ADVA Optical Networking India Private Limited Vs

Harnam Singh Thakur, Member (Judicial)

This is a First Motion Application filed by Applicant Company namely; ADVA Optical Networking (India) Private Limited (Applicant Company/Transferee Company) under Section 230-232 of the Companies Act, 2013 and other applicable provisions of the Act read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 in relation to the Scheme of Amalgamation between ADVA IT Solutions Private Limited (Non-Applicant Company/Transferor Company) and ADVA Optical Networking (India) Private Limited (Applicant Company /Transferee Company). The said Scheme is also attached as Annexure-H of the Application.

The Applicant Company has prayed for dispensing with the requirement for convening the meeting of the Equity Shareholders, Secured Creditors and Unsecured Creditors of the Applicant Company/Transferee Company.

The Transferor Company is presently engaged in the business of designing, developing, processing, making, manufacturing, assembling, marketing, providing, selling, importing, exporting network hardware and/or network software solutions, networking equipments/devices, network management solutions, open source orchestration and control software, network applications software, as well as access technologies including, but not limited to, optical Ethernet, Ethernet over bonded copper, Ethernet over Time Division Multiplexing (TDM)/Synchronous Optical Network (SONET)/Synchronous Digital Hierarchy (SDH)/Plesiochronous Digital Hierarchy (PDH) and multi-services Carrier Ethernet as may be developed in future for the use of service providers and network operators.

The Transferee Company is presently engaged in the business of designing, developing, processing, making, manufacturing, assembling, marketing, providing, selling, importing, exporting network hardware and /or network software solutions, networking equipments/devices, network management solutions, open source orchestration and control software, network applications software, as well as access technologies including, but not limited to, high speed optical Ethernet, Ethernet over bonded copper, Ethernet over Time Division Multiplexing (TDM)/Synchronous Optical Network (SONET)/ Synchronous Digital Hierarchy (SDH)/Plesiochronous Digital Hierarchy (PDH) and multi- service Carrier Ethernet as may be developed in future for the use of service providers and network operators and also carry the business of Ethernet transport hardware and related software to enable advanced next generation networks for data, storage, voice and video services.

It is submitted that the registered office of the Non-Applicant Company/Transferor Company is at 4th Floor, Quadrant 3&4, Umiya Marathahalli (Sarjapur Sector), Banglaore, Karnataka – 560037, India and of Applicant Company/Transferee Company is at 4A, Ground Floor, Building 10, Tower C, DLF Cyber City, Gurugram - 122002, Haryana which is situated in the State of Haryana and, therefore, the territorial jurisdiction of only Applicant Company/Transferee Company falls within this Bench.

The rationale of the Scheme is given below:-

(i) Business Transfer Agreement ("BTA'") dated 30h November 2016 has been executed between AISPL with AONIPL. Subsequent to the execution of BTA, AISPL has transferred all its fixed assets, Assumed Liabilities and all other right, title and interest in and to the assets with respect to its business as envisaged under the BTA on a slump sale basis.

(ii) Subsequent to the execution of the BTA, the AONIPL has received all the rights and powers for conducting and carrying on the Business as it may deem fit. Further all the employees of AISPL has been transferred to AONIPL, therefore as on date AlSPL is a non –operative Company and there is no further plan to make the Company operative in the near future therefore it is in best interest of the Companies to Amalgamate/ Merge both the Companies.

(iii) Consolidation and simplification of group structure by eliminating multiple companies.

(iv) Cost savings are expected to flow from more focused operational efforts, rationalization standardization and simplification of business processes, usage of common resource pool like administration, finance, accounts, legal and other related functions, leading to elimination of duplication and rationalization of administrative expenses.

(v) Combined entity shall optimize and reduce duplication of a cost of tax and various regulatory requirements. The Amalgamation of AlSPL with AONIPL shall result in reduction of overheads, administrative, managerial and other expenditure, and bring about operational rationalization tax and organizational efficiency, and optimal utilization of various resources.

(vi) Cash flow generated by the combined business can be deployed more efficiently to fund organic and inorganic growth opportunities.

(vii) Greater integration and financial strength for the amalgamated entity, which would result in maximizing overall shareholder value, and would improve the financial position of the amalgamated entity.

(viii) Improved, organizational capability and leadership, arising from the pooling of human capital that has the diverse skills, talent and vast experience to compete successfully in an increasingly competitive Industry.

It is stated that the Board of Directors of the Transferor Company and Transferee Company in their respective meetings held on 16.03.2018 have considered and approved the Scheme of Amalgamation subject to sanctioning of the same by this Tribunal. The Board Resolutions of the Transferee Company and Transferor Company are at Annexure-F and Annexure-G respectively of the application. The Transferee Company has authorised all Directors of the Company to do all acts and deeds and things in relation to the Scheme. The affidavit of Mr. Devender Gaur, a Whole-Time Director on behalf of the Transferee Company, has been filed in support of the contents of the application for seeking appropriate orders/directions.

