Bhushan Airways Services Private Limited Vs

Dr. Binod Kumar Sinha, Member (Technical)

Under Consideration is the Company Scheme Application jointly filed by the Applicant Companies under Sections 230 and 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) for the purpose of approving the proposed Scheme of Amalgamation (‘Scheme’) of M/s. Bhushan Airways Services Private Limited (Applicant Company No.1/Transferor Company No.11) with M/s. BSN Enterprises Private Limited (Applicant Company No.2/ Transferee Company). The copy of the proposed scheme of Amalgamation has been placed on record. It is represented that the registered office of both the Applicant Companies are situated in Delhi, therefore, jurisdiction lies with this Tribunal.

M/s. Bhushan Airways Services Private Limited ("Transferor Company No.11"or"ApplicantCompanyNo.1‖)bearingCIN: U62200DL2008PTC173116 was incorporated on 24.01.2008 and registered office of the Applicant Company No.1 is presently situated at 5, Tolstoy Marg, Connaught Place, New Delhi-110010. The Applicant Company- 1 is engaged in the business of chatering aircrafts, helicopters and allied air vehicles in schedule and unscheduled manner to institutions, concerns, body corporates trust and persons in India and abroad.

M/s. BSN Enterprises Private Limited (‘Transferee Company" or "Applicant Company No. 2") bearing CIN: U78499DL1978PTC008880 was incorporated on 22.02.1978 having its registered office situated at 5, Tolstoy Marg, Connaught Place, New Delhi-110010. The Applicant Company No. 2 is engaged in the business of manufacturing, processing, developing, designing, exporting & dealing in mild steel, high carbon, low carbon, steel strips and all other kind of streeps, iron and metal.

The Board of Directors of the respective Applicant Companies have approved the proposed Scheme of Amalgamation in their respective Board Meetings held on 11.01.2023. The certified copy of the Board Resolutions of the Applicant Company No.1 and Applicant Company No.2 is annexed as Annexure A6 (Colly.) at Page no. 207-216 of the Company Scheme Application respectively.

The present Scheme of Amalgamation is presented for amalgamation of M/s. Bhushan Information Technologies Private Limited (‘Transferor Company No.1’), M/s. Jasmine Steel Trading Limited (‘Transferor Company No. 2’), M/s. Marsh Steel Trading Limited (‘Transferor Company No. 3’), M/s. Diyajyoti Steel Limited (‘Transferor Company No. 4"), M/s. Vision Steel Limited (‘Transferor Company No. 5’), M/s. Bhushan Aluminium & Power Private Limited (‘Transferor Company No. 6’), M/s. Priyanka Iron & Energy Private Limited (‘Transferor Company No. 7’), M/s. Shree Ankleshwar Commercial Company Private Limited (‘Transferor Company No. 8’), M/s. Sidhashwar Commercial Private Limited (‘Transferor Company No. 9’), M/s. Vindyachal Mercantiles Private Limited (‘the Transferor Company No. 10’), M/s. Bhushan Airways Services Private Limited (‘Transferor Company No. 11’), M/s. Drester Barter Private Limited (‘Transferor Company No. 12’) and M/s. BSN Enterprises Private Limited (‘Transferee Company’).

The Registered Office of M/s. Bhushan Airways Services Private Limited (‘Transferor Company No. 11 / Applicant No.1’) and M/s. BSN Enterprises Private Limited (‘Transferee Company / Applicant No.2) are situated within the territory of NCT of Delhi. Therefore, this Tribunal have jurisdiction with respect to the Applicant Company No.1 and Applicant Company No.2. Since the Registered Office of the Transferor Company No.1 to Transferor Company No.10 and Transferor Company No.12 (hereinafter collectively referred to as ‘Non –Applicant Companies’) are not situated within the territory of NCLT, New Delhi, accordingly, this Tribunal have no jurisdiction with respect to the Non-Applicant Companies.

The rationale for the Scheme of Amalgamation between the Applicant Companies and the Non Applicant Companies as mentioned in Part-III of the Scheme are as follows:

a) The amalgamation will result in better, efficient and economical manner, achieve cost savings, pooling of resources and rationalization of administrative expenses/services. The amalgamation will enable the Companies to pool their financial, commercial and other resources and considerable synergy of operations would be achieved.

b) The amalgamation will result in enabling the Company to have optimal capital structure, eliminate inefficient share capital instruments and achieved efficiency in terms of operations and profitability of the merged entity under the new standards and regime.

c) With the enhanced capabilities and resources at its disposal, the Transferee Company will have greater flexibility and strength and will be able to compete more effectively as a combined entity.

d) The Transferee Company as a consolidated entity after amalgamation will have better financial and business prospects. The Scheme would be beneficial to and in the best interest of the Shareholders & Creditors, if any, of the Transferor Companies No. 1 to 12 and the Transferee Company. The Scheme shall not in any manner be prejudicial to the interests of concerned members/ creditors or general public at large.

e) It would be advantageous to combine the activities of the Transferor Companies No. 1 to 12 and the Transferee Company into a single Company and consolidate their business and assets. The amalgamation would provide beneficial synergy of operations from administrative point of view, and conserve administrative resources and cost overheads and duplication of management efforts.

