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Judgment
Deep Chandra Joshi, Judicial Member
This Application has been filed jointly by the Applicant Companies herein; namely M/s Janki Corp Limited (‘Applicant No.1 / Demerged Company’) and M/s Janki Textiles India Private Limited (‘Applicant No. 2 / Resultant Company’), under Sections 230-232 of the Companies Act, 2013 (‘Act’) read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (‘Rules’), in relation to the Scheme of Arrangement for Demerger (‘Scheme’) proposed between the Applicant M/s Janki Corp Limited (‘JCL’) registered office at Mandpiya Chouraha, Chittor Road, Bhilwara, Rajasthan – 311001, registered with Registrar of Company – Jaipur, Rajasthan and M/s Janki Textiles India Private Limited (‘JTIPL’) registered office at Mandpiya Chouraha, Chittor Road, Bhilwara, Rajasthan – 311001 with Registrar of Company – Jaipur, Rajasthan. The said Scheme is also submitted as Annexure– G of the Application and the appointed date as per the Scheme is stated to be 01.04.2023.
The Applicant Companies preferred the Application seeking for the following prayer as evident inter alia from the reliefs sought vide CA(CAA) No.01/230-232/JPR/2023, namely:
(i) This Hon’ble Tribunal be pleased to grant dispensation of the meeting of the Equity Shareholders of JCL, the Applicant Demerged Company in light of consent already obtained;
(ii) This Hon’ble Tribunal be pleased to grant dispensation of the meeting of the Equity Shareholders of JTIPL, the Applicant Demerged Company in light of consent already obtained;
(iii) This Hon’ble Tribunal be pleased to issue directions as regard convening, holding and conducting meetings of the Secured Creditors and Unsecured Creditors of JCL, Applicant Demerged Company, for the purpose of considering and if thought fit, approving the proposed Scheme of Arrangement, with or without modifications; in terms of the prayers made hereinabove;
(iv) This Hon’ble Tribunal be pleased to issue necessary directions to JCL, the Applicant Demerged Company as to the method of convening, holding and of Secured Creditors and Unsecured Creditors and as to the notices and advertisements to be issued in this regard;
(v) This Hon’ble Tribunal be pleased to grant exemption from service of individual notice to the Unsecured Creditors of JCL, the Applicant Demerged Company having the value of individual debt at less than Rs. 50,000/-;
(vi) This Hon’ble Tribunal be pleased to appoint the Chairman and Scrutinizer for the said meetings of JCL, the Applicant Demerged Company and in respect of adjournment(s), if any, and further to direct the said Chairman to report the result of the said meetings to the Tribunal within a such time period as the Hon’ble Tribunal may decide in this respect;
(vii) This Hon’ble Tribunal be pleased to fix the Quorum for the said meetings and to lay down the procedure for voting at the meetings;
(viii) This Hon’ble Tribunal be pleased to hold that the meetings of Secured and Unsecured Creditors of JTIPL, the Applicant Resulting Company are not necessary as there are no Secured and Unsecured Creditors;
(ix) It is prayed that notices to the statutory authorities may be ordered by this Hon’ble Tribunal as per the provisions of Section 230(5) of the Act and Rule 8 of the Companies (Compromise, Arrangements and Amalgamations) Rules, 2016;
(x) It is prayed that this Hon’ble Tribunal fix a date for the presentation of the Company Petition and pass such other Order or Orders as this Hon’ble Tribunal may deem fit and proper in the circumstances of the case and render justice.
An Affidavit in support of the Application was sworn for and on behalf of the Applicant Companies by the authorised signatory of the joint Applicant Companies, namely, Mr. Madhusudan Sharma and Ms. Shruti Joshi. The Applicant Companies have enclosed the Board Resolution dated 31.01.2023 for the approval of this Scheme along with this Application as Annexures – F (Colly) (Page No. 201 – 210) of the Application. It is further represented that the Application filed by the Applicant Companies is maintainable in view of Rule 3 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.
