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Judgment
P.S.N. Prasad, J
This Joint Application has been filed by the Petitioner Companies under Section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016, for the purpose of the approval of the Scheme of Amalgamation. The copy of the Scheme has been placed on record.
Subsequent to the Order dated 17.07.2019, second motion petition was filed on 30.09.2019, for fixing a date of hearing as well as other consequential directions in terms of provision of Section 230-232 of the Companies Act, 2013 read with Rule 16 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, are fulfilled as per the Order of this bench dated 19.11.2019.
It is seen from the records that petitioners have filed the affidavit of compliance before this bench dated 30.12.2019 affirming the compliance of the order passed by this Tribunal dated 19.11.2019. In perusal of the affidavit discloses that the petitioners have effected the newspaper publication on dated 09.12.2019 as directed in relation to the date of the hearing of this petition. Further, the affidavit also discloses that copies of the petition have been duly served to the Regional Director, Northern Region, Registrar of the Companies, NCT of Delhi and Haryana, Official Liquidator (New Delhi) and the Income Tax Department in compliance of the order and in proof of the same acknowledgement by the respective offices have also been placed on record
That the Regional Director, MCA has submitted its report with some observations. The para-wise observations and the reply of the observations of the Report as given by the Transferee Company are as follows :
Observation: Para 14 of the Regional Director's Report / Observation / Letter states as follows:
"14. That the order may alter the composition of the shareholders of M/s. Osiatic Consultants and Investments Put. Ltd. and assets and liabilities, net worth and valuation of assets of M/s. Osiatic Consultants and Investments Pvt. Ltd. But no notice of the said order of the Hon'ble Tribunal was filed with MCA portal vide INC-28 by the said company as required u/s 230(8) of the Companies Act, 2013 which will give effect to the Amalgamation Scheme".
The Submissions of the Transferee Company are as follows:
That at the time of filing of first motion application with Hon'ble NCLT New Delhi for the Scheme, NOC of all the shareholders and debenture holders of all the Applicant Companies was filed. That the shareholders and debenture holders of Applicant Company 1 to 6 are group companies and had been apprised of the particulars of the Scheme. And, thereafter the said group companies had provided their consent to the Scheme and for dispensation of meetings. However, the Hon'ble NCLT, New Delhi had directed the meeting of the all the stakeholders of the respective applicant companies as per the following details vide its order date July 7,2019 and also appointed independent Chairman Alternate Chairman and Scrutinizer for the meetings of all stakeholders.
The details of Company and their stakeholders alongwith the results of meeting is given as follows:-
S. No.
Company
Details
Date
Time
Result of Meeting (Approval In %)
1
Nanak Consultants Private Limited
Equity Shareholders
11.09.2019
10.00am
100%
2
Nanak Consultants Private Limited
Debenture holders
11.09.2019
11:00am
100%
3
Kewaldeep Consultants Private Limited
Equity Shareholders
11.09.2019
12.00am
100%
4
Kewaldeep Consultants Private Limited
Debenture holders
11.09.2019
01:00pm
100%
5
Sayush Consultants and Investment Private Limited
Equity Shareholders
11.09.2019
14.30am
100%
6
Ganga Kaveri Credit And Holding Private Limited
Equity Shareholders
11.09.2019
15.30pm
100%
7
Ganga Kaveri Credit And Holding Private Limited
Debenture holders
11.09.2019
16:30pm
100%
8
Sacred Heart Investment Company Private Limited
Equity Shareholders
12.09.2019
10.00am
100%
9
Sacred Heart Investment Company Private Limited
Debenture holders
12.09.2019
11:00am
100%
10
Sacred Heart Investment Company Private Limited
Preferential holders
12.09.2019
12:00pm
100%
11
Kenstar Investments and Finance Private Limited
Equity Shareholders
12.09.2019
13.00pm
100%
12
Osiatic Consultants and Investment Private Limited
Equity Shareholders
12.09.2019
14.30pm
100%
13
Osiatic Consultants and Investment Private Limited
Debenture holders
12.09.2019
15:30pm
100%
14
Osiatic Consultants and Investment Private Limited
Unsecured Creditor
12.09.2019
16:00pm
100%
That as per the above details, all the stakeholders of all the applicant companies had approved the scheme unanimously.
That it was further submitted by the Transferee Company that section 230(1)(b) of Companies Act, 2013 envisages a compromise or an arrangement as proposed between a company and its members/creditors. That this compromise has been effected at the time of the first motion between the company and the members / creditors, upon receipt of the NOCs which were filed along with the said application. That it is only after the said compromise / arrangement has been approved inter se between a company and its members / shareholders does it proceed forward for the approval of governmental / regulatory authorities and the sanction of the Hon'ble NCLT, at which stage we stand today. That the entire process for sanction of a proposed merger / compromise, owing to the time lag inherent in the process, need not necessarily include the same shareholders who had approved the said compromise / merger also being shareholders on the record date, owing to share transfers (which are even more prominent in case of listed companies), acquisition of businesses etc.
That Section 230(l)(b) does not stipulate that consent of shareholders envisaged therein is in fact the shareholders as at the date of sanction of the scheme by the Hon'ble Tribunal; and not the shareholders on the date of filing the application for merger. That if this was in fact the intent of the section then the approval of shareholders at a court convened meeting would also not satisfy the requirements of a compromise / merger between a company and its shareholders.
That without prejudice to the submission above, it is submitted that the Applicant Company 7 of this Scheme (i.e. Osiatic) is also the transferee company in CA (CAA) 134 ND/2019 wherein Indus Valley Investment & Finance Private Limited ("Indus") merges into Osiatic i.e. Scheme III which is already approved by the Hon'ble NCLT, New Delhi Bench III, vide its order dated 12.12.2020 as amended on 18.02.2020.
