Adonis Travels Private Limited vs Registrar of Companies

Bachu Venkat Balaram Das, Member (J)

This petition has been filed by the Petitioner Company under Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016, for the purpose of the approval of the Scheme of Amalgamation of Transferor Companies into Transferee Company.

A perusal of the petition discloses that initially the First Motion joint application was filed before this Tribunal vide CA (CAA)-97(ND)2020 and based on such application moved under Sections 230-232 of the Companies Act, 2013, directions were issued by this Tribunal, wherein the meetings of the Equity Shareholders and Unsecured Creditors of all the Petitioner Companies were dispensed and in the absence of Secured Creditors of all the petitioner companies the convening of meeting did not arise.

Thereafter 2nd motion petition was filed vide CAA -83 (ND)/2020 within prescribed time limit and vide order dated 18.12.2020 the Petitioners were directed to carry out publication in the newspaper "Business Standard" (English, Hindi Edition) and in addition, notices were directed to be served on to the Regional Director (Northern Region), Ministry of Corporate Affairs, Registrar of Companies, NCT of Delhi and Haryana, the Income Tax Department, Official Liquidator and to the other relevant sectoral regulators.

It is seen from the records that all the Petitioners have filed an affidavit dated 03.02.2021. A perusal of the affidavit disclose that the Petitioners have affected the newspaper publication as directed in one issue of the 'Business Standard (English, Hindi Edition).

Further, the Petitioners have also affirmed that the copy of petition has been duly served upon the Registrar of Companies, Reginal Director, Northern Region and Income Tax Department, Official Liquidator, in compliance of the order and in proof of the same acknowledgment from the respective offices have also been placed on record.

The Regional Director filed its representation dated 19.05.2021 and has observed as follows:

i. That all the petitioner companies collected huge amount of money by way of security premium by issuing shares to various entities and deployed the same to related parties and other's as long term loan and advances more than 10 years ago. It appears that all the transferor companies were used for circulation of funds. It is further submitted that these loan & advances recoverability is doubtful but petitioner companies are showing these funds as an assets of the Company. However, statutory auditor of the company has not given any adverse comments in the audit reports.

ii.  The Transferor Companies have nominal revenue from operations and also have no major profits. These company have insignificant business activities and an amount of operational assets.

iii.  The Transferor company and Transferee Company has provided the loan to the related parties in the FY 2016-17 to 2019-20.

iv. The companies has not provided the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient of the loan or guarantee or security for the FY 2016-17 to 2019-20. However, as per Section 186(4) of the Companies Act,2013, company needs to mention the same in the financial statement.

v. That Companies has not mentioned the DIN while signing the MOT-9 for the FY 2016-17. However, as per Section 158 of the Companies Act,2013 it is mandatory to mention it. The financial statement of Transferor Company namely Survi Trade & Agency Private Limited and Transferee Company namely Vasundhara Trex Private Limited for the FY 2017-18 to 2019-20, the details of the basic & Diluted EPS was not mentioned in the front of the profit and loss account and in the notes to account. However, as per AS-20 it is mandatory to mention it. Further, for the FY 2016-17 to 2019-20 the company has provided Inter corporate loans and advances (under Non-Current Liabilities) as interest free loans repayable on demand as per mutual understanding with parties, the same is not repayable within next 12 months from the balance sheet date.

The petitioner have filed its reply to the representation of the report of the Regional Director.

i. The financial statements of the transferor and transferee companies, it will be seen that the petitioner companies have issued equity shares with premium to various entities in accordance with the provisions of Companies Act, 1956. These equity shares were issued prior to the year 2010 when the market conditions were good to carry on the business by these companies. All the transferor companies have carried activities of trading and mercantile objectives except Transferor 5 and Transferor 8 which are registered NBFCs and all the transactions related to loans and advances and premium were held in the normal course of business and have been carried out in the furtherance of business expediency. The petitioner companies dealt with business and granted loans to group companies under the same management and also with other companies. These loans and advances were either renewed or extended according to the market conditions and hence not to be considered as circulation of funds. The auditors did not mention any remark in their audit reports of the respective companies to the shareholders of the companies.

ii.  That the revenue earned by the companies out of their activities were recorded and disclosed in the Profit and Loss account and as per the latest balance sheet the loans and advances made by the companies are intact as it is made to group entities. The petitioner companies proposed merger is to synergise the business and operations of the Group along with enhancement of net-worth which will help their future business. Further, Interest has not been charged for the reason of overall business expediency.

