Anish Realtors Private Limited vs Registrar of Companies

Rohit Kapoor, Member (Judicial)

The instant Petition has been filed under Section 230 - 232 and other applicable provisions of the Companies Act, 2013, for sanction of the Scheme of Amalgamation (Scheme), of the Transferor Companies, namely, Sakar Residency Private Limited (Transferor Company No. 1), Laxmi Coal & Carbon India Limited (Transferor Company No. 2), Himatsingka Consultancy Private Limited (Transferor Company No. 3), and Emerging Minerals Private Limited (Transferor Company No. 4), with Anish Realtors Private Limited (Transferee Company) whereby and where under the Transferor Companies are proposed to be amalgamated with the Transferee Company from the Appointed Date i.e. 01st day of April, 2020 in the manner and on the terms and conditions stated in the Scheme of Amalgamation.

The Petition has now come up for final hearing. Learned Authorised Representatives for the Petitioners submits as follows:-

a) The Scheme was approved unanimously by the respective Board of Directors of the Transferor Companies and the Transferee Company at their meetings held on 17th day of August, 2020, respectively.

b) The circumstances which justify and/or have necessitated the Scheme of Amalgamation and the benefits of the same, are inter-alia as follows:-

(i) The Transferor Companies and the Transferee Company belong to common group and common management. There are common Shareholders and Directors in the Transferor Companies and the Transferee Company.

(ii) The Transferor Companies and the Transferee Company have agreed to integrate their businesses. In order to integrate the fields of activities of the Petitioners and for improving overall business efficiency, to streamline administration of the Petitioners and in the overall interest of future growth and diversification of the business of the Petitioners, the present Scheme is proposed to amalgamate the Transferor Companies with the Transferee Company. The Scheme will be complimentary to the Petitioners for their mutual benefit and interest.

(iii) The proposed Scheme will result in economies of scale, reduction in overheads and other expenses, reduction in administrative and procedural work, elimination of duplication of work, better and more productive and effective utilization of the combined resources of all the Petitioners and will enable the Amalgamated Company to effect internal economies and optimize productivity.

(iv) The said Scheme will result in optimum growth and development of the business of the Petitioners concerned and exploitation of the potential thereof. The said Scheme will enable the undertakings and businesses of both the Petitioners to obtain greater facilities for raising capital, securing and conducting trade on favourable terms and other benefits.

(v) The said Scheme will enable the Petitioners concerned to rationalize and streamline their management, businesses and finance and will pave way for better, more productive and economical control of the running of the operations.

(vi) The businesses of the Petitioners can be conveniently and advantageously combined together and in general business of the Petitioners will be carried on more economically and profitably under the Scheme.

(vii) The said Scheme will contribute in furthering and fulfilling the objects of the Petitioners and in the growth, expansion and development of their business.

(viii) The said Scheme will have beneficial results for the Petitioners, their shareholders, employees and all concerned.

c) The Statutory Auditor of the Transferee Company has by way of their certificate dated 11th day of September, 2020 confirmed that the accounting treatment in the Scheme is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.

d) The Exchange Ratio of shares in consideration of the Amalgamation has been fixed on a fair and reasonable basis and on the basis of the Valuation Report prepared by Mr. Mayur Agrawal, Registered Valuer having Regn. No. IBBI/RV/06/2019/11642.

e) By an Order dated 17th day of November, 2020 in the C.A. (CAA) No. 928/KB/2020, this Tribunal has dispensed with the convening and holding of the meeting of the Equity Shareholders and Creditors (Secured and Unsecured) of the Transferor Companies and the Transferee Company in view of written consent by way of Affidavit given by all the Equity Shareholders of the Petitioners and 92% of Secured Creditors and 100% of Unsecured Creditors of the Transferee Company.

f) Consequently, the Petitioners presented the instant Petition for sanction of the Scheme. By an Order dated 16th day of April, 2021, the instant Petition was admitted by this Tribunal and fixed for hearing on 11th day of August, 2021 upon issuance of notices to the Statutory Authorities and advertisement of date of hearing. In compliance with the said Order dated 16th day of April, 2021, the Petitioners have duly served Notices on the following Statutory Authorities dated 24th day of April, 2021 to 27th day of April, 2021:

(i) The Central Government, through the Regional Director, Eastern Region, Ministry of Corporate Affairs;

(ii) The Registrar of Companies, Kolkata;

(iii) The concerned Assessing Officer along with the Chief Commissioner of Income Tax with PAN of the Petitioners;

(iv) The Official Liquidator, having jurisdiction over the Transferor Companies and the Transferee Company.