That In any case, on approval of all the schemes, Sunrays Properties & Investment Company Private Limited will emerge as the transferee entity and all the debentures will be cancelled on merger of group entities holding the debentures with other entities. The original individual shareholder and his nominee will ultimately be the shareholders of the Sunrays after all the schemes become effective, as in the process, all group companies will merge with Sunrays Properties & Investment Company Private Limited.
That it was further submitted by the Transferor Company that the entities involved in all the schemes are group entities and therefore the outcome of individual application will not mislead shareholders and debenture holders. That it was further submitted by the Transferee Company that already 2 schemes involving the group entities were approved by the Hon'ble NCLT, Bench III, New Delhi i.e. Scheme I, in CA No. CAA/55/ND/2019 with CA (CAA) 137/ ND / 2019 vide its Order dated 12.12.2019 as amended on 17.02.2020; and Scheme III, in CA No. CAA/53/ND/2019 with CA (CAA) 134 / ND / 2019 vide its Order dated 12.12.2019 as amended on 18.02.2020 and therefore, the averment of Regional Director about single consolidated application is not tenable in facts and under law.
That the Petitioner Companies submitted the copy of the judgment of the Hon'ble Supreme Court of India in the matter of Miheer H. Mafatlal vs. Mafatlal Industries Ltd. The relevant quote of the judgement are as follows
Whether the Court has jurisdiction like an appellate authority to minutely scrutinise the scheme and to arrive at an independent conclusion whether the scheme should be permitted to go through or not when the majority of the creditors or members or their respective classes have approved the this aspect the nature of compromise or arrangement between the company and the creditors and members has to be kept in view. It is the commercial wisdom of the parties to the scheme who have taken an informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a court of appeal and sitin judgment over the informed view of the concerned partiesto the compromise as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. Consequently the Company Court's jurisdiction to that extent is peripheral and supervisory and not appellate.
That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed.
Once the exchange ratio of the shares of the transferee-company to be allotted to the shareholders of the transferor-company has been worked out by a recognized firm of chartered accountants who are experts in the field of valuation and if no mistake can be pointed out in the said valuation, it is not for the court to substitute its exchange ratio, especially when the same has been accepted without demur by the overwhelming majority of the shareholders of the two companies or to say that the shareholders in their collective wisdom should not have accepted the said exchange ratio on the ground that it will be determined to their interest."
The Official Liquidator has filed its Report wherein no specific objection has been raised against the approval of the scheme. It is submitted in the report that that the official liquidator has not received any compliant against the proposed Scheme from any person/party interested in the Scheme in any manner and the affairs of the Petitioner Companies do not appear to has been conducted in a manner prejudicial to the interest of its members, creditors or public interest.
It is further submitted by the Petitioner Companies that the dues of Income Tax Department are fully secured as all the dues, if any, shall be the liability of the Transferee Company as provided in the Scheme of Amalgamation.
Further the Certificate of respective statutory auditors of the Petitioner Companies have been placed on the record to the effect that Accounting Treatment proposed in the Scheme of Amalgamation is in conformity with the Accounting Standard notified by the Central Government as specified by under the provisions of Section 133 of the Companies Act, 2013.
In view of the foregoing, upon considering the approval accorded by the members and creditors of the petitioner Companies to the proposed Scheme, and the affidavit by the Regional Director, Northern Region, Ministry of Corporate Affairs reply submitted by the Transferee Company and the report of the Official Liquidator and, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013. The petitioner shall however remain to bound to comply with the statutory requirements in accordance with the law.
Consequently, the scheme is hereby granted to the scheme under section 230 to 232 of the Companies Act, 2013.
The Petitioner Companies shall however remain bound to comply with the statutory requirements in accordance with law.
Notwithstanding the above, if there is any deficiency found or, violation committed que any enactment, statutory rules and regulation, the sanction granted by this court to the Scheme will not come in any way of action being taken, albeit, in accordance with the law, against the concerned persons, directors and officials of the petitioners.
While approving the Scheme as above, we further clarify that this order should not be construed an order in any granting exemption from payment of stamp duty, taxes including Income Tax, GST etc. 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 other law.
THIS TRIBUNAL DO FURTHER ORDER(S):
1) That the Transferor Companies stand dissolved without following the process of wound up; and
2) That all the property, rights and powers of all the Transferor Companies be transferred without further act or deed, to the Transferee Company and accordingly the same shall pursuant to Section 232 of the Act, be transferred to and vest in the transferee Company; and
3) That all the liabilities and duties of the Transferor Company, be transferred without further act or deed, to Transferee Company and accordingly the same shall, pursuant to Section 232 of the Act, be transferred to and become the liabilities and duties of the Transferee Company;
4) That all the proceedings now pending by or against the Transferor Companies by continued by or against the Transferee Company; and
5) That all the employee of the Transferor Companies in Service, if any, on the date immediately preceding the date on which the Scheme takes effect, i.e. the effective date shall become the employees of the Transferee Company on such date without any break or interruption in service and upon terms and conditions not less favourable than those subsisting in concerned Transferor Companies on the said date.
6) That the Petitioner Companies shall within thirty days of the date of the receipt of this order cause a certified copy of this order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered to the Transferor Companies shall be dissolved and the Registrar of Companies shall place all the documents relating to the Transferor Companies registered with him on the file kept by him in relation to the Transferee Company and the files relating to the all Petitioner Companies shall be consolidated accordingly; and
7) That any person interested shall be a liberty to apply to the Tribunal in the above matter for any directions that may be necessary.
The petition stand allowed of in the above terms.