Insurance Regulatory And Development ... vs Shriram Gi Holdings Private Limited

In the matter of: The Insurance Regulatory and Development Authority of India Having office at Survey No.115/1, Financial District Nanakramguda, Hyderabad, Telangana -- 500032 Rep by its GM-Finance & Investments Mr. Mahesh Agarwal ..... Appellant

V

Shriram General Insurance Company Ltd. A Company incorporated under Companies Act 1956 Having its Registered Office at E8, EPIP, RIICO Industrial Area Sitapura, Jaipur, Rajasthan 302022 Rep by its Managing Director & CEO Mr. Anil Kumar Aggarwal ..... Respondent

Present : For Appellant : Mr. E. Omprakash, Senior Advocate for Mr. Mayank Sapra, Advocate For Respondent : Mr. K.G. Raghavan, Senior Advocate For Ms. Preeti Mohan, Advocate

With Company Appeal (AT) (CH) No.31/2024 (IA Nos.613, 1313 & 1166/2024)

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 1 of 31 In the matter of:

The Insurance Regulatory and Development Authority of India Having office at Survey No.115/1, Financial District Nanakramguda, Hyderabad, Telangana - 500032 Rep by its GM-Finance & Investments Mr. Manoj Kumar ..... Appellant

V

Shriram Life Insurance Company Ltd. Having its registered office at Ramky Salenium, Plot No.31 & 32 Financial District, Gachibowli, Hyderabad, Telangana 500032 Rep by its Managing Director & CEO Mr. Casparus J.H. Kromhout ..... Respondent

With Company Appeal (AT) (CH) No.66/2024 (IA No.985/2024) In the matter of: The Insurance Regulatory and Development Authority of India Having office at Survey No.115/1, Financial District Nanakramguda, Hyderabad, Telangana - 500032 Rep by its GM-Finance & Investments Mr. Mahesh Agarwal ..... Appellant

V

Shriram Gi Holdings Pvt. Ltd. A Company incorporated under Companies Act 2013 Having its Registered office at No. 4, Burkit Road, T. Nagar, Chennai - 600017 Rep by its Director Mr. Subhasri Sriram ..... Respondent

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 2 of 31 With Company Appeal (AT) (CH) No.67/2024 (IA No.986/2024) In the matter of: The Insurance Regulatory and Development Authority of India Having office at Survey No.115/1, Financial District Nanakramguda, Hyderabad, Telangana - 500032 Rep by its GM-Finance & Investments Mr. Manoj Kumar ..... Appellant

V

Shriram Li Holdings Pvt. Ltd. A Company incorporated under Companies Act 2013 Having its Registered office at No. 4, Burkit Road, T. Nagar, Chennai - 600017 Rep by its Director Mr. Subhasri Sriram ..... Respondent

Present : For Appellant : Mr. E. Omprakash, Senior Advocate for Mr. G. Vairava Subramanian, Advocate For Respondent : Mr. K.G. Raghavan, Senior Advocate For Ms. Preeti Mohan, Advocate

JUDGMENT

(Hybrid Mode) Per : Justice Sharad Kumar Sharma, Member (Judicial):

1. These are a bunch of four Company Appeals preferred under Section 421

of the Companies Act, 2013. Each of them has been respectively preferred being

aggrieved against the Judgments, which are commonly involving a question, as

raised by the Appellant; ``As to whether, at the stage of amalgamation of the

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 3 of 31 Respondent Companies, whether at all any prior approval was required to be

taken under Section 35(1) of the Insurance Act''.

The details of the instant Appeals are given below:-

(A) Company Appeal TA (AT) No. 4 / 2024 (Company Appeal (AT)

No. 278 / 2024), which challenges the Impugned Judgment of 07.06.2024 as it

has been passed in CP (CAA) / 01 / 230 - 232 (JPR) / 2024 with CA (CAA) / 7 /

230 - 232 / JPR / 2023, has been received by this Appellate Tribunal upon its

transfer by the Principal Bench, NCLAT, New Delhi, vide its Order dated

12.09.2024;

(B) Company Appeal (AT) (CH) No. 31 / 2024 challenges the Impugned

Judgment dated 02.05.2024, as it was passed in CP (CAA) / 01 / 230 / HDB /

2024 in CA (CAA)/ 63 / 230 / HDB/ 2023;

(C) Company Appeal (AT) (CH) No. 66 / 2024, puts a challenge to the

Impugned Order of 09.08.2024 as passed in CP (CAA) / 15 (CHE) / 2024 in CA

(CAA) / 55 (CHE) / 2023 and lastly;

(D) Company Appeal (AT) (CH) No. 67 / 2024, challenges the Impugned

Order of 09.08.2024, as passed in CP (CAA) / 16 (CHE) / 2024 in CA (CAA) /

54 (CHE) / 2023.

2. The prime question, which has been agitated by the learned counsel for the

Appellant is that, amalgamation of the Respondent Companies as a consequence

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 4 of 31 of the approval of Scheme of Amalgamation, in pursuance to the Impugned Order

under challenge would be bad in the eyes of law, in the absence of there being a

prior compliance of the provisions contained under Section 35 (1) of the

Insurance Act, which according to the Appellant, is mandatory when there is an

amalgamation of a Insurance Company engaged in an insurance activities with a

Company performing functions other than that of the insurance.

