Chordia Food Products Limited vs Aveer Foods Limited

The Court convened through video conference today.

The Representative for the Applicant Companies states that the present Scheme is a Scheme of Arrangement between Chordia Food Products Limited ('Applicant Company 1/ Demerged Company') and Aveer Foods Limited ('Applicant Company 2/ Resulting Company') and their respective shareholders for Demerger of 'Food Division' of Chordia Food Products Limited into Aveer Foods Limited (hereinafter referred as to "Scheme") and Reduction of Share capital of Resulting Company.

Chordia Food Products Limited (hereinafter referred to as "CFPL" or "the Demerged Company" or "the Applicant Company 1" was originally incorporated under the name and style of Chordia Food Products Private Limited on 20th January, 1982 under the Companies Act, 1956 in the State of Maharashtra. Subsequently on the conversion of the company from Private Limited to Public Limited the name of the Applicant Company 1 changed from Chordia Food Products Private Limited to Chordia Food Products Limited vide certified given by the Registrar of Companies dated 7th May 1986. The Corporate Identification Number (CIN) of Demerged Company is L15995PN1982PLC026173.

The Authorised, Issued, Subscribed and Paid-up Share Capital of the Applicant Company 1 as on the Latest Audited Balance Sheet date i.e. 31st March 2020, is as under:

Particulars

Amount in Respondent.

Authorised Share Capital:

55,50,000 Equity Shares of Rs.10/- each

5,55,00,000

Total

5,55,00,000

Issued, Subscribed and Paid-Up:

40,28,252 Equity Shares of Rs.10/- each.

Share Forfeiture

4,02,82,520

17,250

Total

4,02,99,770

There is no change in the Share Capital of Applicant Company 1 from 31.03.2020 till the date of filing of this Application. The Shares of the Applicant Company 1 are listed on BSE Limited.

The Applicant Company 1 is engaged in Manufacturing of processed fruits and vegetables in Western India for more than three decades and has been successfully selling its products under the brand name Pravin, Navin, Toofan and Suhana-Pravin. Currently, the Company is having two business divisions: Food Division & Food Infra Division. The Applicant Company 2 is engaged in Manufacturing of food products and dealing in agricultural, horticultural and farm produce.

Aveer Foods Limited (hereinafter referred to as "AFL" or "the Resulting Company" or "the Applicant Company 2") was incorporated under the name and style of Aveer Foods Limited on 11thApril, 2019 under the Companies Act, 2013 in the State of Maharashtra. The Corporate Identification Number (CIN) of Resulting Company is U15549PN2019PLC183457.

The Aurthorised, Issued, Subscribed and paid-up Share Capital of the Applicant Company 2 as on 31st March 2020 is as under:

Particulars

Amount in Respondent.

Authorised Share Capital:

50,00,000 Equity Sharesof Rs.10/-

each

5,00,00,000

Total

5,00,00,000

Issued, Subscribed and Paid-Up:

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

100,000

Total

100,000

There is no change in the share capital of Applicant Company 2 from 31st March 2020 till the date of filing of this Application. The Applicant Company 2 is wholly owned subsidiary of the Applicant Company 1 as the entire share capital is held by the Applicant Company 1 and its nominees. The Share of the Applicant Company 2 are not listed on any Stock Exchange.

The Applicant Company 2 is engaged in Manufacturing of food products and dealing in agricultural, horticultural and farm produce. The copy of the Audited Annual Accounts as on 31st March 2020 of the Applicant Company 2 showing the assets and liabilities as on that date are annexed with Application as Annexure "D".

That the Board of Directors of the Applicant Companies in their respective Board Meetings held on 5th February,2020 have approved the Scheme. The Appointed Date fixed under the Scheme is 1st April, 2020.

The rational for the Scheme of Arrangement is as follows :-

a) Segregation of business of the food division of the Demerged Company into Resulting Company in a manner provided in this scheme resulting into enhanced strategic flexibility to build a viable platform solely focusing on each of the business.

b) Allowing management of each company to pursue independent growth strategies and unlock significant value for shareholders

c) Allow in creating the ability to achieve valuation based on respective risk-return profile and cash flow, attracting right investors and thus enhancing flexibility in accessing capital;

d) Provide scope of separate companies for independent collaboration and expansion including expanding potential Clients/Customer market for each business

e) Aveer Foods Limited will acquire the Food Division ongoing concern basis from Chordia Food Products Limited. Chordia Food Products Limited will focus on other commercial activities/businesses mainly Food Infra Business and all other businesses including contract manufacturing. The demerger will ensure focused management attention and resources and skill set allocation.

