NCLT Allahabad Sanctions EMC–Salasar Amalgamation with Tax Liability Safeguards

Salasar Techno Engineering Limited Vs EMC Limited (NCLT Allahabad)

The National Company Law Tribunal (NCLT), Allahabad Bench, sanctioned the Scheme of Amalgamation of EMC Limited with Salasar Techno Engineering Limited, insofar as the scheme concerned the Petitioner Transferee Company, under Sections 230 and 232 of the Companies Act, 2013. The Tribunal approved 23.10.2024 as the appointed date, subject to the scheme becoming effective in accordance with the applicable proceedings and statutory requirements. The sanction was accompanied by directions concerning transfer of assets, liabilities, employees and proceedings, compliance with income-tax requirements, payment of applicable taxes and charges, filing of the certified order and other consequential formalities.

Background and Acquisition of EMC Limited: Salasar Techno Engineering Limited acquired EMC Limited as a going concern during liquidation proceedings under the Insolvency and Bankruptcy Code, 2016. The acquisition was approved in proceedings identified as I.A. (IB) No. 1140/KB of 2024 in C.P. (IB) No. 1237/KB/2018. The earlier approval permitted restructuring, amalgamation, merger or demerger in accordance with the Companies Act, 2013. EMC Limited consequently became a wholly owned subsidiary of Salasar Techno Engineering Limited. The present petition concerned amalgamation of that subsidiary into its holding company.

First Motion and Dispensation of Meetings: The Transferee Company filed CA (CAA) No. 11/ALD of 2025 seeking dispensation of meetings of equity shareholders, warrant holders, secured creditors and unsecured creditors. By order dated 01.05.2025, the Allahabad Bench allowed the prayer and dispensed with those meetings. The earlier order also dealt with the companies’ objects, authorised and paid-up capital, rationale for the proposed amalgamation and statutory requirements. The Second Motion petition was filed on 03.05.2025. The Tribunal expressly confined its present consideration to the Transferee Company because that company fell within its territorial jurisdiction.

Notices and Statutory Compliance: By order dated 13.05.2025, the Tribunal directed notices to the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi; the Registrar of Companies, Uttar Pradesh, Kanpur; the jurisdictional Income Tax Department; and the Principal Chief Commissioner of Income Tax, Lucknow. It also directed publication of hearing notices in the English and Hindi editions of Business Standard. The Transferee Company filed an affidavit of service and publication on 30.06.2025, recording service of notices through postal, electronic and other specified modes. Newspaper publication was stated to have been completed on 26.05.2025. Subsequent affidavits reported that no objections or representations had been received from creditors or the public.

Registrar of Companies and Regional Director Reports: The Registrar of Companies submitted its report dated 03.07.2025 without raising an objection to the proposed Scheme. The report recorded that EMC Limited was a wholly owned subsidiary of the listed Transferee Company and noted that a copy of service of notice upon SEBI was not enclosed with the petition. It also recorded financial particulars of the Transferee Company based on the balance sheet as at 31.03.2024. The Regional Director submitted a report dated 22.07.2025 without objecting to the Scheme, leaving its consideration to the Tribunal. In response, the Transferee Company filed its reply on 22.09.2025 and undertook to comply with Section 232(3)(i) of the Companies Act, 2013, including payment of any balance fee or charges arising from an increase in authorised share capital.

Income Tax Department’s No-Objection and Undertakings: The Income Tax Department submitted a report giving its no-objection to the Scheme and confirming that no demands or proceedings were outstanding or pending against the Petitioner Transferee Company. The Transferee Company nevertheless furnished extensive undertakings protecting the Department’s rights. These included responsibility for future tax liabilities of EMC Limited, compliance with future proceedings permitted under the Income Tax Act, payment of existing or subsequently determined tax demands, and non-objection to notices issued in the name of the Transferor Company after amalgamation. The undertakings also preserved the Department’s rights of recovery, enquiry, investigation and scrutiny.

Approval and Appointed Date: Having considered the reports, compliance affidavits, absence of further objections and undertakings, the Tribunal found the Scheme prima facie compliant with the applicable statutory requirements. It sanctioned the Scheme annexed as Annexure P1 insofar as the Petitioner Transferee Company was concerned. The Scheme was declared binding upon its shareholders and creditors from the appointed date. The Tribunal approved 23.10.2024 as that date, reflecting the acquisition of EMC Limited as a wholly owned subsidiary during the insolvency process.