3. Section 35 of the Insurance Act is extracted hereunder:

``Amalgamation and transfer of insurance business:

(1) Notwithstanding anything contained in any other law for the time being in force, no insurance business of an insurer shall be transferred to or amalgamated with the insurance business of any other insurer except in accordance with a scheme prepared under this section and approved by the Authority.

(2) Any scheme prepared under this section shall set out the agreement under which the transfer or amalgamation is proposed to be effected, and shall contain such further provisions as may be necessary for giving effect to the scheme.

(3) Before an application is made to the Authority to approve any such scheme notices of the intention to make the application together with a statement of the nature of the amalgamation or transfer, as the case may be, and of the reason therefore shall, at least two months before the application is made, be sent to the Authority and certified copies, four in number, of each of the following documents shall be furnished to the Authority, and other such copies shall during the two months aforesaid be kept open for the inspection of the members and policy-holders at the principal and branch offices and chief agencies of the insurers concerned, namely: --

(a) a draft of the agreement or deed under which it is proposed to effect the amalgamation or transfer;

(b) balance sheets in respect of the insurance business of each of the insurers concerned in such amalgamation or transfer, prepared in such forms as may be specified by the regulations;

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 5 of 31 (c) actuarial reports and abstracts in respect of the life insurance business of each of the insurers so concerned, prepared in conformity with the regulations specified in this regard.

(d) a report on the proposed amalgamation or transfer, prepared by an independent actuary who has never been professionally connected with any of the parties concerned in the amalgamation or transfer at any time in the five years preceding the date on which he signs his report;

(e) any other reports on which the scheme of amalgamation or transfer was founded.

The balance-sheets, reports and abstracts referred to in clauses (b),

(c) and (d) shall be prepared as at the date at which the amalgamation or transfer if approved by the Authority is to take effect, which date shall not be more than twelve months before the date on which the application to the Authority is made under this section:

Provided that if the Authority so directs in the case of any particular insurer there may be substituted respectively for the balance-sheet, report and abstract referred to in clauses (b) and (c) prepared in accordance with this sub-section certified copies of the last balance-sheet and last report and abstract prepared in accordance with sections 11 and 13 of this Act or sections 7 and 8 of the Indian Life Assurance Companies Act, 1912 (6 of 1912), if that balance-sheet is prepared as at a date not more than twelve months, and that report and abstract as at a date not more than five years, before the date on which the application to the Authority is made under this section].''

4. In order to better appreciate the controversy, we feel it apt to deal with as

to what does the word ``Amalgamation'' would mean in context of the Insurance

Act, to be read in correlation with the provisions of the Companies Act, 2013.

5. As per Section 35 (1) of the Insurance Act, which has been extracted above.

If Sub-section (1) is taken into consideration, the said provision falls to be part

and parcel of Part II of the Insurance Act particularly that as contained under its

sub head ``Amalgamation and Transfer of Insurance Business''.

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 6 of 31

6. The use of word Amalgamation and Transfer under the Sub-Head to Part

II of the Insurance Act, that would itself mean, that the concept of amalgamation

was not an alien feature unknown to the provisions of the Insurance Act itself,

though, the Insurance Act in itself does not defines ``Amalgamation''

independently.

7. In order to answer the implications of the amalgamation and transfer of

business, as prescribed under Part II of the Insurance Act, we will have to

understand, as to what does the term ``Amalgamation'' in itself mean, for the

purposes of answering the question raised in the instant Appeal.

8. While the Insurance Act is silent with regards to the definition of the term

``Amalgamation'', the same stands explained in Chapter XV of the Companies

Act, under the provisions of Section 230 to 232 of the Companies Act. Since the

application of Insurance Act in the instant cases of Amalgamation has been

consistently and vehemently harped upon by the learned counsel for the Appellant

alleging that the respective Impugned Orders under challenge in these Appeals,

would be bad in the absence of compliance of the provisions contained under

Section 35 (1) of the Insurance Act, it becomes inevitable for us to deal with the

question, as to what the term ``Amalgamation'' would actually mean, in the

context of the Companies Act, since it is not contained under the Statute i.e.

Insurance Act, we will have to base our principles on the general law as

applicable.

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 7 of 31

9. Taking its literal connotation into account, as far as the word

``Amalgamate'' is concerned, no very precise meaning can be given to it; it would

broadly mean an activity where either two or more Companies are so joined to

form a new Company or, one is absorbed into or blended with another, to carry

on business of the Companies that is absorbing the other.

10. What is important to note is that, an ``Amalgamated Company'' is the

resultant Company formed after the process of Amalgamations, it germinates

from the merger of two or more Companies, which upon formation could be

treated as to be an ``Amalgamated Company'' as defined under Section 2 (1B) of

the Income Tax Act of 1961.

