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Judgment
Balraj Joshi, Member (Technical)
The instant Company Petition has been filed under section 230(6) read with section 232(3) of the Companies Act, 2013 (“Act”) for sanction and confirmation of the Scheme of Amalgamation of ATP Healthcare Private Limited being the Petitioner No. 1 above named (" Transferor Company No 1 " or “Petitioner No.1”) and Shivshakti Sponge Iron Limited being the Petitioner No. 2 above named ("Transferor Company No 2 " or “Petitioner No.2”) with VSP Udyog Private Limited being the Petitioner No.3 above named (" Transferee Company" or “Petitioner No.3”) whereby and whereunder the Transferor Companies are proposed to be amalgamated with the Transferee Company from the Appointed Date i.e. 01st April, 2021 in the manner and on the terms and conditions stated in the said Scheme of Amalgamation (“Scheme”). A copy of the said Scheme is annexed to the Company Petition being –Annexure- A Vol I at Page No 45 to 76.
It is submitted by Ld. counsel appearing for the Petitioners that the Appointed Date as per the Scheme is 01st April,2021.
It is submitted by Ld. counsel appearing for the Petitioners that none of the Applicant Companies are NBFC Companies.
It is submitted by Ld. counsel appearing for the Petitioners that list of Equity shareholders of the Petitioner Companies as at 31st December,2021 duly certified by the statutory auditors of the Petitioner Company are all collectively annexed to the Company Petition being –Annexure-H Vol III at Page No 288 to 294.
It is submitted by Ld. counsel appearing for the Petitioners that list of Secured Creditors and Unsecured Creditors of the Petitioner Companies as at 31st December,2021 duly certified by the statutory auditors of the Petitioner Company are all collectively annexed to the Company Petition being –Annexure- I Vol III at Page No 295 to 312.
It is submitted by Ld. counsel appearing for the Petitioners that the Valuation Report dated 21.01.2022 recommending the Swap Ratio has been prepared by VIKASH GOEL , IBBI Registered Valuer. Copy of the said report is annexed to the Company Petition being Annexure- K Vol III at Page No 319 to 335.
It is submitted by Ld. counsel appearing for the Petitioners that the Board of Directors of the Petitioner Companies have at their respective meetings held on 21.02.2022 have passed resolution approving the proposed Scheme of Amalgamation. Copy of the said Board Resolution are collectively annexed to the Company Petition being Annexure- L Vol III at Page No 336 to 341.
It is submitted by Ld. counsel appearing for the Petitioners that the statutory auditors of the Petitioner Companies have all by their certificates dated 25.02.2022 have confirmed that the accounting treatment contained in PART V under paragraph 14 to the Scheme is in conformity with Accounting Standard contained in Section 133 of the Companies Act , 2013 and Rules made there under . Copy of the said certificates are collectively annexed to the Company Petition being Annexure- M Vol III at Page No 342 to 349.
The Petition has now come up for final hearing. Learned Counsel for the Petitioners submits as follows:-
i. The circumstances which justify and/or have necessitated the Scheme and the benefits of the same are, inter alia, as follows:-
a. The TRANSFEREE COMPANY is currently engaged in sale of TMT bars. Apart from pursuing its main object, both the Transferor companies have made deployment of funds in other investable instruments. The business of the TRANSFEROR COMPANIES and the TRANSFEREE COMPANY can be combined/ adjusted and carried forward conveniently with combined strength;
b. The amalgamation will enable the TRANSFEREE COMPANY to consolidate its line of business by restructuring and re-organizing its business activities and Capital Structure;
c. The amalgamation will enable the amalgamated company to broad base their business activities under the roof of the TRANSFEREE COMPANY;
d. The amalgamation will result in economy of scale including reduction in overhead expenses relating to management and administration in better and more productive utilization of various resources;
e. The business of the Transferor Companies can be conveniently and advantageously combined together and in general with the business of the Transferee Company concerned and will be carried on more economically and profitably under the said Scheme;
f. The said Scheme of Amalgamation will enable the establishment of a larger company with larger resources and a larger capital base enabling further development of the business of the company concerned. The said scheme will also enable the undertakings and business of the said applicant company to obtain greater facilities possessed and enjoyed by one large company compared with a number of small Company for raising capital, securing and conducting trade on favorable terms and other benefits;
g. The said scheme will contribute in furthering and fulfilling the objects of the Company concerned and in the growth and development of these businesses;
h. The said scheme will strengthen and consolidate the position of the amalgamated company and will enable the amalgamated company to increase its profitability;
i. The said scheme will enable the undertakings concerned to pool their resources and to expand their activities;
j. The said scheme will enable the Companies concerned to rationalize and streamline their management, business and finances and to eliminate duplication of work to their common advantages;
k. The said scheme will have beneficial results for the Companies concerned, their shareholders, employees and all concerned.
