Genus Innovation Limited Vs

The present Joint Company Petition is filed by the Applicant Companies above named under Sections 230 & 232 of the Companies Act, 2013, the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and other applicable provisions, if any, for sanction of the Scheme of Arrangement of Genus Innovation Limited (“Petitioner Company No. 1” or “Demerged Company”), and New Geo Metering Solutions Private Limited (“Petitioner Company No. 2” or “Resulting Company”) (“Scheme” or “Scheme of Arrangement”).

The Petition has now come up for final hearing. The Ld. Counsel for the Petitioner Companies submits as follows:

(i) The proposed ‘Scheme of Arrangement’ has previously been approved by the Board of Directors of Petitioner Company No.1 in its meeting held on 19.01.2022 as modified by a resolution passed by the Board of Directors in its meeting duly held on 31.05.2022 and the Board of Directors of the Petitioner Company No. 2 in its meeting held on 19.01.2022 as modified by a resolution passed by the Board of Directors in its meeting duly convened on 31.03.2022

(ii) The factual position of the Authorized, Issued, Subscribed and Paid-up Share Capital of the Petitioner Company 1 and Petitioner Company 2 as on 31st March, 2022 is described in the present Company Petition.

(iii) The rationale of the proposed Scheme of Arrangement is elaborately described in the present Company Petition which may be summarized as under:

(i) The Demerged Company has in place a management structure in the form of business verticals /undertakings  to  dynamically  review, evaluate  and forecast developments in the concerned sectors and to monitor the performance and improve returns from such specialized investments. The nature of risks and competition involved in each such undertaking is distinct and requires attribution of dissimilar technical and managerial focus. With a view to concentrate the growth efforts in a focused manner and to provide flexibility to manage each of the business divisions using strategies optimal to the nature and return profile of the division, the management of the Demerged Company, proposes to undertake a Scheme of Arrangement to demerge its interests in the Demerged Business Undertaking on a going concern basis, and vest the same with the Resulting Company.

(ii) The Scheme of Arrangement is likely to be value accretive for the shareholders and would result in the following benefits:

a. Enables focused management orientation to each of the business due to individual specialization and leadership vision, which would provide greater visibility on the performance of the respective businesses;

b. Attribution of appropriate risk and valuation to different business undertakings based on their respective risk return profile and cash flows;

c. The management and Board of Directors of the Petitioner Companies would be able to chart-out independent strategies of their respective business to maximize value creation for the respective stakeholders; and

d. Opportunities for strategic partnership and flexibility for fund raising capability for future growth and expansion and to create a structure geared to take advantage of growth opportunities.

(iii) The Scheme is not opposed to public policy and does not have any adverse effect on either the shareholders or employees or creditors of the Demerged Company or Resulting Company.

The Petitioners have stated that the accounting treatment proposed in the Scheme of Arrangement is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 as certified by the respective Auditors of the Petitioner Companies.

It has also been stated in the Petition that no proceedings under Sections 235 to 251 of the Companies Act, 1956 or under Sections 210 to 226 of the Companies Act, 2013 are pending against any of the Petitioner Companies.

It has also been stated in the Petition that the Scheme is not prejudicial to the interest of the Shareholders and Creditors of the Petitioner Companies and the Petition is made bona fide and is in the interest of both the Petitioner Companies and their respective Shareholders and Creditors as a whole and is just and equitable.

It has been stated that the Demerged Company is a public limited company with unlisted shares and the Resulting Company is a private limited company under the common management and control.

It is also submitted that valuation exercise has been carried out to determine the share exchange ratio for the proposed Scheme of Arrangement. Ms Madhvi Takiar Sehgal, Registered Valuer having IBBI Reg. No.: IBBI/RV/02/2018/10289, has prepared the Share Exchange Entitlement Ratio

The following Share Exchange Entitlement Ratio has been proposed for the proposed Scheme of Arrangement:

Ø  1 fully paid-up equity share of face value of INR 10.0 each in the Resulting Company for every 1 fully paid-up equity share of face value of INR 1 each held in the Demerged Company

Any fraction of share arising out of the aforesaid share exchange process, if any, will be rounded off to the nearest whole number.

The Petitioner Companies have annexed the Share Exchange Entitlement Ratio dated 15th January, 2022 given by Ms Madhvi Takiar Sehgal, Registered Valuer having IBBI Reg. No.: IBBI/RV/02/2018/10289 describing the methodology adopted by them in arriving at and recommending the Share Exchange Entitlement Ratio.