iii.  The said loans were given before the provisions of the Section 186 were notified by the MCA. further the provisions of the Section 186 (4) are applicable only in the year when the loans are given and the Company is not required to disclose the details in subsequent years, accordingly the details have not been disclosed in the financial statements.

iv.  That in the notice of AGMs Director's Report(s), Form AOC-1, Form AOC-2 for financial year 2016-17 of all the Transferor Companies and transferee company DIN is mentioned in all the places, however, due to an inadvertent error the DIN was not mentioned on the last page of MGT-9 (Extract of Annual Return). MGT- 9 is a merely an attachment to Director's Report and consider it complied in letter and spirit of the law as DIN of all the Directors of Transferor companies and transferee Company were properly mentioned elsewhere in the Director's Report.

v. That in the Financial Statements of Transferor Company namely Survi Trade & (CAA)- Agency Private Limited and Transferee Company Vasundhara Trex Private Limited, the details of the Basic and Diluted EPS have been mentioned in the heading, however due to clerical error the details of diluted EPS have not been printed on the front of the P & L Account, further, Transferor Company 8 namely Survi Trade & Agency Private Limited and Transferee Company namely Vasundhara Trex Private Limited has provided Inter corporate loans and advances (under Non-Current Liabilities) as interest free loans and the same are good for repayment, as and when recalled.

The Official Liquidator has filed its report on 24.03.2021 wherein no specific objection has been raised against the approval of the scheme. It is submitted in the report that the Official Liquidator has not received any complaint against the proposed scheme from any person/party interested in the scheme in any manner and that the affairs of the transferor companies do not appear to have been conducted in a manner prejudicial to the interest of its members or to public interest.

The Income Tax Department has not filed its report whereas in the daily order dated 02.11.2021 it has been stated that the Income Tax Department has no specific objection to the approval of the scheme.

In the petition it has been affirmed that no proceedings for inspection, inquiry or investigation under the provisions of the Companies Act, 2013 or under the provisions of the Companies Act, 1956 are pending against the Petitioner Companies.

Certificates of respective statutory auditors of all the petitioner companies have been placed on record to the effect that accounting treatment proposed in the Scheme of Amalgamation is in conformity with the accounting standard notified by the Central Government as specified under the provisions of Section 133 of the Companies Act, (CAA)- 2013.

In view of the foregoing, upon considering the approval accorded by the members and creditors of all the petitioner companies to the proposed scheme, as well as the objections filed by the regional director, northern region, the official liquidator, and the Income Tax Department and being satisfied in view of affidavit of undertaking filed by the transferee company, there appears to be no impediment in sanctioning the present scheme. Consequently, sanction is hereby granted to the scheme under section 230 & 232 of the companies act, 2013. The petitioner however shall be bound to comply with the statutory requirements in accordance with law.

Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme, will not come in the way of action being taken, albeit, in accordance with law, against any of the concerned person, director and officials of the petitioners.

While approving the scheme as above, we further clarify that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes, GST, or any other charges, if any, 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.

THIS TRIBUNAL DO FURTHER ORDER(S):

a)  That all the transferor companies shall stand dissolved without following the process of winding up; and

b)  That all the property, rights and powers of all the transferor companies, be transferred without further act or deed, to the transferee company and accordingly the same shall

pursuant to Section 232 of the Companies Act, 2013, be transferred to and vets in the transferee company.

c)  That all the liabilities and duties of the all transferor companies, be transferred without further act or deed, to the transferee company and accordingly the same shall, pursuant to Section 232 of the Act, be transferred to and become the liabilities and duties of the transferee company; and

d)  That all proceeding now pending by or against the transferor company, be continued by or against the transferee company; and

e)  That all the employees of all the transferor companies in service, on the date immediately preceding the date on which the scheme takes effect, i.e., the effective date shall become the employees of the transferee company on such date without any break or interruption in services and upon terms and conditions not less favorable than those subsisting in the respective transferor companies on the said date.

f)  That petitioner companies 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 Company for registration and on such certified copy being so delivered all the transferor companies shall stand dissolved and the Registrar of Company shall place all documents relating to all the transferor company registered with him on the file kept by him in relation to the transferee company and the files relating to all the petitioner companies shall be consolidated accordingly; and

g) That any person interested shall be at liberty to apply to the tribunal in the above matter for any directions that may be necessary.

The petition stands disposed of in the above terms.