11. Under the Income Tax Act, the term ``Amalgamation'' has been defined

under Section 2 (1B) which reads as under:

``Section 2(1B) "amalgamation", in relation to companies, means the merger of one or more companies with another company or the merger of two or more companies to form one company (the company or companies which so merge being referred to as the amalgamating company or companies and the company with which they merge or which is formed as a result of the merger, as the amalgamated company) in such a manner that--

(i) all the property of the amalgamating company or companies immediately before the amalgamation becomes the property of the amalgamated company by virtue of the amalgamation;

(ii) all the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation;

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 8 of 31 (iii) shareholders holding not less than three-fourths in value of the shares in the amalgamating company or companies (other than shares already held therein immediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation, otherwise than as a result of the acquisition of the property of one company by another company pursuant to the purchase of such property by the other company or as a result of the distribution of such property to the other company after the winding up of the first-mentioned company;''

12. Thus, on a summary scrutinization, the term ``Amalgamation''

specifically denotes the merger of two or more Companies, to form one

Company, as a composite independent unit which is called the Amalgamated

Company, and the Companies which are merged are thus called as Amalgamating

Companies, if the Amalgamation is made in such a manner, as it has been

prescribed under the clauses of Sub Section 1-B of Section 2 of the Income Tax

Act, as referred to hereinabove.

13. Law Lexicon in its VI Edition as published by P. Ramanatha Aiyer also

details the consequences which would flow as a result of Amalgamation, which

is given as under:

``(i) all the property of the amalgamating company or companies immediately before the amalgamation becomes the property of the amalgamated company by virtue of the amalgamation;

(ii) all the liabilities of the amalgamating company or companies immediately before the amalgamation become the liabilities of the amalgamated company by virtue of the amalgamation;

(iii) shareholders holding not less than [three-fourths] in value of the shares in the amalgamating company or companies (other than shares

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 9 of 31 already held therein immediately before the amalgamation by, or by a nominee for, the amalgamated company or its subsidiary) become shareholders of the amalgamated company by virtue of the amalgamation.''

14. In other words, it could be said that amalgamation is nothing but a blending

of two or more existing undertakings into composite undertaking where ``the

Shareholders of each blending Company become substantially the

Shareholders of the Company which is carrying on the blended

undertaking''. This is the concept, which has been laid down by (Halsbury IV

Edition Vol. VII Para 1539 P 855).

15. The said principle has been considered and further elaborated by the

Division Bench of Hon'ble High Court of Andhra Pradesh while dealing with the

provisions contained under Section 394 of the Companies Act, 1956, in the

matters of S.S. Somayajulu v. Hope Prudhomme And Co. Ltd., Madras, which

has ultimately analysed and has observed that the two Companies are so joined

to form a third entity or one is absorbed and loses its existence with the another.

The relevant paragraph is extracted hereunder:

``(26) WE have little doubt in our minds that the evidence of these witnesses was trumped up to suit the plaintiff's case and must be rejected. Exhibit A- 17 is a letter dated 16th April, 1952 from E. G. S. as director of the first defendant company and the managing agents of D-2 company, that he would be glad if the plaintiff would, whenever funds were emergency required for the purposes of the company, or there was delay in his (the plaintiff's) getting funds from the head office for the purposes of the company, find the necessary funds first, so that the business of the company might not suffer for want of funds, which would duly be reimbursed to him

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 10 of 31 later. In the first place, this is not a letter from the third defendant. This letter was written in April, 1952, and it can hardly be said to prove that the third defendant personally requested the plaintiff to make the advances or that he guaranteed the payment of the advances and the salary due to the plaintiff in November, 1952. There are any number of letters that passed between the plaintiff and D-2 company, and nowhere was a reference made to this personal guarantee by D-3. We must, therefore, reject this part of the plaintiff's case as well we shall now consider the liability of the first defendant company. Section 153-A of the Indian Companies Act, 1913, added by section 83 of the Act (XXII of 1936), makes provision for facilitating arrangements and compromises. According to that section, under a scheme for the amalgamation of any two or more companies, the whole or any part of the undertaking or the property or liabilities of any company concerned in the scheme referred to as the " transferor company" can be transferred to another company called the " transferee company" with the sanction of the Court. By this method, one company in effect absorbs the other. The word " amalgamation " has no definite legal meaning. It contemplates a state of things under which two companies are so joined as to form a third entity, or one company is absorbed into and blended with another company. Amalgamation does not involve the formation of a new company to carry on the business of the old company.''

16. The Hon'ble Apex Court also had an occasion to consider the ramification

of Amalgamation, in one of the Judgments reported in AIR (1991) SC 70

Saraswati Industrial Syndicate Ltd. v. C.I.T., where the Hon'ble Apex Court has

observed that, as a result of an identified amalgamation accepted by the two

merging entities and the consequential taking over of an existing Company by

another Company, as a consequence of its restructuring, no precise or straight-

jacketed conception could be given to the concept of amalgamation and it could

be summarized as;

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 11 of 31

(a) Blending of two or more existing undertakings;

(b) Resulting into a formation of a one undertaking;

(c) The shareholders of each blending Company become substantially the

shareholders of the Company which is thus created.

