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L&T Finance Limited, In Re
Factual and Procedural Background
The present opinion concerns the sanction sought under Sections 230 to 232 of the Companies Act, 2013, for a Scheme of Amalgamation involving L&T Finance Limited and L&T FinCorp Limited (the Petitioner Companies) with Family Credit Limited (the Transferee Company). The Petitioner Companies and the Transferee Company approved the Scheme by passing Board Resolutions annexed to their respective petitions. The petitions were filed pursuant to orders in Company Summons for Direction Nos. 766 of 2016 and 767 of 2016. Compliance with directions of the Hon'ble Bombay High Court, including affidavits of compliance, was affirmed by the Petitioners. The Regional Director and the Official Liquidator submitted reports on the Scheme, with no objections from any party or objector to the Tribunal.
Legal Issues Presented
- Whether the Scheme of Amalgamation complies with the provisions of Sections 230 to 232 of the Companies Act, 2013, and related statutory requirements.
- Whether the Scheme is fair, reasonable, and not prejudicial to shareholders, the public, or contrary to public policy.
- Whether requisite approvals, including those from the Reserve Bank of India and compliance with accounting and tax regulations, have been satisfied.
Arguments of the Parties
Petitioner Companies' Arguments
- The Scheme was approved by their respective Boards and filed in accordance with prior court directions.
- They complied with all requirements as per the Bombay High Court’s directions and undertook to comply with all statutory requirements under the Companies Act, 1956/2013 and applicable Rules.
- The Petitioner Companies committed to comply with all applicable provisions of the Income Tax Act and address any tax implications arising from the Scheme.
- The Reserve Bank of India (RBI) has granted its approval to the Scheme.
- They undertook to comply with accounting standards including AS-14 and other applicable standards as required by the Regional Director’s observations.
Table of Precedents Cited
No precedents were cited in the provided opinion.
Court's Reasoning and Analysis
The Tribunal considered the affidavits and reports filed by the Regional Director and the Official Liquidator. The Regional Director’s affidavit contained observations requiring compliance with accounting standards, tax obligations, and RBI approval. The Petitioners’ undertakings to comply with these requirements were accepted. The Official Liquidator reported that the affairs of the Transferor Companies were conducted properly and recommended dissolution post-amalgamation. The Tribunal found the Scheme to be fair, reasonable, compliant with applicable laws, and not prejudicial to shareholders or the public. No objections were raised by any party or objector. Based on the material on record and statutory compliances, the Tribunal proceeded to sanction the Scheme.
Holding and Implications
Company Scheme Petition Nos. 283 of 2017 and 284 of 2017 are made absolute in terms of the prayers sought.
The Scheme of Amalgamation is sanctioned, with directions for lodging the order and Scheme with the Registrar of Companies electronically and physically as required. The Petitioners are directed to pay costs to the Regional Director and Official Liquidator. The order dispenses with the filing and issuance of a drawn-up order. All concerned regulatory authorities are directed to act on the authenticated copy of the order and Scheme. No new precedent is established; the decision results in the lawful amalgamation and dissolution of the Transferor Companies in accordance with the sanctioned Scheme.
1. Heard learned counsel for parties. No objector has come before this Hon'ble Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petitions.
2. The sanction of this Hon'ble Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013, to a Scheme of Amalgamation of L&T Finance Limited and L&T FinCorp Limited with Family Credit Limited.
3. The Petitioner Companies and the Transferee Company have approved the said Scheme of Amalgamation by passing the Board Resolutions which are annexed to the respective Company Scheme Petitions.
4. The Learned Advocate appearing on behalf of the Petitioners states that the Petitions have been filed in consonance with the orders passed in their respective Company Summons for Direction Nos. 766 of 2016 and 767 of 2016.
5. The Learned Advocate appearing on behalf of the Petitioners has stated that the Petitioner Companies have complied with all requirements as per directions of the Hon'ble Bombay High Court and they have filed necessary affidavits of compliance in the Hon'ble Bombay High Court. Moreover, the Petitioner Companies undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956/2013 and the Rules made there under whichever is applicable. The said undertaking is accepted.
6. The Regional Director has filed his Affidavit on 17 January 2017, inter alia, stating therein that save and except as stated in paragraph IV (a) to (c) of the said Affidavit, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraph IV of the said Affidavit, the Regional Director has stated that:
“IV. The observations of the Regional directors on the proposed Scheme to be considered by the Hon'ble NCLT are as under:-
(a) In addition to compliance of AS-14 the Transferee Company shall pass such accounting entries which are necessary in connection with the scheme to comply with other applicable Accounting Standards such as AS-5 etc.
(b) The tax implication if any arising out of the scheme is subject to final decision of Income Tax Authorities. The approval of the scheme by this Hon'ble Court may not deter the Income Tax Authority to scrutinize the tax return filed by the transferee Company after giving effect to the scheme. The decision of the Income Tax Authority is binding on the petitioner company.
(c) As both Transferor Companies and Transferee Company are registered NBFC Companies with RBI, NOC from RBI is required.”
7. As far as the observation of the Regional Director, Western Region, Mumbai, as stated in paragraph IV (a) of his Affidavit is concerned, the Transferee Company undertakes that in addition to compliance of AS-14 accounting treatment, the Transferee Company shall pass such accounting entries as may be necessary in connection with the Scheme to comply with any other accounting standards.
8. As far as the observation of the Regional Director, Western Region, Mumbai, as stated in paragraph IV (b) of his Affidavit is concerned, the Petitioner Company submits that the Petitioner is bound to comply with all applicable provisions of the Income Tax Act and all tax issues arising out of the Scheme will be met and answered in accordance with law.
9. As far as the observation of the Regional Director, Western Region, Mumbai, as stated in paragraph IV (c) of his Affidavit is concerned, the Petitioner Companies submit that the RBI has given its approval to the Scheme.
10. The Official Liquidator has filed his report on 24 January 2017 in Company Scheme Petition Nos. 283 of 2017 and 284 of 2017 inter alia, stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved.
11. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy.
12. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition Nos. 283 of 2017 and 284 of 2017 are made absolute in terms of prayer clauses (a) to (c).
13. Petitioners are directed to lodge a copy of this order along with a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with E-Form INC-28, in addition to physical copy, as per the relevant provision of the Companies Act 1956/2013, whichever is applicable.
14. The Petitioner Companies in all Petitions to pay costs of Rs. 25,000/- each to the Regional Director, Western Region, Mumbai, and to the Official Liquidator, High Court, Bombay. Costs to be paid within four weeks from the date of the order.
15. Filing and issuance of the drawn up order is dispensed with.
16. All concerned regulatory authorities to act on a copy of this order along with the Scheme duly authenticated by the Company Registrar, National Company Law Tribunal, Mumbai.
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