1. Scheme of amalgamation of six transferor companies with transferee company under Sections 230 and 232, Companies Act, 2013. (Para 1 , 2 )
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2024 Supreme(Online)(NCLT) 4188
NATIONAL COMPANY LAW TRIBUNAL
Bidisha Banerjee, Judicial Member, Balraj Joshi, Technical Member, D. Arvind, Technical Member
AMABEL VITRAN PRIVATE LIMITED VS
C.P.(CAA)/126/KB/2022|INC.A.(CAA)/57/KB/2022|C.A.(CAA) NO. 57/KB/2022
Advocates:
For the Appellants/Petitioners: Ratnanko Banerjee, Shaunak Mitra, Joveria Sabbah, Akash Agarwal, Saptarshi Kar
For the Appellants/Petitioners: Ratnanko Banerjee, Shaunak Mitra, Joveria Sabbah, Akash Agarwal, Saptarshi Kar
Amalgamation of companies does not preclude the sanction of a scheme due to pending tax demands or criminal investigations, as financial liabilities transfer to the transferee company and individual criminal liabilities persist independently, supported by the statutory requirement to preserve corporate records.
Headnote:(A) Companies Act, 2013 - Sections 230(6), 232(3), 232(4) and 239 - Scheme of Amalgamation - Sanction of scheme - Objections based on pending income tax demands and allegations of shell companies and money laundering - Transfer of financial liabilities - Any financial liability of the companies regarding government taxes shall be borne by the transferee company and therefore cannot be a reason for not sanctioning the scheme (Para 11).
(B) Criminal proceedings and investigations - Amalgamation does not result in the abatement of criminal proceedings against individuals or directors - Such liabilities, as and when established, shall be faced by the concerned individuals, notwithstanding the provisions of the scheme (Para 11).
(C) Preservation of records - Under Section 239, books and papers of amalgamated companies shall not be disposed of without prior permission of the Central Government - The preservation of entire records by the transferee company ensures that investigations or prosecutions can be continued (Para 11).
Facts of the case:
Six transferor companies applied for the sanction of a scheme of amalgamation with one transferee company. The Regional Director and Income Tax Department raised strong objections, citing outstanding tax demands, alleging that some transferor companies acted as conduits for round-tripping money or as shell entities, and noting that physical verification revealed the registered offices were not being maintained. Additionally, it was pointed out that criminal prosecutions under the previous company law were pending against some of the transferor companies.
Findings of Court:
The court observed that financial liabilities, including tax demands, are transferred to the transferee company upon amalgamation, thus not hindering the sanction of the scheme. It further held that criminal proceedings against directors or individuals do not abate because of corporate amalgamation. The court noted that since the law mandates the preservation of books and papers of amalgamated companies, the evidence required for ongoing or future investigations remains available.
Issues: Whether pending income tax demands, allegations of money laundering, and ongoing criminal investigations should act as a bar to the sanction of a scheme of amalgamation.
Ratio Decidendi: Corporate amalgamation does not extinguish the financial liabilities of the transferor companies, which are inherited by the transferee company, nor does it absolve individuals of criminal liability. Under Section 239 of the Companies Act, 2013, the mandatory preservation of records ensures that the legal basis for investigation and prosecution is maintained regardless of the corporate merger.
Result: Petition allowed; Scheme of Amalgamation sanctioned.
Legal Category Hierarchy
- corporate law
- tax law
- practice and procedure
-
criminal law
- criminal proceedings against directors (Para 11)
Table of Contents
2. Objections by Regional Director and Income Tax Department regarding tax demands and alleged criminal conduct versus petitioners' compliance and liability contentions. (Para 7 , 8 , 9 , 10 )
3. Tax liabilities pass to transferee; criminal proceedings against individuals survive amalgamation; investigations cannot stall business decisions permanently. (Para 10 , 11 )
4. Criminal liability of directors does not abate by amalgamation; financial liabilities of transferor transfer to transferee under the scheme. (Para 11 )
5. Scheme of amalgamation sanctioned with effect from appointed date; transferor companies dissolved without winding up. (Para 11 , 12 , 13 )
6. What is the effect of amalgamation on pending criminal proceedings against the transferor company's directors?
Criminal proceedings against individuals including directors do not abate by amalgamation; such liability survives and is faced by concerned individuals. (Para 11 )
7. Does the pendency of income tax demands against the transferor company preclude sanction of a scheme of amalgamation?
No, any financial liability including tax demands passes to the transferee company, which remains liable, and thus cannot be a standalone reason to refuse sanction. (Para 11 )
8. What obligations does the transferee company have regarding records of the amalgamated transferor companies?
The transferee must preserve books and papers under Section 239, Companies Act, 2013, without disposing of them without prior Central Government permission. (Para 11 )
CORRIGENDUM
1. This matter was not on board today and was taken up upon mentioning.
2. In the order dated 3rd of December, 2024, At page 26, para (b), some typographical errors have been occurred as under:-
i. It is mentioned as ‘All the debts, liabilities, duties and obligations of the Prudential Tradelink Private Limited, Puja Shoppers Private Limited, Goodluck Suppliers Private Limited, Monifa Len Den Private Limited and Ayodele Distributors Private’.
