Crown Beers India Private Limited vs The Regional Director, South Eastern Region & Ors.

[Per; Ms. Shreesha Merla, Member (Technical)]:

Aggrieved by the Order dated 31.05.2022 passed by the Ld. NCLT (National Company Law Tribunal), in I.A. No.2/2021 in CP (CAA) No. 576/230/HDB/2019 connected with CA (CAA) No.986/230/HDB/2018 the Transferor Company, M/s. Crown Beers India Private Limited preferred these Appeals, under Section 421 of the Companies Act, 2013 (hereinafter referred to as ‘The Act’). Since both these Appeals deals with common facts, they are being disposed of by this common Order.

Company Petition No. 576/230/HDB/2019 connected with CA (CAA) No. 986/230/HDB/2018 was preferred by the Appellant herein, which is the Transferor Company, under Sections 230–232 of the Act, seeking a direction to dispense a Meeting of the Secured Creditors of the Appellant and for directions to convene the Meetings of the Equity Shareholders, Preference Shareholders and Unsecured Creditors of the Appellant, for the purpose of consideration of the Scheme. Vide Order dated 06.02.2019, NCLT allowed the prayers of the Appellant in CA (CAA) No. 986/230/HDB/2018 and directed the Appellant to convene the Meetings of the Equity Shareholders and preference Shareholders. It is submitted that the Appellant filed I.A. No.258/2019 seeking direction for extension of the dates of the Meeting by a period of two months for the various Meetings which were scheduled for 01.04.2019. NCLT, vide Order dated 29.03.2019, allowed this extension by a period of two months and directed the Appellant to hold the Meeting on 01.06.2019. Thereafter, the Appellant filed I.A.343/2019 seeking directions to change the venue and also the extension of the date of the Meeting to 18.06.2019. Vide Order dated 06.05.2019, NCLT allowed the change of venue for the Meetings as prayed for.

It is submitted that the Appellant had duly complied with the directions and convened the Meetings of the Shareholders and Unsecured Creditors wherein each class of the Stakeholders unanimously voted in favour of the Scheme, subsequent to which the Appellant filed CP (CAA) 576/230/HDB/2019 before the NCLT seeking sanctioning of the Scheme. It is submitted that vide Order dated 11.08.2019 NCLT had admitted a Company Petition and directed the Appellant to publish the date of final hearing by advertising and directed the Appellant to Issue Notices and serve the relevant Statutory Authorities, namely the Regional Director, Ministry of Corporate Affairs (‘MCA’), Registrar of Companies (‘RoC’), the Official Liquidator and the Income Tax Department. It is stated that the second Respondent namely, the RoC Hyderabad had issued a notice dated 01.08.2019, seeking various clarifications and documentary proof to which a detailed Reply along with the requisite documents were filed on 31.12.2019. The first Respondent/the Regional Director South Eastern Region (‘SER’), MCA, Hyderabad had also issued a notice dated 18.11.2019, for which the Appellant had given a very detailed Reply on 24.01.2020. The first Respondent filed a Report by way of an Affidavit before the NCLT on 29.10.2019, and its second Report on 24.01.2020 and third Report on 11.03.2020. Likewise, the second and third Respondents have also filed their Reports before the NCLT and correspondence was exchanged between the Appellants and Respondents on a continuous basis. While so, the NCLT vide Order dated 26.02.2021 in CP (CAA) 1027/2020/MB filed by the Transferee Company, had directed that the appointed date of the Scheme be changed from, 01.04.2018 to 01.04.2020. As there ought to be a common appointed date for the implementation of the Scheme, the Appellant herein had filed I.A. 2/2021 seeking for modification for the appointed date from 01.04.2018 to 01.04.2020 in consonance with the direction of the NCLT Mumbai Bench.

When this Application was pending before the NCLT, the Petition praying for the sanction of the Scheme was decided vide the Impugned Order. It is also submitted that the Report filed by the first Respondent in I.A. 2/2021 was never served on the Appellant.

It is submitted by the Learned Counsel, on a query from the Bench regarding the liberty given to the Petitioner Company to approach a fresh after making proper rectification to the proposed Scheme, that it would take considerable amount of time and the purpose of the Scheme of Amalgamation, would be lost.

We observe from the record that the NCLT has gone into great detail into the Reports received from the Statutory Authorities i.e., the Regional Director, SER, MCA, Hyderabad, who filed the Reports on 30.10.2019, 27.01.2020, 12.03.2020 and 16.12.2021 together with the Reports filed by the Official Liquidator dated 11.03.2020, 07.09.2021 and 09.11.2021 and also the reports received from the MCA and has observed that there are multiple objections raised by the Regional Director and the Official Liquidator, which have not been satisfied to the complete satisfaction of the respective Statutory Authority. An Application to amend the Scheme had also been moved, which is pending therefore, the NCLT, while rejecting the instant Scheme, gave a liberty to the Petitioner Companies/Appellants herein to approach afresh after making proper rectifications to the proposed Scheme.

Some of the observations made by the Regional Director, SER in their Additional Affidavit dated 16.12.2021 (fourth Report) are detailed as hereunder:

It is also relevant to detail the observations made by the `Official Liquidator’, vide their Additional Affidavit dated 09.11.2021:

Keeping in view the aforenoted observations, whereby the `Statutory Authorities’, had sought clarifications from the `Appellant Company’ herein, this `Tribunal’, do not find any `irregularity’ or `infirmity’, in the directions passed by the `Tribunal’ (`National Company Law Tribunal’). The `Regional Director’, is a `Public Authority’, looking after the interest of the `Public/Shareholders/Investor’ at large, and if there are any observations, made by the `Regional Director’ that there were `irregularities’ and `non-compliances’ that were present, it is imperative that the `Company’ must comply with the provisions of Law, and not to `violate’, any `Public Policy’, failing which, the `National Company Law Tribunal’, is empowered to reject the `Petition’, seeking approval of the `Scheme’. Before the Scheme gets approved, under Section 230 of the Companies Act, 2013, the `Company’, must, be in compliance with all the provisions required by the `Statutory’ and `Public Authorities’.

Before the sanctioning of the `Scheme’, under Section 230 of the Companies Act, no action ought to be pending against the `Company’, by any `Public Authority’. The contention of the Learned Counsel for the Appellant that I.A. 2 / 2021, seeking change of date was kept pending, has also been addressed to by the `Tribunal’, in the `impugned order’ and the same has not been approved or dealt with on account of the `multiple objections’, raised by the `Regional Director’ and the `Official Liquidator’, which were not been complied with, to the `subjective satisfaction’ of the respective `Statutory Authorities’.

In the light of the foregoing(s), this `Tribunal’, does not find any ground(s), to interfere with the well-reasoned `Order’ of the `Tribunal’ (`NCLT’), especially, keeping in view that a `Liberty’ was indeed granted to the `Appellants’ herein, to file a `Petition’ afresh `rectifying the irregularities’, pointed by the concerned `Authorities’.

Hence, these `Appeals’ fail and accordingly they are dismissed in Limine at the `Admission Stage’ itself. No Order as to costs. The connected pending `Interlocutory Applications’, if any, are closed.