17. There are various processes and procedures under which the amalgamation

of the two or more companies can be carried out, resulting in the assets and

liabilities of the amalgamating Companies becoming the assets and liabilities of

the amalgamated Company. But, according to the judicial precedence,

amalgamation in its strict interpretation will not mean acquisition by a company

of the Share Capital of the other (amalgamated) Company which remains in

existence and continues with the undertaking.

18. In yet another Judgment as reported in 1975 (99) ITR 211 (Cal), the

definition of ``Amalgamation'' as given under Section 2 (1B) of the Income Tax

Act, the features and the consequences of amalgamation has been attempted to be

explained which is that it is an Arrangement by which the Assets and Liabilities

of the two or more amalgamating Companies, become vested in or under the

control of one company, with substantial shareholders of the amalgamating

Companies coming together to form the ``amalgamated entity''.

19. The concept of amalgamation which is applicable to the Co-operative

Banks registered under Cooperative Societies Acts and to the Societies registered

under the Society & Registration Act, too are based upon the same principles of

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 12 of 31 amalgamation which has been laid down by the Halsbury Law, as well as the

Judgments referred to hereinabove, by us.

20. The Finance Act of 1927 under its Section 55, had also provided that

amalgamation within the meaning of the said Section as provided under the

Finance Act, will have to be taken as to be the welding and blending of two or

more Companies, which retain certain entities when there was no amalgamation.

21. The concept of amalgamation of the Companies Act, has been recently

considered by the Hon'ble Apex Court in a Judgment reported in 2004 Vol VII

SCC 1 in the matters of Singer India Ltd. v. Chander Mohan Chanda & Ors.

22. In the said Judgment, it has extracted the concept of amalgamation by

drawing its foundation from Halsbury Law of England IV Edition Vol VII Para

1539 as referred to above, and has almost reiterated the same principles that, it is

the blending up of two or more of the existing Companies into one undertaking

where shares of each blending Company become substantially the shareholding

of the Amalgamated Company, which is to carry on the blended undertakings.

23. In this Judgment too, it has been made quite explicit, that amalgamation is

not a mere acquisition by a Company of the Share Capital of the other Company

which remains in existence and continues in the undertaking.

24. It is in the context of the aforesaid perspective and the interpretation given

to the term ``Amalgamation'' by the various Courts of Law, the question, which

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 13 of 31 has been agitated in the instant Company Appeals is to be answered, where the

Companies as respectively engaging consideration in each of these Company

Appeals, have already been amalgamated by virtue of the effect of the Impugned

Order under challenge.

25. The Appellant challenges the Impugned Order contending thereof that, the

process of amalgamation carried by the Impugned Order, would be dehors to law,

due to non-compliance of the provisions contained under Section 35(1) of the

Insurance Act, as extracted above and on the grounds that since the said

provisions start with a non-obstante clause, there would be a bar created against

amalgamation of the Companies in the instant cases and the amalgamation of the

companies could be carried only after taking a prior approval by the Authority,

as per Section 35(1) of the Insurance Act.

26. Owing to the word ``Authority'' being used under the Insurance Act, it

becomes inevitable for us to deal with as to how the Authority has been defined

with under the Insurance Act. The Insurance Act of 1938 in its Sub-Section (1A)

of Section 2 defines the ``Authority'', which means the ``Insurance Regulatory

& Development Authority of India'', as established under sub-section 1 of

Section 3 of the Insurance Regulatory & Development Authority Act of 1999 i.e.

the Appellant herein. Based upon the said strength, the Appellant contends that,

since the order of amalgamation of the Insurance Companies has been issued

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 14 of 31 without its prior approval, it is in contravention to Section 35, and hence it cannot

be upheld in the eyes of law.

27. On the contrary, it has been argued by the learned counsel for the

Respondent is, that if the concept of amalgamation as dealt hereinabove is taken

into consideration, from the perspective of Section 35 of the Insurance Act of

1938, the necessity of seeking of an approval prior to amalgamation as per Sub-

Section 1 of Section 35, would be limited to in relation to an amalgamation of

two Insurance Companies only i.e. meaning thereby, the provisions contained

under Section 35, do not per se necessitate taking of an approval from the

Authority, in those situations where an insurance company is being sought to be

amalgamated with a Company, which is not engaged in the insurance business.

28. It is argued by the learned counsel for the Respondent that, when the

Statute has not specifically provided for seeking of a prior approval of merging

an Insurance Company, with a Company not engaged in the insurance business,

the Approval from the Authority under Section 35 of Insurance Act is not required

under law.