ii. It should be read as “all the debts, liabilities, duties and obligations of the Amabel Vitran Private Limited, Suhana Marketing Private limited, Druth Vyasaya Private Limited, Sadabahar Investment Private Limited, Heaven Suppliers Private Limited, Panchmukhi Management Services Private Limited”.
3. Rest of the contents of the order shall remain unchanged.
D. Arvind
Member (Technical)
Bidisha Banerjee
Member (Judicial)
Corrigendum signed on 9/12/2024.
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IN THE NATIONAL COMPANY LAW TRIBUNAL
DIVISION BENCH, COURT-I
KOLKATA
C.P.(CAA) NO.126/KB/2022
Connected with
C.A.(CAA) NO. 57/KB/2022
An application under Section 230(6) read with Section 232(3) of the Companies Act,2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and other applicable provisions of the law.
In the Matter of:
AMABEL VITRAN PRIVATE LIMITED, PAN AADCT1964E, a Company within the meaning of the Companies Act, 2013, having its Registered Office at 159, Rabindra Sarani, 3rdFloor, Room No 3C, Kolkata-700 007;
........ Transferor Company No. 1 / Petitioner No. 1
-And-
SUHANA MARKETING PRIVATE LIMITED, PAN AAMCS7271A, a Company within the meaning of the Companies Act, 2013, having its Registered Office at 159, Rabindra Sarani, 3rd Floor, Room No 3C, Kolkata-700 007
........ Transferor Company No. 2 / Petitioner No. 2
-And-
DRUTH VYASAYA PRIVATE LIMITED, PAN- AABCF5312N, a Company within the meaning of the Companies Act, 2013, having its Registered Office at159, Rabindra Sarani, 3rd Floor, Room No 3C, Kolkata-700 007;
........ Transferor Company No. 3/ Petitioner No. 3
-And-
SADABAHAR INVESTMENT PRIVATE CONSULTANTS PRIVATE LIMITED, PAN AAOCS7127B, a Company within the meaning of the Companies Act, 2013, having its Registered Office at 159, Rabindra Sarani, 3rd Floor, Room No 3C, Kolkata-700 007;
Page 1 of 28
IN THE NATIONAL COMPANY LAW TRIBUNAL
DIVISION BENCH, COURT-I
KOLKATA
C.P.(CAA) NO.126/KB/2022
Connected with
C.A.(CAA) NO. 57/KB/2022
........ Transferor Company No. 4 / Petitioner No. 4
-And-
HEAVEN SUPPLIERS PRIVATE LIMITED, PAN AADCP7635E, a Company within the meaning of the Companies Act, 2013, having its Registered Office at 159, Rabindra Sarani, 3rd Floor, Room No 3C, Kolkata-700 007;
........ Transferor Company No. 5 / Petitioner No. 5
-And-
PANCHMUKHI MANAGEMENT SERVICES PRIVATE LIMITED, PAN AADCP7635E, a Company within the meaning of the Companies Act, 2013, having its Registered Office at 159, Rabindra Sarani, 3rd Floor, Room No 3C, Kolkata-700007;
........ Transferor Company No. 6 / Petitioner No. 6
-And-
ARISTRO FINCORP PRIVATE LIMITED, PAN AAECS0680H, a Company within the meaning of the Companies Act, 2013, having its Registered Office at 159, Rabindra Sarani, 3rd Floor, Room No 3C, Kolkata-700 007;
........ Transferee Company / Petitioner No.7
-And-
In the Matter of:
1) Amabel Vitran Private Limited
2) Suhana Marketing Private Limited
3) Druth Vyasaya Private Limited
4) Sadabahar Investment Consultants Private Limited
5) Heaven Suppliers Private Limited
6) Panchmukhi Management Services Private Limited
7) Aristo Fincorp Private Limited
........ Petitioners
Date of pronouncing the Order:03/12/2024
Page 2 of 28
IN THE NATIONAL COMPANY LAW TRIBUNAL
DIVISION BENCH, COURT-I
KOLKATA
C.P.(CAA) NO.126/KB/2022
Connected with
C.A.(CAA) NO. 57/KB/2022
Coram:
Bidisha Banerjee : Member (Judicial)
Balraj Joshi : Member (Technical)
Counsel on Record for the Applicant(s):
1. Mr. Ratnanko Banerje