f) The nature of Technology, Risk, Competition and capital intensity involved in each of the Undertakings of the Demerged Company is distinct from each other. Consequently, each Undertaking of the Demerged Company is capable of addressing independent business opportunities, deploying different technologies and attracting different set of Investors, Strategic Partners, Lenders and Other Stakeholders. Hence as a part of overall business reorganization plan, it is considered desirable and expedient to reorganize and reconstruct the Demerged Company by Demerging the Demerged Undertaking to the Resulting Company in the manner and on the terms and conditions contained in the Scheme.

g) Upon the scheme becoming operative, the investment in shares held in AFL as appearing in the Books of Accounts of CFPL shall stand cancelled and extinguished and result in Capital Reduction in the Resulting Company. This would enable the shareholders of the Demerged Company to hold shares in the Resulting Company in the same proportion in which they currently hold shares in the Demerged Company.

h) The Purpose of the Scheme is to give effect to the bona fide Rational of the Scheme which includes but not limited to long term vision of Group with respect to independent management and growth of both the business (i.e. Food division and Food Infra business), value-addition to various stake holders (including government authorities) and contribution to the development of social-economic parameters based on commercial substance of the Scheme.

A meeting of the Equity Shareholders of the Applicant Company 1, be convened and held on Thursday, 27th day of April,2021 at 11.30 A.M for the purpose of considering and, if thought fit, approving, with or without modification(s), the proposed Scheme of Arrangement between Chordia Food Products Limited and Aveer Foods Limited and their respective shareholders, through Video Conferencing (VC) or Other Audio Visual Means (OAVM) mode, as per applicable operating procedures mentioned in General Circular Nos.14/2020, 17/2020, 22/2020, 33/2020 and 39/2020 dated 8th April, 2020, 13th April, 2020, 15th June, 2020, 28th September, 2020 and 31st December,2020 respectively, issued by Ministry of Corporate Affairs (the "MCA Circulars") including any statutory modification or re-enactment thereof for the time being in force and not in physical presence of shareholders in view of the current extraordinary circumstances due to COVID-19 pandemic requiring social distancing norms issued by Ministry of Corporate Affairs (the "MCA") in terms of the MCA Circular.

There are 8 (eight) equity shareholders in the Applicant Company 2. All the equity shareholders have filed affidavits consenting to the Scheme, which have been placed on record at Annexure-'I-2' of the Application. Therefore, the meeting of the equity shareholders of the Applicant Company 2 is dispensed with.

At least one month before the said the meeting of Equity Shareholders of the Applicant Company 1 to be held as aforesaid, a notice convening the said meeting through VC/OAVM , on day, date and time aforesaid, together with a copy of the Scheme, a copy of the explanatory statement disclosing all material facts as required under Section 230(3) of the Companies Act, 2013 read with Rule 6 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 notified, shall be sent by email to each of the Equity Shareholders of the Applicant Company 1, at their respective registered email address of the Equity Shareholders as per the records of the Applicant Company 1 or can be obtained free of charge by emailing to the Applicant Company No. 1 at [email protected].

At least not less than 30 days before the said meeting of the Equity Shareholders of the Applicant Company 1 to be held as aforesaid, a notice convening the said meeting through VC/OVAM, indicating the day, date and time of the meeting as aforesaid be published and stating that copies of the Scheme and the statement required to be furnished pursuant to Section 230(3) of the Companies Act,2013 read with Rule 6 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 can be obtained free of charge at the Registered Office of the Applicant Company 1 as aforesaid and/or at the office of its Authorised Representative ZADN & Associates at 1st Floor, Sadhana Rayon House, Dr. D.N. Road, Fort, Mumbai-400 021 or by emailing to the Applicant Company No. 1 at [email protected].

That the notice of the Meeting of the Equity Shareholders of the Applicant Company 1 shall be advertised in two local newspapers, viz, "Times of Inida" in English and translation thereof in "Daily Eaikya" in Marathi language both having wide circulation in the state in which Registered Office of the Applicant Company 1 is situated, and shall also be placed not less than thirty (30) days before the date fixed for the meeting on the website of the Applicant Company 1, of the SEBI and recognised stock exchange where the securities of the Applicant Company 1 is listed.

Mr. HukmichandSukhlal Chordia, Chairman of the Applicant Company 1, failing him Mr. Pradeep Hukmichand Chordia, Managing Director of the Applicant Company 1, failing him Mr. Bapu Ramchandra Gavhane, Wholetime Director of the Applicant Company 1 shall be the Chairperson of the aforesaid meeting of the Equity Shareholders of the Applicant Company 1 to be held on Thursday, 27th day of April,2021 at 11.30 A.M or any adjournment or adjournments thereof.

Mr. Shekhar Ghatpande., Practicing Company Secretary (FCS No. 1659 & COP No.782 is hereby appointed as Scrutinizer of the meeting of the Equity Shareholders of the Applicant Company 1 to be held as aforesaid.