29. The Respondent has further contended that Section 35 of Insurance Act,

will not create an embargo in amalgamation of the Insurance Company, with a

non-insurance entity or a company engaged in any other business, because the

Insurance Act has prescribed for an amalgamation that is restricted in its

applicability between the two Insurance Companies only. It is argued by the

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 15 of 31 learned counsel for the Appellant that, when there is a ``Merger'' or

``Amalgamation'' of an Insurance Company with another Company not engaged

in Insurance Business, no prior approval is required and more particularly so,

when Section 35 of Insurance Act, itself does not contemplate an amalgamation

of the said nature, though the thought of amalgamation and its consequential

effect was known to the framers of law, who have legislated the Insurance Act

and Once Section 35 does not create a bar on ``Amalgamation'' of Insurance

Company with another Company, not being a Company engaged in the insurance

business, it by logical implication excludes from its ambit, the subject of

amalgamation of Insurance Company with a non-insurance company and it

naturally follows that no prior approval is required under Insurance Act for these

cases. He further contends that had it been intended to bring such class of

amalgamation under Insurance Act, and to impose restrictions, that would have

been done by the legislature by incorporating suitable explicit provisions under

Section 35 of Insurance Act itself and not otherwise, and that, absence of suitable

explicit provisions in the Insurance Act for treatment of amalgamation of an

Insurance Company with a Company not engaged in Insurance Business cannot

be interpreted to claim that since no exclusion is provided, prior approval from

the Authority has to be taken.

30. The learned counsel for the Appellant in further elaboration of his

argument has argued, that since the consequential effect of the amalgamation will

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 16 of 31 have a bearing on the Share configuration of the respective insurance

Companies, it will attract section 6A of the Insurance Act and therefore, without

the compliance of the provisions contained under Section 35 of Insurance Act,

the merger cannot be done without the approval of authority, because of the

provisions contained under Section 6A of the Insurance Act. He further contends

that since there happens to be a change in the Capital Structure, Voting Rights

and other such allied activities in the respective insurance companies, no

amalgamation ought to have been permitted, as the very objective of Section 6A

of the Insurance Act is being defeated. Provisions of section 6A is extracted

hereunder:

``6A. Requirements as to capital structure and voting rights and maintenance of registers of beneficial owners of shares. -- (1) No public company limited by shares having its registered office in India, shall carry on life insurance business or general insurance business or health insurance business or re-insurance business, unless it satisfies the following conditions, namely: --

(i) that the capital of the company shall consist of equity shares each having a single face value and such other form of capital, as may be specified by the regulations;

(ii) that the voting rights of shareholders are restricted to equity shares;

(iii) that, except during any period not exceeding one year allowed by the company for payment of calls on shares, the paid-up amount is the same for all shares, whether existing or new:

Provided that the conditions specified in this sub-section shall not apply to a public company which has, before the commencement of the Insurance (Amendment) Act, 1950 (47 of 1950), issued any shares other than ordinary shares each of which has a single face

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 17 of 31 value or any shares, the paid-up amount whereof is not the same for all of them for a period of three years from such commencement.] (2) Notwithstanding anything to the contrary contained in any law for the time being in force or in the memorandum or articles of association but subject to the other provisions contained in this section the voting right of every shareholder of any public company as aforesaid shall in all cases be strictly proportionate to the paid-

up amount of the equity shares held by him.

2* * * * * (4) A public company as aforesaid which carries on life insurance business, general and health insurance business and re-insurance business--

(a) shall, in addition to the register of members maintained under the Companies Act, 2013 (18 of 2013), maintain a register of shares in which the name, occupation and address of the beneficial owner of each share shall be entered including any change of beneficial owner declared to it within fourteen days from the receipt of such declaration;

(b) shall not register any transfer of its shares--

(i) unless, in addition to compliance being made with the provisions of section 56 of the Companies Act, 2013 (18 of 2013), the transferee furnishes a declaration in the prescribed form as to whether he proposes to hold the shares for his own benefit or as a nominee, whether jointly or severally, on behalf of others and in the latter case giving the name, occupation and address of the beneficial owner or owners, and the extent of the beneficial interest of each;

(ii) where, after the transfer, the total paid-up holding of the transferee in the shares of the company is likely to exceed five per cent. of its paid-up capital unless the previous approval of the Authority has been obtained to the transfer;

(iii) where, the nominal value of the shares intended to be transferred by any individual, firm, group, constituents of a group, or body corporate under the same management,

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 18 of 31 jointly or severally exceeds one per cent. of the paid-up equity capital of the insurer, unless the previous approval of the Authority has been obtained for the transfer.

Explanation.--For the purposes of this sub-clause, the expressions "group" and "same management" shall have the meanings respectively assigned to them in the Competition Act, 2002 (12 of 2003).] (5) Every person who has any interest in any share of a company referred to in sub-section (4) which stands in the name of another person in the register of members of the company, shall, within thirty days from the commencement of the Insurance (Amendment) Act, 1950, or from the date on which he acquires such interest, whichever is later, make a declaration in the prescribed form (which shall be countersigned by the person in whose name the shares is registered) to the company declaring his interest in such share, and notwithstanding anything contained in any other law or in any contract to the contrary, a person who fails to make a declaration as aforesaid in respect of any share shall be deemed to have no right or title whatsoever in that share:

Provided that nothing in this sub-section shall affect the right of a person who has an interest in any such share to establish in a Court his right thereto, if the person, in whose name the share is registered, refuses to countersign the declaration as required by this sub-section:

Provided further that where any share, belonging to an individual who has made any such declaration as is referred to in this sub-section is held by a company in its name in pursuance of any trust or for the purpose of safe custody or collection or realisation of dividend, such individual shall, notwithstanding anything contained in the Companies Act, 2013 (18 of 2013) or in the memorandum or articles of association of the company which has issued the share, be deemed to be the holder of the said share for the purpose of exercising any voting rights under this section to the exclusion of any other person.