ii. It is submitted by Ld. Counsel appearing for the Petitioners that there are no proceedings are pending under Sections 210 to 227 of the Companies Act, 2013 against the Petitioners.
iii. By an order dated 20th May, 2022 in Company Application No. C.A (CAA) No.37/(KB)/2022 this Tribunal made the following directions with regard to meetings of shareholders and creditors under Section 230(1) of the Act:-
a. Meetings dispensed:
Equity Shareholders
Meeting of Equity Shareholders of the Applicant Companies for considering the Scheme are dispensed with in view of all shareholders of Applicant Companies having respectively given their consent to the Scheme by way of affidavits.
Preference Shareholders
Meeting of Preference Shareholders of the Applicant No 2 for considering the Scheme are dispensed with in view of all Preference Shareholders of Applicant No 2 having respectively given their consent to the Scheme by way of affidavits.
Secured Creditors
Meeting of Secured Creditors of Applicant No 3 for considering the Scheme are dispensed with in view of consent by 100 % in value of Secured creditors of Applicant No 3 having respectively given their consent to the Scheme by way of affidavits.
Unsecured Creditors
Meeting of Unsecured Creditors of Applicant No 1 for considering the Scheme are dispensed with in view of consent by 99.64 % in value of Unsecured creditors of Applicant No 1 having respectively given their consent to the Scheme by way of affidavits.
Meeting of Unsecured Creditors of Applicant No 2 for considering the Scheme are dispensed with in view of consent by 100 % in value of Unsecured creditors of Applicant No 2 having respectively given their consent to the Scheme by way of affidavits.
Meeting of Unsecured Creditors of Applicant No 3 for considering the Scheme are dispensed with in view of consent by 90.32 % in value of Unsecured creditors of Applicant No 3 having respectively given their consent to the Scheme by way of affidavits.
b. No requirement of Meetings
Secured Creditors
Secured Creditors of Applicant No 1 – being fully paid off as on 30-03-2022 as evidenced by auditors certificate .
Secured Creditors of Applicant No 2 - NIL Creditors verified by auditors certificate .
c. Meetings to be held
No meeting is required to be held.
Consequently, the Petitioners presented the instant petition for sanction of the Scheme. By an order dated 20 September 2022 the instant petition was admitted by this Tribunal and fixed for hearing on 10 October 2022 upon issuance of notices to the Statutory/Sectoral Authorities and advertisement of date of hearing. In compliance with the said order dated 20 September 2022 the Petitioners have duly served such notices on the Regulatory Authorities as given in the table below :
NAME OF THE REGULATORY AUTHORITY
DATE OF SERVICE
Upon Income Tax Authorities- By Speed Post
14-09-2022 & 23-09-2022
Upon Registrar of Companies , West Bengal – Through Special Messenger
14-09-2022 & 22-09-2022
Upon Regional Director, Eastern Region – Through Special Messenger
14-09-2022 & 22-09-2022
Upon Official Liquidator , High Court Calcutta – Through Special Messenger
14-09-2022 & 22-09-2022
BY E MAIL
Upon Income Tax Authorities
14-09-2022 & 23-09-2022
Upon Registrar of Companies , West Bengal
14-09-2022 & 23-09-2022
Upon Regional Director, Eastern Region
14-09-2022 & 23-09-2022
PAPER PUBLICATION
Financial Express - In English
15-09-2022 & 23-09-2022
Dainik Statesman – Bengali Translation
15-09-2022 & 23-09-2022
An affidavit of Compliance duly affirmed on 28 September,2022 has also been filed.
