Eversendai Frontiers Private Limited vs Eversendai Constructions Private Limited

Sucharitha R., J

Under consideration are Two Company Petition No.16/CAA/2020 and CP/17/CAA/2020 filed by the above mentioned Petitioner Companies under section 230 and 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules 2016. The instant Company Petition in the matter of the Scheme of Amalgamation by virtue of which of M/s. Eversendai Frontiers Private Limited (hereafter referred as "Transferor Company") with M/s. Eversendai Constructions Private Limited (hereafter referred as "Transferee Company") as a going concern.

The Transferor Company viz., M/s. Eversendai Frontiers Private Limited, is a Private Limited Company, it was incorporated on 11.07.2014, under the Companies Act, 2013, having its registered office at Plot No. 1 & 2, the Lords, 5th Floor, Thiruvika Industrial Estate, Ekkatuthangal, Gundy, Chennai-600032 in the state of Tamilnadu. The main objects of the Transferor Company is set out in clause III (a) of its Memorandum of Association (in short "MoA"). The extract of the main objects, inter-alia to carry on the business or vocation of builders, contractors, engineering, design, detailing, manufacturing of building materials, cement steel, sand hardware, mechanical, electrical items etc.

The Transferee Company viz., M/s. Eversendai Constructions Private Limited, is a Private Limited Company, it was incorporated on 14.08.2009, under the Companies Act, 1956, having its registered office at Plot No. 1 & 2 (NP), the Lords, 5th Floor, Northern Extn Area, Thiruvika Industrial Estate, Ekkatuthangal, Guindy, Chennai-600032 in the state of Tamilnadu. The main objects of the Transferor Company is set out in clause III (a) of its Memorandum of Association (in short "MoA"). The extract of the main objects, inter-alia to carry on the business or vocation of builders, contractors, engineering, design, detailing, manufacturing of building materials, cement, steel, sand, hardware, mechanical, electrical items etc. The Board of Directors of the Transferor Company and Transferee Company vide their resolution dated 8th December, 2018 respectively approved the said scheme of Amalgamation.

This Tribunal vide its order dated 11.10.2019 passed in CA/1023 /CAA/2019 ordered the convening, holding and conducting meeting of the Equity Shareholders and unsecured secured creditors of Transferor Company. The chairman has convened and held the meetings of the shareholders and unsecured creditors of the Transferor Company separately and filed the result of meeting before this bench. The Transferor Company has no Secured Creditor and furnished a certificate from a Chartered Accountant to this effect. In respect of the Transferee Company in CA/1024/CAA/2019 this Tribunal had ordered the convening, holding and conducting meetings of the Equity Shareholders, Secured Creditors and unsecured secured creditors of Transferee Company. The chairman has convened and held the meeting of the shareholders Secured Creditors and unsecured creditors of the Transferee Company separately and filed the result of meetings before this bench. The Applicant Companies have complied with all the orders passed by the Bench.

On perusal of the rationale of the scheme of Amalgamation, the Board of Directors of the Transferor Company and Transferee Company are of the view that the scheme of Amalgamation is expected to yield the following benefits:

i) Benefit of operational synergies to combined entity in hitherto untapped high growth segments for the Transferee Company can be put to the best advantage of all the stakeholders. It would be result in economies of scale, effective coordination and better control; and

ii) Consolidation and simplification of group structure by eliminating multiple companies; and

iii) The amalgamation will lead to backward integration and synergies of operations and a stronger and wider capital and financial base for future growth/expansion of Transferee Company along with diversification; and Since both the companies are into similar businesses, the consolidation will help to have full integration of activities; and

iv) Cost savings are expected to flow from more focused operational effects, rationalization, standardization and simplification of business processes, usage of common resource pool like human resource, administration, finance, accounts, legal, technology and other related functions, leading to elimination of duplication and rationalization of administrative expenses; and

v) Improved organizational capability and leadership, arising from the pooling of human capital that has the diverse skills, talent and vast experience to compete successfully competitive industry; and

vi) Simplification in compliances of various applicable laws and group structuring; and

vii) To avoid cascading effects of multiple taxes in proposed GST; and

viii) Cash flow generated by the combined business can be developed more efficiently to fund organic and inorganic growth opportunities.

There is no investigation or proceeding pending against the companies under the provisions of the Companies Act, 1956 and or the Companies Act, 2013 or by the Registrar of the Companies, Tami Nadu.