(11) The provisions of this section, 8***, shall, on and from, the commencement of the Insurance (Amendment) Act, 1968, also apply to insurers carrying on general insurance business subject to the following modifications, namely: --

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 19 of 31 (i) that references in sub-sections (1), (3), (5) and (6) to the Insurance (Amendment) Act, 1950, shall be construed as references to the Insurance (Amendment) Act, 1968; 9*** 10* * * * * [Explanation] --For the purpose of this section, the holding of a person in the shares of a company shall be deemed to include--

(i) the total paid-up holding in such shares held by such person in the name of others; and

(ii) if any shares of the company are held--

(a) by a public limited company, of which such person is a member holding more than ten per cent of the paid-up capital, or

(b) by a private limited company, of which such person is a member, or

(c) by a company, of which such person is a managing director, manager, 1*** or in which he has a controlling interest, or

(d) by a firm in which such person is a partner, or

(e) by such person jointly with others, such part of the total paid-up holding of the company or firm or of the total joint holding in those shares, as is proportionate to the contribution made by such person to the paid-up capital of the company, the paid-up capital of the firm or the joint holding, as the case may be.''

31. This artificial distinction, which has been attempted to be carved out by the

learned counsel for the Appellant for opposing the amalgamation alleging it to be

in contravention to Section 6A of the Insurance Act is misconceived, owing to

the various precedences, which have already been discussed above and the very

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 20 of 31 concept of amalgamation, which has been dealt with. In the instant case, the

amalgamation of the two Companies i.e. the Insurance Company with the

company engaged in a non-insurance activity, will automatically result into the

merger of the Share Capital and the Shareholding of the non-insurance company

with the insurance company, and there is no change in shareholding as a whole

as a consequence of amalgamation because the Merging Company (Transferor

Company) is only the holding company of the Insurance Company. As it has been

observed by the Hon'ble Apex Court in the various Judgments, which has been

referred to hereinabove, that the Shareholding of the two merging Entities

intending to merge or amalgamate, will too simultaneously also stand merged or

amalgamated with the Amalgamated Company, the consequence of

amalgamation in the instant cases will not be in contravention of Section 6A of

the Insurance Act.

32. Another important point argued by the Appellant which is required to be

considered by us is that, the entire process of amalgamation, ought to have been

conducted only after an approval from the Authority under Section 35 of the

Insurance Act as per exception to the provisions contained under Section 1(4)(b)

of the Companies Act.

Section 1(4)(b) of the Companies Act reads as under:

``Sec. 1(4)(b):

(1) This Act may be called the Companies Act, 2013.

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 21 of 31 (4) The provisions of this Act shall apply to--

(a) .................................

(b) insurance companies, except in so far as the said provisions are inconsistent with the provisions of the Insurance Act, 1938 (4 of 1938) or the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);

(c) ......................................''

33. It provides for that the Insurance Companies as contemplated under the

Insurance Act of 1938, will be deemed to be a Company under the Companies

Act. It provides further that, the Insurance Companies would be treated as to be

the Companies under the Companies Act, subject to the condition that there is no

inconsistency within the provisions of the Insurance Act, 1938 or the Insurance

Regulatory & Development Authority Act, 1999.

34. In order to sustain his argument, learned counsel for the Appellant,

contends that the Scheme of Amalgamation proposed under Sections 230 - 232

of the Companies Act is inconsistent with Section 35 of Insurance Act and hence

provisions of Companies Act with respect to amalgamation will not apply in the

instant cases.

35. The learned counsel for the Respondent counters this by stating that it

could not be argued under the Companies Act under the provisions contained

under Chapter XV, provides for the ``Compromises, Arrangements and

Amalgamations'' and it will be applicable in the instant cases and the respective

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 22 of 31 learned Tribunals are right in conducting the proceedings on the Petitions

preferred under Section 230 to 232 of the Companies Act by the Respondents

seeking for an amalgamation of their respective Companies, on Section 35 of

Insurance Act limits itself only to the field of amalgamation of two Insurance

Companies.

36. In the light of the provisions contained under Section 230 to 232 of the

Companies Act, the learned counsel for the Respondent argues, that when the

Companies Act, which has a feature of being a special Statute and has a self-

contained provision, in respect of amalgamation in the light of the provisions

contained under Section 230 to 232, the restrictions contemplated by Section

35(1) of the Insurance Act, cannot be held to be an inconsistent with the

provisions of the Companies Act governing amalgamation of Companies.