In relation to the territorial jurisdiction, it is stated that the Registered Offices of the Demerged Company and Resultant Company fall within the purview of the Registrar of Companies, Jaipur. Therefore, this Tribunal has the necessary territorial jurisdiction to entertain this Application.
We have perused the Application, and the connected documents/papers, including the Scheme of Arrangement, contemplated between the Demerged /Applicant Company and the Resultant Company.
A perusal of the Application filed by the Applicant Companies indicates the details of the capital structure of the Applicant Companies, which is tabulated as follows:
Sr.
No.
Name of the Company
Date of Incorporation
Authorized Share Capital
Issued, Paid- Up and Subscribed
Share Capital
CIN No.
1.
Janki Corp Limited (Demerged Company)
16.09.1993
Rs. 50,00,00,000 /-divided into 5,00,00,000/ - Equity Shares of Rs. 10/- each.
Rs. 31,35,36,000 /- divided into 3,13,53,600/- Equity Shares of Rs. 10/- each.
U17118RJ 1993PLC0 23549
2.
Janki Textiles India Private Limited (Resultant Company)
21.12.2022
Rs. 15,00,000/- divided into 1,50,000/- Equity Shares of Rs. 10/- each.
Rs. 6,27,080/- divided into 62,708/- Equity Shares of Rs. 10/- each.
U17299RJ 2022PTC0 85354
The Applicant Company No.1/Demerged Company has filed the Memorandum and Articles of Association of Applicant Company inter-alia delineating their object clauses as Annexure – A (Colly) of the Application. The main objects of the Applicant Company No.1 / Demerged are as follows:
· To carry on the business of spinners, weavers, manufacturers, producers, ginners, pressers, packers, balers, liners, cleaners, processors, doubters, combers, wool combers, worsted spinners, woollen spinners, knitters, printers, dyers, bleachers, calenderers, sellers, buyers, traders, brokers, stockists, importers, exporters, merchandise, distributors, barterers, shippers and dealers in all kinds of threads, fabric/cloth, yarn, fibres, jeans, suitings, shirtings, sarees, dress materials, ready-made garments of all fabrics including waste cotton, linen, hemp, jute, wool, polysters, acrylics, silk, artificial silk, rayon, manmade synthetic fibre, fibers, staple synthetic yarn and any other fibrous material, allied products, by-products and to treat and utilise any waste arising from any such manufacturing, production or process.
· To carry on the business of manufacturers, processors, producers, jobbers including doing the job work for others and getting the job work done from others, designers, distributors, stockists, importers and exporters, buyers, sellers and dealers of all or any of the products of fabrics and textiles, industrial fabrics, non-woven fabrics, sheets, tapes, ropes, cords, twines, canvas, territowels, durries, newar, parachutes, carpets, rugs, blankets, namdas, tarpaulins, linens, worsted stuff and other products as are prepared or manufactured from nylon, polyestors, acrylics, rayon, silk, artificial silk, linen, cotton, wool, and any other synthetic, artificial and natural fibres and intermediates of all types, grades and formulations and including specifically plastics, polyester fibres, polyaeryloni-trile, polyvinylacetate, polypropelene, nylon and rayon.
· To carry on the business of manufacturers, producers, processors, importers, exporters, buyers, sellers and dealers in and as brokers, agents, stockists, distributors and suppliers of all kinds of waterproof fabrics, pavliners, floorclothes, carpets, tent clothes, tweed, patto, pashminas blazer, gaberdine, drill, tapestry, georgetta, linen, velvet, tarpaulin, khaddar, lace and Linning, surgical cotton, surgical bandages, lints, gauge, sanitary goods necessary for medical aid, hospital needs, as are made from or with cotton, nylon, silk, polyester acrylics, jute, wool and other kinds of fibre, by whatever name called or made under any process, whether natural or artificial and by mechanical or other means.
· To carry on the business of manufacturing, trading, producing, crushing, acquiring, importing, exporting, buying, selling, treating, processing, developing, retreating, storing, distributing, transporting and otherwise dealing in all kinds and classes of pig iron, sponge iron and steels of all kinds, ferrous and non-ferrous metals and alloys, iron and metal scrap, ferro-alloys, cast iron and steel and metal goods, tools and implements of all kinds, billets, pre-reduced billets, ingols etc.