The appointed date of the Scheme is 01.01.2018 as mentioned in the Clause 1(c) of Scheme of Amalgamation attached as Annexure-H of the application.

It is stated that the Transferee Company has filed the audited financial statements as on 31.12.2018 and unaudited statement of accounts as on 31.08.2019 are at Annexure-B and C respectively of the application. The audited financial statements as on 31.12.2018 of the Non-Applicant/Transferor Company is at Annexure-E of the application. The Applicant Company/Transferee Company has also filed the audited financial statements as on 31.12.2020 and unaudited financial statements as  on  30.09.2020  as  Annexure-A1  and Annexure-A2 respectively, of Diary No.01108/02 dated 29.11.2021.

It is submitted that no investigation proceedings are pending against the Applicant Company under Sections 235 to 251 or any other provisions of the Companies Act, 1956 or Sections 206 to 229 of the Companies Act, 2013. It is also submitted that there are no investigation proceedings pending against the Transferee Company and/or Transferor Company under the Companies Act, 1956 and Companies Act, 2013 or under any other law.

It is submitted that in pursuance of the proviso to Sec. 230 (7) and Section 232 (3) of the Act, the Applicant/Transferee Company have filed the certificate dated 25.05.2018 issued by Statutory Auditors of Applicant Company certifying that the Scheme is in compliance with the Accounting Standards under Section 133 of the Act and the same is attached as Annexure-M of the application.

It is further submitted by the counsel for applicant company that as per Valuation Report dated 08.03.2018 submitted by V R Associates, Chartered Accountant bearing Registration No.001239C is attached as Annexure-P of the application. The proposed Share Swap Ratio is given below:-

“25 equity shares of ADVA Optical Networking (India) Private Limited (AONIPL)of INR 10/- each fully paid up shall be allotted for every 87 equity shares of ADVA IT Solutions Private Limited (AISPL) of INR 10/-each fully paid up”

It is further submitted by the learned counsel that the Scheme (Annexure-H of application) also takes care of the interests of the staff/workers and employees of the Demerged Companies. By virtue of Clause 7.2, it is stated that in so far as the Provident Fund, Gratuity Fund, Superannuation Fund or any other Special Fund created or existing for the benefit of the staff, workmen and employees of the Transferor Company is concerned including all arrangements with Life Corporation of India, if any, in relation to such Fund or Funds, upon the Scheme coming into effect, the Transferee Company shall stand substituted for the Transferor Company for all purposes whatsoever in relation to the administration or operation of such Fund or Funds and in relation to the arrangements with Life Insurance Corporation of India, if any, or in relation to the obligation to make contributions to the said Fund or Funds in accordance with the provisions thereof as per the terms provided in the respective Trust Deeds, if any, to the end and intent that all rights, duties, powers and obligations of the Transferor Company in relation to such Fund or Funds shall become those of the Transferee Company and all the rights, duties and benefits of the employees employed in different units of the Transferor Company under such Funds and Trusts shall be protected Subject to the provisions of law for the time being in force. It is clarified that the services of the staff, Workmen and employees of the Transferor Company shall be treated as having been continuous for the purpose of the said Fund or Funds.

The applicant company has furnished the following documents -

i. Proposed Scheme of Amalgamation (Annexure-H of the application).

ii. List of Secured Creditors duly certified by the Statutory Auditors of Applicant Company (Annexure-A-2 of Diary No.01099/1 dated 08.01.2021).

iii. List of Unsecured Creditors duly certified by the Statutory Auditors of Applicant Company (Annexure- L of the application).

iv. Certificate of Statutory Auditors to the effect that Accounting treatment proposed in the Scheme is inconformity with Section 133 of Companies Act, 2013 (Annexure-M of the application).

v. Audited Financial Statement as on 31.12.2018 and 31.12.2019 (Annexure-B and E, Annexure-R respectively of the application) and Audited Financial Statement as on 31.12.2020 (Annexure A-1 of Diary No.01108/2 dated 29.11.2021).

vi. Provisional Financial Statement as on 30.09.2021 (Annexure A-2 of Diary No.01108/2 dated 29.11.2021).

The Transferor Company i.e. ADVA IT Solutions Private Limited CIN: U72200KA2013FTC068756 is a subsidiary of foreign company incorporated under the Companies Act, 1956 on 25.04.2013. The Certificate of Incorporation along with Memorandum and Articles of Association is attached as Annexure-D of the application. The details of the Share Capital Structure of the Non-Applicant/Transferor Company as on 31.12.2017 is given below:-

Particulars

Amount in Rupees

Authorised Share Capital

10,000 Equity shares of Rs.10/- each

Rs.1,00,000

Issued, Subscribed and Paid-up Share

Capital

10,000 Equity shares Rs.10/- each fully

paid-up

Rs.1,00,000

The Applicant Company/Transferee Company i.e. ADVA Optical Networking (India) Private Limited CIN: U72200HR2010FTC056956 is a subsidiary of foreign company incorporated under the Companies Act, 1956 on 23.07.2010. The certificate of incorporation along with Memorandum and Articles of Association is part of Annexure-A of the application. The details of the Share Capital Structure of the Applicant/Transferee Company as on 31.12.2019 is given below:-

