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Judgment
Narender Kumar Bhola, Member (T)
This is first motion application jointly filed by the Applicant Companies under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (for brevity "the Act") read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (for brevity "the Rules") in relation to the Scheme of Arrangement (for brevity "the Scheme") proposed between the Applicant Companies and their respective shareholders and creditors.
Affidavits in support of the application sworn for and on behalf of the Applicant Companies have been filed by Mr. Devinder Kansal and Mr. Felix Joseph Louis being the respective authorized representatives of the Applicant Companies.
It is represented that the Scheme does not contemplate any corporate debt restructuring as contemplated under Section 230(2)(c) of the Act. We have been taken through the averments made in the Application as well as the documents annexed there with. It is further represented that the Application filed by the Applicant Companies is maintainable in view of Rule 3(2) of the Rules and it is also represented that the registered office of the Applicant Companies are situated within the territorial jurisdiction of this Tribunal and fall within the domain of Registrar of Companies, NCT of Delhi.
In relation to Applicant Company 1, it is represented:
(a) The Applicant Company 1 is an unlisted public limited company and was incorporated on May 21, 2009 under the provisions of the Companies Act, 1956. The authorized share capital of the Applicant Company 1 as on the date of the Application is Rs. 25,00,00,000 divided into 50,00,000 equity shares having face value of Rs. 10/- each and 2,00,00,000 preference shares having face value of Rs. 10/- each. The issued, subscribed and fully paid up share capital of the Applicant Company 1 as on the date of the Application is Rs. 22,05,00,000 divided into 20,50,000 equity shares having face value of Rs. 10/- each, 50,00,000 - 8% optionally convertible cumulative redeemable preference shares having face value of Rs. 10/- each fully paid up, and 1,50,00,000 -2% optionally convertible non-cumulative redeemable preference shares having face value of Rs. 10/- each fully paid up. The registered office of the Applicant Company 1 is situated at 2nd Floor, F-7, Block B-1, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi - 110044.
(b) As on December 31, 2019, the Applicant Company 1 has 8 (Eight) equity shareholders holding a total of 20,50,000 equity shares having a face value of Rs. 10/- each. Further, the Applicant Company 1 also has 1 (One) 8% optionally convertible cumulative redeemable preference shareholder (i.e., Ms. Renu Alka Sehgal) holding 50,00,000 - 8% optionally convertible cumulative redeemable preference shares as well as 1 (One) 2% optionally convertible non-cumulative redeemable preference shareholder (i.e., Systematic Conscom Limited) holding 1,50,00,000 - 2% optionally convertible non-cumulative redeemable preference shares. A certificate issued by a Chartered Accountant certifying the list of shareholders of the Applicant Company 1 as on December 31, 2019 has been filed along with the application as Annexure - A-9 (Colly.).
(c) As on December 31, 2019, the Applicant Company 1 has a total of 4 (Four) secured creditors representing a total outstanding secured debt of Rs. 55,70,78,126 (Rupees Fifty-Five Crores Seventy Lakhs Seventy-Eight Thousand One Hundred and Twenty-Six Only). A certificate issued by a Chartered Accountant certifying the list of secured creditors of the Applicant Company 1 as on December 31, 2019 and the consent affidavits executed by all secured creditors holding 100% of the total outstanding secured debt of the Applicant Company 1 as on December 31, 2019 approving the Scheme for the purpose of seeking dispensation from holding the meeting of the secured creditors of the Applicant Company 1 have also been filed along with the application as Annexure A-10 (Colly.).
(d) As on December 31, 2019, the Applicant Company 1 has a total of 2,086 (Two Thousand Eighty-Six) unsecured creditors representing a total outstanding unsecured debt of Rs. 61,78,69,063 (Rupees Sixty-One Crore Seventy-Eight Lakhs Sixty-Nine Thousand and Sixty-Three Only). A certificate issued by a Chartered Accountant certifying the list of unsecured creditors of the Applicant Company 1 as on December 31, 2019, and the consent affidavits executed by 27 (Twenty Seven) unsecured creditors holding over 90% of the total outstanding unsecured debt of the Applicant Company 1 approving the Scheme for the purpose of seeking dispensation from holding the meeting of the unsecured creditors of the Applicant Company 1, have also been filed along with the application as Annexure A-11 (Colly.).