· To set up any mineral based industry to manufacture or process minerals, purchase, take on lease or otherwise acquire any mines, mining rights and metalligerrous land anywhere and any interest therein and to explore, work, exercise, develop and turn to the account the same.
· To act as a consultant, construction advisor to any plant whether in India or abroad for manufacturing producing, treating, processing, developing in all kinds of ferrous and non-ferrous metals, pig iron, sponge iron, steel and metal goods. To cogenerate, generate electricity through conventional and non-conventional means from raw material or waste heat or from any other material for selling to the outside buyers or for its own consumption to continuously invest in research activities for diversifying or improving production, maintenance and growth of the company.
· To search for, get, work, raise, make merchantable, sell and deal in iron, coal, iron-stone, brickearth, fireclay, limestone, dolomite, quartz quartzite, manganese asbestos and other metals, minerals and substances and to manufacture and sell fuel and other products.
· To arrange, deal in all aspects of the business, contracting, generation, transmission, sale, purchase, captive consumption, supply and distribution of power/ electricity in India and abroad by establishing Wind Power Plant or any other type of Power generation plant using conventional and/or non-conventional energy sources as may be in use or which may be developed or invented in future.
· To deal in immovable properties such as land and buildings and to purchase, acquire, take or given on lease or in exchange or in any other lawful manner in India or abroad land including agriculture land, plot, building, structures, factories, farm houses and estates, real estate or interest therein and any rights over or connected with them and to develop the same for sale or on installments or for any other purpose by preparing building sites and by constructing, altering improving, developing, promoting, decorating, furnishing, maintaining of heritage spots, hotels, resorts, malls, plazas, apartments, shopping malls, farm houses, complexes, commercial and residential buildings, colonization, multi storey offices, multiplex, amusement park, flats, gardens, houses, shops, showrooms, and townships and to equip them or any part thereof with all or any amenities or conveniences thereon and by consolidating or connecting or subdividing properties and leasing or disposing or the same and to manage such land and building.
·
The Applicant Company No. 2/ Resultant Company has filed the Memorandum and Articles of Association of Applicant Company No.2 inter-alia delineating their object clauses as Annexure – C (Colly) of the Application. The main objects of Applicant Company No. 2/ Resultant Company are as follows:
· To carry on the business of manufacturing, trading, buying, selling, dealing, producing, importing, exporting, whole selling, retailing in textile goods.
· To carry on the business of manufacturers, producers, processors, printing on jobwork and importers, exporters, buyers, sellers and dealers in all kinds of label, textiles, yarn, fabrics, leather clothes whether synthetic or natural prepared or manufactured from nylon cellulose, viscose, polyester, acrylics, rayon, silk, artificial silk, linen n arrow fabrics, cotton, wool, jute, lamp, flex, leather hession and any other fibre or fibre as materials, textile, substances, allied products, by products and substitute for all or any of them and to treat and utilize any waste arising from any such manufacture, production or process and converters of synthetic, artificial and natural and fibre glass into materials like cloth, tapes, ropes, yarns, twines and such other articles as may be conveniently produced or manufactured.
· To carry on in India or elsewhere the business of manufacturing, processing, Producing, washing, ginning, pressing, spinning, weaving, crimping, dyeing, texturing, carding, bleaching, combing, doubling, finishing, colouring, mercerizing, twisting, improving, buying, selling, reselling, importing, exporters, storing, fabricating, developing, marketing, or supplying and to act a broker, trader, agent, C & F agent, distributor, representative, consultant, collaborator, adatia stockists, liasioner, jobworker or otherwise to deal in all types of natural and synthetic yarns and fabrics made of materials such as cotton, flax, hemp, linen, wool, nylon, viscose, ramie, polyester, silk, artsilk, tureen, jute, staple, fibres, cashmilon, filaments, terecotton, comofilaments, acrylics, polynosic, polypropylene, polymide, polymethane, cellulose, dropping, spun or other fibrous substances or any combination thereof.
