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Judgment
Subrata Kumar Dash, Member (Technical)
This is a joint First Motion Application filed by Applicant Companies namely; Dynamic Drilling & Services Private Limited (for short hereinafter referred to as Applicant Company No. 1/Transferor Company); Jaguar Overseas Limited (for short hereinafter referred to as Applicant Company No. 2/Transferee Company/Demerged Company); and Dynamic Drilling & Offshore Services Private Limited (for short hereinafter referred to as Applicant Company No. 3/Resulting Company No. 1) and Jaguar Overseas Universal Private Limited (for short hereinafter referred to as Applicant Company No. 4/Resulting Company No. 2) under Sections 230 & 232 of the Companies Act, 2013, read with Section 66 of the Companies Act, 2013 (the Act) and other applicable provisions of the Act read with Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 (the Rules) in relation to the Scheme of Arrangement between the Applicant Companies. The said Scheme is attached as Annexure A-6 of the Application.
The Applicant Companies have prayed for dispensing with the requirement of convening the meetings of the Equity Shareholders of all the Applicant Companies; and Un-secured Creditors of the Applicant Company No. 3 & 4. It is further prayed for convening the separate meetings of Unsecured Creditors of the Applicant Company No. 1/Transferor Company and the Applicant Company No. 2/Transferee Company/Demerged Company.
The Applicant Company No. 1/Transferor Company is presently engaged in the business of prospecting for, exploration, exploitation, drilling, extraction, production of oil, gas and petroleum products; onshore and/or offshore and other allied services to Oil & Gas Sector.
The Applicant Company No. 2/Transferee Company/Demerged Company is presently engaged in the business of (i) Engineering, Procurement and Construction business in various areas such as electricity, mining, solar power and others in India or abroad. (ii) Carry on the business of advisory & consultancy services such as fund planning, international taxation, treasury management, accounting and payroll control, manpower support services.
The Applicant Company No. 3/Resulting Company No. 1 is set up with the objects of, inter alia, undertaking the business of prospecting for, exploration, exploitation, drilling, extraction, production of oil, gas and petroleum products; onshore and/or offshore and other allied services to Oil & Gas Sector.
The Applicant Company No. 4/Resulting Company No. 2 is incorporated with the objects of, inter alia, undertaking the business of Engineering, Procurement and Construction projects as well as supply projects in India or elsewhere in the world.
It is submitted that the registered offices of all the Applicant Companies are situated in the State of Haryana and hence are under the territorial jurisdiction of this Bench.
The rationale of the Scheme is given below:
8.1 The merger of the Transferor Company into Transferee Company shall provide the following benefits:
8.1.1 The proposed amalgamation will result in simplification and streamlining of the shareholding structure of the Transferee Company by elimination of shareholding tiers and simplification of promoter’s shareholding.
8.1.2 Further, such a simplified direct holding structure is expected to re-align the Promoters’ shareholding and demonstrate Promoters' direct commitment and engagement with the Transferee Company, from the perspective of its shareholders.
8.1.3 The merger would enable seamless access to strong business relationships, closer and better-focused attention being given to the businesses which would get integrated, aligned and streamlined, leading to the achievement of their full business and growth potential.
8.2 The demerger of the Demerged Undertaking 1 and Demerged Undertaking 2 of the Demerged Company and vesting of the same in the Resulting Company 1 and Resulting Company 2, respectively, shall provide the following benefits:
8.2.1 Creation of a separate, distinct and focussed entity housing the Demerged Undertaking 1 and Demerged Undertaking 2 leading to greater operational efficiencies for the respective Demerged Undertaking.
8.2.2 Segregation and unbundling of the Oil & Gas segment and Engineering, Procurement & Construction segment of the Transferee Company into the Resulting Companies, will enable the attention of the right customer, strategic partners, lenders, etc. resulting in deeper market penetration and explore greater opportunities in their respective business domains.
8.2.3 The different business divisions have their own set of strengths and dynamics in the form of nature of risks, competition, challenges, opportunities and business methods leading to different growth potentials which will enable independent and distinct capital allocation approach and balance sheet management based on the distinct needs of each business.
8.2.4 The nature of capital, operating, regulatory and statutory requirements for Oil & Gas segment are different from the Engineering, Procurement & Construction segment of Transferee Company. Accordingly, the segregation will lead to simplification and better control of compliances and internal reporting.