The  Applicant  Companies  have  placed  on  record  their  respective Certificate of Incorporation (‘CoI’), Memorandum of Association (‘MoAs’), Article of Associations (‘AoAs’), List of Directors and MCA Master Date. The Applicant Companies further placed on record the Audited Balance Sheet of the respective Applicant Companies as on 31.03.2022 and provisional Financial Statement of the respective Applicant Companies as on 30.11.2022.

The Applicant Companies have submit their respective affidavits filed under Section 230(2) of the Companies Act, 2013 disclosing the information of pending investigation and proceedings against the applicant companies. The pending disclosure affidavits under Section 230 (2) of the Companies Act, 2013 filed by the respective Applicant Companies are marked as Annexure A7 (Colly.) at pg. no. 217-299 of the Company Scheme Application.

The Transferor Company No.11/Applicant Company No.1 in point 2(b) of affidavit dated 29.03.2023 had made the following disclosure with regard to the pending investigation and proceedings against the Applicant No.1 Company. The point 2(b) of affidavit dated 29.03.2023 is reproduced below:-

“2(b). That investigation or proceedings under Section 206 to 229 of the Companies Act, 2013 are completed against the Transferor Company No. 11 involved in the present Scheme of Amalgamation and the matter is now pending before the Hon'ble Special Judge (Companies Act) Dwarka Courts, New Delhi. The present said proceedings of the Transferor Company No. 11 shall not abate, or discontinued or be in any way prejudicially affected by reason of the transfer of the Business of the Transferor Company No. 11 or because of anything contained in the Scheme, but the proceedings shall be continued, prosecuted and enforced by or against the Transferee Company in the same manner and to the same extent as it would or might have been continued, prosecuted and enforced by or against the Transferor Company No. 11 as if the Scheme had not been made.”

The Transferee Company/Applicant Company No.2 in point 2(b) of affidavit dated 29.03.2023 had made the following disclosure with regard to the pending investigation and proceedings against the Applicant No.2 Company. The point 2(b) of affidavit dated 29.03.2023 is reproduced below:-

“2(b). That investigation or proceedings under Section 206 to 229 of the Companies Act, 2013 are completed against the Transferee Company involved in the present Scheme of Amalgamation and the matter is now pending before the Hon'ble Special Judge (Companies Act) Dwarka Courts, New Delhi.

The Applicant Companies had relied on the Hon’ble NCLAT’s judgement in the matter of MEL Windmills Pvt. Ltd. v. Mineral Enterprises Limited and MEL Properties Private Limited [Company Appeal (AT) No. 04 of 2019; order dated 27.05.2019 wherein it was held that that at the very threshold stage, Hon'ble Tribunal was not required to venture into the merits of the proposed scheme of demerger. It had to be examined only after obtaining the consent of creditors/members with requisite majority. Further, the pendency of investigation would not stand as a legal impediment in sanctioning the proposed scheme of demerger for any civil action or criminal proceedings in respect of past events/ transactions.

The  Hon'ble  Supreme  Court  in  Rainbow Denim Limited V.  Rama Petrochemicals  Limited,  (2002)  10  Supreme  Court  Cases  498 decided on 1.12.2000 held that, ―the appropriate time for learned Company Judge to consider Scheme would be subsequent to approval thereof by shareholders and creditors of the Company‖.

The Applicant Companies have placed on record respective certificate from statutory auditors of the Applicant Companies certifying that accounting treatment provided in the Scheme is being compliant with the applicable Accounting Standards as specified under Section 133 of the Act, read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and other generally accepted accounting principles. The copy of the Certificate issued by the statutory Auditor of the respective Applicant Companies is annexed as Annexure A-14(Colly.) at page no.365 - 370 to the Company Scheme Application.

The Learned Counsel for the Applicant Companies submits that the Appointed Date for the Scheme of Amalgamation means April 01, 2022 (01.04.2022) or such other date as may be approved by the Hon’ble National Company Law Tribunal, New Delhi or Hon’ble National Company Law Appellate Tribunal (NCLAT), or any other competent Court(s), judicial or quasi-judicial authority or any other competent authority having power to sanction the scheme. The copy of the Scheme of Amalgamation between the Applicant Companies and the Non – Applicant Companies is annexed as ‘Annexure A-5’ at page no. 124-206 to the Company Scheme Application.

