ISAGRO (ASIA) Agrochemicals Private Limited vs PI Industries Limited

Deep Chandra Joshi, Judicial Member

This is a second motion petition filed by PI Industries Limited (Petitioner  Company' / 'Transferee Company') under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 ('Act') and in terms of Rule 15 of the  Companies (Compromises,  Arrangements  and Amalgamations) Rules, 2016 ('Rules') for sanction of the  Scheme of Amalgamation ('Scheme')   between   ISAGRO (Asia)   Agrochemicals Private  Limited  ('Transferor  Company')  and  the  Petitioner/Transferee Company. The registered office of the Transferor Company is in the State of Maharashtra; thus, the jurisdiction of Transferor Company lies with the National   Company   Law   Tribunal,   Mumbai   Bench.   The   Transferee Company is situated within the jurisdiction of this Bench.

The  Petitioner  Company  filed  First  Motion  Application  bearing  CA  (CAA)  No. 110/230-232/JPR/2020 .before  this  Tribunal   seeking  the following directions:

(i) To convene meeting of equity shareholders of Transferee Company through e-voting;

(ii) To dispense with the meeting of secured creditors of Transferee Company;

(iii)   To dispense with the meeting of unsecured creditors of Transferee  Company or in the alternative, issue directions to convene meeting of unsecured creditors having an individual/distinct outstanding of more than or equal to Rs. 10,00,000 as at 30.06.2020.

Vide order dated  18.12.2020, the meeting of equity  shareholders was directed to be held on 06.02.2021 through VC and OAVM. Meetings of secured creditors were dispensed with on receiving consent affidavits and objections   were   invited   for   unsecured   creditors   of  the   Transferee Company having a value of more than Rs. 10,00,000/, Further, it is seen that the Petitioner Company  has  filed First Motion Order passed by NCLT, Mumbai Bench dated 10.11.2020 as Annexure 6 of the Petition.

When the petition was listed on 23.03.2021, the following directions were  issued: -

(i) The  date  of hearing  of the  Petition filed by  the Petitioner  Companies  for   the   approval   of  the   Scheme   is  fixed   on  29.04.2021.

(ii)   Notice of the hearing shall be advertised in two Newspapers,  namely, Dainik Bhaskar,  Udaipur Edition and Economic Times (All India Edition) not less than ten days before the aforesaid date fixed for hearing.

(iii) In addition to above public notices, the Petitioner Company shall  serve the notice of the Petition on the following Authorities, namely,  Central  Government,  Jurisdictional Income  Tax Authority  under  which  the  Petitioner  Company  is  assessed indicating clearly the PAN No.; Registrar of Companies, Jaipur;  Securities and Exchange Board of India; Reserve Bank of India; National Stock Exchange of India Ltd.; BSE Ltd.; as well as other Sectoral Regulators, which may govern the working of the Company in the Scheme, at least thirty days before the date fixed for hearing of the above Petition.

(iv) Further, notices shall also be served to the Objector(s) or to the representative(s)   as  contemplated  under  Sub-section (4)   of Section 230 of the Companies Act, 2013 who may have made representations and who have desired to be heard directly or through their representatives, along with a copy of the Petition and the extracts filed therewith, at-least fifteen days before the date fixed for hearing.

(v) The Petitioner Companies shall, at-least seven days before the date of hearing of the Petition, file an affidavit of service in relation to said publication effected as well as service of notice on   the  authorities   mentioned  above  including  the  Sectoral Regulator(s) as well as to Objectors, if any,

(vi) Objections, if  any, to   the   Scheme, contemplated   by   the Authorities to whom notice has been given, may be filed on or before the date of hearing fixed herein, failing which it may be considered by this Tribunal that there is no objection on the part of the  Authorities  to  the  approval  of the  Scheme,   by  this Tribunal, subject to other conditions being satisfied as may be applicable  under  the Companies  Act, 2013 and Regulations/Rules framed thereunder.

(vii) The  Petitioner  Company shall  comply with proviso  to  Sub-Section (7)  of Section  230 as  may  be  applicable  under  the circumstances on or before the date fixed for hearing by filing a certificate of the Companies 'Auditor.

(viii)The next date of hearing is fixed on 29.04.2021 for consideration of the approval of the Scheme of Arrangement as contemplated between the Companies and their shareholders.

Due to intervening second wave of COVID-19 pandemic, the matter could not bd heard on 29.04.2021. However, the matter was heard on 17.11.2021 and order was reserved.