37. What is relevant to be considered is, that in each of these Company

Appeals, challenge is being given to the Order of respective Learned Tribunal

approving the Scheme of Amalgamation proposed by the respective Respondents

/ Applicants in Company Appeal (AT) (CH) No. 31 / 2024, approval of Scheme

of Amalgamation of the Petitioner ``Shriram Life Insurance Company Ltd.'' with

its ``holding Company'' i.e. ``Shriram LI Holdings Private Ltd.'' which is the

``Transferor Company'' is being challenged.

38. In Company Appeal (AT) (CH) No. 66 / 2024, challenge is being given to

the approval of Scheme of Amalgamation where ``Shriram GI Holdings Private

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 23 of 31 Ltd.'' is the ``Transferor Company'' and ``Shriram General Insurance Company

Ltd.'', is the ``Transferee Company''.

39. In Company Appeal (AT) (CH) No. 67 / 2024, the Scheme of

Amalgamation of ``Shriram LI Holdings Private Ltd.'' which is the Transferor

Company with ``Shriram Life Insurance Company Ltd.'' is being challenged.

40. In Transfer Appeal TA (AT) No. 04 / 2024 (Company Appeal (AT) No.

278 / 2024), challenge is being given to the Order of Approval of the Scheme of

Amalgamation proposed by ``Shriram General Insurance Company Ltd.'', the

``Transferee Company'', which is being merged with ``Shriram GI Holdings

Private Ltd.'', the ``Transferor Company''.

41. In all these two cases of amalgamation, the Transferor Companies were

holding major portion of the Transferee Companies which are in Life Insurance

and Non-life Insurance business respectively. It has been held by respective

Tribunals that upon merger / amalgamation the Shareholders of the Holding

Companies will hold Shares of the Transferee Companies which are Insurance

Companies, the same number and same per centage and hence, this will not

attract, the provisions contained under Section 6A of the Insurance Act.

42. There is another important aspect, which is required to be considered that

in all these Company Appeals, by virtue of the Impugned Orders, the Transferor

Companies, which were not engaged in Insurance Business have been permitted

to be merged with the Transferee Companies, which are Insurance Companies

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 24 of 31 and it has been done strictly in accordance with the provisions contained under

Section 230 to 232 of the Companies Act, which prescribes for an amalgamation

and which is not in contravention to or in consistent with any of the provisions of

the Insurance Act.

43. In accordance to the provisions contained under Section 230 to 232 of the

Companies Act as referred to hereinabove, there are certain prescribed

procedures, which are required to be followed in accordance with the rules as

framed thereunder i.e. ``Companies (Compromises, Arrangements and

Amalgamations) Rules, 2016'' before it is contemplated to sanction a Scheme

of Arrangement for amalgamation of the two Companies irrespective of the fact

that whether it is between two Insurance Companies or only one of them being

engaged in insurance business.

44. It is borne out from record and the findings, which has been recorded in

the respective Impugned Orders, that various steps and compliances as prescribed

in the procedure have been strictly followed by the Transferor Companies and the

Transferee Companies in accordance with the provisions contained under Section

230 to 232 of the Companies Act and the aforesaid Rules. First Motion

applications were filed for convening / dispensing with the Meeting of the

Shareholders, Secured Creditors and Unsecured Creditors of the Petitioner's

Company, before the respective Tribunals. The said First Motion applications

were disposed of by the respective Tribunals dispensing with the holding of a

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 25 of 31 Meeting with of the Equity Shareholders and Secured and Unsecured Creditors

of the Petitioner's Companies. No objection of any kind since was ever raised at

the stage of dispensation of carrying the First Motion and hence, no plea under

Section 6A of Insurance Act would be attracted.

45. While moving to the ``second stage'' of Amalgamation, the Respondent

Companies as respectively involved in each of these Company Appeals, had filed

the Second Motion Petition within the stipulated timeframe as per the said Rules,

praying for directions:

(a) To fix a date of Hearing of the Petitions filed for the approval of the

Scheme of Amalgamation;

(b) To issue public notices inviting objections by carrying out publication

in two Newspapers one being of English and one in a Vernacular;

(c) To serve notices of the Petitions on the Competent Authorities for e.g.

Income Tax Authorities, Registrar of Companies, Official Liquidators,

Regional Directors of the respective Regions, Competition

Commission of India, Reserve Bank of India, IRDAI and other such

Regulatory Authorities, for the purposes of inviting their comments and

objections on Scheme of Arrangement of Amalgamation proposed by

the Petitioner Companies.

46. Upon receipt of the necessary directions from the Learned Tribunals, the

Petitioner Companies had undertaken necessary works as detailed above. Further,

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 26 of 31 they had also filed an Affidavit of Service of having effected service of notices

upon the Authorities as referred to hereinabove, by filing an Affidavit of Service.

47. On perusal of the respective notices, it is quite clear that the notices thus

published, had specifically invited, from the concerned Authorities, objection if

any, as against the proposed Scheme of Arrangement for Amalgamation.

48. The Petitioner Companies had also filed the Affidavit of Compliance

through their Authorized Signatories, along with the relevant documents.

49. The learned Tribunals had considered the objective of and the rationale

behind the Scheme of Amalgamation in detail which has been extracted in the

Impugned Order and which, for the purposes of brevity, has not been extracted

hereunder.

