CRL Finance & Investment Private Limited vs Registrar of Companies

Rajasekhar V.K. Member (Judicial)

The court convened by video conference.

The instant petition has been filed under Section 232(3) and other applicable provisions of the Companies Act, 2013 (“Act”) for sanction of the Scheme of Amalgamation of Casablanca Broking & Agency Private Limited, being the Petitioner No. 2 abovenamed ("Transferor Company No. 1" or “Petitioner No. 2”), Janpragati Syntex Private Limited, being the Petitioner No. 3 abovenamed ("Transferor Company No. 2" or “Petitioner No. 3”),

Nalimbur Mercantile Private Limited, being the Petitioner No. 4 abovenamed ("Transferor Company No. 3" or “Petitioner No. 4”), Wondermax Mercantile Private Limited, being the Petitioner No. 5 abovenamed ("Transferor Company No. 4" or “Petitioner No. 5”) with CRL Finance & Investment Private Limited, being the Petitioner No. 1 abovenamed ("Transferee Company" or “Petitioner No. 1”) whereby and whereunder the Transferor Companies are proposed to be amalgamated with the Transferee Company from the Appointed Date, viz 1st Day of April,2020 in the manner and on the terms and conditions stated in the said Scheme of Amalgamation (“Scheme”).

The Petition has now come up for a final hearing. Counsel for the Petitioners submits as follows:-

(a) The Scheme was approved unanimously by the respective Board of Directors of the Petitioner Companies at their meetings held on 19/03/2021 respectively.

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

(i) For the purposes of better, efficient and economical management, control and running of the business of the undertakings concerned and also for administrative convenience and to obtain advantage of economy of large scale and to broad base the present business, the present Scheme is proposed to amalgamate the Transferor Companies with the Transferee Company.

(ii) Simplification of corporate structure by reducing the number of legal entities and reorganizing the legal entities in the group structure;

(iii) Significant reduction in the multiplicity of legal and regulatory compliances required at present to be carried out;

(iv) Elimination of duplication in administrative costs and multiple record-keeping, thus resulting in cost savings;

(v) Concentrated effort and focus by the senior management to grow the business by eliminating duplicative communication and burdensome coordination efforts across multiple entities.

(vi) Simply the Shareholding of Transferee Company.

(c) The Statutory Auditors of respective Petitioner Companies have by their certificates dated 30/06/2021 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) No proceedings are pending under Sections 210 to 227 of the Companies Act, 2013 against the Petitioners.

(e) 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 Report thereon of Pranab Kumar Chakrabarty, Registered Valuer.

(f) The shares of the all Petitioner Companies are not listed in any Stock exchange.

(g) By an order dated 8th November,2021 in Company Application (CAA) No. 153/KB/2021, this Tribunal made the following directions with regard to meeting(s) of shareholders and creditors under Section 230(1) :-

Meetings dispensed: Meetings of the Equity Shareholders, and Unsecured Creditor of the Applicant No. 1 , 2, 3, 4 and 5 are dispensed-with under Section 230(1) read with Section 232(1) of the Act.

No requirement of meeting: Nil Secured creditors of all Applicant Companies as verified by the auditors certificate.

Meeting to be held: No meeting is required to be held.

(h) Consequently, the Petitioners presented the instant petition for sanction of the Scheme. By an order dated 09/02/2022 the instant petition was admitted by this Tribunal and fixed for hearing on 31/03/2022 upon issuance of notices to the Statutory / Sectoral Authorities and advertisement of date of hearing. In compliance with the said order dated 09/02/2022, the Petitioners have duly served such notices on the Regional Director, MCA on 02/03/2022, Registrar of Companies on 02/03/2022, Official Liquidator on 02/03/2022 Income Tax officer on 02/03/2022, Reserve Bank of India on 02/03/2022. The Petitioner(s) have also published such advertisements once each in the Financial Express on 14/03/2022 and in Aajkaal on 14/03/2022. An affidavit of compliance duly affirmed on 16/03/2022 in this regard has also been filed by them.