The affidavit of compliance by the authorized signatory of the Petitioner  Company was filed vide Diary No.  1010 dated 19.04.2021  along with attested photocopies  of newspaper  cuttings  evidencing  publication  of notice   in   'Economic   Times' (all   India   Edition)   in   English   dated 29.03.2021  and  `Dainik Bhaskar' (Rajasthan Edition)  in Hindi,  dated 28.03.2021.   Copies   of proof  of  service   of  notice  to  the   statutory authorities, namely (a) Central Government through Regional Director (North Western Region), Ministry of Corporate Affairs, Ahmedabad; (b) Registrar of Companies and Official Liquidator, Jaipur; (c) Jurisdictional Income Tax Authority; (d) Securities and Exchange Board of India; (e) National Stock Exchange; (f) Bombay Stock Exchange; and (g) Reserve Bank of India are also part and parcel of the compliance affidavit.

The Regional Director had filed its report vide Diary No. 601/2021 dated 05.03.2021  along with the report of the RoC. The observations are as under:

a.  The   Petitioner   Transferee   Company   has   submitted   the   draft  Scheme with the Stock Exchange pursuant to the SEBI Circular No. CFD/DIL 3/CIR/2017/21 dated 10.03.2017 for the purpose of disclosures.

b.  There are foreign national/ NRI/ Foreign Bodies Corporate holding   shares   in   the   Petitioner   Transferee   Company.   The   Regional Director is not aware as to whether the petitioner transferee has complied with the provisions of FEMA and RBI guidelines or not, in this regard. Therefore, the Petitioner Transferee company be directed  to  ensure  about  the  compliances  of FEMA  and  RBI guidelines, in the matter, from time to time.

c.  The RD has also stated that the report of the office of the Registrar  of Companies, Rajasthan, Jaipur has been received vide letter No. ROC/Ama1/2018-19/403  dated  27.01.2021  and  as  per the  said report, there are no complaints against the petitioner transferee company and also there is no complaint / representation against the scheme of amalgamation of the Companies. A copy of ROC report is enclosed and marked as Annexure-A to the letter of the RD.

d.  The Petitioner Company be directed to pay such amount of legal  fees / cost to the Central Government which may be considered appropriate.

In response  to  the  RD's  report,  the  authorized  representative  of the  Petitioner Company has filed an affidavit vide Diary No. 1910 dated 21.09.2021 stating that the contents of para 1 and para 2 sub-paras (a), (b), (c) and (d) are matters of record. With respect to the observations made in sub-paragraph (e) of paragraph 2, the Petitioner Company has stated that it has duly complied with Section 47 of FEMA, 1999 along with Regulation 4 of Foreign Exchange Management (Mode of Payment and Reporting of Non-Debt   Instruments)   Regulations, 2019. Further, the Petitioner Company  undertakes  to  comply  with  the  requirements/stipulations  of FEMA/RBI   from   time   to   time.   It   is   further  stated  that  Petitioner Transferee Company had issued notices dated 06.01.2021 and 23.03.2021 to RBI. However, no objection to the scheme was received from the RBI.

The Petitioner Company  has  also not received any objection/representation from Income Tax Department and SEBI.

The Petitioner Company vide CA No. 77/JPR/2021 placed on record the  copy of order dated 16.07.2021  whereby NCLT,  Mumbai Bench has approved   the   Scheme   of  Amalgamation   in   regards   to   Transferor Company. Further, the Petitioner Company has filed an affidavit vide Diary No. 266/2021 dated 27.01.2021 stating that neither the Transferor Company nor the Transferee Company  satisfies the threshold limit of assets/ turnover as specified under Section 5 of Competition Act, 2002; therefore it is not required to  send the notice  inviting representation/ objections in respect of the Scheme to the Competition Commission of India.

The date of incorporation, authorized, issued and paid-up share capital, rationale  of the  Scheme  have  been  discussed  in  detail  in  the  Order a disposing of the First Motion Application on 18.12.2020.

In compliance of the proviso to sub-section (7) of Section 230 of the Companies  Act,  2013,  the  Petition or Company  has placed  on record certificate of the Chartered Accountant dated 20.03.2020 as Annexure 16 of First Motion Application.

The  audited  financial  statements  of the  Transferee  Company  as  on 31.03.2021 are attached as Annexure 1 of CA No. 70/JPR/2021.

