Shouri Properties Private Limited Vs

K.K. Vohra, Member (Technical)

The Learned Counsel for the Applicant Companies submits that the present Scheme under Sections 230-232 and other applicable provisions of the Companies Act, 2013 (the Act) is a Scheme of Merger (by absorption) of Shouri Properties Private Limited (First Applicant Co/Transferor Co) with INOX Leisure Limited (Second Applicant Co/Transferee Co) and their respective Shareholders.

The respective Board of Directors of the Applicants have approved the Scheme in their meetings held on January 21, 2022. The Appointed Date fixed under the Scheme is February 1, 2022.

The Counsel for the Applicants submitted that the First Applicant Co has taken one multiplex cinema theatre on lease and sub-leased the same to its Holding Company and the Second Applicant Co is engaged in the business of operating Multiplex Entertainment including cinemas, theatres, family entertainment and amusement centres, food courts, restaurants and all kinds of business relating to movie exhibition, entertainment hotels and tourism related industries.

The Counsel for the Applicants further submitted that the Transferor Co is a wholly owned subsidiary of the Transferee Co and entire share capital of this Transferor Co is owned and controlled by the Transferee Co.

The Counsel for the Applicants submitted the Introduction and Rationale for the Scheme of Absorption: -

(i) Shouri Properties Private Limited is a private limited company incorporated under the provisions of the Companies Act, 1956.

(ii) INOX Leisure Limited is a public limited company incorporated under the provisions of the Companies Act, 1956. The shares of INOX are listed on the BSE Limited and the National Stock Exchange of India Limited. INOX is engaged in the business of owning, operating and managing multiplex cinema theatres in India.

(iii) With a view to maintain a simple corporate structure and eliminate duplicate corporate procedures, it is desirable to merge and amalgamate all the undertakings of Shouri Properties Private Limited into INOX Leisure Limited. The merger of all undertakings of Transferor Co into the Transferee Co shall facilitate consolidation of all the undertakings to enable effective management and unified control of operations. The merger would create economies in managerial costs by consolidating operations and would substantially reduce duplication of administrative responsibilities and multiplicity of records and legal and regulatory compliances.

(iv) The proposed amalgamation is in the interest of the shareholders, creditors, stakeholders and employees, of both the companies, as it would enable a focused business approach for the maximization of benefits to all stakeholders.

There are 7 Equity Shareholders in the First Applicant Co (Second Applicant Co 2 has 14,09,994 out of 14,10,000 shares followed by 6 other shareholders each having one share) and the First Applicant Co being the subsidiary company, the applicants have procured the consent affidavits from all the Equity Shareholders of the First Applicant Co which have been filed with the Company Application (pages 579, 580-613).

There are no Creditors (Secured as well as Unsecured) in the First Applicant Co. Certificate issued by S.C. Bandi & Co. Chartered Accountant is filed with the Application (page 614). Therefore, the First Applicant Co seeks direction to dispense with holding of meeting of the Creditors Co.

The Second Applicant Co has secured creditors of value of INR 63 crores and Unsecured creditors of value of INR 129.82 crores as on January 31, 2022. Certificate issued by S.C. Bandi & Co. Chartered Accountant is filed with the Application. (Page 615). Hon’ble NCLAT has held in the matter of Ambuja Cement Ltd, Company Appeal (AT) No. 19 of 2021 (Para 37 read with Para 39) have concluded that Consent affidavits of creditors are not necessary for the merger of wholly owned subsidiary company with holding Company.

The Applicant Companies further submits that:

a. Being a merger of wholly owned subsidiary company into its holding company, no shares would be issued or allotted as consideration pursuant to the merger. Accordingly, the rights of members of the Transferee Co are not affected as there would be absolutely no change in the equity share capital of the Transferee Co. Also, the present Scheme will not result in any dilution in shareholding of the shareholders of the Transferee Co;

b. The net worth of the Transferee Co is and will continue to remain highly positive post-merger;

c. The existence of the Transferee Co will remain as before without any change either to its shareholding pattern or debt position pursuant to the Scheme;