(i) All statutory formalities requisite for obtaining the 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, Ministry of Corporate Affairs, Kolkata (“RD”), Official Liquidator, High Court, Calcutta have filed their representations before this Tribunal.

The Official Liquidator has filed his report dated 18th May,2022 and concluded as under:-

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 the 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 30th March, 2022 (“RD affidavit”) which has  been  dealt  with  by the  Petitioner(s)  and  the  Petitioners have  also  filed  Rejoinder affidavit. The observations of the RD and responses of the Petitioner(s) are summarized as under:-

(a) Paragraph No. 2 (a) of RD affidavit : That it is submitted that as per records available, 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 statutory returns for the year ended 31/03/2021.

Paragraph 5(a) of Rejoinder : With reference to paragraph 2(a) of the said reply, the petitioners make no comments as it already stated that there is no complain and/or representation against the scheme and both petitioners companies have updated in filing with Registrar of Companies.

(b) Paragraph No. 2 (b) 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 5(b) of Rejoinder : With reference to para 2 (b), it is stated that the petitioners' companies undertake to comply with the provisions of section 232(3)(i) of the Companies Act 2013. Further, Part-B of Clause 9 of the Scheme relating to authorised capital is in accordance with section 232(3)(i) of the Companies Act 2013.

(c) Paragraph No. 2 (c) of 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 5 (c) of Rejoinder : With reference to para 2 (c), it is stated that the petitioners companies undertakes to pay applicable stamp duty on the transfer of the immovable properties from the Transferor Companies to it. However Petitioner Companies undertakes that stamp duty will be paid immediately after sanction of scheme and the Scheme becomes effective.

(d) Paragraph No. 2 (d) of 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 5(d) of Rejoinder : (d) With reference to para 2 (d), it is stated that the Scheme enclosed to the Company Application and Company Petition are one and same and there is no discrepancy and no change.

(e) Paragraph No. 2 (e) of RD affidavit : It is submitted that all the petitioner companies are NBFCs registered with Reserve Bank of India (RBI).However, no 'NOC' from RBI has been provided yet in the matter.

Paragraph 5(e) of Rejoinder : With reference to para 2 (e), it is stated that notice has been served upon the R.B.I two times, but till date the petitioner companies has not received any objection. Further it is stated that after the sanctioning of the Scheme, all petitioner companies are NBFC. Further, it is stated that in case it is found that the if Transferee and Transferor companies has violated any provision of the Reserve Bank of India Act then the Directors of the Transferee Company and Transferor Companies shall be liable for breaching the applicable provisions of the Reserve Bank of India Act irrespective of the sanction of the Scheme.

(f) Paragraph No. 2 (f) of RD affidavit : In the financial statement and annual return of the transferor company, Janpragati Syntex Private Limited for 2020-21, it is stated that the other transferor company, Wondermax Mercantile Private Limited holds 1,70,000. nos. shares which is 22.9.1% of the shares of the company as on 31.03.2021, But in the financial statement of Wondermax Mercantile Private Limited for 2020-21 no. shareholding in Janpragati Syntex Private Limited as on 31.3.2021 is reported in the schedule of Investments. Therefore the source of funds in Janpragati Syntex Private Limited is not from Wondermax Mercantile Private Limited contrary to what is stated in the financial statement and annual return of Janpragati Syntex Private Limited which questions the credibility of those documents beside the serious implication about the actual source of the funds.

Paragraph 5(f) of Rejoinder : (f) With reference to para 2 (f), it is submitted that Wondermax Mercantile Private Limited is having inventories as on 31.03.2021 amounting to Rs 9,47,466/- whereas as on 31.03.2020 amounting to Rs 25,35,546.65. It is stated that Wondermax Mercantile Private Limited holds 1,70,000 Equity Shares of Janpragati Syntex Private Limited and the said is not treated as Investment whereas the said 1,70,000 Equity Shares of Janpragati Syntex Private Limited are included in closing stock. Certificate from Statutory Auditor of Wondermax Mercantile Private Limited confirming the said fact alongwith break-up of closing stock as on 31/03/2021 is annexed hereto and is marked as Annexure “A”.