In relation to the equity shareholders and preference shareholders, the Applicant Company 1 prays for direction to convene the respective meetings of the equity shareholders and preference shareholders of the Applicant Company 1 for the purpose of approving the Scheme. Further, the Applicant Company 1 seeks dispensation with the requirement of convening the meeting of the secured creditors and unsecured creditors of the Applicant Company 1 on account of the consent affidavits in favour of the Scheme.
In relation to the Applicant Company 2, it is represented:
(a) The Applicant Company 2 is an unlisted public limited company and was incorporated on April 25, 2019 under the provisions of the Companies Act, 2013. The authorized share capital of the Applicant Company 2 as on the date of the Application is Rs. 4,00,00,000 divided into 40,00,000 equity shares having face value of Rs. 10/- each. The issued, subscribed and fully paid up share capital of the Applicant Company 2 as on the date of the Application is Rs. 1,00,000/- divided into 10,000 equity shares of Rs. 10/- each fully paid-up. The registered office of the Applicant Company 2 is situated at 2nd Floor, F-7, Block B-1, Mohan Cooperative Industrial Estate, Mathura Road, New Delhi - 110044.
(b) As on December 31, 2019, the Applicant Company 2 has 7 (Seven) equity shareholders holding a total of 10,000 equity shares having a face value of Rs. 10/- each. The Applicant Company 2 has no preference shareholder. A certificate issued by a Chartered Accountant dated February 25, 2020 certifying the list of shareholders of the Applicant Company 2 as on December 31, 2019 has been filed along with the application as Annexure A-18 (Colly.).
(c) As on December 31, 2019, the Applicant Company 2 has no secured creditors. A certificate issued by a Chartered Accountant dated February 25, 2020 certifying that the Applicant Company 2 has no secured creditors as on December 31, 2019 has been filed along with the application as Annexure A-19.
(d) As on December 31, 2019, the Applicant Company 2 has no unsecured creditors. A certificate issued by a Chartered Accountant dated February 25, 2020 certifying that the Applicant Company 2 has no unsecured creditors as on December 31, 2019 has also been filed along with the application as Annexure A-20.
In relation to the equity shareholders, the Applicant Company 2 prays for direction to convene the meeting of the equity shareholders of the Applicant Company 2 for the purpose of approving the Scheme. Further, the requirement of convening the meetings of the preference shareholders, secured creditors and unsecured creditors of the Applicant Company 2 does not arise since the Applicant Company 2 has no preference shareholders as on date and has no secured creditors or unsecured creditors as on December 31, 2019.
We have perused the Application and the connected documents/papers filed with the Application including the Scheme as contemplated between the Applicant Companies.
It is seen that the board of directors of both the Applicant companies vide separate meetings, both held on August 6, 2019, have approved the Scheme and the filing thereof with this Tribunal. Further, the board of directors of both the Applicant Companies vide separate meetings, both held on March 20, 2020, re-affirmed the earlier resolution dated August 6, 2019. Copies of such board resolutions passed by the respective board of directors of the Applicant Companies have been placed on record by the Applicant Companies.
Both the Applicant Companies have filed the copies of their respective Memorandum of Associations and Articles of Associations. The Applicant Company 1 has filed a copy of its standalone audited financial statement for the financial year ending March 31, 2019 along with a copy of its standalone, unaudited financial statement for the period ending December 31, 2019. Since the Applicant Company 2 has been incorporated on April 25, 2019, the Applicant Company 2 has filed a copy of the standalone, unaudited financial statement of the Applicant Company 2 for the period ending December 31, 2019.
Taking into consideration the Application and the documents filed therewith, as well as in view of the present circumstances owing to CoVID-19 pandemic and the restrictions/lockdown imposed by the Central and State Government, we propose to issue the following directions with respect to convening or dispensing the meetings of shareholders and creditors of the Applicant Companies, which are as follows: -
A. In relation to the Applicant Company 1: -
(i). With respect to the Equity Shareholders:
Meeting of the equity shareholders of the Applicant Company 1 be convened at 10:30 am through video conferencing ("VC") or Other Audio/Visual Means ("OAVM") and/or physical meeting, on August 1, 2020 (Saturday), to be held at a place falling within the jurisdiction of the State in which the registered office of the Applicant Company 1 is situated, as the Applicant Company 1 may determine considering the CoVID-19 pandemic situation/restrictions, subject to notice of meeting being issued. The quorum of the meeting of the equity shareholders shall be 6 in number present in person. The voting on the Scheme to be undertaken either in person or by proxy or through electronic means and/or through such means as the Applicant Company 1 may deem appropriate in view of the on-going CoVID-19 pandemic subject to and in accordance with the manner prescribed under applicable laws.