Consequences of Amalgamation: Upon the Scheme becoming effective, the property, rights, powers, liabilities and duties of the Transferor Company were directed to vest in the Transferee Company in accordance with the Scheme. Employees serving on the effective date were to become employees of the Transferee Company, while pending proceedings by or against the Transferor Company were to continue by or against the Transferee Company. As the amalgamation involved a wholly owned subsidiary merging with its holding company, no new shares were to be issued and no valuation or share-exchange-ratio report was required.

Tax and Filing Directions: The Tribunal clarified that sanction of the Scheme did not grant exemption from stamp duty, Income Tax, GST or other applicable taxes and charges. It directed compliance with Section 170A of the Income Tax Act, 1961, including filing of modified income-tax returns where required within six months from the end of the month of the order. The Tribunal also directed filing of the certified order with the Registrar of Companies, payment of differential authorised-capital fees where applicable, and deposit of Rs. 25,000 in favour of the Ministry of Corporate Affairs.

Final Decision: CP (CAA) No. 13/ALD/2025 was allowed and disposed of. The Tribunal sanctioned the Scheme as applicable to Salasar Techno Engineering Limited, with the appointed date of 23.10.2024 and subject to the prescribed conditions, statutory filings, tax obligations and the scheme becoming effective in accordance with the orders of the competent jurisdictional tribunals.

FULL TEXT OF THE NCLT JUDGMENT/ORDER

1. This is a Joint Second Motion Petition filed on 03.05.2025 by the Companies above named underSections 230 & 232 of the Companies Act, 2013,, , the  Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and other applicable provisions, if any, for sanction of the Scheme of Amalgamation of EMC Limited (hereinafter referred as Non Petitioner Transferor Company) with Salasar Techno Engineering Limited (hereinafter referred as Petitioner Transferee Company) and their respective Shareholders and Creditors.

2. The main objects and authorized and paid-up share capital of the Petitioner Companies, rationale of the scheme and required statutory compliances have been discussed in the first motion order dated 01.05.2025. This order deals with the Scheme of Amalgamation in respect of the Transferee Company only as this Tribunal has jurisdiction over the Transferee Company only.

3. The Petitioner Transferee Company- Salasar Techno Engineering Limited acquired the Non-Petitioner Transferor Company- EMC Limited as a going concern during the liquidation process under the Insolvency and Bankruptcy Code, 2016, as approved by the Hon’ble Nationa l Company

2024, passed in I.A. (IB) No. 1140/KB of 2024 IN C.P. (IB) No. 1237/KB/2018. The Hon’ble NCLT while approving the sale of EMC Limited to Salasar Techno Engineering Limited, i nter alia, granted the right to restructure, amalgamate, merge, or demerge EMC Limited in accordance with the provisions of the Companies Act, 2013.

4. The first motion petition was initially filed by the Petitioner Transferee Company vide CA (CAA) 11/ALD of 2025, seeking directions of this Tribunal to dispense with the requirement of convening all the meetings of Equity Shareholders, Warrant Holders, Secured Creditors and Un- secured Creditors of the Transferee Company. Accordingly, this Tribunal vide its order dated 01.05.2025, allowed the above- mentioned prayers, by dispensing with the requirement of convening and holding all the above meetings relating to the Petitioner Transferee Company.

5. This Tribunal vide its order dated 13.05.2025 directed to the Petitioner Transferee Company to issue notice in respect of the Scheme of Amalgamation to the Statutory Authorities, viz., a) The Central Government through the office of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi having email ID – [email protected] located at Ministry of Corporate Affairs, B- 2 Wing, New Delhi 110003 with respect to all the Applicants; b)The Registrar of Compani es, Uttar Pradesh, Ministry of Corporate Affairs, Kanpur; having email id – [email protected] located at Ministry of Corporate Affairs, 37/17, Westcott Building, The Mall, Kanpur 208 001 with respect to all the Applicants. c) The Income Tax Department having jurisdiction over the Applicant Companies by mentioning the PAN number of the Applicant Companies and to the Principal Chief Commissioner of Income Tax (PCCIT), Lucknow being the nodal officer, having email id – [email protected] locate d at Pratyaksh Kar Bhawan, 57, Ramtirth Marg, Lucknow (226001) Uttar Pradesh.

6. This Tribunal further directed to issue notice of hearing in respect of present Company Petition to the Statutory Authorities and also to make paper publication in this respect in “Business Standard” (English) & (Hindi) both in Delhi NCR Edition Newspaper on 13.05.2025.