(v) Such other sectoral regulators which are likely to be affected by the proposed Scheme of Amalgamation.

(vi) Further, the Petitioners have also published advertisements once in English daily “Financial Express” and another in Bengali daily “Aajkal” dated 26th April, 2021. An Affidavit of Compliance in this regard has also been filed by them on 30th day of April, 2021.

g) All statutory formalities requisite for obtaining sanction of the Scheme have been duly complied with by the Petitioners. The Scheme has been made bona fide and is in the interest of all concerned.

Pursuant to the said advertisements and notices, the Regional Director, Eastern Region, Ministry of Corporate Affairs, Kolkata (“RD”), the Official Liquidator attached to the Hon’ble High Court, Calcutta and other Authorities and persons, as the case may be, have filed their representations before this Tribunal.

The Official Liquidator has filed its report dated 12th  August, 2021 and concluded as under:-

Para 10: That the Official Liquidator on the basis of information submitted by the Petitioner Companies is of the view that the affairs of the aforesaid Transferor Companies do not appear to have been conducted in a manner prejudicial to the interest of its members or to public interest as per the provisions of the Companies Act, 1956/the Companies Act, 2013 whichever is applicable.

The Regional Director (“RD”) has filed his reply affidavit dated 29th October, 2021 (“RD affidavit”) which has been dealt with by the Petitioner(s) by their Rejoinder affidavit dated 22nd December,  2021  (“Rejoinder”).  The  observations  of  the  RD  and  responses  of  the Petitioner(s) are summarized as under:-

a) Paragraph No. 2(a) of the RD affidavit:

It is submitted that on examination of the report of the Registrar of Companies, West Bengal, it appears that no complaint and /or representation on the proposed Scheme of Amalgamation has been received against the Petitioner Companies, Further, as per available records all the petitioner companies are updated in filing their Statutory Returns including Financial Statements and Annual Return.

b) Paragraph No. 2(b) of the RD affidavit:

Petitioner company should undertake to comply with the provisions of section 232(3)(i) of the Companies Act, 2013 through appropriate affirmation.

Paragraph 3 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (b) it is to state that as per the

Scheme submitted to the Hon’ble National Company Law Tribunal, Kolkata Bench, in terms of the provisions of Section 232(3)(i) of the Companies Act, 2013, the Authorized Share Capital of the Transferor Companies will be added to the Authorized Share Capital of the Transferee Company without any payment of fees, duty, charges or any payment of similar nature after Amalgamation. Further, after Amalgamation, the Transferor Companies shall stand dissolved and the fees, if any, paid by the Transferor Companies on its Authorized Share Capital will be set off against any fees payable by the Transferee Company on its Authorized Share Capital subsequent to Amalgamation which is in line with Section 232(3)(i) of the Act. Hence, in substance, Clause 2.8 of Part – III of the Scheme is in compliance with Section 232(3)(i) of the Companies Act, 2013. However, we furnish the undertaking to the effect that the Registrar of Companies (ROC) fees payable, if any, will be paid by the Transferee Company on sanctioning of the Scheme is annexed and marked as “Annexure – A”.

c) Paragraph No. 2(c) of the RD affidavit:

That the Transferee Company should be directed to pay applicable stamp duty on the transfer of the immovable properties from the Transferor Companies to it.

Paragraph 4 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (c) it is to state that there are immovable properties in the Transferor Companies i.e. Sakar Residency Private Limited

(hereinafter referred to as the “Transferor Company No. 1”), Laxmi Coal & Carbon India Limited (hereinafter referred to as the “Transferor Company No. 2”) and Emerging Minerals Private Limited (hereinafter referred to as the “Transferor Company No. 4”) as on 31st March, 2021. Therefore, the Transferee Company will pay the applicable stamp

duty on the transfer of immovable properties of the Transferor Companies i.e. Sakar Residency Private Limited (hereinafter referred to as the “Transferor Company No. 1”), Laxmi Coal & Carbon India Limited (hereinafter referred to as the “Transferor Company No. 2”) and Emerging Minerals Private Limited (hereinafter referred to as the “Transferor Company No. 4”). An Undertaking in this respect is annexed herewith and marked as “Annexure – B”.

d) Paragraph No. 2(d) of the RD affidavit:

In compliance of Accounting Standard-14 or IND-AS 103, as may be applicable, the Transferee Company shall pass such accounting entries which are necessary in connection with the scheme to comply with other applicable Accounting Standards such as AS-5 or IND-AS-8 etc.