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 Official Liquidator, High Court Calcutta, the Regional Director, Ministry of Corporate Affairs, Kolkata (“RD”), have filed their representations before this Tribunal .
The Official Liquidator has filed his report dated 09-09-2022 and concluded as under:-
Para 9
That the Official Liquidator has not received any complaint against the proposed Scheme of Amalgamation from any person/party interested in the Scheme in any manner till the date of filing of this Report.
Para 11
That the Official Liquidator on the basis of information submitted by the Petitioner Companies is of the view that the affairs of the Transferor Company(ies) 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 RD has filed his reply affidavit dated 06 October 2022 (“RD affidavit”) which has been dealt with by the Petitioner(s) by their Rejoinder affidavit dated 06 October 2022 (“Rejoinder”). The observations of the RD and responses of the Petitioners are summarized as under:-
Paragraph 2 (a) of RD Affidavit
That it is submitted that as per available record, it appears that no complaint and/or representation has been received against the proposed Scheme of Amalgamation. Further, all the petitioner companies are also up-dated in filing their Financial Statements and Annual Returns for the financial year 31/03/2021.
Paragraph 2 (a) of the Rejoinder
No adverse comments made by the Registrar of Companies, West Bengal in his report to the Regional Director. Further the Registrar of Companies, West Bengal has not received any Complaint and / or representation from any person on the proposed Scheme. Hence no comments are offered.
Paragraph 2 (b) of RD Affidavit
The Petitioner Companies should be directed to provide list / details of Assets, if any, to be transferred from the Transferor Companies to the Transferee Company upon sanctioning of the proposed Scheme.
Paragraph 2 (b) of the Rejoinder
The Deponents duly authorized hereby undertakes that Petitioner Companies ,shall file list / details of assets that will be transferred by the Transferor Companies to the Transferee Company upon coming into effect of the Scheme.
Paragraph 2 (c) of 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 2 (c) of the Rejoinder
The Transferee Company undertakes that it shall comply with the provisions of Sec 232(3)(i) of the Companies Act, 2013 in regard to adjustment of fees upon clubbing of Authorized Share Capital(s) of the Transferor Company (ies) with the Authorized Share Capital of the Transferee Company in post-amalgamation and shall file a detailed statement thereof with the Registrar of Companies at the time of filing of INC – 28.
Paragraph 2 (d) of RD Affidavit
That the Transferee Company should be directed to pay stamp duty, if any, applicable on the transfer of the immovable properties from the Transferor Companies to it.
Paragraph 2 (d) of the Rejoinder
The Transferee Company undertakes that it shall pay applicable stamp duty on the transfer of the immovable properties from the Transferor Companies to it.
Paragraph 2 (e) of RD Affidavit
The Tribunal may kindly direct the Petitioners to file an affidavit 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 2 (e) of the Rejoinder
The Deponents duly authorised by the Petitioner Companies hereby affirms 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 2 ( f ) of RD Affidavit
It is submitted that as per instructions of the Ministry of Corporate Affairs, New Delhi, a copy of the scheme was forwarded to the Income Tax Department on 14/06/2022 with a request to forward their views/ observations in the matter but the same is still awaited.
Paragraph 2 (f) of the Rejoinder
The Income Tax authorities have not made any observations on notice served by the office of the Regional Director. Further the Petitioner Companies have also complied with the directions contained in the order passed by the Tribunal and have effected service upon the Income Tax Department.