7. In compliance thereof, the Petitioner Transferee Company filed Affidavit of service and publication vide dairy No. 1223 dated 30.06.2025, confirming that notices have been duly published in Business Standard ” (English) & (Hindi) both in Delhi NCR Edition Newspaper. The Petitioner Companies have also served notice of the Company Petition to the Statutory Authorities as per the follow detail:

8. In response to the above stated notice, the Registrar of Companies, Ministry of Corporate Affairs, Kanpur, Uttar Pradesh has submitted its Report dated 03.07.2025. No objection has been raised by the Registrar of Companies on the Scheme of Amalgamation. The relevant paragraph of the said report has been reproduced hereunder:

“1. The transferor company is a wholly owned subsidiary company of the Transferee Company.

2. The Transferee Company is a Listed Company. The copy of service of notice to the SEBI is not found enclosed in the petition.

3. The financial position of the Transferor and Transferee company are as under (As per Balance Sheet as on 31.03.2024)”:-

9. In response to the above stated notice, the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi has submitted its Report dated 22.07.2025. No objection has been raised by the Regional Director on the Scheme of Amalgamation. The relevant parag raph of the said report has been reproduced hereunder: “ The above submissions made in Para 1 to 10 are based on the proposed Scheme of Amalgamation and Report of the Registrar of Companies for kind consideration of Hon’ble Tribunal. The Hon’ble Tribunal may satisfy itself with regard to the Scheme and pass such order or orders as deemed fit and proper.”

10. The Petitioner Transferee Company has filed its reply in response to the RD report vide diary no. 1901 dated 22.09.2025 and has made the submission which has been reproduced hereunder:

“ We wish to clarify and confirm that Clause 12.3 of the Scheme of Amalgamation clearly provides that in terms of the provisions of section 232(3)(i) of the Companies Act, 2013 the Petitioner Transferee Company will pay the b alance fee and other charges, if any, on the increase in its authorized share capital pursuant to the Scheme of Amalgamation.

We once again confirm and undertake that the Transferee Company will comply with the provisions of section 232(3)(i) of the Compan ies Act, 2013, and other applicable provisions, if any, and make the requisite payment to the Registrar of Companies and other authorities, if any, on increase of its authorised capital subsequent to the sanction of the Scheme of Amalgamation.”

11. In response to the notices served, the Income Tax Department submitted its report wherein the Income Tax Department has given its ‘no objection’ to the present scheme of amalgamation. The Income Tax Department has also confirmed that there are no demands or proceedin gs outstanding/pending against the Petitioner Transferee Company. The copy of the income tax report has been annexed as Annexure 1 with the reply affidavit filed by the Petitioner Transferee Company vide diary no. 1902 dated 22.09.2025. The Petitioner Tran sferee Company vide diary no. 1902 undertakes the following:

“ a. That Petitioner Transferee Company undertake and confirm that any liability which may arise in future against the Non- Petitioner Transferor Company, will be paid by the Petitioner Transferee Company in accordance with the applicable provisions of Law. The Scheme will not adversely affect the right of recovery of the Income Tax Department, or any enquiry, investigation, scrutiny or other proceedings being carried out by Income Tax Department ag ainst the Petitioner Transferee Company. The Income Tax Department is entitled to recover any tax demand or any other dues of the Non Petitioner Transferor Company from the Petitioner Transferee Company.

b. The Petitioner Transferee Company undertakes that it shall be liable and responsible for any future proceedings as permissible under the provisions of the Income Tax Act, 1961, that may be initiated against the Non-Petitioner Transferor Company.

c. The Petitioner Transferee Company hereby undertakes not to contest the issuance of notices addressed to the Non- Petitioner Transferor Company by the Income Tax Department, subsequent to the sanction of the Scheme of Amalgamation.

d. The Petitioner Transferee Company hereby unequivocally waives any right or cont ention to contest the validity or legitimacy of notices emanating in the name of the Non- Petitioner Transferor Company, irrespective of the mode or justification presented, including but not confined to the argument that said notices are attributed to the Non – Petitioner Transferor Company, rather than the Petitioner Transferee Company. The notices issued and any consequential proceedings stemming therefrom shall command absolute adherence and legal constraint upon the Petitioner Transferee Company. The noti ces issued and the resultant proceedings shall be fully binding upon the Petitioner Transferee Company.

e. The Petitioner Transferee Company undertakes that any existing tax demand, whether determined, pending adjudication, or arising as a consequence of a ny assessment, reassessment, or appellate proceedings pertaining to the Non- Petitioner Transferor Company and when required under law. The Petitioner Transferee Company shall remain solely r esponsible for the payment of such tax liabilities and shall not contest or dispute its obligation to satisfy such demands on any ground whatsoever.

f. That the Petitioner Transferee Company undertakes to pay any demand that may be raised by the Income Tax Department or any other competent authority in terms of the applicable provisions of law, subsequent to the sanction of the Scheme by this Hon’ble Tribunal.”