A perusal of the present Petition discloses that initially the Petitioner Companies had filed a Company Application No. CA (CAA) No. 13/ALD of 2022 seeking directions of this Tribunal to dispense with the requirement of convening the meetings of the Equity Shareholders, Secured creditors and Unsecured Creditors of the Petitioner Companies, for the purpose of considering and approving the Scheme of Arrangement. Accordingly, this Tribunal vide its order dated 23rd August, 2022 , allowed the above mentioned prayers, by dispensing with the requirement of convening the meetings of the Equity Shareholders, secured creditors and Un-secured Creditors of the Petitioner Companies, for the purpose of considering and approving the Scheme of Arrangement.

This Tribunal vide its order dated 23rd August, 2022 directed to issue notice of the Company Application/Scheme of Arrangement to the Statutory Authorities, viz., (a) the Central Government through the office of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi; (b) the Registrar of Companies, Uttarakhand, (c) Jurisdictional Income Tax Authority.

This Tribunal further directed to issue notice of hearing in respect of present Company Petition to the Statutory Authorities and also to make paper publication in this respect in “Times of India” (English, Uttarakhand Edition) and “Amar Ujala” (Hindi, Uttarakhand Edition).

In compliance thereof, the Petitioner Companies have filed Affidavit of service and publication, confirming that notices have been duly published in “Times of India” (English, Uttarakhand Edition) and “Amar Ujala” (Hindi, Uttarakhand Edition) on 29th October, 2022. The Petitioner Companies have also served notice of the Company Petition to (a) the Central Government through the office of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi; (b) the Registrar of Companies, Uttarakhand (c) the Jurisdictional Income Tax Authority.

In response to the above stated notice, the Registrar of Companies, Ministry of Corporate Affairs, Uttarakhand has submitted its Report dated 22nd February 2023. No objection has been raised by the Registrar of Companies on the Scheme of Arrangement.

In response to the above stated notice, the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi has submitted its Report dated 28th February, 2023. No objection has been raised by the Regional Director on the Scheme of Arrangement.

In response to the notices served, the Income Tax Department has furnished its Report dated 10th April 2023 in respect of the Petitioner Companies. The Income Tax Department has given its ‘No-objection’ to the proposed Scheme of Arrangement.

The Petitioner Companies have filed Affidavits dated 13th October 2023 wherein the Petitioner Companies have undertaken that all legal proceedings whether in relation to tax liabilities shall be continued and enforced by or against the Petitioner Companies, as the case maybe, subsequent to the sanction of the Scheme by this Tribunal. Hence, interest of the Income Tax Department will be duly protected even after the approval of the Scheme of Arrangement.

The Petitioner Companies have also filed Affidavits vide Diary No. 0902110005802022 dated March 13, 2023, confirming that neither the Petitioner Companies nor their Legal Counsel has received any objection/representation from any person against the Petition or the proposed Scheme of Arrangement in response to the publication of the notice of hearing of the present Petition in Newspapers.

We have gone through the reports/comments of the Ld. Registrar of Companies, Uttarakhand, Regional Director (Northern Region), Ministry of Corporate Affairs, New Delhi, Ld. and the Income Tax Department and after perusing the same, we find that there appears to be no reservation to grant sanction to the Scheme and we are of the view that the sanction of the present Scheme is not against public policy, nor it would be prejudicial to the public interest at large.

In addition to above, all the statutory compliance seems to have been complied with by the Petitioner Companies, therefore, the present Company Petition deserves to be allowed in terms of its Prayer Clause.

As a result, the proposed Scheme of Arrangement, which is annexed to the Company Petition stands approved and sanctioned and the same shall be binding on all the Shareholders and Creditors of the above-named Petitioner Companies and also on the Petitioner Companies with effect from the Appointed Date, i.e., 1st day of April, 2022. The Petitioner Companies are required to act upon as per terms and conditions of the sanctioned Scheme of Arrangement.

While approving the Scheme as above, it is clarified that this order should not be construed as, in any way, granting exemption from payment of stamp duty (if any, is applicable), taxes (including Income Tax, GST or any other charges, if any, are applicable) and payment in accordance with law or in respect to any permission / compliance with any other requirement which may be specifically required under any law.