In response to the notice served upon the Income Tax department on 15-09-2022 they have vide their letter No DCIT,Cir-1(1)/Kol/NCLT/2022-23 dated 16-09-2022 have recorded that there is an outstanding demand of Rs. 44,62,56,284/ in respect of Transferee Company namely – VSP Udyog Private Limited .
A letter dated 11-12-2020 has been delivered to the office of Income Tax Department received on 15-12-2020 intimating them about the approval of the resolution plan by the National Company Tribunal , Kolkata Bench (in respect of the Transferee company) and consequent extinguishment of all claims pertaining to the pending litigations / liabilities which had not crystallised into debt without any further act or deed on the part of the Resolution Applicant . Further it has also been stated in the said letter at paragraph 4 that “Furthermore the resolution plan envisaged that upon payment of the aforementioned settlement amount to the OCs, any and all claims or demands made by , or liabilities or obligations owed or payable to ( including any demand for any losses or damages, principal, interest, compound interest, penal interest, liquidated damages, penalty and other cost or charges already accrued/accruing or in connection with any third party claims) any actual or potential OCs of the CD or in connection with any operational debt of CD, whether admitted or not, due or contingent, asserted or unasserted, crystallised or uncrystallised, known or unknown, secured or unsecured, disputed or undisputed, present or future , in relation to any prior period prior to the effective date shall stand extinguished without any recourse. ”
Further the letter received from Income Tax Department, the Letter addressed to Income Tax Department by the Resolution Applicant and the order passed by the Tribunal in C.P(IB) NO 1221 / KB / 2018 dated 20-10-2020 are all collectively annexed marked – Annexure – B .
(Annexure –B to reply to observation made by the Regional Director at Page No 15to 38 )
The Income Tax Department has raised an objection that there is a outstanding demand of Rs.44,62,56,284/ in respect of Transferee Company namely VSP Udyog Private Limited and has also failed to file the ITR for the A.Y. 2019-2020, A.Y. 2020-21, A.Y. 2021-22 and A.Y. 2022-23 vide letter dated 16.09.2022. The Ld. Counsel appearing for the Petitioners submits that the Petitioners have also in response to the letter received from DCIT Circle 1(1)/Kolkata under whose jurisdiction the Transferee Company – VSP UDYOG PRIVATE LIMITED are assessed to Income Tax have also filed their reply with the Income Tax Department duly affirmed on 06 October 2022 in response to the letter dated 16.09.2022.
The contents of Paragraph 2 to 8 of the said affidavit are reproduced below :
Paragraph 2
That Sri Kausik Ray , DCIT , Circle -1(1), Kolkata in response to the notice served upon the Income Tax department by the Petitioners on 15-09-2022 have vide their letter No DCIT,Cir-1(1)/Kol/NCLT/2022-23 dated 16-09-2022 have recorded that there is an outstanding demand of Rs.44,62,56,284/ in respect of Transferee Company namely – VSP Udyog Private Limited. Further he has also concluded in the said letter that Form B is being submitted in respect of the claim of IT Demand and also drew attention to the CBDT’s direction vide letter F.NO 279/MISC/M- 171/ 2013- IT dated 11-04-2014 for consideration by the Tribunal at the time of sanctioning the proposed Scheme of Amalgamation .
Paragraph 3
That the deponent would like to submit in the first place that VSP Udyog Private Limited – Corporate Debtor was under CIRP process . That Amit Metaliks Limited submitted a Resolution Plan for revival of VSP Udyog Private Limited which was accepted by the Committee of Creditors of VSP Udyog Private Limited and was submitted to the Hon’ble National Company Law Tribunal which after due consideration approved the Resolution Plan submitted by Amit Metaliks Limited and passed order on 20-10-2020 confirming the same.