·
The Financial Statements for the year ended 31.03.2022 of the Demerged Company are annexed as Annexure – B (Colly) of the Application. Further, the Applicant Companies have their provisional unaudited Financial Statements of JCL dated 30.11.2022 and JTIPL dated 15.01.2023 annexed as Annexure – B1 and D (Colly), respectively of the Application. Furthermore, the Applicant Companies has annexed the statement showing the details of the Assets and Liabilities of the Demerged Undertaking being transferred to the Resulting Company as on 30.11.2022 as Annexure – B2 of the Application.
The Applicant has furnished the details of the Shareholders, Secured Creditors and Unsecured Creditors, of Demerged and Resultant company, as of date, which are as follows:
S.
No.
Name of the Company
No. of Equity Shareholders
No. of Secured
Creditors
No. of Unsecured
Creditors
1.
Janki Corp Limited
(Demerged Company)
12
3
583
2.
Janki Textiles India Private
Limited (Resultant Company)
12
NIL
NIL
The Applicant Companies stated that all the equity shareholders of the Applicant Company No. 1 and 2 had given their consent through affidavits annexed as Annexure – I and M in the Application, respectively and taken on record. Further, the Applicant Companies filed the affidavits in compliance with the Order dated 27.04.2023 vide Diary No. 1096 – 97 dated 02.05.2023 wherein it requested for the dispensation of the issuance of the personal notice to 266 unsecured creditors that have an individual debt value of less than Rs. 50,000/- and a cumulative debt of Rs. 42,58,673.65/- against total unsecured debt of Rs. 48,45,06,648.55/-.
The aforementioned cumulative debt amount of 266 unsecured creditors constitutes less than 1% of the total unsecured debt, 0.04% of the total gross income and 0.3% of the net profit of Applicant No. 1 / Demerged Company. Thus, the dispensation from the issuance of the personal notice to 266 unsecured creditors will not cause any prejudice to the stakeholders. Furthermore, the balance of convenience and equity lies in favour of the Applicant Companies as such dispensation would result in a quick resolution of the Scheme. In addition, it has relied on the judgments of the coordinate benches in Ashima Dyecot Private Limited v. Ashima Limited, CA(CAA) No.18/NCLT/AHM/2020 and Aggarwal Spintex P. Ltd., CA(CAA) No.09/NCLT/CHD/PB/2021 wherein the service of notice to the unsecured creditors having individually debts valued at less than Rs. 50,000/- and Rs. 1,00,000/-, respectively were dispensed with.
The Applicant Companies have complied with Section 230(2) requirements and disclosed all the material facts about themselves. The Applicant stated in Para 14 on Page No. 31 of the Application that no investigation proceedings are pending against the Demerged/ Applicant Company and Resultant Company under the Companies Act, 2013 or under the Insolvency and Bankruptcy Code, 2016.
The Applicant Demerged Company and Resultant Company have complied with Section 230(7) and Section 232(3) of the Act by filing the certificate of the Company’s Auditor concerning compliance with the Accounting Standards under Section 133 of the Companies Act, 2013 as Annexure – H (Colly) of the Application. Further, during the course of arguments, it is stated by the Applicant Companies that in the present matter, there is a requirement for Corporate Debt Restructuring. The Applicant shall comply with Section 230(2)(c) of the Companies Act, 2013 and duly place the report before Chairperson and Scrutinizer for circulation. The Chairperson and Scrutinizer are directed to ensure service of the said report at the time of issuance of notices for the meeting to the Secured and Unsecured Creditors.
We have perused the Application, and the connected documents/papers filed including the Scheme of Arrangement by way of demerger contemplated between the Applicant(s) Demerged Company and Resulting Company.
The Board of Directors of the Demerged Company and Resulting Company at their respective meetings held on 31.01.2023 have unanimously approved the proposed Scheme of Arrangement and copies of resolutions passed thereon have been placed on record by the companies.