12. The Petitioner Transferee Company filed an Affidavi t vide diary no. 1233 dated 30.06.2025 in comp liance to the order dated 13.05.2025 wherein the following has been submitted-

“3. That in compliance with the Order dated 13th May, 2025 notice of hearing of the Petition has been duly published in the following newspapers:

i. “Business Standard” (English, Delhi NCR Edition) Newspaper in its issue dated 26th May, 2025.

ii. “Business Standard” (Hindi, Delhi NCR Edition) Newspaper in its issue dated 26th May, 2025.”

13. The Petitioner Transferee Company filed an Affidavi t vide diary no. 1443 dated 21.07.2025 in compliance to the order dated 01.05.2025 wherein the following observation has been submitted which is reproduced hereunder:

“2. That in compliance with the Order dated 13th May, 2025, passed by this Hon’ble Tribunal, notice of the hearing of the Petition published “Business Standard” (English, Delhi NCR Edition); and “Business Standard” (Hindi, Delhi NCR Edition), both dated 26th May, 2025.

3. That it is confirmed that neither the Petitioner Company nor its Legal Counsel has received any objection/rep resentation from any person against the Petition or the proposed Scheme of Amalgamation till the date of filing of this Affidavit.”

14. The Petitioner Transferee Company filed an Affidavi t vide diary no. 1043 dated 23.05.2025 in compliance to the order dated 01.05.2025 wherein the following observation has been submitted which is reproduced hereunder:

“4. That it is further confirmed that neither the Petitioner Company nor its Legal Counsel have received any compliant, objection or representation from any Secured Creditor, Un- secured Creditor or any person, against the proposed Scheme of Amalgamation till the date of filing of this Affidavit.”

15. We have heard the learned Counsels for the Petitioner Companies and learned Counsels for the statutory authorities i.e. Ld. Registrar of Companies, Kanpur, Ld. Regional Director ( Northern Region), Ministry of Corporate Affairs, New Delhi, and the Income Tax Department whose reply / objections were filed before us and we have also gone through the reports / comments filed by them.

16. After considering the details as discussed above, the Scheme of Amalgamation contemplated among the Petitioner Companies, has been found to be prima facie in compliance with all the requirements stipulated under the relevant sections of the Companies Act, 2013. In the absence of any further objections before us against the proposed Scheme of Amalgamation and wherever any future compliance was required in furtherance of the scheme, necessary undertakings were also filed by the Petitioner Transferee Company for compliance, and also, since all the requisite sta tutory compliances have been fulfilled as required at present, this Tribunal sanctions the Scheme of Amalgamation appended as Annexure P1 with the petition in terms of its Prayer Clause.

17. In the result, the proposed Scheme of Amalgamation, which is annexed to the Company Petition stands approved and sanctioned as far as Petitioner Transferee Company is concerned, and the same shall be binding on all the Shareholders and Creditors of the above-named Petitioner Transferee Company with effect from the Appointed Date.

18. 23 As regards the appointed date, it has been mentioned in the Application that the “Appointed Date” is rd October 2024 or such other date as this Tribunal may fix. As the Transferor Company i.e. M/s EMC Limited was acq under the IBC, 2016, by the Transferee Company i.e. M/s Salasar Techno Engineering Ltd. as a wholly owned subsidiary, we approve the “Appointed Date” to be 23.10.2024 as proposed by the Pe titioner Transferee Company.

19. While approving the Scheme as above, it is clarified that this order should not be construed as, in any way, granting exemption from payment of stamp duty (if any, is applicable), taxes (including Income Tax, GST or any other charges, if any, are applicable) and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. The Transferee Company shall also comply with the provisions of Section 170A of the Income Tax Act, 1961 for fili ng of modified tax returns if any, are required to be filed.

