Radha Riddhi Enterprises Pvt. Ltd. And Ors vs Smg Realties Pvt. Ltd.

Janab Mohammed Ajmal, Member (J)

The Petitioner seeks sanction of the Tribunal under Sections 230 to 232 and other relevant provisions of the Companies Act, 2013 (the Act) and the Rules framed there under for the Scheme of Amalgamation of RADHA RIDDHI ENTERPRISES PVT. LTD, the First Transferor Company and SHREE SAINATH AGRO FIELDS PVT. LTD, Second Transferor Company with SMG REALTIES PVT. LTD., the Transferee Company.

The Bench is convened by videoconference. Heard the Learned Counsel for the Petitioner Companies. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petitions to the said Scheme.

The Petitioner Companies have approved the said Scheme of Amalgamation by passing the Board Resolutions dated 17th December, 2019 which are annexed to the respective Company Scheme Petitions.

The Learned Advocate appearing on behalf of the Petitioners states that the Petitions have been filed in consonance with the Order dated 06.02.2020 passed in the Company Scheme Application No. 370 of 2020 of the Hon'ble National Company Law Tribunal, Mumbai Bench.

The Learned Advocate appearing on behalf of the Petitioners further states that the Petitioner Companies have complied with all requirements as per directions of the Tribunal, and they have filed necessary affidavits of compliance before the Tribunal.

The Learned Counsel for the Petitioners states that the management is of the opinion that the merger will lead to synergies of operations and more particularly the following benefits:

a. Consolidation of automobile rental business of the group which is presently carried on by different group companies.

b. Economies in administrative and managerial costs by consolidating operations and would substantially reduce duplication of administrative responsibilities and multiplicity of records and legal and regulatory compliances.

c. Consolidation and improvement in the internal control systems and procedures which will bring greater management and operational efficiency due to integration of various similar functions being carried out by the entities such as human resources, finance, legal, management etc.

d. The consolidation of all the entities into one entity will strengthen the financials of the Amalgamated Company which in turn will help in raising finance at better terms.

e. Synergies arising out of the consolidation of supporting businesses through the amalgamation will lead to improved earnings and cash flow of Amalgamated Company and also in effective management of the movable and immovable properties of the Amalgamated Company.

f. Reflection of fair value of assets and liabilities of the Amalgamating Companies.

g. Facilitating enhancement in value for all stakeholders.

The Regional Director has filed his Report dated 6th day of August, 2020 stating therein that save and except the observations as stated in paragraph IV (a) to (g) of the report, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraph IV of the said Report, the Regional Director has stated that:

a) In compliance of AS-14 (IND AS-I03), the Petitioner 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.

b) As per Definition of the Scheme.

"The Appointed Date" means the October 1, 2019 or any other date as may be approved by the National Company Law Tribunal (Tribunal), And.

"Effective Date" shall mean the last of the dates on which the conditions and matters referred to in Clause 18 of the Scheme occur or have been fulfilled or waived and references in this Scheme to the date of "coming into effect of this Scheme" or "effectiveness of this Scheme" shall mean the 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 an 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 Petitioner may be asked to comply with the requirements 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(3)(i) of 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.

d) The Hon'ble Tribunal may kindly seek the undertaking that this Scheme is approved by the requisite majority of members and creditors as per Section 230(6) of the Act in meetings duly held in terms of Section 230(1) read with subsection (3) to (5) of Section 230 of the Act and the Minutes thereof are duly placed before the Tribunal.

e) The main objects in the Memorandum of Associating of the Transferee company contains the Real Estate activity. Hence, the petitioner company may be directed to comply/clarify the applicability of (RERA)Real Estate Regulation and Development Act, 2016 with Maharashtra Rules and Regulation 2017

f) Hon'ble NCLT may kindly direct the petitioners to file an affidavit to the extent that the Scheme enclosed to Company Application & Company Petition, are made and same and there is no discrepancy/any change/changes are made, and liberty be given to Central Government to file further report if any required.

g) The Petitioners under provisions of section 230(5) of the Companies Act, 2013 have to serve notices to concerned authorities which are likely to be affected by Amalgamation. Further, the approval of the Scheme by this Hon'ble Tribunal may not deter such authorities to deal with any of the issues arising after giving effect to the Scheme. The decision of such Authorities is binding on the Petitioner Company(s).