(ii) With respect to the Preference Shareholders:
Meeting of the preference shareholders of the Applicant Company 1, (i.e. fully paid-up 8% optionally convertible cumulative redeemable preference shares and fully paid-up 2% optionally convertible non-cumulative redeemable preference shares) be convened at 11:30 pm through VC or OAVM and/or physical meeting, on August 1, 2020 (Saturday), to be held at a place falling within the jurisdiction of the State in which the registered office of the Applicant Company 1 is situated, as the Applicant Company 1 may determine considering the CoVID-19 pandemic situation/restrictions, subject to notice of meeting being issued. The quorum of the meeting of the preference shareholders shall be 2 in number present in person. The voting on the Scheme to be undertaken either in person or by proxy or through electronic means and/or through such means as the Applicant Company 1 may deem appropriate in view of the on-going CoVID-19 pandemic subject to and in accordance with the manner prescribed under applicable laws.
(iii) With respect to the Secured Creditors:
The meeting of the secured creditors of the Applicant Company 1 is dispensed with, as the Applicant Company 1 has a total of 4 (Four) secured creditors representing a total outstanding secured debt of Rs. 55,70,78,126 (Rupees Fifty Five Crores Seventy Lakhs Seventy Eight Thousand One Hundred and Twenty Six Only), as on December 31, 2019, and consent affidavits executed by all secured creditors holding 100% of the total outstanding secured debt of the Applicant Company 1 as on December 31, 2019 approving the Scheme for the purpose of seeking dispensation from holding the meeting of the secured creditors of the Applicant Company 1 have been placed on record.
(iv) With respect to the Unsecured Creditors:
The meeting of the unsecured creditors of the Applicant Company 1 is also dispensed with, as the Applicant Company 1 has a total of 2086 (Two Thousand Eighty-Six) unsecured creditors representing a total outstanding unsecured debt of Rs. 61,78,69,063 (Rupees Sixty One Crore Seventy Eight Lakhs Sixty Nine Thousand and Sixty Three Only) and consent affidavits executed by 27 (Twenty Seven) unsecured creditors holding over 90% of the total outstanding unsecured debt of the Applicant Company 1 as on December 31, 2019 approving the Scheme for the purpose of seeking dispensation from holding the meeting of the unsecured creditors of the Applicant Company 1, have been placed on record.
B. In relation to the Applicant Company 2: -
(i) With respect to the Equity Shareholders:
Meeting of the equity shareholders of the Applicant Company 2 be convened at 12:30 pm through VC or OAVM and/or physical meeting, on August 1, 2020 (Saturday), to be held at a place falling within the jurisdiction of the State in which the registered office of the Applicant Company 2 is situated, as the Applicant Company 2 may determine considering the CoVID-19 pandemic situation/restrictions, subject to notice of meeting being issued. The quorum of the meeting of the equity shareholders shall be 5 in number present in person. The voting on the Scheme to be undertaken either in person or by proxy or through electronic means and/or through such means as the Applicant Company 2 may deem appropriate in view of the on-going CoVID-19 pandemic subject to and in accordance with the manner prescribed under applicable laws.
(ii) With respect to the Preference Shareholders:
The meeting of the preference shareholders of the Applicant Company 2 is dispensed with, as the requirement of convening the meetings of the preference shareholders does not arise since the Applicant Company 2 has no preference shareholders.
(iii) With respect to the Secured Creditors:
The meeting of the secured creditors of the Applicant Company 2 is also dispensed with, as the requirement of convening the meetings of the secured creditors does not arise since the Applicant Company 2 has no secured creditors as on December 31, 2019.
(iv) With respect to the Unsecured Creditors:
The meeting of the unsecured creditors of the Applicant Company 2 is also dispensed with, as the requirement of convening the meetings of the unsecured creditors does not arise since the Applicant Company 2 has no unsecured creditors as on December 31, 2019.
C. In case the required quorum as noted above for the meetings of the Applicant Companies is not present at the time of commencement of the meetings, then the meetings shall be adjourned by 30 minutes and thereafter the persons present shall be deemed to constitute the quorum. The Chairperson and Alternate Chairperson appointed herein along with Scrutinizer shall ensure that the proxy register is properly maintained.