THIS TRIBUNAL DO FURTHER ORDER:

20. With respect to the Amalgamation of the Transferor Company with and into the Transferee Company under Part IV of the Scheme:

i. Upon the Scheme becoming effective, al l the property, rights and powers of the Transferor Company specified in the Scheme of Amalgamation be transferred, without further act or deed, to the Transferee Company and accordingly, the same shall, pursuant to and vested in the Transferee Company for all the estate and interest of th e Transferor Company therein but subject nevertheless to all charges now affecting the same; and

ii. Effective date is the date by which the merger/amalgamation of both transferor and transferee companies are completed subsequent to the 2 after filing of the order of merger to the Registrar of Companies nd motion order passed in respect of both transferor as well as transferee company by the jurisdictional tribunal. In respect of the transferee company in the present case ion, the 2 on which this tribunal has the jurisdictnd motion order is passed vide the present order.

iii. Upon the Scheme becoming effective, all the liabilities and duties of the Transferor Company be transferred, without further act or deed, to the Transferee Company and accordingly the same shall p ursuant to Sections 230 & 232 of the Companies Act, 2013, be transferred to and become the liabilities and duties of the Transferee Company; and

iv. Upon the Scheme becoming effective, all the employees of the Transferor Company, in service on the Effective Da te, shall be transferred to and shall become the employees of the Transferee Company as provided in the Scheme of Amalgamation; and

v. Upon the Scheme becoming effective, all proceedings now pending by or against the Transferor Company be continued by or agai nst the Transferee Company; and

vi. Upon this Scheme becoming effective from the Effective Date, the Transferee Companies shall comply with the notices issued post amalgamation with respect to any income tax proceedings against the Transferor Company date, for which notices may be issued post amalgamation, and to the effect that the Transferee Company shall not raise any objection on the ground that the Transferor Company no longer exists;

vii. Since the Non-Appl icant Transferor Company is a wholly owned subsidiary of the Applicant Transferee Company and this is an amalgamation of a Wholly Owned Subsidiary with its Holding Company, no new shares will be issued pursuant to the Scheme of Amalgamation. Hence, no Repo rt on Valuation of Shares or Share Exchange Ratio is required for the proposed Scheme of Amalgamation.

viii. That the assessment under the Income Tax Act will be in accordance with the provisions of the Section 170 (2A) of the Income Tax Act, 1961; the Petitione r No. 2 / Transferee Company shall file modified income tax return if any is required to be filed pursuant to the scheme as approved by this order in the manner and form as prescribed u/s 170A of the Income Tax Act, 1961 within six months from the end of the month of this order.

ix. That all benefits, entitlements, incentives and concessions under incentive schemes and policies that the Transferor Company is entitled to include under Customs, Excise, Service Tax, VAT, Sales Tax, GST and Entry Tax and Income Tax laws, subsidy receivables from Government, grant from any governmental authorities, direct tax benefit/exemptions/deductions, shall, to the extent statutorily available and along with associated obligations, stand transferred to and be available to the Tr Company was originally entitled to all such benefits, entitlements, incentives and concessions.

21. The Petitioner Transferee Company shall supply legible printouts of the Scheme and the Schedule of Assets in an acceptable form to the Registry within three weeks from the date of pronouncement of the order and the Registry will append such printouts, after verification, to the certified copy of the Order.

22. A certified copy of this Order in Form No. CAA – 7 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 be supplied if applied for, subject to compliance with usual formalities.

23. The Petitioner Transferee Company shall within thirty days of the date of the receipt of this Order cause a certified copy of this order to be delivered to the Registrar of Companies, Kanpur, for registration; and on such certified copy being so delivered, the Transferor Company shall stand dissolved without undergoing the process of winding up and the Registrar of Companies shall place all documents relating to the Transferor Company and registered with him on the file kept by him in relation to the Transferee Company and the files relati ng to the said Companies shall be consolidated accordingly.

24. That the Petitioner Transferee Company shall file the revised memorandum further make the requisite payments of the differ ential fee (if any) for the enhancement of authorized capital of the Transferee Company; after setting off the fees paid by the Transferor Company;

25. That the Petitioner Transferee Company shall deposit an amount of Rs. 25,000/- (Rupees Twenty-Five Thousand Only) in favour of “ The Ministry of Corporate Affairs” within a period of four weeks from the date of receipt of the certified copy of this order and file an affidavit of compliance thereof.

26. All the concerned Regulatory Authorities an d other persons to act on a copy of this Order annexed with the Scheme duly authenticated by the Registrar, National Company Law Tribunal, Allahabad Bench, Prayagraj.

27. Any person interested shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary.

28. Accordingly, the present Company Petition bearing CP (CAA) No. 13/ALD/2025 is allowed and stands disposed of.