Paragraph 4
That while approving the resolution plan the Hon’ble Tribunal also recorded in Paragraph 13(i) ( page No 6 ) which is reproduced below:
“The Resolution Plan of M/S Amit Metaliks Limited , which is approved by the Committee of Creditors with 95.35% voting shares, is hereby approved under provisions of Sub – section (1) of Section 31 of the Insolvency and Bankruptcy Code,2016 , which shall be binding on the Corporate Debtor, M/S VSP Udyog Private Limited, its employees, members, creditors, guarantors, the Central Government, any state government or any local authority and other stake holders involved in the Resolution Plan ”.
Paragraph 5
That while approving the resolution plan the Tribunal also recorded in Paragraph 10A the Financial proposal submitted by the Resolution Applicant which is reproduced below :
Resolution Debt
Total Admitted Amount (In Cr )
Payment Proposed in the Resolution Plan
( In Cr )
Upfront Payment ( In Cr )
Balance payment ( In Cr )
CIRP Cost
1.00
1.00
1.00
--
Employees , Workmen
4.16
0.60
0.60
--
Operational Creditors
, including Government dues
950.91
0.24
0.24
--
Financial Creditors
339.76
50.90
21.33
29.57
Total
1295.83
52.74
23.17
29.57
Paragraph 6
That while approving the resolution plan the Tribunal also in Paragraph 12 which is reproduced below :
“It is also stated that the average Fair Value and the Liquidation Value obtained from the appointed IBBI Registered Valuer, are Rs.69,24,16,000/ and Rs.50,85,07,000/ respectively. The Resolution Applicant, herein, has offered a total Resolution Plan amount of Rs.52.74 Crores to discharge the liabilities of the Corporate Debtor which includes 14.98% to the Secured Financial Creditors and 0.025% to Operational Creditors and the Employees will be paid 14.42% and further infusion of Rs 60 Crores towards Working Capital requirements , to revive the Corporate Debtor Company and make its unit operational. “
Paragraph 7
That government dues are placed at par with Operational Creditors and accordingly they will be paid 0.025% against their claim as approved by the Tribunal and to be binding on all.
Paragraph 8
That Amit Metaliks Limited letter dated 11.12.2020 delivered to the office of Income Tax Department all received on 15.12.2020 intimating them about the approval of the resolution plan by the National Company Tribunal , Kolkata Bench and extinguishment of all claims pertaining to the pending litigations / liabilities which had not crystallised into debt without any further act or deed on the part of the Resolution Applicant .
Further it has also been stated in the said letter at paragraph 4 that “Further more the resolution plan envisaged that upon payment of the aforementioned settlement amount to the OCs, any and all claims or demands made by, or liabilities or obligations owed or payable to (including any demand for any losses or damages, principal, interest, compound interest, penal interest, liquidated damages, penalty and other cost or charges already accrued / accruing or in connection with any third party claims ) any actual or potential OCs of the CD or in connection with any operational debt of CD , whether admitted or not, due or contingent, asserted or unasserted, crystallised or un crystallised, known or unknown, secured or unsecured , disputed or undisputed, present or future , in relation to any prior period prior to the effective date shall stand extinguished without any recourse .
The learned Counsel appearing for the Petitioners submitted that the amount which has been demanded is for the pre-CIRP period has been extinguished in view of the judgment of the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, 2021 SCC OnLine SC 313.
The Ld. Counsel appearing for the Income Tax Department had sought time to report instructions on the issue of extinguishment of the amount in terms of the law laid down by the Hon’ble Supreme Court in Ghanashyam Mishra and Sons Private Limited v. Edelweiss Asset Reconstruction Company Limited, 2021 SCC OnLine SC 313, however as a matter of abundant caution, we summoned DCIT Circle-I (1) Kolkata to be present on 30 December 2022.
Mr. K. Ray, DCIT Circle-I (1) Kolkata was present before us on 30 December 2022, he submitted that the department does not have any objection in the Scheme of Amalgamation which is under consideration. However, the Income Tax Demand totaling to Rs.44,62,56,284/- as raised in the letter vide DCIT, Cir-1 (1)/Kol/NCLT/2022-23/569 dated 16 September 2022 needs to be taken care of by the Transferee Company in accordance with law.