8.2.5 Independent setup of each of the undertaking of the Demerged Company and the Resulting Companies to ensure required depth and focus on each of the companies and adoption of strategies necessary for the growth of the respective companies. The structure shall provide independence to the management in decisions regarding the use of their respective cash flows for dividends, capital expenditure or other reinvestment in their respective businesses.
8.2.6 Unlocking of value for shareholders of the Demerged Company by transfer of each of the Undertaking, which would enable optimal exploitation, monetization and development of respective undertaking by attracting focused investors having the necessary ability, experience and interests in this sector and allowing the pursuit of inorganic and organic growth opportunities in such businesses; and
8.2.7 Enabling the business and activities to be pursued and carried on with greater focus and attention through separate companies each having its own separate administrative setup and dedicated management.
It is stated that The Board of Directors of the Transferor Company, the Transferee Company/Demerged Company and the Resulting Companies No. 1 & 2 in their respective meetings held on 13.05.2022, considered and unanimously approved the proposed Composite Scheme of Arrangement subject to sanctioning of the same by this Tribunal. The copies of the Board Resolutions of the Applicant Companies No. 1 to 4 are attached as Annexure: A-1/5, A-2/5, A-3/4 and A-4/4, respectively with the application.
The appointed date of the Scheme is 01.04.2022 as mentioned in Clause 1(iii) of Part-I of Scheme of Arrangement which is attached as Annexure: A-6 of the application.
It is stated that Applicant Company No. 1 and Applicant Company No. 2 have filed their Audited Financial Statements as on 31.03.2021 which are attached as Annexure A-1/2 and Annexure A-2/2, respectively of the Application. Applicant Company No. 1 & Applicant Company No. 2 have also filed their Un-audited Financial Statements (provisional) as on 31.03.2022 which are attached as Annexure A-1/3 and Annexure A-2/3, respectively of the Application. Applicant Company No. 3 and Applicant Company No. 4 have filed the Un-audited Financial Statements (provisional) as on 31.03.2022 which are attached as Annexure A-3/2, and A-4/2 respectively of the application.
It is submitted that the Scheme does not propose any buyback of shares nor there is any corporate debt restructuring envisage in the proposed scheme of arrangement.
It is further submitted that in pursuance of the proviso to Section 230(7) and Section 232(3) of the Act, Applicant Company No. 1 has filed certificate dated 26.05.2022 and the Applicant Companies No. 2 to 4 have filed certificates dated 13.05.2022 issued by their respective Statutory Auditors certifying that the Scheme is in compliance with the Accounting Standards under Section 133 of the Act and the same are attached as Annexure A-7 with the application.
It is further submitted by the counsel for the Applicant Companies that as per Valuation Report/Share Entitlement Ratio Report dated 13.05.2022 submitted by Ms Punam Singal, Registered Valuer (S&FA) bearing registration No. IBBI/RV/11/2019/12585 is attached as Annexure A-5 of the application. The Share Entitlement Ratio is given below:
“For amalgamation of Dynamic Drilling & Services Private Limited into Jaguar Overseas Limited
i. For every 11 (eleven) Equity Shares of ₹10 each held in the Dynamic Drilling & Services Private Limited, 100 (one hundred) Equity Shares of Jaguar Overseas Limited of ₹10 each to be distributed among the shareholders of Dynamic Drilling & Services Private Limited (other than where shareholder is Jaguar Overseas Limited itself) in proportion of their holding.
For demerger of Demerged Undertaking 1 of Jaguar Overseas Limited into Dynamic Drilling & Services Private Limited
ii. For every 8 Equity Share of Rs. 10/- each held in Jaguar Overseas Limited (post amalgamation), 1 Equity Shares of the Dynamic Drilling & Offshore Services Private Limited of Rs. 10/-each.
For demerger of Demerged Undertaking 2 of Jaguar Overseas Limited into Jaguar Overseas Universal Private Limited
iii. For every 8 Equity Share of Rs. 10/- each held in Jaguar Overseas Limited (post amalgamation), 1 Equity Shares of the Jaguar Overseas Universal Private Limited of Rs. 10/- each. ”
It is submitted by the learned counsel that the Scheme (Annexure A-6) also takes care of the interest of the staff/workers and employees of the Applicant Companies, by virtue of Part III-Clause 9.1 and Part IV-Clause 21.1 of the Scheme.