THIS TRIBUNAL DO FURTHER ORDER:

i. Upon the Scheme becoming effective, all the property, rights and powers of the Demerged Company relating to the Demerged Undertaking, without further act or deed, be transferred to and vested in or deemed to have been demerged from, transferred to and vested in, from the said Appointed Date, to the Resulting Company;

ii. Upon the Scheme becoming effective, all the liabilities and obligations of the Demerged Company relating to the Demerged Undertaking be transferred from the said Appointed Date, without further act or deed, to the Resulting Company and shall thereupon become the liabilities and obligations of Resulting Company;

iii. Upon the Scheme becoming effective, all the employees of the Demerged Company relating to the Demerged Undertaking, in service on the Effective Date, shall be transferred to and shall become the employees of the Transferee Company as provided in the Scheme of Amalgamation;

iv. Upon the Scheme becoming effective, the Provident Fund, Gratuity Fund including fund maintained with LIC, Superannuation Fund or such other Special Fund, if any, or Trusts (hereinafter collectively referred as “Funds‟) created for the benefit of the staff, workmen and employees of the Demerged Company relating to the Demerged Undertaking shall be transferred to the Resulting Company

v. Upon the Scheme becoming effective, all proceedings now pending by or against the Demerged Company relating to the Demerged Undertaking be continued by or against the Resulting Company;

vi. Upon the Scheme becoming effective, all the statutory licenses, specifically BIS certification, ISO and OHSAS certifications, permits, quotas, entitlements approvals, permissions, registrations, incentives, tax deferrals and benefits, subsidies, concessions, grants, rights, claims, leases, tenancy rights/ lease or license rights relating to the Demerged Undertaking, shall, without further act or deed, transferred to the Resulting Company

vii. Upon the Scheme becoming effective, pursuant to the provisions of Section 61, 64 and all other applicable provisions, if any, of the Companies Act, 2013 and Article II (1) of Articles of Association, all the 15,00,000 (fifteen Lakhs) equity shares of INR 1 (Rupees one only) each of the Resulting Company be consolidated and divided into 1,50,000 (One Lakh fifty thousand) Equity shares of INR 10 (Rupees Ten Only).

viii. Upon the Scheme becoming effective, the subscribed, issued and paid up share capital of the Demerged Company shall stand reduced from INR 39,736,290 (Three Crore Ninety Seven lacs Thirty Six Thousand Two Hindered Ninety) divided into 3,973,629 (Thirty Nine Lacs Seventy Three Thousand Six Hundred and twenty Nine) equity shares of INR 10 (ten) each to INR 3,973,629 (Thirty Nine Lacs Seventy Three Thousand Six Hundred and twenty Nine) divided into 3,973,629 (Thirty Nine Lacs Seventy Three Thousand Six Hundred and twenty Nine) equity shares of INR 1 (One) each.

ix. Upon the Scheme finally coming into effect and in consideration of the transfer and vesting of all the said assets and liabilities of the Demerged Company to the Resulting Company relating to the Demerged Undertaking in terms of the Scheme, the Resulting Company shall, without any further application or deed, issue and allot Share(s) to the Shareholders of the Demerged Company in the following manner as provided in the Scheme of Arrangement:

§  The Resulting Company will issue 1 (one) Equity Shares of face value of ₹10 each, credited as fully paid-up, to the Shareholders of the Demerged Company for every 1 (one) Equity Shares of face value ₹1 each held in the Demerged Company

Liberty is granted to the Petitioners to file the Schedule of Assets.

The Petitioner Companies shall, within thirty days of the date of the receipt of this Order, cause a certified copy of this order to be delivered to the Registrar of Companies, Uttarakhand, for registration

The Petitioner Companies shall supply legible print outs of the Scheme and the Schedule of Assets in acceptable form to the Registry and the Registry will append such print outs, after verification, to the certified copy of the Order.

Certified copy of this Order be supplied, if applied for, subject to compliance with usual formalities.

That the Resulting Company shall deposit an amount of Rs.25,000/- (Rupees Twenty Five Thousand Only) in favour of “The Ministry of Corporate Affairs” within a period of four weeks from the date of receipt of the certified copy of this order and file affidavit of compliance thereof.

All the concerned Regulatory Authorities and other persons to act on a copy of this Order annexed with the Scheme duly authenticated by the Registrar, National Company Law Tribunal, Allahabad Bench.

Any person interested shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary.

Accordingly, the present Company Petition bearing CP (CAA) No. 17/ALD of 2022 is allowed and stands disposed of.