It is also noted that the members of the Committee of Creditors that approved the Resolution Plan consisted of fifteen members including various banks and that the approval to the Resolution Plan accorded by Adjudicating Authority on 20 October 2020 provided as under:
“9.3.5. it is clarified that upon payment of the aforementioned settlement amount to the OCs, any and all rights and entitlements of any actual or potential OCs of the CD, whether admitted or not, due or contingent, asserted or unasserted, crystallised or uncrystallized, known or unknown, disputed or undisputed, present or future, in relation to any period prior to the Effective Date or arising on account of the acquisition of control by the RA over the CD pursuant to this RPlan, shall stand permanently extinguished and the CD of the RA shall at no point of time, directly or indirectly, have any obligation, liability or duty in relation thereto.”
Heard the submissions made by the Ld Counsel appearing for the Petitioner, submissions made by the RD and Mr. Kausik Ray appearing for DCIT, Cir. I(1), Kolkata, and perused the records along with the reports of the OL, the Income Tax Department. Upon perusing the records and documents in the instant proceedings and considering the submissions and legal position as mentioned above, we allow the petition in terms of the following orders:-
a. The Scheme of Amalgamation mentioned in this Petition, being Annexure “A” is sanctioned by this Tribunal with the Appointed date as 1st day of April, 2021 on ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited with VSP Udyog Private Limited and their shareholders, Creditors and all concerned;
b. The issue of Income Tax claim shall be dealt with as per the above stipulation and in accordance with law. If there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of any action being taken, albeit, in accordance with law, against the Concerned persons, directors and officials of the Petitioners.
c. While approving the scheme as above, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to ant permission/compliance with any other requirement which may be specifically required under any law.
d. All the properties, rights and interest of ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited be transferred to and vested in without further act or deed in VSP Udyog Private Limited and accordingly the same shall pursuant to Section 232 of the Companies Act, 2013 and read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 be transferred to and vested in VSP Udyog Private Limited for all the estate and interest of ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited but subject nevertheless to all charges, now affecting the same, as provided in the Scheme;
e. All the debts, liabilities and duties of ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited be transferred from the Appointed Date, without further act or deed to VSP Udyog Private the Companies Act, 2013 and read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 be transferred to and become the debts, liabilities and duties of VSP Udyog Private Limited for which the Transferee company shall preserve all the records pertaining to the Transferor companies as required under law;
f. That all the proceedings and/or suit appeals now pending by or against ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited shall be continued by or against VSP Udyog Private Limited, for which the Transferee company shall preserve all the records required for such proceedings till the culmination of such proceedings.
g. The Transferee Company do without further application issue and allot shares to the shareholders of ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited, the shares in the Transaferee Company to which they are entitled in terms of the Scheme.
h. The schedule of assets and liabilities in respect of ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited be filed within a period of 60 days from the date of the order to be made herein;
i. The Transferor Companies namely ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited shall stand dissolved from the effective date ;
j. VSP Udyog Private Limited, ATP Healthcare Private Limited and Shivshakti Sponge Iron Limited shall within 30 days (Effective date) after the date of obtaining the Certified Copy of the order to be made herein cause certified copies of this order to be delivered to the Registrar of Companies, West Bengal for registration respectively;
k. The transferor companies shall stand dissolved without winding up , from the effective date.
l. Any person interested be at liberty to apply to this Tribunal in the above matter for any direction that may be necessary;
The Petitioners shall supply legible print out of the scheme and schedule of assets and liabilities in acceptable form to the department and the department will append such printout, upon verification to the certified copy of the order.
The Company Petition C.P (CAA) No. 116/KB/2022 connected with Company Application C.A(CAA) NO 45/KB/2022 is disposed of accordingly.
Certified copy of this order, if applied or, be supplied to the parties, subject to compliance with all requisite formalities.