(g) Paragraph No. 2 (g) of RD affidavit : In the financial statement of the transferor company, Janpragati Syntex Private Limited for 2020-21 it is stated that the company holds 33,637 nos. quoted shares of MPS Limited for Rs.48,07,623/- as on 31.03.2021. But in the Annual Return of MPS Limited (listed company as on 31.03.2021 no shareholding of Janpragati Syntex Private Limited is shown. The petitioner should clarify.

Paragraph 5(g) of Rejoinder: (g) With reference to para 2 (g), it is stated that in financial statement of Janpragati Syntex Private Limited for the year ended 31/03/2021 it is stated that company have investment in PMS (Portfolio Management Scheme) of MPSL (Master Portfolio Services Limited) amounting to Rs 48,07,623.07 and not in MPS Limited as observed by Ld Regional Director, MCA. Copy of the statement issued by MPSL (Master Portfolio Services Limited) alongwith valuation of said investment are annexed hereto and marked as Annexure “B”.

(h) Paragraph No. 2 (h) 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 31/03/2021 for their views/ observation in the matter but the same is still awaited.

Paragraph 5(h) of Rejoinder: (h) With reference to para 2 (h), it is stated that the petitioner companies have also served the notice two times to respective income tax assessing officer and have received no communication. However the Petitioner Companies undertakes that even after the sanction of scheme, the Transferee Company will be liable for all liabilities of Transferor Companies.

Paragraph 6 of Rejoinder It is further stated and submitted that the petitioners companies undertakes that if there is any deficiencies found, or violation committed relating any enactment, statutory rules or regulation, the sanction granted by the Hon’ble Tribunal to the scheme will not come in the way of action being taken in accordance with law, against the concerned persons, directors and official of the petitioners and Transferee Company.

Further, it is directed that in case it is found that the if Transferee and Transferor companies has violated any provision of the Reserve Bank of India Act then the Directors of the Transferee Company and Transferor Companies shall be liable for breaching the applicable provisions of the Reserve Bank of India Act irrespective of the sanction of the Scheme.

After hearing submissions made by the Ld Counsel appearing for the Petitioners, it is ordered that in case of any default including any Provisions of Income Tax Act in this respect of the Transferor Companies the Income Tax department , the ROC, West Bengal and all other Statutory Department 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 responsible for the liabilities/non-compliance of the Transferor Companies also.

Further, heard submissions made by the Ld Counsel appearing for the Petitioner, Mr Harihar Sahoo, Joint Director for and on behalf of RD, who appeared and were heard. Upon perusing the records and documents in the instant proceedings and considering the submissions, we allow the petition and make the following orders:-

(a) the Scheme of Amalgamation mentioned in paragraph 1 of the petition, being Annexure "A" hereto is hereby sanctioned by this Tribunal to be binding with effect from 1st Day of April,2020 (“Appointed Date”) on Transferor Companies and Transferee Company, their respective shareholders and creditors and all concerned;

(b) 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;

(c) all the 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;

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

(e) 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;

(f) The Transferee Company do 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;

(g) leave is granted to the Petitioners to file the Schedule of Assets and liabilities of the Transferor Companies in the form as prescribed in the Schedule to Form No. CAA-7 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within three weeks from the date of receiving a copy of this order;

(h) That any person interested shall be at liberty to apply to this Tribunal in the above matter for any directions that may be necessary.

(i) The Transferor Companies and the Transferee Company shall each within thirty days of the date of the receipt of this order, cause a certified copy thereof to be delivered to the Registrar of Companies for registration and on such certified copies being so delivered, the Transferor Companies shall be dissolved with effect from the date or last of the dates of filing of the certified copies of the order, as aforesaid (Effective Date) and the Registrar of Companies shall place all 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 companies shall be consolidated accordingly.

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

Company Petition (CAA) No. 232/ KB /2021 is disposed accordingly.

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