Particulars

Amount in

Rupees

Authorised Share Capital

50,000 Equity shares of Rs.10/- each

Rs.5,00,000

Issued, Subscribed and Paid-up Share Capital

10,000 Equity shares Rs.10/- each fully paid-up

Rs.1,00,000

The Applicant Company has furnished the details of the Shareholders. Secured Creditors and Unsecured Creditors which is as follows:

Name of the

Applicant

Company

Shareholders

along with their

consent on

Creditors along with their consents

on affidavit

affidavit

Equity

Shareholder

Consent

submitted

on Affidavit

Secured

Creditors

Consent

submitted

on Affidavit

Unsecured

Creditors

Consent

submitted

on

affidavit

Transferee

Company

2

(Two)

100%

in

value

Nil

Nil

8

(Eight)

99.34%

in

value

It is further submitted that the list of Equity Shareholders of Applicant Company/Transferee Company duly certified by the Statutory Auditors is attached as Annexure-J of the application. As per the certificate dated15.05.2021 issued by Statutory Auditors, there are 2 (Two) Equity Shareholders of Applicant Company/Transferee Company as on 31.03.2018. All Equity Shareholders of the Transferee Company have given their consents by way of affidavits to the proposed scheme and the same are attached as Annexure-A1 of Diary No.01099/1 dated 08.01.2021. The list of Secured Creditors of Transferee Company duly certified by the Statutory Auditors is attached as Annexure-A1 of Diary No.01099/1 dated 08.01.2021. As per the certificate dated 04.01.2021 issued by Statutory Auditors, there are Nil Secured Creditors as on 30.09.2020. The list of Unsecured Creditors of Transferee Company duly certified by the Statutory Auditors is attached as Annexure- L of the application. As per the certificate dated 23.09.2019 issued by Statutory Auditors, there are 8 (Eight) Unsecured Creditor as on 31.08.2019. The Unsecured Creditors of the Transferee Company have given their consent holding 99.34% in value by way of affidavit to the proposed scheme and the same are attached as Annexure-J of application and Annexure A-3 of Diary No.01099/1 dated 08.01.2021.

This Bench has decided the issue of dispensation of meeting of shareholders in the cases of: CA (CAA) No.2/Chd/Hry/2021 Goibibo Group Private Limited & Ors. Dated 23.12.2021; CA No.189/2021 & CA (CAA) No.41/Chd/Pb/2021 G.N.A Transmissions Pvt. Ltd. & Ors. Dated 23.12.2021; and CA (CAA) No.35/Chd/Hry/2021 NAM Estates Private Limited dated 23.12.2021. In the aforementioned orders, after discussing the differing views of coordinate Benches, this Bench has followed the decisions of the Hon’ble NCLAT in DLF Phase-IV Commercial Developers Limited and others with DLF Limited, (Company Appeal (AT) No. 180 of 2019) dated 19.08.2019 and Alovera Tradelink Pvt. Limited and others Vs. Ostwal Physchem (India) Limited in Company Appeal (AT) No. 178/2019 decided on 06.08.2019 on this issue and has held that “depending on the facts and circumstances of each case, the NCLT has the powers to dispense with the meetings of shareholders and others by using judicial discretion”.

Accordingly, the directions of this Bench in relation to the Applicant Company/Transferee Company in the present case are as under:-:

a) The meetings of the Equity Shareholders of the Applicant Company/Transferee Company are dispensed with keeping in view the shareholding pattern, financial structure of the company and the fact that the consents by way of affidavits have been received.

b) Since, there are no Secured Creditors in the Applicant Company/Transferee Company. Therefore, there is no scope for any meeting.

c) The meeting of the Unsecured Creditors of the Applicant Company/Transferee Company is dispensed with as it has 8 (Eight) Unsecured Creditor and the consents (99.34%) of Unsecured Creditors have been received by way of affidavits.

In view of the above, the First Motion Application stands allowed by giving liberty to the Applicant Company to file Second Motion Petition with a direction that the Applicant Company shall make specific prayer for sending notices to the (a) the Central Government through Regional Director (Northern Region), Ministry of Corporate Affairs, (b) Jurisdictional Registrar of Companies, (c) the Official Liquidator (attached to Punjab and Haryana High Court), (d) Income Tax Department through the Nodal Officer - Principal Chief Commissioner of Income Tax, NWR, Aaykar Bhawan, Sector 17-E, Chandigarh, by disclosing the PAN numbers of the Applicant Company in the title of the Second Motion Petition. The applicant company shall also file separate affidavit stating the sectoral regulators governing the respective company while filing second motion petition.