In The matter Of : Greenply Leasing And Finance Pvt. Ltd. And Another

This joint petition has been filed by Greenply Leasing & Finance Pvt. Ltd., first petitioner Company (hereinafter referred to as "Demerged Company" and S. M Safeinvest Pvt. Ltd, the second petitioner Company (hereinafter referred to as "Resulting Company") for sanction of the Composite Scheme of Arrangement between the petitioners and their respective shareholders and creditors. The second petitioner Company is wholly owned subsidiary of the first petitioner Company.

The learned counsel for the petitioners submit that the object of the petition is to obtain sanction of the Composite Scheme of Arrangement among the above noted petitioners whereby and where under it Is proposed to demerge the transferred business of the Demerged Company and all the estates, assets, rights, claims, title, interest, licenses, liabilities, employees, accretions and appurtenances of the Demerged Company pertaining to the transferred business ("Demerged Undertaking", as defined more particularly in Para 1.6 of Part A of the Scheme) and transfer it to the Resulting Company with appointed date being 1" January, 2018 on the terms and conditions fully stated in the Composite Scheme of Arrangement, copy annexed to the petition marked as Annexure 'A' at pages 29 to 58.

The learned counsel for the petitioners further submit that the Board of Directors of the petitioner companies in their respective meetings held on 18th June, 2018 approved the Composite Scheme of Arrangement between the Demerged Company, Greenply Leasing & Finance Pvt. Ltd. and the Resulting Company, S.M Safeinvest Pvt. Ltd. and their respective shareholders and creditors. Copy of the respective Board Resolutions is annexed with the petition marked as Annexure - 'P' at pages 389 to 392.

The respective Board of Directors feel that the Composite Scheme of Arrangement is beneficial to the respective shareholders, creditors, employees and all stakeholders of the Demerged Company and the Resulting Company. The proposed Composite Scheme of Arrangement is aimed at achieving the following business and commercial objectives:

(i) For the purpose of better, efficient and economical management, control and running of the business of the undertakings concerned and for administrative convenience and to obtain advantage of economy of large scale and to broad base the present business, the present scheme of Arrangement is proposed to demerge the General Investment division of Greenply Leasing & Finance Private Limited to and vesting in S. M. Safeinvest Private Limited.

(ii) Greenply Leasing & Finance Pvt. Ltd. has two investment divisions namely:- i) STRATEGIC INVESTMENT DIVISION and ii) GENERAL INVESTMENT DIVISION. As part of an overall Scheme of Arrangement, the management of the Company has concurred on a plan whereby the GENERAL INVESTMENT DIVISION of the above named DEMERGED COMPANY will be Demerged to and vested In RESULTING COMPANY as mentioned elsewhere in the Scheme. The RESULTING COMPANY Is a wholly owned subsidiary company of the GENERAL INVESTMENT COMPANY.

(iii) The Demerger would result In better management and administration and control over the affairs of the GENERAL INVETSMENT DIVISION.

(iv) It will impart better management, focus & will ensure optimum utilization of manpower & various other resources of the DEMERGED COMPANY and RESULTING COMPANY.

(v) The proposed demerger will provide scope for the independent expansion of businesses of the DEMERGED COMPANY and RESULTING COMPANY.

(vi) Post this Scheme of Arrangement, the Company are expected to be better poised for meeting future growth opportunities, gain the advantage of cost savings and improvement of their earning potential.

(vii) This scheme is expected to be in the beneficial interest of the shareholders and creditors of both the companies. This scheme is not expected to be in any manner prejudicial to the interest of the concerned members, creditors, employees or general public at large.

It has been also stated in the petition that there are no proceedings pending under the provisions of Sections 206 to 229, as made applicable from April 01, 2014 of the Companies Act, 2013 against any of the Petitioner Companies.

In compliance of the order dated 26.07.2019 the petitioner companies have filed affidavit of service affirmed on 06.09,2019 evidencing publication of notice in newspapers, 'Dainik Assam' and 'The Assam Tribune' and service of notice upon Central Government through Regional Director NER, Registrar of Companies, Official Liquidator, Income Tax Department, Reserve Bank of India, Agricultural Income Tax department, by speed post and by e-mail at their respective addresses.

It is further submitted that a certificate from the Statutory Auditor of the Demerged Company in regard to the effect that the Accounting Treatment, proposed in the scheme is in conformity with the Accounting Standard prescribed under Section 133 of the Companies Act, 2013. The same is annexed at Annexure -"H" to the petition. Page No. 332.

In view of the consent given in affidavit form by all shareholders of the Demerged Company and the Resulting Company, requirement of conveying and holding of separate meetings of the equity shareholders of both the applicant Companies is dispensed with.

In view of the fact that there are no Secured and Unsecured Creditors of the Applicant Companies, the requirement of convening and holding separate meeting of the Secured and the Unsecured Creditors of the Applicant Companies does not arise.

The learned counsel for the petitioner companies further submits that the Resulting Company is a wholly owned subsidiary company of the Demerged Company.

It is stated that the Scheme of Arrangement does not involve the reduction of share capital nor was there any measure in the scheme for restructuring corporate debt.

On perusal of the records, it is also revealed that the Regional Director, NE Region, Ministry of Corporate Affairs has furnish his response by way of an affidavit dated 24th September, 2019 and has made observations in Para 2 stating inter-alia therein that they have no objection to the proposed Composite Scheme of Arrangement. The same is also reproduced betow:

"(a) That it is submitted that on examination of the report of the Registrar of Companies, Guwahati dated 16.09.2019 it appears that no prosecution for any violation of the Companies Act, 1956/2013 have been filed by the ROC against the petitioner companies and its directors. Further, it is reported by the ROC that no complaint and/or representations has been received against the proposed scheme of Arrangement. The petitioner companies have filed their statutory returns up to financial year 31.03.2018.