So far as the observation in paragraph IV (a) of the Report of the Regional Director is concerned, the Learned Counsel for the Petitioner Companies submits that in addition to Compliance of AS-14, 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, if applicable) etc.

So far as the observation in paragraph IV (b) of the Report of the Regional Director is concerned, the Learned Counsel for the Petitioner Companies submits that the Appointed Date is 1st October, 2019 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.

So far as the observation in paragraph IV (c) of the Report of the Regional Director is concerned, the Learned Counsel for the Petitioner Companies submits that the setting off of fees paid by the Transferor Company on the Authorised Share Capital shall be accordance with proviso to section 232(3)(i) of the Companies Act, 2013.

So far as the observation in paragraph IV (d) of the Report of Regional Director is concerned, the Petitioner Companies undertake that this Scheme is approved by the requisite majority of members and creditors as per the directions issued in terms of the NCLT order dated 6th February, 2020.

So far as the observation in paragraph IV (e) of the Report of Regional Director is concerned, the Petitioner Companies state that they are primarily engaged in automobile renting business and presently do not have any ongoing Real Estate project. As a result, provisions of Real Estate Regulation and Development Act, 2016 and rules made thereunder are not applicable to them.

So far as the observation in paragraph IV (f) of the Report of the Regional Director is concerned, the Learned Counsel for the Petitioner Companies submits that the Petitioner undertakes that Scheme enclosed to the Company Application and the Scheme enclosed to the Company Petition are one & same there is no discrepancy or deviation.

So far as the observation in paragraph IV (g) of the Report of the Regional Director is concerned, the Learned Counsel for the Petitioner Companies submits that the Scheme of Amalgamation filed before this Tribunal will not deter any authorities to deal with any of the issues arising after giving effect to the Scheme and that the decision of authorities is binding on the Petitioner Company (s).

The observations made by the Regional Director have been explained by the Petitioner Companies in Para 8 to 14 above. The clarifications and undertakings given by the Petitioner Companies are accepted by the Tribunal.

The Official Liquidator has filed his report on 13th August, 2020 in the Company Scheme Petition No. 944 of 2020, inter alia, stating therein that the affairs of the Transferor Companies have been conducted in a proper manner not prejudicial to the interest of the Shareholders of the Transferor Companies and that the Transferor Companies may be ordered to be dissolved by this Tribunal.

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

Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 944 of 2020 is made absolute in terms of clauses (a) to (c). Hence ordered.

ORDER

The Petition is allowed subject to the following.

i. The Scheme, with the Appointed Date fixed as 1st October, 2019 of the CP (CAA) No. 944/MB/2020 is hereby sanctioned. It shall be binding on the Petitioner and the Companies involved in the Scheme and all concerned including their respective Shareholders, Secured Creditors, Unsecured Creditors/Trade Creditors and Employees.

ii. The Transferor Companies be dissolved without being wound up.

iii. The Petitioner Companies are directed to file a certified copy of this Order along with a copy of the Scheme, duly certified by the Deputy/Assistant Registrar of this Tribunal, with the Registrar of Companies concerned, electronically in E-form INC-28 within 30 days from the date of receipt of the Order.

iv. The Petitioner Companies to lodge a copy of this Order and the Scheme duly authenticated by the Deputy/Assistant Registrar of this Tribunal, within 60 days from the date of receipt of the Order, with the Superintendent of Stamps concerned, for the purpose of adjudication of stamp duty, if any, payable.

v. The Petitioner Company shall comply with the undertakings given by it.

vi. All concerned shall act on a copy of this Order along with Scheme duly authenticated by the Deputy/Assistant Registrar of this Tribunal.

vii. The Petitioner Companies are directed to issue newspaper publications with respect to approval of the Scheme, in the same newspapers in which previous publications were issued.

viii. The Petitioner Companies shall take all consequential and statutory steps required under the provisions of the Act in pursuance of the Scheme. ix. Any person interested shall be at liberty to apply to the Tribunal in above matter for any direction that may be necessary.