NCLT Chennai Sanctions Amalgamation of Sundaram Auto Components With TVS Motor Company

The Chennai Bench of the National Company Law Tribunal (NCLT) on 6 May approved a Scheme of Arrangement providing for the amalgamation of Sundaram Auto Components Limited (transferor company) with its holding company, TVS Motor Company Limited (transferee company).

Judicial Member Sanjiv Jain and Technical Member Venkataraman Subramaniam passing the order sanctioning the scheme between the two companies, observed:

“In the absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme.”

Sundaram Auto Components, a wholly owned subsidiary of TVS Motor Company, had approached the Tribunal seeking approval of the amalgamation to consolidate its assets and liabilities with the parent company. The companies submitted that the scheme aimed to simplify the group structure, reduce multiplicity of legal and regulatory compliances, eliminate duplicate expenses, and enhance operational and managerial efficiencies.

In the first motion proceedings, the Tribunal had dispensed with meetings of equity shareholders, preference shareholders, secured creditors, and unsecured creditors. Notices were subsequently issued to the Regional Director, Registrar of Companies, Income Tax Department, and Official Liquidator, and public advertisements were also carried out.

The Regional Director raised certain observations regarding the appointed date of the scheme, filing of Form BEN-2, pending GST and tax disputes, and charges in favour of the State Bank of India (SBI), among other compliance-related issues.

The companies responded that the appointed date would remain 1 April 2025, confirmed that Form BEN-2 had already been filed, and clarified that pending tax and GST proceedings had been duly disclosed in the audited financial statements.

On SBI-related concerns, the companies submitted that no secured loans had been availed and only non-fund-based facilities such as letters of credit and bank guarantees were operational, and therefore a No Objection Certificate was not required.

The Official Liquidator sought undertakings that there would be no retrenchment of employees and that no modification would be made to the scheme without prior approval of the Tribunal. The companies furnished the undertakings accordingly.

The Income Tax Department stated that it had no objection to the amalgamation, while reserving liberty to initiate proceedings under the Income Tax Act, 1961.

After examining the scheme, the Tribunal held:

“….this Tribunal is of the considered view that the scheme as contemplated amongst the Petitioner Companies seems to be prima facie beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company.”

The Tribunal further clarified that approval of the scheme would not bar statutory authorities from initiating action in accordance with law if any violations are found. It also noted:

“....it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law.”

Accordingly, the NCLT sanctioned the Scheme of Arrangement.

For Petitioner: Advocate Pawan Jhabakh

For Regional Director: Advocate Avinash Krishnan Ravi

For Official Liquidator: Pola Raghunathan

For Income Tax Department: Advocate Raj Jhabakh