Taking into consideration the Application filed by the Applicant Company and the documents filed therewith, this Tribunal proposes to issue the following directions for calling, convening and holding the meetings of the Equity Shareholders, Secured and Unsecured Creditors or dispensing with the same, as well as the issue of notices in relation to Applicant Company No.1/Demerged Company as follows:
In relation to Applicant No. 1/ Demerged Company:
(i) With respect to Equity Shareholders
Since it is represented that there are 12 (Twelve) Equity Shareholders in the Applicant Company No. 1 / Demerged Company, and it is seen that their consent affidavits have been placed on record as Annexure – I (Colly), therefore the necessity of convening and holding a meeting to consider the approval of the Scheme is dispensed with.
(ii) With respect to Secured Creditors
Since it is represented that there are 3 (Three) Secured Creditors in the Applicant Company, and it is seen that its consent is not on record; therefore, this Tribunal is of the view that a meeting of the Secured Creditor of the Applicant Company No. 1/ Demerged Company is required to be held through VC & OAVM subject to notice of the meeting being issued through the post, courier or e-mail ids registered with the Applicant Company No. 1 / Demerged Company.
(iii) With respect to Unsecured Creditors
Since it is represented that there are 583 (Five Hundred and Eighty-Three) Unsecured Creditors in the Applicant Company No. 1/ Demerged Company, and it is seen that their consent is not on record; therefore, this Tribunal is of the view that a meeting of the Unsecured Creditors of the Applicant Company No. 1/ Demerged Company is required to be held through VC & OAVM subject to notice of the meeting being issued through the post, courier or e-mail ids registered with the Applicant Company No. 1 / Demerged Company. Furthermore, the unsecured creditors of Applicant No. 1 having individual debt value of less than Rs. 50,000/- are dispensed from the service of notice in light of the aforementioned observations. However, such unsecured creditors shall be entitled to attend and vote at their respective meeting(s) pursuant to a public notice published in the newspapers as directed.
In relation to Applicant No. 2/ Resulting Company:
(i) With respect to Equity Shareholders
Since it is represented that there are 12 (Twelve) Equity Shareholders in the Applicant Company No. 1 / Resulting Company, and it is seen that their consent affidavits have been placed on record as Annexure – M (Colly), therefore the necessity of convening and holding a meeting to consider the approval of the Scheme is dispensed with.
(ii) With respect to Secured Creditors
Since the Applicant Resultant Company represents that there are no Secured Creditors in the Applicant Company No. 2 / Resultant Company, the necessity of convening and holding a meeting to consider the approval of the Scheme is dispensed with.
(iii) With respect to Unsecured Creditors
Since the Applicant Resultant Company represents that there are no Unsecured Creditors in the Applicant Company No. 2 / Resultant Company, the necessity of convening and holding a meeting to consider the approval of the Scheme is dispensed with.
Directions for the Meeting to be held are issued as under: -
Considering the prevalent norms, the above-stated meetings of the Applicant Companies shall be called, convened and conducted through VC & OAVM, subject to the notice of the meeting being issued through post/courier/e-mail, as specified below:
(i) Holding the meetings and conclusion of the voting of the Secured and Unsecured Creditors of the Applicant Companies shall be done through VC & OAVM, within sixty days of passing of this Order, following the Companies Act, 2013, and applicable Rules & Guidelines. The quorum of the meeting of the Equity Shareholders, Secured and Unsecured Creditors shall be 33% in value.
(ii) In case the quorum as noted above for the aforesaid meetings of the Applicant Companies are not present at the specified time, then the meeting shall be adjourned by half an hour, and thereafter the persons present and voting, including authorized representatives, shall be deemed to constitute the quorum. The Scrutinizer is duty-bound to record all proceedings of the meeting conducted through VC & OAVM. The Applicant Companies shall endeavour to attain at least the quorum fixed, if not more, concerning the Scheme’s approval.
(iii) Mr. Brij Bhushan Sharma, (Mobile No. +91 – 9797820378, e-mail id: [email protected]) is appointed as the Chairperson and Mr. Sandeep Kumar Jain, (Mobile No. +91 – 9828050920, e-mail id: [email protected]) is appointed as the Scrutinizer for meetings of Equity Shareholders, Secured and Unsecured Creditors of the Applicant Companies through VC & OAVM, which are accordingly directed by this Tribunal to be called, convened, conducted and concluded.