12.As per the Scheme, the Appointed Date shall mean 27.12.2019 or such   other date  as  may  be  proposed  and  approved by  this  Tribunal.  The effective date, as stated in the Scheme is as below: -

"Effective Date" means the last of the dates on which all the conditions and matters referred to in Clause 17 hereof have been fulfilled or such other date as may be fixed or approved by the NCLT or other Appropriate Authority. References in this scheme to the date of 'coming into effect of this scheme' or 'effectiveness of this scheme' shall mean the Effective Date;

13.We have heard the Learned Counsel for the Petitioner Company and  perused the documents placed on record and also considering the approval accorded by the members and creditors of the Petitioner Company to the proposed Scheme, and the affidavits/ no objection filed by the respective statutory  authorities,  there  appears  no  impediment  in  sanctioning the present Scheme. The Petitioner Company shall however remain bound to comply with the statutory requirements in accordance with law, as pointed by the Regional Director.

The Scheme (Annexure 1) is approved and we hereby declare the same to  be  binding  on  all  the  shareho1der4  and  creditors  of the  Petitioner Company  and  on  all  concerned.  While  approving the  Scheme,  it  is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or in respect of any permission/compliance   with   any   other  requirement  which  may   be specifically required under any law.

AND THIS TRIBUNAL DOES FURTHER ORDER:

i) Subject to Clause 4 in the Scheme, with respect to the assets of the Transferor Company, including all rights, titles and interests in the agreements, immovable property held in the name of the Transferor Company  shall,  without  any  further  act,  instrument  or  deed,  be transferred to and vested in and / or be deemed to be transferred to and vested in the Transferee Company, with effect from the Appointed Date by operation of law, as the case may be, in favour of Transferee Company;

ii) All the debts, liabilities, duties and obligations of every kind of the Transferor  Company  shall,  without  any  further  act  or  deed,  be transferred to, and vested in, and / or deemed to have been transferred to, and vested in, the Transferee Company;

iii) All proceedings now pending by or against the Transferor Company shall be continued by or against the Transferee Company;

iv) All  the  employees  of the  Transferor  Company  in  service  on the Effective   Date   shall   become   the   employees   of  the   Transferee Company  on  the  same  terms  and  conditions  on  which  they  are engaged by the Transferor Company without treating it as a break, discontinuance or interruption in service on the said date;

v) The Transferor Company being a wholly owned subsidiary of the Transferee Company, the Transferee Company shall not be required to issue any shares or pay any consideration in lieu of the amalgamation. Upon the Scheme becoming effective, all the equity shares issued by the Transferor Company and held by the Transferee Company shall stand cancelled without the requirement of any further act or deed for the cancellation.

vi) With effect from the Appointed Date and upon the Scheme becoming effective from Effective Date, all taxes/ cess/ duties paid, payable, received or receivable by or on behalf of the Transferor Company including all or any refunds, credits claims or entitlements shall, for all purposes,  be  treated  as  the  tax/  cess/ duty,  liabilities  or refunds,  credits, claims or entitlements of the Transferee Company.

vii) Upon the Scheme coming into effect, the Transferor Company shall stand  dissolved without winding-up,  and the  Board  of Transferor Company shall without any further act, instrument or deed be and stand dissolved.

viii) The Petitioner Company within 30 days after the date of receipt of the  certified copy of this Order, cause a certified copy of this Order to be delivered to the respective Registrar of Companies of Maharashtra & Rajasthan,   for  registration  and  on  such  certified  copy  being  so delivered,   the   Transferor   Company   shall   be   dissolved   without undergoing the process  of winding up. The  Scheme  will  become effective on filing of the certified copy of this order with both the involved   Registrars   of  Companies.   The   concerned  Registrar  of Companies  shall  transfer all  documents relating to the Transferor Company registered with him to the file jurisdiction relating to the said Transferee Company and thus the files relating to the Transferor and Transferee Companies shall be consolidated accordingly, as the case may be;

ix) That the Transferee Company shall deposit an amount of Rs. 25,000/- in favour of "The Prime Minister's National Relief Fund" and Rs. 30,000/-  to  be  paid  in  the  Online  Miscellaneous  fee  account  of Ministry of Corporate Affairs, within a period of four weeks from the date of receipt of certified copy of this Order; and

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

As   per   the above directions, Form No.  CAA-7 of   Companies (Compromises,  Arrangements  and Amalgamations)  Rules,  2016,  formal orders be issued on the petitioner company on filing of the Schedule of Property i.e., (i) freehold property of the concerned Company;  and (ii)leasehold property of the concerned Company by way of affidavit of the Petitioner Company, respectively.

Copy of this order be communicated to the Counsel for the Petitioner  Company.