It is submitted that the Applicant Companies are required to serve notices to (i) The Central Government, through Regional Director, Northern Region, Ministry of Corporate Affairs; (ii) The Registrar of Companies, Delhi and Haryana; and (iii) Official Liquidator; (iv) Jurisdictional Income Tax Department. It is further submitted that the Scheme does not attract the provisions of the Competition Act, 2002. Hence, no intimation/approval is required from the Competition Commission of India.
It is submitted by the Applicant Companies that there are no material investigations or legal proceedings pending against any of the Applicant Companies under Section 210 to 227 of the Companies Act, 2013 and Section 235 to 251 of the Companies Act, 1956 or any other applicable law. Moreover, there are no proceedings pending under the Companies Act, 2013 before the jurisdictional Adjudicating Authority.
The Applicant Companies have furnished the following documents:
i. Proposed Scheme of Arrangement (Annexure A-6 of the application).
ii. Copy Memorandum and Articles of Association of the Applicant Companies No. 1 to 4 (Annexure A-1/1, A-2/1, A-3/1 and A-4/1 respectively of the application).
iii. List of Equity Shareholders of the Applicant Companies No. 1 to 4 as on 31.03.2022 along with consent furnished by way of affidavits (Annexure A-1/6, A-2/6, A-3/5 and A-4/5 respectively of the application).
iv. List of Secured Creditors of the Applicant Companies No. 1 to 4 as on 31.03.2022 duly certified by Vijay Tulshyan & Co., Chartered Accountants (Annexure A-1/7, A-2/7, A-3/6 and A-4/6 respectively of the application).
v. List of Unsecured Creditors of the Applicant Companies No. 1 & 2 as on 31.03.2022 duly certified by Vijay Tulshyan & Co., Chartered Accountants (Annexure A-1/8 and A-2/8 respectively of the application).
vi. List of Unsecured Creditors of the Applicant Companies No. 3 & 4 as on 31.03.2022 duly certified by Vijay Tulshyan & Co., Chartered Accountants and their consent affidavits (Annexure A-3/7 and A-4/7 respectively of the application).
vii. Certificates of Statutory Auditors to the effect that the Accounting treatment proposed in the Scheme is in conformity with Section 133 of the Companies Act, 2013 (Annexure A-7 of the application).
viii. Audited Financial Statements as on 31.03.2021 of the Applicant Companies No. 1 & 2 (Annexure A-1/2 and A-2/2, respectively of the application).
ix. Un-audited Financial Statements (provisional) for the year/period ended on 31.03.2022 of the Applicant Companies No. 1 to 4 (Annexure A-1/3, A-2/3, A-3/2 and A-4/2 respectively of the application).
x. Report on Valuation of Shares & Share Entitlement Ratio (Annexure A-5 of the application).
The Applicant Company No. 1/Transferor Company i.e. Dynamic Drilling & Services Private Limited, CIN: U74999HR2009PTC102133 is a Private Limited Company incorporated under the Companies Act, 1956 on 28.08.2009. The Applicant Company No. 2/Transferee Company/Demerged Company i.e. Jaguar Overseas Limited, CIN: U51909HR1991PLC102794 is a Private Limited Company incorporated under the Companies Act, 1956 on 24.12.1991. The Applicant Company No. 3/Resulting Company No. 1 i.e. Dynamic Drilling & Offshore Services Private Limited, CIN: U11100HR2022PTC101914 is a Private Limited Company incorporated under the Companies Act, 2013 on 09.03.2022. The Applicant Company No. 4/Resulting Company No. 2 i.e. Jaguar Overseas Universal Private Limited, CIN: U45201HR2022PTC101980 is a Private Limited Company incorporated under the Companies Act, 1956 on 14.03.2022.