D. Mr. Sanjay Kalia (Independent Director of the Applicant Company 1) is appointed as the Chairperson for all the meetings to be called under this Order. He shall be paid an aggregate fee of Rs. 30,000/- (Rupees Thirty Thousand only) for his services in addition to meeting his incidental expenses. In the absence of the Chairperson, Ms. Madhu Bhaskar (Independent Director of Applicant Company 1) is appointed as the Alternate Chairperson for the meetings to be called under this Order. She shall be paid an aggregate fee of Rs. 25,000/- (Rupees Twenty-Five Thousand only) for her services in addition to meeting her incidental expenses. Mr. D. P. Gupta, PCS (FCS-2411; C.P. No. -1509) is appointed as the Scrutinizer for all the meetings to be called under this Order. He shall be paid an aggregate fee of Rs. 20,000/-(Rupees Twenty Thousand only) for his services in addition to meeting his incidental expenses. The fees of Chairperson, Alternate Chairperson and Scrutinizer along with the travelling expenses and other out of pocket expenses shall be borne by the Applicant Companies. A copy of this order shall be supplied to the learned counsels for the Applicant Companies who in turn shall supply copy of the same to the Chairperson, Alternate Chairperson and the Scrutinizer.
E. Individual notices shall be sent to the shareholders as above by the Applicant Companies through email or through registered post or speed post or courier services, as available considering the present circumstances due to the CoVID-19 pandemic and the consequent restrictions/lockdowns imposed by the Central and State Government, 30 days in advance before the scheduled date of meeting, indicating the day, date, the place fixed for and time of meeting as aforesaid, together with a copy of Scheme and copy of explanatory statement as required under the Act and the Rules, along with the proxy forms and any other documents as may be prescribed under the Act.
F. The Applicant Companies shall publish an advertisement at least 30 clear days before the aforesaid meetings, indicating the day, date and the place fixed and time of meetings as aforesaid, to be published in "Financial Express" (English) and "Jansatta" (Hindi), both Delhi NCR edition, with the option of publication in its electronic version considering the present circumstances due to the CoVID-19 pandemic and the consequent restrictions/lockdowns imposed by the Central and State Government. The Applicant Companies shall also publish the notice on their websites, if any.
G. The Chairperson shall be responsible to report the results of the meetings to the Tribunal in Form No. CAA 4, as per Rule 14 of the Rules within 7 (seven) days of the conclusion of the meetings. The Chairperson shall be assisted by the authorized representative/Company Secretary of the Applicant Companies and the Scrutinizer, who will assist the Chairperson and Alternate Chairperson in preparing and finalizing the reports.
H. In order to comply with Section 230(5) of the Act read with Rule 8 of the Rules, the Applicant Companies are directed to serve notice of the proposed Scheme on the following authorities: (i) Regional Director, Northern Region, Ministry of Corporate Affairs at B-2 Wing, 2nd Floor, Pt. Deendayal Antyodaya Bhawan (earlier known as Paryawaran Bhawan), C.G.O. Complex, New Delhi - 110003; (ii) Registrar of Companies, National Capital Territory of Delhi & Haryana at 4th Floor, IFCI Tower, 61, Nehru Place, New Delhi-110 019; (iii) the Income Tax Department at DCIT (High Court Cell), Lawyer's Chamber Block 1, Room No. 428 & 429 Delhi High Court, New Delhi; and any other sectoral regulator who may have significant bearing on the operation of the Applicant Companies, through email or through registered post or speed post or courier services, as reasonably available during the present circumstances due to the CoVID-19 pandemic and the consequent restrictions/lockdowns imposed by the Central and State Governments, stating that representations, if any, to be made by them shall be sent to the Tribunal within a period of 30 days from the date of receipt of such notice and copy of such representations shall be simultaneously sent to the Applicant Companies, failing which, it shall be presumed that the authorities have no objections to the proposed Scheme. The notices to Income Tax authorities shall disclose sufficient details like PAN card numbers, ward numbers and assessing officers so that proper reply may be filed.
I. The Applicant Companies further shall furnish a copy of the Scheme (together with the explanatory statement), free of charge, within 1 day of any requisition for the Scheme made by every member of the Applicant Companies entitled to attend the meetings as aforesaid.
J. The authorized representative of the Applicant Companies shall furnish affidavits stating that the directions of this Tribunal in relation to service of notice of meetings and publication of advertisement has been complied with at least one week before the proposed meetings.
K. All the aforesaid directions are to be complied with in accordance with the applicable law, including forms and formats contained in the Rules as well as the provisions of the Act by the Applicant Companies and as directed by this Tribunal.
In view of the above, the present Application stands allowed.