That the Chairperson appointed for the aforesaid meeting of the Equity Shareholders to issue the advertisement and send out the notices of the respective meeting referred to above. The said Chairperson shall have all powers as per respective company's Articles of Association and also under the Companies Act, 2013 in relation to the conduct of the meeting, including for deciding procedural questions that may arise or at any adjournment thereof or any other matter including an amendment to the Scheme or resolution/ if any, proposed at the meetings by any person(s).

The quorum for the aforesaid meeting of the Equity Shareholders shall be as prescribed under Section 103 of the Companies Act, 2013.

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

The voting by authorised representative shall be permitted, provided that an authorisation/Board Resolution duly signed by the person entitled to attend meeting through VC/OAVM and participate there at and cast their votes through e-voting are send to the Applicant Company 1 on their email id [email protected] or filed with the Applicant Company 1 at its Registered office(s) not later than 48 hours before the aforesaid meeting as required under Rule 6 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.Since the meeting for Applicant Company 1 is being held through VC/OAVM pursuant to circular no. 14/2020 dated 8th April 2020, appointment of proxies shall not be allowed.

The value and number of the shares of each Equity shareholders shall be in accordance with the books/ register of the Applicant Company 1 or depository records and where the entries in the books/register/ depository records are disputed, the Chairperson of the meeting shall determine the value and the number for the purpose of the aforesaid meeting and his decision in that behalf would be final.

The Chairperson of meeting to file an affidavit not less than seven (7) days before the date fixed for the holding of the meeting of Equity Shareholder and do report to this Tribunal that the direction regarding the issue of notices and the advertisement have been duly complied with as per Rule 12 of the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016.

The Chairperson of the meeting to report to this Tribunal, the result of the aforesaid meeting of Equity Shareholders within thirty days of the conclusion of the meeting.

The Representative for the Applicant Company 1 submits that as stated in paragraph 28 of the Company Scheme Application there are 4 (four) Secured Creditors of the value of Rs.5,48,90,876 as on 30th September,2020. The Scheme is between the Applicant Companies and their respective shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no compromise and/or arrangement with creditors and they are not called upon to make any sacrifices, hence their interests are not getting affected in any way. Hence, only meeting of the Equity Shareholders of the Applicant Company 1 is proposed to be held in accordance with the provision of Section 230(1)(b) of the Companies Act,2013. The Applicant Company 1 Undertakes to obtain consent from all Secured Creditors and submit with NCLT before filing of the Petition.

The Representative for the Applicant Company 2 submits that there are no secured creditors in the Applicant Company 2, as stated in para

29 of the Company Scheme Application therefore the question of convening meeting of secured creditors and sending notices to the secured creditors does not arise.

That the Representative for the Applicant Company 1 submits that as stated in paragraph 30 of the Company Scheme Application there are 1061 Unsecured Creditors of the value of Rs 4,04,86,276 as on 30th September,2020 which are in the nature of trade payables and other current liabilities. The Scheme is between the Applicant Companies and their respective shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no compromise and/or arrangement with creditors and they are not called upon to make any sacrifices, hence their interests are not getting affected in any way. Hence, only meeting of the Equity Shareholders of the Applicant Company 1 is proposed to be held in accordance with the provision of Section 230(1)(b) of the Companies Act,2013. This bench hereby directs the Applicant Company 1 to issue notice to all Unsecured Creditors. The notice shall be sent by registered post or by speed post and to its registered or last known address by email to the registered e- mail address, as per records of the Applicant Company 1 as required under section 230(3) of the Companies Act, 2013 with a direction that they may submit their representations, if any, to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Company 1

That the Representative for the Applicant Company 2 submits that as stated in paragraph 31 of the Company Scheme Application there are 19 Unsecured Creditors of the value of Rs 1,31,55,467/- which are in the nature of long-term borrowings and trade payables. The Scheme is between the Applicant Companies and their respective shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no compromise and/or arrangement with creditors and they are not called upon to make any sacrifices, hence their interests are not getting affected in any way. Hence, only meeting of the Equity Shareholders of the Applicant Company 1 are proposed to be held in accordance with the provision of Section 230(1)(b) of the Companies Act,2013. This bench hereby directs the Applicant Company 2 to issue notice to all Unsecured Creditors. The notice shall be sent by registered post or by speed post and to its registered or last known address by email to the registered e-mail address, as per records of the Applicant Company 2 as required under section 230(3) of the Companies Act, 2013 with a direction that they may submit their representations, if any, to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Company 2.