The Applicant Companies in Part VI of the Scheme of Amalgamation submits that upon coming into effect of the Scheme and in consideration of the transfer of all the said assets and liabilities of the Transferor Companies No.1 to 12 to the Transferee Company in terms of the scheme, the Transferee Company without any further application or deed issue and allot fully paid up equity share of the face value of Rs.10/- each of the Transferee Company to the Equity Shareholders of the Transferor Companies No.1 to 12, except to the extent shares are held by the Transferee Company, or shares held by Transferor Companies inter se, whose names appear in the Register of Members.

The Applicant Companies submit that the share valuation report for the purpose of proposed scheme of amalgamation has been taken from Mr. Subodh Kumar, Registered Valuer. The share valuation report by the Registered Valuer on the share exchange ratio for the proposed Scheme of Amalgamation between the Applicant Companies and Non Applicant Companies dated 31.12.2023 is placed on record and annexed as ‘Annexure-A 13’ at pg no. 327 – 364 of the Company Scheme Application.

The Applicant Company submits that the Shares exchange ratio in which the shares be allotted by the Transferee Company to the Shareholders of the Transferor Companies No.11 is 10,000 equity shares of Transferee Company/Applicant Company No.2. for 2,548 equity shares of Transferor Company No.11/Applicant Company No.1.

The Learned Counsel for the Applicant Companies submits that the Applicant Company No.1 as on 31.12.2022 has 28 (twenty eight) Equity Shareholders. The copy of the CA certified list of the Equity Shareholders of the Applicant Company No.1 as on 31.12.2022 is annexed as ‘Annexure A-8’ at page no. 300-301 to the Company Scheme Application.

The Learned Counsel for the Applicant Companies submits that there is ‘Nil’ Secured Creditor in the Applicant Company No.1 as on 30.11.2022. The copy of the certificate of the Chartered Accountant certifying that there is ‘Nil’ Secured Creditors of the Applicant Company No.1 as on 30.11.2022 is annexed as ‘Annexure A-9’ at page no. 302 - 303 to the Company Scheme Application.

The Learned Counsel for the Applicant Companies submits that there are ‘7’ Unsecured Creditors aggregating to the value of Rs.49,16,958/-as on 30.11.2022 in the Applicant Company No.1. The list of the Unsecured Creditors along with the certificate of the chartered accountant certifying list of the Unsecured Creditors of the Applicant Company No.1 as on 30.11.2022 are annexed as ‘A-9’ at page no. 302 – 303 to the Company Scheme Application.

The Learned Counsel for the Applicant Companies submit that the Applicant Company No.2 as on 31.12.2022 has ‘27’ (Twenty Seven) Equity Shareholders. The copy of the list of the Equity Shareholders of the Applicant Company No.2 certified by the Chartered Accountant as on 31.12.2022 is annexed as ‘Annexure A-10 (Colly.)’ (page no.304-305) to the Company Scheme Application.

The Learned Counsel for the Applicant Companies submits that there is ‘Nil’ Secured Creditor in the Applicant Company No.2. The copy of the certificate of the Chartered Accountant certifying that there is ‘Nil’ Secured Creditors of the Applicant Company No.2 as on 30.11.2022 is annexed as ‘Annexure A-11’ at page no. 306 - 307 to the Company Scheme Application.

The Learned Counsel for the Applicant Companies submits that there are ‘7’ Unsecured Creditors aggregating to the value of Rs.7,02,26,165/- as on 30.11.2022 in the Applicant Company No.2. Further, it is submitted that out of the ‘7’ Unsecured Creditors  aggregating to Rs.7,02,26,165/- in value, ‘5’ Unsecured Creditors holding 99.60% of total outstanding debt have by way of affidavit have given written consent to the proposed scheme of Amalgamation. The list of the Unsecured Creditors along with the certificate of the chartered accountant certifying list of the Unsecured Creditors of the Applicant Company No.2 as on 30.11.2022 are annexed as ‘A-11’ at page no. 306 – 307 to the Company Scheme Application. The copy of the consent affidavit of the Unsecured Creditors of the Applicant Company No.2 are annexed as Annexure ‘A-12’ at page no. 308 - 326 to the Company Scheme Application.