The Applicant Companies have furnished the details of the Equity Shareholders, Secured Creditors and Unsecured Creditors as follows:
Name of the Applicant
Companies
Shareholders along with their consent
Creditors along with their consent
Equity Shareholder
Consent submitted on affidavit
Secured Creditors
Consent submitted on affidavit
Unsecured Creditors
Consent submitted on affidavit
Applicant
Company No. 1
10 (Ten) Equity Shareholder
100% (in value)
Nil
NA
298 (Two
Hundred and Ninety-Eight) Unsecured Creditors
Meeting to be convened
Applicant
Company No. 2
12 (Twelve) Equity Shareholders
100% (in value)
Nil
NA
300 (Three Hundred) Unsecured Creditors
Meeting to be convened
Applicant
Company No. 3
2 (Two) Equity Shareholders
100% (in value)
Nil
NA
1 (One)
Unsecured Creditor
100% (in value)
Applicant
Company No. 4
2 (Two) Equity Shareholders
100% (in value)
Nil
NA
2 (Two)
Unsecured Creditor
100% (in value)
Accordingly, the directions of this Bench in the present case are as under:
I. In relation to Applicant Company No. 1/Transferor Company:
a. The meeting of the Equity Shareholders is dispensed with, keeping in view the shareholding and ownership pattern of the company and the fact that the consent by way of affidavits have been received from all the shareholders;
b. Since, there is no Secured Creditor in the Transferor Company/Applicant Company No. 1. Therefore, there is no scope for any meeting;
c. The meeting of the Unsecured Creditors of the Applicant Company No. 1/Transferor Company No. 1 be convened as prayed for on Saturday, 24.09.2022 at 2:00 P.M. at Palladium Hotels, Ramnagar, Palwal-121102, Haryana subject to notice of the meeting being issued. The quorum of the meeting of the Unsecured Creditors shall be 120 in number or 40% in value of the Unsecured Creditors.
II. In relation to Applicant Company No.2/Transferee Company/Demerged Company:
a. The meeting of the Equity Shareholders is dispensed with keeping in view the shareholding and ownership pattern of the company and the fact that the consent by way of affidavits have been received from all the shareholders;
b. Since, there is no Secured Creditor in the Applicant Company No.2/Transferee Company/Demerged Company. Therefore, there is no scope for any meeting;
c. The meeting of the Unsecured Creditors of the Applicant Company No. 2/Transferee Company/Demerged Company be convened as prayed for on Saturday, 24.09.2022 at 3:00 P.M. at Palladium Hotels, Ramnagar, Palwal-121 102, Haryana subject to notice of the meeting being issued. The quorum of the meeting of the Unsecured Creditors shall be 120 in number or 40% in value of the Unsecured Creditors.
III. In relation to Applicant Company No. 3/Resulting Company No. 1:
a. The meeting of the Equity Shareholders is dispensed with keeping in view the shareholding and ownership pattern of the company and the fact that the consent by way of affidavits have been received from all the shareholders;
b. Since, there is no Secured Creditor in the Applicant Company No. 3/Resulting Company No. 1. Therefore, there is no scope for any meeting;
c. The meeting of the Unsecured Creditors of the Applicant Company No.3/Resulting Company No. 1 is dispensed with as it has 2 (Two) Unsecured Creditors and the consent of all the Unsecured Creditors have been received by way of affidavits;
IV. In relation to Applicant Company No. 4/Resulting Company No. 2:
a. The meeting of the Equity Shareholders is dispensed with keeping in view the shareholding and ownership pattern of the company and the fact that the consent by way of affidavits have been received from all the shareholders;
b. Since, there is no Secured Creditor in the Applicant Company No. 4/Resulting Company No. 2. Therefore, there is no scope for any meeting;
c. The meeting of the Unsecured Creditors of the Applicant Company No.4/Resulting Company No. 2 is dispensed with as it has 1 (One) Unsecured Creditor and the consent of sole Unsecured Creditor has been received by way of affidavit;
V. In case the required quorum as noted above for the meetings is not present at the commencement of the meeting, the meeting shall be adjourned by 30 minutes and thereafter the persons shall be deemed to constitute the quorum.
VI. Mr. Jasmeet Singh Bhatia, Address: 1502, Sector 7-C, Chandigarh, Mobile No. 9888446606, email id: jasmeetbhatia123@gmail.com , is appointed as the Chairperson for the meeting to be called under this order. An amount of ₹ 2,00,000/- (Rupees Two Lakhs Only) be paid for his services as the Chairperson.
VII. Mr. Aditya Jain, Address: 133, Sector 35-A, Chandigarh-160022, Mobile No. 9779288882, email id: adv.adityajain88@gmail.com , is appointed as the common Alternate Chairperson for the meeting to be called under this order. An amount of ₹1,50,000/- (Rupees One Lakh and Fifty Thousand Only) be paid for his services as the Alternate Chairperson.
VIII. Mr. Gulshan Kumar Jain, Address: SCO No. 186-188, Sector 17-C, Chandigarh-160017, Mobile No. 9814507007, email id: gkjain@gmail.com , is appointed as the common Scrutinizer for the above meeting to be called under this order. An amount of ₹1,00,000/-(Rupees One Lakh Only) be paid for his services as the Scrutinizer.