The Counsel for the Applicants submits that in view of above, no reconstruction or arrangement happens with its shareholders, and thus, it does not require to hold a shareholders’ meeting for approval of the proposed Scheme. The Transferor Co, being a wholly owned subsidiary of the Transferee Co, the creditors of the transferee company, are not likely to be affected by the scheme. The Hon’ble National Company Law Appellate Tribunal in the case of Ambuja Cements Limited in Company Appeal (AT) No. 19 of 2021 pronounced on 06.04.2021 and Patel Engineering Limited in Company Appeal (AT) No. 137 of 2021 pronounced on 22.12.2021 have taken similar view. The facts in the present case are like the facts of the above cases, therefore, it is prayed that the meeting of shareholders and creditors of the Transferee Co be dispensed with. The rights of creditors of the Transferee Co are not affected as there is no compromise or arrangement with them.

In view of the above submissions and in the interest of justice, the Scheme is to be allowed. The following order is passed.

ORDER

The Application be and the same is allowed.

(a) The meetings of the following are dispensed with:

(i) The Equity Shareholders of the Transferor Co;

(ii) The Equity Shareholders of the Transferee Co;

(iii) The Secured and Unsecured Creditors of the Transferee Co; and

(iv) There are no Creditors (Secured or Unsecured) in Transferor Co. Hence the question of holding meeting does not arise.

(b) The Applicant Co 2 shall send individual notices to all its Secured & Unsecured Creditors, enclosing a copy of the Scheme, by courier/registered post/ speed post at their last known address or hand delivery or through email, with a direction that they may submit their representations, if any, within a period of thirty days from the date of receipt of such intimation to the Tribunal with copy of such representations simultaneously to be served upon the Applicant Companies. The aforesaid notice shall also be advertised in two local newspapers viz. one in English and another in vernacular. It shall be the responsibility of the Transferee Company to ensure that every creditor is put on notice regarding the Scheme, so that they may take an informed decision thereon.

(c) The Applicant Companies shall serve notice of the Application along with copy of scheme upon: (i) Regional Director, Ministry of Corporate Affairs, Everest, 100 Marine Drive, Mumbai 400 002; E [email protected]; (ii) Registrar of Companies, MCA, 100, Everest, Marine Drive, Mumbai 400 002; E [email protected]; (iii) concerned Income Tax Authorities within whose jurisdiction the Applicant Company’s assessments are made i.e. for the Transferor Co having PAN No. AAFCS8445M and for the Transferee Co having PAN No. AAACI6063J; (iv) National Stock Exchange of India Ltd., Exchange Plaza, 5th floor, Plot No. C/1, G-Block, Bandra-Kurla Complex, Bandra (E), Mumbai - 400051; (v) Bombay Stock Exchange Ltd, P.J. Towers, Dalal Street, Mumbai - 400001 and (vi) Securities Exchange Board of India ( only in case of the Second Applicant Company) and any other applicable regulatory authority pursuant to sub-section (5) of Section 230 of the Companies Act, 2013 and as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, with a direction that they may submit their representations, if any to the Tribunal with copy of such representations to the Applicant Companies.

(d) All notices, Affidavits etc. should be submitted in the prescribed form and within the time frame given in the relevant provisions of Law and Rules.

(e) The Transferor Co shall serve notice of the Application along with the copy of the Scheme upon Official Liquidator (OL), pursuant to Section 230(5) of the Companies Act, 2013 and Rule 8 of the Rules at Official Liquidator, Mumbai, Ministry of Corporate Affairs, Bank of India Building, 5th Floor, Mahatma Gandhi Road, Mumbai 400 001; E [email protected]; Tel 22675008.

(f) M/s. R. Seth & Associates, Chartered Accountants, having address at 104, F-1, HDIL, Residency Park 2nd, Virar (W), Thane, Mumbai – 401303, Mob : 9310660221/7715017974 and E mail [email protected] is appointed to assist the OL to scrutinize the books of accounts of the said Transferor Company for the last 5 years and submit its report to the Tribunal. The aforesaid Company to pay fees of INR 1,50,000 for this purpose.

(g) The Applicant Companies shall file an Affidavit of Service of the directions given by the Tribunal in the Registry for proving service of notice on the Creditors and Regulatory Authorities as stated above enclosing the evidence in support of service.