Paragraph 5 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (d) it is to state that the Transferee Company will comply with Accounting Standard - 14 (AS-14). An Undertaking in this respect is annexed herewith and marked as “Annexure – C”.

e) Paragraph No. 2(e) of the RD affidavit:

The Hon'ble Tribunal may kindly seek the undertaking that this scheme is approved by the requisite majority of members and creditors as per section 230(6) of the Companies Act 2013 in meeting duly held in terms of section 230(1) read with sub-sections (3) to (5) of section 230 of the said Act and the Minutes thereof are duly placed on record.

Paragraph 6 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (e) it is to state that the Hon’ble Tribunal by an Order dated 17th day of November, 2020 in C.A. (CAA) No. 928/KB/2020 has dispensed with the convening of the meeting of Shareholders and Creditors (Secured and/or Unsecured) of the Petitioners as all the Equity Shareholders and more than 90% of the Creditors (Secured and/or Unsecured) of the Petitioners has consented to the Scheme of Amalgamation by way of Affidavit. A copy of an Order dispensing with the meeting of the Shareholders and Creditors is annexed herewith and marked as “Annexure – D”.

f) Paragraph No. 2(f) of the RD affidavit:

The Hon'ble Tribunal may kindly direct the Petitioners to file an affidavit to the extent that the Scheme enclosed to the Company Application and Company Petition are one and same and there is no discrepancy or no change is made.

Paragraph 7 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (f) it is to state that the Scheme of Amalgamation enclosed in Company Application as well as in Company Petition is one and same and no changes made therein. An Undertaking in this respect is annexed herewith and marked as “Annexure – E”.

g) Paragraph No. 2(g) of the RD affidavit:

The Petitioners under provisions of section 230(5) of the Companies Act 2013 have to serve notices to concerned authorities which are likely to be affected by the Amalgamation or arrangement. Further, the approval of the scheme by the Hon'ble Tribunal may not deter such authorities to deal with any of the issues arising after giving effect to the scheme. The decision of such authorities shall be binding on the Petitioner Company (s) concerned.

Paragraph 8 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (g) it is to state that pursuant to an Order passed in C.P. (CAA) No. 54/KB/2021 Connected with C.A. (CAA) No.

928/KB/2020 dated 16th April, 2021, the Petitioners has served notice under Section 230(5) of the Companies Act, 2013 along with the Scheme of Amalgamation and Order copy of the National Company Law Tribunal (NCLT), Kolkata Bench to the Central Government through the Regional Director, Eastern Region, Ministry of Corporate Affairs; the Registrar of Companies, Kolkata; the concerned Income Tax Assessing Officer along with the Chief Commissioner of Income Tax with Permanent Account Number (PAN) of the Petitioners; the Official Liquidator attached to the Hon’ble High Court Calcutta having jurisdiction over the Transferor Companies and the Transferee Company and other sectoral regulators applicable over the Transferee Company and the Transferor Companies which are likely to be affected by the proposed Scheme of Amalgamation. A certified true copy of acknowledgment receipt of notice served to the statutory authorities is annexed and marked as “Annexure – F”.

h) Paragraph No. 2(h) of the RD affidavit:

The Transferor Company, Sakar residency Private Limited’s shares are held by various family Trusts to the extent of 95.95% as on 31.03.2020. A trust cannot own shares in a company as it is not a separate legal entity. A trust is simply a relationship. Therefore the shareholding position in the company is irregular and not according to the law. In view of the scheme involving issuance of shares by the transferee company to the shareholders of transferor companies, while a Trust cannot be a shareholder the scheme is not proper and is objected upon.