IX. The fee of the Chairperson, Alternate Chairperson, Scrutinizer and other out-of-pocket expenses for them shall be borne by the Applicant Companies No. 1 & 2.
X. It is further directed that individual notices of the said meetings shall be sent by the Applicant Companies No. 1 & 2 to their respective Unsecured Creditors 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 time as aforesaid, together with a copy of the Scheme, copy of the explanatory statement with Share Exchange Ratio as discussed in para 14 of this order required to be sent under the Companies Act, 2013 and the applicable Rules and any other documents as may be prescribed under the Act shall also be duly sent with the notice.
XI. It is further directed that along with the notices, Applicant Companies No. 1 & 2 shall also send, statements explaining the effect of the scheme on the creditors, key managerial personnel, promoters and non-promoter members, etc. along with the effect of the scheme of arrangement on any material interests of the Directors of the Company or the debenture trustees if any, as provided under sub-section (3) of Section 230 of the Act.
XII. It is also directed that the Provisional Financial Statements of Applicant Companies as on 31.03.2022 or as on a subsequent date be also circulated for the aforesaid meeting(s) in terms of Section 232 (2) (e) of the Act.
XIII. That the Applicant Company No. 1 and 2 shall publish an advertisement with a gap of at least 30 clear days before the aforesaid meetings, indicating the day, date and place and the time of the meetings as aforesaid, to be published in “Business Standard” (English, Delhi NCR Edition) and “Business Standard” (Hindi, Delhi NCR Edition). The publication shall also indicate that the explanatory statement required to be furnished pursuant to Sections 230 & 232 read with Section 102 of the Companies Act, 2019 can be obtained free of charge at the registered office of the Applicant Companies. The Applicant Companies shall also publish the notice of the meetings on their website, if any.
XIV. Voting by proxy/authorised representatives is permitted provided that the proxy in the prescribed form duly signed by the person entitled to attend and vote at the aforesaid meetings is filed with the Applicant Companies at their Registered Office, not later than 48 hours before the meeting vide Rule 10 of the Companies (CAA) Rules, 2016 read with Section 105 of the Act. Valid Proxies and Authorised Representatives shall be counted for the purpose of quorum.
XV. The Scrutinizer’s report will contain his findings on the compliance to the directions given in Para X to XIV above.
XVI. The Chairperson shall be responsible to report the result of the meetings to the Tribunal in Form No. CAA-4, as per Rule 14 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within 7 (seven) days of the conclusion of the meetings. The Chairperson would be fully assisted by the authorized representative/Company Secretary of the Applicant Companies and the Scrutinizer, who will assist the Hon’ble Chairperson and Alternate Chairperson in preparing and finalizing the report.
XVII. The Applicant Companies shall individually and in compliance of sub-section (5) of Section 230 of the Act and Rule 8 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 send notices in Form No. CAA-3 along with copy of the Scheme, Explanatory Statement and the disclosures mentioned in Rule 6 of the “Rules” to (a) the Central Government through the office of the (a) Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi; (b) the Registrar of Companies, NCT of Delhi and Haryana, New Delhi; (c) the Official Liquidator; and (d) the Income Tax Department, in the respective circle/ward where these Companies are assessed or through the nodal office by mentioning the PAN number of the Applicant Companies; and to such other Sectoral Regulator(s) governing the business of the Applicant Companies, if any, stating that report on the same, if any, shall be sent to this Tribunal within a period of 30 days from the date of receipt of such notice and copy of such report shall be simultaneously sent to the applicant companies, failing which it shall be presumed that they have no objection to the proposed Scheme.
XVIII. The Applicant Companies shall furnish a copy of the Scheme free of charge within one day of any requisition for the Scheme made by any creditor or member/shareholder entitled to attend the meeting as aforesaid.
XIX. The authorized representative of the Applicant Companies shall furnish affidavit of service of notice of meeting and publication of advertisement and compliance of all directions contained herein at least a week before the proposed meeting.
XX. All the aforesaid directions are to be complied with strictly in accordance with the applicable laws including forms and formats contained in the Rules as well as the provisions of the Companies Act, 2013 by the Applicant Companies.
With the aforesaid directions, this First Motion Application stands disposed of. A copy of this order be supplied to the learned counsel for the Applicant Companies who in turn shall supply a copy of the same to the Chairperson, Alternate Chairperson and the Scrutinizer immediately.