(b) It is submitted hat as per instructions of the Ministry of Corporate Affairs, New Delhi, a letter was forwarded to the Income Tax Department and RBI on 28.05.2019 with a request to forward their comments/observation/objections, if any, on the Composite Scheme of Arrangement between the Demerged Company and Resulting Company. However, the said authority has not forwarded their report to this Directorate till date.

(c) That the petitioner/demerged company Is a NBFC company registered with the RBI. The office of deponent has issued letter dated 28.05.2019 seeking comments/observations/objections on the said scheme of arrangement between the petitioner companies. However, the said authority has not forwarded its comments/observations/objections to this Directorate till date. The petitioner company being NBFC is regulated and controlled by RBI.

(d) The petitioner/resulting company is required to increase its authorize share capital In order to issue shares to the shareholders of the petitioner/demerged company In order to issue shares to the shareholders of the petitioner/demerged company as Envisaged in the scheme after fifing fees and as per provision of the Companies Act, 2013 and Rules.

(e) That as per Clause 17(a) of Part IV of the Scheme, the Issued, Subscribed and Paid up Capital of the Demerged Company shall reduced from Rs. 10/- to Rs. 8/- by cancelling a sum of Rs. 2/- from each paid-up Equity shares of Rs. 10/- each after such reduction firstly 10 equity share of Rs. 8 shall be consolidated and thereafter be subdivided/splitted into 8 equity share of Rs. 10/- each. After such consideration and splitting/subdivision the paid-up share capital shall stand reorganized to Rs. 4,09,80,070/- divided into 40,98,007 equity share of Rs. 10/- each in place of 5,12,25,090/- divided into 51,22,509 Equity Shares of Rs. 10/- each.

(e) That the deponent craves leave of the Hon'ble Tribunal to state that although the present scheme of arrangement has been drafted under Section 230 to 232 read with section 66 of the Companies Act and other applicable provisions, clause 17(d) of the scheme inter-alia provides that reduction of share capital of demerged company is technical in nature therefore provisions of section 66 will not be applicable. It is not understood that in case of non-applicability of Section 66 of the Act under which provision of the Companies Act the reduction of share capital as given in the scheme may be allowed by the Hon'ble Tribunal.

(f) That it is submitted that on examination of the proposed scheme of amalgamation, the Central Government has decided that the instant petition/scheme need not be opposed subject to observation made in preceding paragraph."

It is to be noted that as per the order dated 26th September, 2019 the advocate appearing on behalf of the applicant was granted time to file rejoinder to the report filed by the RD. The applicants contended with regards to the statement made in Para 2(b) of the affidavit filed by the Regional Director that the advocate appearing for Income Tax Department has conveyed their "No Objection" to the proposed scheme of Arrangement on 26th September, 2019 before this Hon'ble Tribunal.

The applicants also contended with regards to the statement made in Para 2(c) of the affidavit filed by the Regional Director that the Petitioner Companies have received "No objection" (NOC) letter dated 06.08.2018 issued by the Reserve Bank of India on the Composite Scheme of Arrangement and the copies of the same was submitted with this Office.

The applicants contended with regards to the statement made in Para 2(e) (first) of the affidavit filed by the Regional Director stating that no observation are made by the Regional director and that the contents are merely informative in nature.

The applicants contended with regards to the statement made in Para 2(e) (second) of the affidavit filed by the regional Director that as such there is no Impediments in sanctioning the scheme by this Hon'ble Tribunal and refer the case RATNAGIRI GAS AND POWER PRIVATE LIMITED (Demerged Company) and KONKAN LNG PRIVATE LIMITED (Resulting Company) wherein it has been held that Section 230 is a complete code in itself and Explanation to Section 230 expressly and categorically states that provision of Section 66 shall not apply to reduction of share capital effected in pursuance of order of Tribunal under Section 230.

As submitted by the learned counsel for the petitioner Companies, on perusal of the records have also revealed that the Office of the Assistant Commissioner of Income tax by their letters dated 02nd September, 2019 addressed to this Tribunal have given their "No Objection" to the proposed Composite Scheme of Arrangement.

Heard the parties. Since all the requisite statutory compliance has been fulfilled, the following Order in terms of the prayers made in the petition is passed:

(a) The Composite Scheme of Arrangement between Greenply Leasing & Finance Pvt. Ltd. (Demerged Company) and S. M Safeinvest Pvt. Ltd. (Resulting Company) and their respective shareholders and creditors (copy annexed as Exhibit 'F' to the petition) under Sections 230 to 232 read with Section 66 of the Companies Act, 2013 is hereby declared to be binding on both the petitioner Companies and their respective shareholders and creditors with effect from the appointed date i.e. 1st January, 2018;

(b) "Vesting of Demerged Undertaking" comprising of the entire activities, operations, business division and undertaking of the Demerged Company pertaining to the Transferred Business as Is presently carried out by the Demerged Company Is hereby being transferred to the Resulting Company on a going concern basis along with all related assets, liabilities, employees, rights, powers as defined in the Scheme;

(c) Leave is granted to file the schedule of assets in relation to the Demerged Undertaking within a period of 60 (sixty) days from the date of the order to be passed herein;

(d) The petitioner Companies respectively shall within 30(Thirty) days after obtaining the certified copy of this order deliver the same to the Registrar of Companies, North Eastern Region for registration respectively; and

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

The company petition no. CP (CAA) 06/GB/2019 connected with CA (CAA) No. 04/GB/2018 is disposed of accordingly.

Urgent certified copy of this order, if applied for, is supplied to the parties, subject to compliance of all requisite formalities.