In The Matter Of: Kirpalaney & Associates (Engineers) Private Limited And Another

The sanction of this Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013, to the Scheme of Merger by Absorption of Kirpalaney & Associates (Engineers) Private Limited by Kirpalaney Engineers and Realtors Private Limited and their respective Shareholders ("the Scheme").

The Petitioner Companies has approved the said Scheme unanimously by passing the Board Resolution on 18th April, 2019 and thereafter they have approached the Tribunal for sanction of the Scheme.

The First Petitioner Company is in the business of providing engineering consulting services. The Second Petitioner Company is in the business of establishing, acquiring, owning, managing, operating, running and maintaining commercial office and among other things constructing, executing, improving houses, buildings, managing lands, buildings, business centres and other property and collecting rent, compensation, service charges, and other income.

The Rational for Scheme of Merger-

The First Petitioner Company is a subsidiary of the Second Petitioner Company and both the Petitioner Companies are part of the same group. As a result of merger of the First Petitioner Company with the Second Petitioner Company, the following benefits will accrue to the Group:

i. Consolidation of businesses of the Group;

ii. Reduction in number of companies and regulatory compliances thereof; iii. Streamlining the holding structure;

iv. Ease of management;

v. Reduction of operating and administrative costs; and vi. Leveraging on synergies on consolidation.

The authorised share capital of the First Petitioner Company is Rs. 5,00,000/- comprising of 50,000 equity shares of Rs. 10/- each. The Issued, Paid-up and Subscribed share capital is Rs. 3,10,500/- comprising of 31,050 equity shares of Rs. 10/- each.

The authorised share capital of the Second Petitioner Company is Rs. 6,50,000/- comprising of 65,000 equity shares of Rs. 10/- each. The Issued, Paid-up and Subscribed share capital is Rs. 6,50,000/- comprising of 65,000 Equity Shares of Rs. 10 each.

Upon this Scheme becoming effective and upon amalgamation of the First Petitioner Company with the Second Petitioner Company in terms of this Scheme, the Second Petitioner Company shall, without any application or deed, issue and allot Equity shares, credited as fully paid up, to the extent indicated below, to the equity shareholders of the First Petitioner Company (other than Equity Shares held by the Second Petitioner Company in the First Petitioner Company) whose names appear in the register of members of the First Petitioner Company, on the Record Date or to such of their respective heirs, executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the First Petitioner Company in the following proportion viz.:

"156 Equity Share of the face value of Rs. 10 each of THE SECOND PETITIONER COMPANY shall be issued and allotted as fully paid up for every 100 Equity share of the face value of Rs. 10/- each fully paid up held in THE FIRST PETITIONER COMPANY"

The Regional Director has filed his report dated 11th September, 2019 stating therein that, save and except as stated below, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraph IV of the said Report, it is stated that:

a) In compliance of AS-14 (IND AS-103), the Petitioner Companies shall pass such accounting entries which are necessary in connection with the scheme to comply with other applicable Accounting Standards such as AS-5(IND AS-8) etc.

b) As per Definition of the Scheme,

"Appointed Date" means 31st March, 2019 such other date as may be fixed or approved by the National Company Law Tribunal, Mumbai Bench or such other competent authority. And

"Effective Date" means the later of the dates on which the certified or authenticated copies of the Order sanctioning this Scheme of Amalgamation, passed by the National Company Law

Tribunal, Mumbai Bench or such other competent authority, as may be applicable, are filed with the Registrar of Companies, Pune, Maharashtra at Pune by the Transferor Company and the Transferee Company or such date which may be deemed to be an effective date under the provisions of the Companies Act, 2013. Any references in the Scheme to "upon the Scheme becoming effective" or "effectiveness of the Scheme" shall mean the Effective Date.

In this regard, it is submitted that Section 232(6) of the Companies Act 2013 states that the scheme under this section shall clearly indicate as appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date. However, this aspect may be decided by the Hon'ble Tribunal taking into account its inherent powers.

Further, the Petitioners may be asked to comply with the requirement and clarified vide circular no F. No. 7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs.

c) Petitioner Company have to undertake to comply with section 232(2)(i) of the Companies Act, 2013, where the transferor company is dissolved, the fee, if any, paid by the transferor company on its authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation and therefore, petitioners to affirm that they comply the provisions of the section.

In response to the above observations made by the Regional Director in his report, the Petitioner Companies undertakes and clarifies as under:

i. As far as the observations made in paragraph IV (a) of the Report of Regional Director is concerned, the Transferee Company undertakes that in addition to compliance of AS-14 (IND AS-103), in case applicable; the Transferee Company shall pass such accounting entries which are necessary in connection with the scheme to comply with other applicable Accounting Standards such as AS-5(IND AS-8) etc.

ii. As far as the observations made in paragraph IV (b) of the Report of Regional Director is concerned, please take note that there is typo error in the definition as stated in the observation and the actual definition of the scheme read as under:-'Appointed Date' means opening business hours of the 31st day of March, 2019

'Effective Date' means the last of the date of filing the certified copies of orders under the applicable section(s) of the Act, with the Registrar of Companies.

Further, the Transferee Company confirms that as per Clause 1.3 of the Scheme, "Appointed Date" means opening business hours of the 31st day of March, 2019. Further, Clause 2 of the Scheme specifies that the Scheme shall be effective from the Appointed Date but shall be operative from the Effective Date. In this regard, it is submitted that, in terms of provisions of section 232(6) of the Companies Act, 2013, the Scheme shall be deemed to be effective from 31st day of March, 2019 i.e. the Appointed Date. Thus, the Petitioner Companies will be complying with the requirement and clarified vide circular no F. No. 7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs iii. Aa far as observations made in paragraph IV (c) of the Report of Regional Director is concerned, the Petitioner Company states that, the Transferee Company will be eligible for set-off of fees on the authorised share capital paid by the Transferor company and thus comply with the the provisions of Section 232(3)(i) of the Companies Act, 2013.

The clarifications and undertakings given by the Petitioner Companies to the observations made in the Report of the Regional Director are considered by this Bench and those are hereby accepted. Subsequently, this Bench hereby directs the Petitioner Companies to comply with the provisions/statements which the Petitioner Companies undertakes herein.

The Official Liquidator has filed his report dated 11th September, 2019 stating that the affairs of the Transferor Company has been conducted in a proper manner.

From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy.

Since all the requisite statutory compliances have been fulfilled, the Company Petition No. 2922 of 2019 filed jointly by the Petitioner Companies is made absolute in terms of prayer clause (a) of Company Petition No. 2922 of 2019.

The Petitioner Companies are directed to file a copy of this Order along with a copy of the Scheme of Merger with the concerned Registrar of Companies, electronically, along with E-Form INC-28, in addition to the physical copy within 30 days from the date of receipt of the Order from the Registry, duly certified by the Deputy Registrar or the Assistant Registrar, as the case may be, of the National Company Law Tribunal, Mumbai Bench.

The Petitioner Companies to lodge a copy of this Order and the Scheme duly certified by the Deputy Registrar or the Assistant Registrar, as the case may be, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, on the same, within 60 days from the date of receipt of the Order.

All authorities concerned, to act on a copy of this Order along with the Scheme duly certified by the Deputy Registrar or Assistant Registrar, as the case may be, National Company Law Tribunal, Mumbai Bench.

Any person interested in this Scheme, is at liberty to apply to the Tribunal in these matters for any directions or modification that may be necessary.

The Scheme is sanctioned and the appointed date of the Scheme is fixed as 31st March, 2019.

Ordered accordingly.