The Equity Shares of the Applicant Company 1 are listed on BSE Limited. Pursuant to the Securities Exchange Board of India Limited (SEBI) Circular No. CFD/DIL3/CIR/2017/21 dated 10th March, 2017 and CFD/DIL3/CIR/2018/2 dated 3rd January, 2018 (the "SEBI CIRCULARS")read with Clause 37 of SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015 (SEBI Listing Regulations), the Applicant Company 1 has submitted the Scheme along with necessary documents with BSE Limited. The Applicant Company 1 has received Observation Letter from BSE Limited for the Scheme of Arrangement between Chordia Food Products Limited and Aveer Foods Limited and with their respective shareholders. BSE Limited has given their "Observation Letter" to the Scheme of Arrangement. Hereto annexed and marked as Annexure "H"is certified true copy of the Observation Letter received from BSE Limited.

The Applicant Companies submits that the Applicant Company 2 is wholly owned subsidiary of the Applicant Company 1 as the entire equity share capital of the Applicant Company 2 is held by the Applicant Company 1 and its nominee.

Upon the Scheme becoming operative and upon the issue of shares by the Resulting Company in accordance with Clause 9 of the Scheme, the existing 10,000 (ten thousand Only) Equity Shares of Rs.10/- each of the Resulting Company held by the Demerged Company, as on the Operative Date shall, without any application or deed or further act, deed, matter or thing, stand reduced, cancelled and extinguished without any payment.

The cancellation of the existing Equity Shares of the Resulting Company as mentioned in Clause 10.1 of the Scheme shall be effected as an integral part of this Scheme in pursuance of Section 66 of the Act and the order of the this Tribunal sanctioning the Scheme shall be deemed to be also the Order under Section 66 of the Act for the purpose of confirming the cancellation and reduction. The cancellation and reduction would not involve either a diminution of liability in respect of unpaid share capital or payment of paid-up share capital and hence the provisions of Section 66 of the Act will not be applicable. Further, the Resulting Company shall not be required to add the words "and reduced" as suffix to its name consequent upon such reduction.

None of the Applicant Companies are registered under the Competition Act, 2002 nor any approval of Competition Commission of India is required, and no investigation is pending against either of these companies under the provisions of the Companies Act, 2013.

The Demerged Company was part of scheme sanctioned dated 30.08.2018 by this Hon'ble Tribunal vide CP(CAA) 173/174/175 of 2018, wherein the Demerged Company was the transferee company/resultant company in the said sanctioned scheme.

The Applicant Company 1, pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, is directed to serve by registered/speed post and by hand delivery the notice of the meeting of its Equity Shareholders upon: (i) Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai, Maharashtra, (ii) the Registrar of Companies, Pune, (iii) Income Tax Authority within whose jurisdiction the assessments of the Applicant Company 1 is made (mentioning the PAN of Applicant Company 1 - PAN: AAACC7421J) at the following address: The Deputy Commissioner of Income Tax, Central Circle 1(2), 6th Floor, Bodhi Tower, Salisbury Park, Pune- 411 037, (iv) BSE Limited, (v) Securities Exchange Board of India (SEBI) and (vi) Goods and Service Tax Authority (mentioning GST RC No. 27AAACC7421J1ZQ) at the following address Deputy. Commissioner of State Tax, E-616, 4th Floor, Cabin No. 411, Goods & Service Tax Bhavan, Airport Road, Yerwada, Pune- 411 006, with a direction that they may submit their representation, if any, within a period of 30 (thirty) days from the date of receipt of such notice, to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Company 1, failing which, it will be presumed that the aforesaid authorities have no representations to make on the Scheme.

The Applicant Company 2, pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, is directed to serve a copy of the scheme by registered post/speed post and by hand delivery upon: (i) Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai, Maharashtra, (ii) the Registrar of Companies, Pune, (iii) Income Tax Authority within whose jurisdiction the assessments of the Applicant Company 2 is made (mentioning the PAN of Applicant Company 2-PAN: AASCA2192G) at the following address: Income Tax Officer, Ward 1(1) PMT Building, Swargate, Pune-411 037, (iv) Goods and Service Tax Authority (mentioning GST RC No. 27AASCA2192G1ZF) at the following address (a) Deputy. Commissioner of State Tax, E-616, 4thFloor, Cabin No. 411, Goods & Service Tax Bhavan, Airport Road, Yerwada, Pune- 411 006, (b) Assistant Commissioner of commercial taxes, local goods & services tax office 310, D C Compound, Dharwad-580001, with a direction that they may submit their representation, if any, within a period of 30 (thirty) days from the date of receipt of such notice, to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Company 2, failing which, it will be presumed that the aforesaid authorities have no representations to make on the Scheme.

The Applicant Companies shall file proof of compliance electronically to report to this Tribunal that all the directions including issue of notices and publication of advertisement have been duly complied with.

Ordered accordingly.