50. Upon service of notice, the respective Regional Directors along with the

Report of the Registrar of Companies vide its communication placed on record

intimated to the Learned Tribunal that there are no pending Complaints or

Enquiries or Inspection or Investigation or Prosecution against the Petitioner

Company, and it has no objection subject to the condition that the Petitioner

Company has been adequately preserving the Books of Accounts, papers and

records and they shall not be disposed of, without the prior permission of the

Central Government as per Section 239 of the Companies Act, 2013, that the

Petitioner Company has given a written undertaking for adherence of all

procedural law and will not be absolved from any Statutory liabilities, if the

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 27 of 31 Scheme of Arrangement was sanctioned, and that the requisite Stamp Duty on

the Transfer of Property / Assets of the Transferor Company to the Transferee

Company is to be paid before the implementation of the Scheme.

51. Except for the Appellant herein who had filed their objection against the

Scheme of Amalgamation owing to the non-compliance of the provisions

contained under Section 35 of the Insurance Act. All other Authorities i.e. the

Regional Director, Official Liquidator - Chennai, Income Tax Department,

Competition Commission of India, Reserve Bank of India and Valuers Report

had supported the Scheme of Amalgamation and conveyed their no objection to

the Scheme.

52. The objection raised by the learned counsel for the Appellant before

Learned Tribunals during the consideration of the said Schemes of

Amalgamation, had confined their argument from the perspective that the

Insurance Companies have been registered under Section 3 of the Insurance Act,

and since the object of their Registration is contemplated under Section 2 (7A)

(c) of the Insurance Act, as their sole objective is to provide insurance and to

carry out their business in the field of Life Insurance, General Insurance and

Health Insurance, their Amalgamation with other entities should be done in

accordance with Section 35 of the Insurance Act.

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 28 of 31

53. What implications would Section 35 of Insurance Act, would have for the

purposes of sustaining the objections raised by the Appellant in the light of the

provisions contained under Section 35 of the Insurance Act has already been

dealt with by us in the preceding paragraphs.

54. The objections as preferred by the Appellant were considered by the

respective Tribunals observing thereof that, owing to the fact of no objection

having been given by the Income Tax Department, and no objection having been

given by the Regional Director, the Official Liquidator, the Competition

Commission of India and with obtaining of the Valuers Report and since the

Scheme of Amalgamation being not in violation of Section 35 of the Insurance

Act, based on the reasons given in detail in the respective Orders, the Scheme of

Amalgamation as proposed by the respective Petitioner Companies are fit to be

approved.

55. The Learned Tribunal had also drawn upon the ratio in Judgment of

Vodafone Essar Gujarat Ltd. v. Department of Income Tax as reported in 2012

SCC OnLine Gujarat 6485 which has been upheld by the Hon'ble Apex Court

in SLP (C) No.029819 / 2012, to consider as to in what fashion amalgamation

can be granted while protecting rights of various Departments.

56. Owing to the fact that the logic, which has been assigned by the respective

learned Tribunals that, since the controversy at hand falls to be well within the

exercise of powers of Amalgamation under Section 230 to 232 of the Companies

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 29 of 31 Act, that it is not hit by Section 35(1) of the Insurance Act and that the provisions

of Amalgamation as contained under the Insurance Act and that as contained

under the Companies Act under Section 230 to 232, are not inconsistent with each

other, and that, thus, the Insurance Company despite of being a Company as

contemplated under the Insurance Act, would still have a right of Amalgamation

under the Approved Scheme of Amalgamation as per Section 230 to 232 of

Companies Act under the facts and circumstances of the instant cases, the

respective learned Tribunals have gone ahead to pass the Impugned Orders, while

not accepting the objections raised by the Appellant herein.

57. After having heard the learned counsels for the parties, and having given a

thoughtful consideration to the grounds taken by the learned counsels for the

parties and particularly owing to the percept of ``Amalgamation'', which we have

dealt with hereinabove, as there happens to be no statutory bar created under the

Insurance Act, which could have called for a prior compliance of Section 35 of

Insurance Act, for Amalgamation in the instant cases to be carried under Section

230 to 232 of the Companies Act, 2013, the Amalgamation as made by the

Impugned Orders do not suffer from any apparent legal error which could call for

an interference in the exercise of our Appellate powers under Section 421 of the

Companies Act, 2013.

58. Thus, Company Appeal TA (AT) No. 4 / 2024 (Company Appeal (AT)

No. 278 / 2024), Company Appeal (AT) (CH) No. 31 / 2024, Company Appeal

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 30 of 31 (AT) (CH) No. 66 / 2024 & Company Appeal (AT) (CH) No. 67 / 2024 lack

merits and the same are dismissed. The Scheme of Amalgamation as affirmed by

the Impugned Judgment is hereby confirmed. All connected pending

Interlocutory Applications, if any, would stand closed.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical) 10/03/2025 SR/TM/MS

TA(AT) 4/2024 (CA(AT) 278/2024) & CA (AT) (CH) 31, 66 & 67/2024 Page 31 of 31