We have heard the Learned Counsel for the Applicant Companies and perused the record. Taking into consideration aforesaid submissions, following directions are issued: -

A1. In relation to Transferor Company No. 11/Applicant Company No.1

i) With respect to convening the meeting of the Equity Shareholders:

-

In view of the fact that the Applicant Company No.1 has ‘28’ Equity Shareholders as on 31.12.2022, meeting of the Equity Shareholders of the Applicant Company No.1 is directed to be held within a period of 60 days at such date and time as mutually decided by the Applicant Company No.1 and the Chairperson appointed at Registered Office of the Applicant Company No.1 or such other place as may be decided within the jurisdiction where registered office is situated or through audio visual means enabled with e-voting for the purpose of considering and, if thought fit, approving with or without modification(s) the proposed Scheme of Amalgamation. The quorum for the meeting of Equity Shareholders of the Applicant Company No.1 is at least ‘13’ equity shareholders present in person or through Authorised Representative.

ii) With respect to convening the meeting of the Secured Creditors: -

The Applicant Company No.1 has ‘Nil’ Secured Creditor. Therefore, the requirement of convening the meeting of the Secured Creditors of the Applicant Company No.1 does not arise.

iii) With respect to convening the meeting of the Unsecured Creditors:

-

In view of the fact that the Applicant Company No.1 has ‘7’ (‘Seven’) Unsecured Creditors aggregating to the value of Rs.49,16,958/- in the Applicant Company No.1 meeting of the Unsecured Creditors of the Applicant Company No.1 is directed to be within a period of 60 days at such date and time as mutually decided by the Applicant Company No.1 and the Chairperson appointed at Registered Office of the Applicant Company No.1 or such other place as may be decided within the jurisdiction where registered office is situated or through audio visual means enabled with e-voting for the purpose of considering and, if thought fit, approving with or without modification(s) the proposed Scheme of Amalgamation. The quorum for the meeting of Unsecured Creditors of the Applicant Company No.1 is at least ‘4’ Unsecured Creditors present in person or through Authorised Representative.

A2. In relation to Transferee Company/Applicant Company No.2

i) With respect to convening the meeting of the Equity Shareholders: In view of the fact that the Applicant Company No.2 has ‘27’ Equity Shareholders as on 31.12.2022, meeting of the Equity Shareholders of the Applicant Company No.2 is directed to be held within a period of 60 days at such date and time as mutually decided by the Applicant Company No.2 and the Chairperson appointed at Registered Office of the Applicant Company No.2 or such other place as may be decided within the jurisdiction where registered office is situated or through audio visual means enabled with e-voting for the purpose of considering and, if thought fit, approving with or without modification(s) the proposed Scheme of Amalgamation. The quorum for the meeting of Equity Shareholders of the Applicant Company No.2 is at least ‘13’ equity shareholders present in person or through Authorised Representative.

ii) With respect to convening the meeting of the Secured Creditors: -

The Applicant Company No.2 has ‘Nil’ Secured Creditor. Therefore, the requirement of convening the meeting of the Secured Creditors of the Applicant Company No.2 does not arise.

iii) With respect to convening the meeting of the Unsecured Creditors:-

In view of the fact that the Applicant Company No.2 has ‘7’ (‘Seven’) Unsecured Creditors aggregating to the value of Rs.7,02,26,165/- in the Applicant Company No.2, as on 30.11.2022 and out of the ‘7’ Unsecured Creditors, ‘5’ Unsecured Creditors being 99.60% in value have given their respective written consent to the proposed Scheme of Amalgamation. Therefore, in view of Section 230 (9) of the Companies Act, 2019, the requirement of convening the meeting of the Unsecured Creditors of the Applicant Company No.2 is hereby dispensed with.

Mr. Prabhakar Kumar (Mobile No. 9810011532, Email IdJ info@vapn.in) is appointed as the Chairperson and Mr. Ashok Kumar (Mobile No. 8383990872, Email Id- acsashok19@gmail.com), is appointed as Scrutinizer for the meeting of the Equity Shareholders and Unsecured Creditors of the Applicant Company No.1 in terms of the direction issued herein.

The Fees of the Chairperson for the aforesaid both the meetings shall be Rs.1,50,000/- and the Fees of the Scrutinizer for the aforesaid meeting shall be Rs.1,25,000/- in addition to meeting their incidental expenses. The fees of Chairperson and Scrutinizer along with the travelling expenses and other out of pocket expenses shall be borne by the Applicant Company No.1.

Mr. Parvindra (Mobile No.8882017384, Email Id: adv.parvindra@gmail.com) is appointed as the Chairperson and Ms. Swati Mishra (Mobile No.: 9149023243, Email Id-cs.swatimishra94@gmail.com), is appointed as Scrutinizer for the meeting of the Equity Shareholders of the Applicant Company No.2 in terms of the direction issued herein.