Paragraph 9 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (h) it is to state that as per Section 2(55) of the Companies Act, 2013, “member”, in relation to a company, means-

(i) the subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company and on its registration shall be entered as member in its register of members;

(ii) every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository;

The above definition of “member” refers to every other “person” who can become the registered members of the company. However, the word “person” is not defined in the Companies Act, 2013. Therefore, reference may be made to the General Clauses Act, 1897, wherein Section 2(30) gives an inclusive definition of the word “person” to include any company or association or body of individuals, whether incorporated or not which may reasonably be expanded to include a Trust.

Hence, Trusts holding shares in Sakar Residency Private Limited may be concluded to be within the four corners of the law.

i) Paragraph No. 2(i) of the RD affidavit:

The transferor company, Rudrakash Investment Advisory Private Limited, is a Non-Banking Financial Company. Its latest financial statement as at 31.03.2020 exhibits that more than 50% of its total assets were financial assets and more than 50% of its income was financial income as follows: -

Total Assets

(Rs)

Financial Assets (Rs)

Total Income (Rs)

(other than

provision for

doubtful debts

written back)

Financial

Income (Rs

Lakhs)

183,53,741

155,91,606

11,62,833

8,79,562

(short term loans and

advances-advances)

The company is an NBFC, but functioning without Registration Certificate from the Reserve Bank of India under section 45IA of the Reserve Bank of India Act 1934, as it appears since the Auditor has surprisingly stated in the Auditors' Report that the company is not required to be registered with RBI as NBFC. The said material fact that the company is an NBFC functioning without necessary registration with RBI has not been also disclosed in the scheme, contrary to the provisions of section 230(2)(a) of the Companies Act 2013.

Paragraph 10 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (i) it is to be said that the Company i.e. Rudrakash Investment Advisory Private Limited is not involved in the proposed scheme of Amalgamation. Hence, this observation is irrelevant.

j) Paragraph No. 2(j) of the RD affidavit:

The Transferor Company, Laxmi Coal and carbon India Limited's shares are held by various Family Trusts to the extent of 85.53% as on 31.3.2020. A trust cannot own shares in a company as it is not a separate legal entity. A trust is simply a relationship. Therefore the shareholding position in the company is irregular and not according to the law. In view of the scheme involving issuance of shares by the transferee company to the shareholders of transferor companies, while a Trust cannot be a shareholder the scheme is not proper and is objected upon.

Paragraph 11 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (j) it is to state that as per Section

2(55) of the Companies Act, 2013, “member”, in relation to a company, means-

(i) The subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company and on its registration shall be entered as member in its register of members;

(ii) Every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) Every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository;

The above definition of “member” refers to every other “person” who can become the registered members of the company. However, the word “person” is not defined in the Companies Act, 2013. Therefore, reference may be made to the General Clauses Act, 1897, wherein Section 2(30) gives an inclusive definition of the word “person” to include any company or association or body of individuals, whether incorporated or not which may reasonably be expanded to include a Trust.

Hence, trusts holding shares in Laxmi Coal and Carbon India Limited may be concluded to be within the four corners of the law.

k) Paragraph No. 2(k) of the RD affidavit:

The Transferor Company, Laxmi Coal and carbon India Limited has not filed PAS-6 for half years ended 30.09.2019, 31.03.2020, 30.09.2020 and 31.03.2021. Since once merged there would be no remaining possibility to file those pending statutory forms, the Transferor company may kindly be directed to file the pending forms and thereafter the forms filed would be examined by the Registrar of Companies for giving further representation to the Hon’ble Tribunal.

Paragraph 12 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (k) it is to be said that the Transferor Company, Laxmi Coal and Carbon India Limited has filed relevant PAS – 6 and the copy of Form along with Challan is annexed herewith and marked as “Annexure – G”.

l) Paragraph No. 2(l) of the RD affidavit:

The Transferor Company, Emerging Minerals Limited's shares are held by various family Trusts to the extent of 96.64% as on 31.3.2020. A trust cannot own shares in a company as it is not a separate legal entity. A trust is simply a relationship. Therefore the shareholding position in the company is irregular and not according to the law. In view of the scheme involving issuance of shares by the transferee company to the shareholders of transferor companies, while a Trust cannot be a shareholder the scheme is not proper and is objected upon.