(iv) The honorarium of the Chairperson for the aforesaid meetings of the Equity Shareholders, Secured and Unsecured Creditors of the Applicant Companies shall be Rs. 1,00,000/- (Rupees One Lakh Only) and the honorarium of the Scrutinizer shall be Rs. 75,000/- (Rupees Seventy-Five Thousand Only) in addition to reimbursement of their incidental and out of pocket expenses. The Chairperson and Scrutinizer will file their report within a week of the conclusion of the meetings. They shall be fully assisted by the authorized representative/ Company Secretary and other relevant staff of the Applicant Companies.
(v) Individual notice(s) of the above said meeting shall be send by the Applicant Companies to the Secured and Unsecured Creditors on record of the company through registered post or speed post or courier or e-mail, 30 days in advance before the scheduled date of the meeting, indicating the day, date, time and link to meeting through VC & OAVM as aforesaid, together with a copy of the Scheme, copy of the explanatory statement required to be sent along with any other documents as prescribed under the Companies Act, 2013, and Rules/ Guidelines thereunder and also any information/document as specified in this order which shall also be duly sent with the notice.
(vi) It is further directed that along with the notice; the Applicant Companies shall also send a statement(s) explaining the effect of the Scheme on the creditors, key managerial personnel, promoters and non-promoter members, etc., along with the effect of the arrangement for demerger on any material interests of the directors of the company(s), as provided under sub-section 3 of Section 230 of the Act.
(vii) The Applicant Companies shall publish an advertisement indicating the day, date, time and link of the meeting to be conducted through VC & OAVM as aforesaid, with a gap of at least 30 clear days before the holding of the meeting/conference. Such meeting notice is to be published in two leading daily newspapers with a large circulation in the area, in English and the vernacular, stating that the copies of the Scheme and the Explanatory Statement are required to be furnished according to Section 230 of the Companies Act, 2013 shall be available and provided free of charge at the registered office of the Applicant Companies to eligible persons. The Applicant Companies shall publish the notice on its website if any.
(viii) The Applicant Companies shall further furnish a copy of the Scheme free of charge within one day of any requisition for the Scheme made by any Shareholders, Secured and Unsecured Creditor(s) of the Applicant Companies entitled to vote as aforesaid.
(ix) The authorized representative of the Applicant Companies shall furnish an affidavit of service of notice of meeting and publication of advertisement and compliance with all directions contained herein at least a week before the proposed meetings.
(x) The Chairperson shall be responsible to report the result of the meeting of secured and unsecured creditors of Applicant Company No. 1 to the Tribunal in Form No. CAA – 4, as per Rule 14 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within seven days of the conclusion of the aforesaid meetings. He would be fully assisted by the authorised representative/ Company Secretary of the Applicant Companies, and the Scrutinizer will assist the Chairperson in preparing and finalising the reports of the meetings.
All the aforesaid directions are to be complied with strictly in accordance with the applicable law, including forms and formats contained in the Companies (Companies, Arrangements, Amalgamations) Rules, 2016, as well as the provisions of the Companies Act, 2013. The Applicant Companies are directed to send notice individually along with a copy of the Scheme to the Income Tax Authorities (indicating the respective PAN Nos.), ROC concerned, Official Liquidator and Regional Director (North Western Region), Reserve Bank of India, Competition Commission of India as well as other sectoral regulators or authorities, if applicable, as advance notice for their representation/observation, if any. Further, it is not a listed company; consequently, there is no requirement for approval from the Securities and Exchange Board of India.
The Applicant Companies shall file the petition for issuance of notices and fix the date of hearing for the approval of the Scheme in due course.
Hence, this Application bearing CA (CAA) No. 01/230-232/JPR/2023 stands allowed on the aforesaid terms. Copy of this order is to be provided to the Applicant Companies and the designated Chairperson and Scrutinizer.