The Fees of the Chairperson for the aforesaid meeting shall be Rs.1,00,000/- the Fees of the Scrutinizer for the aforesaid meeting shall be Rs.75,000/- in addition to meeting their incidental expenses. The fees of Chairperson and Scrutinizer along with the travelling expenses and other out of pocket expenses shall be borne by the Applicant Company No.2.

The Applicant Companies are directed to comply with the General Circular No. 10/2022 and General Circular No. 11/2022 read with General Circular No. 14/2020 dated 08th day of June, 2020 and General Circular No. 14/2020 dated 13th day of April, 2020 clarifying the passing of ordinary and special resolutions by companies under the Companies Act, 2013 read with rules made thereunder in case the meetings are conducted through audio visual means enabled with e-voting. The Companies may conduct the meeting of shareholders/unsecured creditors as the case may be through Video Conferencing or Other Audio-Visual Means (VC/OAVM) and submit a report to this Tribunal about the compliance of the same.

In case the quorum as noted above for the aforesaid respective meetings is not present at the meeting, then the meeting shall be adjourned by half an hour. Thereafter the persons present and voting shall be deemed to constitute the quorum.

A copy of this order shall be supplied to the learned counsels for the Applicant Companies who in turn shall supply a copy of the same to the respective Chairperson and the Scrutinizer of the meetings as directed above.

That individual notices of the above said meetings shall be sent by the respective Applicant Companies through registered post or speed post or through courier or e—mail, 30 days in advance before the scheduled date of the meeting, indicating the day, date, the place and the time as aforesaid, together with a copy of Scheme, copy of explanatory statement, required to be sent under the Companies Act, 2013 and the prescribed form of proxy shall also be sent along with it, and in addition to the above any other documents as may be prescribed under the Act or Rules may also be duly sent with the notice.

That an individual notice of the aforesaid meetings of the Applicant Companies shall be advertised in two local newspapers viz. “Business Standard” in English and translation thereof in “Business Standard” in Hindi, both circulated in Delhi not less than one month before the date fixed for the meetings. The Applicant Companies shall also publish the notice on their websites, if any and file a compliance affidavit of service with this Tribunal.

The Chairperson shall be responsible to report the results of the meetings to the Tribunal in Form No. CAA 4, as per Rule 14 of the Rules within 7 (seven) days of the conclusion of the meetings. The Chairperson shall be assisted by the Scrutinizer, who will assist the Chairperson and Alternate Chairperson in preparing and finalizing the reports.

Voting shall be allowed on the proposed Scheme by voting in person, by proxy, through postal ballot or through electronic means as may be decided by the Chairperson in consultation with the counsel of the Applicant Companies in terms of the provisions of the Companies Act, 2013 and Rules framed there under.

The Applicant Company No.1 is further directed to serve notice along with copy of scheme upon: (1) the Regional Director (Northern region), Ministry of Corporate Affairs, Delhi; (2) the Registrar of Companies, NCT of Delhi & Haryana; (3) Income Tax Authority within whose jurisdiction the Applicant Company No.1 is assessed to tax; (4) Official Liquidator and any sectoral authorities who may have bearing on the operation of the Applicant Company No.1, pursuant to Section 230(5) of the Companies Act, 2013 and Rule 8 of the Companies (Compromises Arrangements and Amalgamations) Rules, 2016. If no response is received by the Tribunal from such authorities within 30 days of the date of receipt of the notice, it will be presumed that they have no objection to the proposed Scheme.

The Applicant Company No.2 is further directed to serve notice along with copy of scheme upon: (1) the Regional Director (Northern region), Ministry of Corporate Affairs, Delhi; (2) the Registrar of Companies, NCT of Delhi & Haryana; (3) Income Tax Authority within whose jurisdiction the Applicant Company No.2 is assessed to tax; and any sectoral authorities who may have bearing on the operation of the Applicant Company No.2, pursuant to Section 230(5) of the Companies Act, 2013 and Rule 8 of the Companies (Compromises Arrangements and Amalgamations) Rules, 2016. If no response is received by the Tribunal from such authorities within 30 days of the date of receipt of the notice, it will be presumed that they have no objection to the proposed Scheme.

Further, this Tribunal does not wish to delve into the merits of the present case at the present threshold stage of the First Motion Application and the present Scheme of Amalgamation will be considered on merits at the time of the presentation of the Second Motion Application, once the scheme is approved by the shareholders and creditors of the respective Applicant Companies.

The Applicant Companies Shall file Compliance Affidavit with regard to the directions given in this order proving dispatch of service of notices of the respective meetings as well as service of notice to the regulatory authorities.