wholly Owned Subsidiary of the 'Transferee Company' and financial position of the 'Transferee Company' is positive and the merger is not affecting the rights of the Shareholders or the Creditors. 11. The material on record establishes that the 'Transferee Company' is a Wholly Owned Subsidiary of the 'Transferor Company' and there is....