Paragraph 13 of the Rejoinder:

That in reply to the statement made in paragraph No. 2 (l) it is to state that as per Section 2(55) of the Companies Act, 2013, “member”, in relation to a company, means-

(i) The subscriber to the memorandum of the company who shall be deemed to have agreed to become member of the company and on its registration shall be entered as member in its register of members;

(ii) Every other person who agrees in writing to become a member of the company and whose name is entered in the register of members of the company;

(iii) Every person holding shares of the company and whose name is entered as a beneficial owner in the records of a depository;

The above definition of “member” refers to every other “person” who can become the registered members of the company. However, the word “person” is not defined in the Companies Act, 2013. Therefore, reference may be made to the General Clauses Act, 1897, wherein Section 2(30) gives an inclusive definition of the word “person” to include any company or association or body of individuals, whether incorporated or not which may reasonably be expanded to include a Trust.

Hence, trusts holding shares in Emerging Minerals Limited may be concluded to be within the four corners of the law.

Heard submissions made by the Ld. Authorised Representatives appearing for the Petitioners and the Joint Director, Office of the Regional Director, Eastern Region, Ministry of Corporate Affairs. Upon perusing the records and documents in the instant proceedings and considering the submissions, we allow the Petition and make the following orders:-

(i) That the said Scheme of Amalgamation being “Annexure – 1”to the Petition is sanctioned by the Tribunal as to be binding with effect from the Appointed Date i.e. 1st day of April, 2020 on Sakar Residency Private Limited (Transferor Company No. 1), Laxmi Coal & Carbon India Limited (Transferor Company No. 2), Himatsingka Consultancy Private Limited (Transferor Company No. 3), and Emerging Minerals Private Limited (Transferor Company No. 4), and Anish Realtors Private Limited (Transferee Company), their respective Shareholders and Creditors and all concerned;

(ii) That with effect from the Appointed Date i.e. 1st day of April, 2020, all the property, rights and powers of the Transferor Companies, including those described in the Schedule of Assets herein, be transferred from the said Appointed Date, without further act or deed, to the Transferee Company and, accordingly, the same shall pursuant to Section 232(4) of the Companies Act, 2013, be transferred to and vest in the Transferee Company for all the estate and interest of the Transferor Companies therein but subject nevertheless to all charges now affecting the same, as provided in the Scheme;

(iii) That with effect from the Appointed Date i.e. 1st day of April, 2020, all debts, liabilities, duties and obligations of the Transferor Companies be transferred from the said Appointed Date, without further act or deed to the Transferee Company and, accordingly, the same shall pursuant to Section 232(4) of the Companies Act, 2013, be transferred to and become the debts, liabilities, duties and obligations of the Transferee Company;

(iv) That all proceedings and/or suits and/or appeals now pending by or against the Transferor Companies be continued by or against the Transferee Company, as provided in the Scheme;

(v) That the employees of the Transferor Companies shall be engaged by the Transferee Company, as provided in the Scheme;

(vi) That the Transferee Company without further application issue and allot to the shareholders of the Transferor Companies, the shares in the Transferee Company to which they are entitled in terms of the Scheme.

(vii) Leave is granted to the Petitioners to file the Schedule of Assets of the Transferor Companies in the form as prescribed in the Schedule to Form No. CAA7 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within three weeks from the date of receiving a copy of this Order;

(viii) That the Transferor Companies and the Transferee Company each within 30 (Thirty) days of the date of receipt of this Order cause a certified true copy of this Order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered, the Transferor Companies shall be dissolved without winding up with effect from the date or last of the dates of filing of the certified copy of the Order, as aforesaid (Effective Date) and the Registrar of Companies shall place all the documents relating to the Transferor Companies and registered with him on the file kept by him in relation to the Transferee Company and the files relating to the said Transferor Companies shall be consolidated accordingly.

(ix) Any person interested be at liberty to apply to this Tribunal in the above matter for any direction that may be necessary;

In case of any default, including any provisions of Income Tax in respect of transferor companies, the Income Tax Department, the ROC West Bengal and all others, statutory departments/authorities shall be at liberty to initiate appropriate proceedings against the transferee company which after the sanction of the scheme by this Tribunal is in any case shall be responsible for the liabilities/non-compliances of the transferor companies as well.

The Petitioner(s) shall supply legible print out of the scheme and schedule of assets in acceptable form to the Registry and the Registry will append such printout, upon verification to the certified copy of the order.

The Company Petition being C.P. (CAA) No. 54/KB/2021 is disposed of accordingly.

Urgent certified copy of this Order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.