The Regional Director, Southern Region (In short, 7RD7) in the Report Affidavit (for brevity, 'Report7) dated 17.01.2020 submitted that as per records of ROC, Chennai, the Transferor and Transferee Companies are regular in filing their statutory returns and no investigation is pending against the companies. It is further submitted that as per clause 12 of part- D of the scheme of Amalgamation provides for protection of the interest of the executives, staff, workmen and other employees of the Transferor Company. It is further submitted that as per clause 5.1 of part -C of the scheme has stated that the transferee company will pay the differential fee if any on the enhanced authorised capital after adjusting the fee paid by the Transferor Company. The Transferee Company may be directed to comply with the provisions of clause (i) of sub section (3) of the section 232 of the companies act, 2013 in respect of the payment of further fees for the enhanced authorised capital However, the RD has decided not to make any objection to the Scheme and submitted that the petition may be disposed of on merits.

With regard to observation made by the RD para 9 of his Report the Transferee Company has undertaken to comply with the observations raised by the filling the amended Memorandum and Articles of Association of the Transferee Company under section 232(3)(i) of the Companies Act, 2013.

The Official Liquidator (In short, 'OL') in the report dated 25.02.2020 submitted that M/s. Pores Fernando & Co., Chartered Accountants appointed on the order of this Tribunal, have scrutinized the books and accounts of the Transferor Company. The Auditor observed that the Transferor Company has maintained and written up all the statutory books in accordance with normally accepted accounting principles and policies in accordance with the requirements of the Companies Act, 1956 & Companies Act, 2013 and also the affairs of the company have not been conducted in a manner prejudicial to the interest of its members, creditors or to public interest.

The OL further submitted that as per terms of the Scheme of Amalgamation, upon the scheme becoming effective the shareholders of the Transferor Company will get "For every 1 share ofEFPL, 46 Equity Share ofECPL shall be allotted to the Shareholders of the EFPL, in which the One Share held by ECPL in EFPL will stand cancel". The Chartered Accountants are of the opinion that the affairs of Transferor Company have not been conducted in a manner prejudicial to the interest of its members or creditors or to the public. The OL has submitted that the company petitions may be decided on merits.

Further perusal of the scheme shows that the accounting treatment is in conformity with the established accounting standards. In short, there is no apprehension that any of the creditors would lose or be prejudiced if the proposed scheme is sanctioned. The said Scheme of Amalgamation will not cast any additional burden on the stakeholders and also will not prejudicially affect the interests of any class of the creditors in any manner. The Appointed date of the said Scheme is 01st April, 2018.

The Petitioner Companies have stated that the scheme Proposed does not fall within the ambit of sections 5 and 6 of the Competition Act, 2002.

The scheme does not require any modification as it appears to be fair and reasonable, not contrary to public policy and also not violative of any provisions of law. All the statutory compliances have been made under section 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Scheme of Amalgamation between the Transferor Company and the Transferee Company was duly approved by the shareholders of respective companies. Taking into consideration all the above, the Company Petitions are allowed and the scheme of Amalgamation annexed with the petition is hereby sanctioned which shall be binding on all the members, creditors and shareholders.

While approving the scheme as above, we further clarify that this order will not be construed as an order granting exemption from payment of stamp duty or taxes or any other charges, if payable, as per the relevant provisions of law or from any applicable permissions that may have to be obtained or, even compliances that may have to be made as per the mandate of law.

The Transferor Company shall be dissolved without winding up from the date of the filing of the certified copy of this order with the Registrar of Companies

The Company to the said Scheme or other person interested, shall be at liberty to apply to this Bench for any direction that may be necessary with regard to the working of the said Scheme. The Petitioner Companies to file with the Registrar of Companies the certified copy of this Order within 30 days of the receipt of the order.

The Transferor Company is also directed to pay Rs. 50,000/- to Official Liquidator to M/s. Pores Fernando & Co., Chartered Accountants, and the Auditor who investigated into the affairs of the Transferor Company within 15 days of passing of this order.

The Order of sanction to this Scheme shall be prepared by the Registry as per the format provided under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 as has been notified on 14th December, 2016.

Accordingly, the Scheme annexed with the petitions stands sanctioned and CP/16 & 17/CAA/2020 stands disposed of.