Sita Nirman Pvt Ltd Vs

Rajasekhar V.K. Member (Judicial)

The instant petition has been filed under Section 230(6) read with Section 232(3) of the Companies Act, 2013 (“Act”) for sanction of the Scheme of Amalgamation of Anderson  Dealtrade  Private  Limited  being  the  Petitioner  No.2  above  named ("Transferor Company No 1), Apeksha Vyapaar Private Limited, being the Petitioner No.3 above named ("Transferor Company No 2”), Pawanputra Trading Private Limited being the Petitioner No. 4 above named ("Transferor Company No. 3”), Sunrise Retails Private Limited being the Petitioner No. 5 above named ("Transferor Company No 4 ") and Ultramarine Impex Private Limited being the Petitioner No. 6 above named ("Transferor Company No 5 ") with Sita Nirman Private Limited being the Petitioner No.1 above named ("Transferee Company") whereby and where under the Transferor Company are proposed to be amalgamated with the Transferee Company from the Appointed Date, 01st April, 2020 in the manner and on the terms and conditions stated in the said Scheme of Amalgamation (“Scheme”).

The Petition has now come up for final hearing. Counsel for the Applicants submits as follows:-

(a) The Scheme was approved by the Board of Directors of the Petitioner Companies at their meetings held on 03rd March, 2021.

(b) The circumstances which justify and/or have necessitated the Scheme and the benefits of the same are, inter alia, as follows: -

a. The Transferee Company and the Transferor Company No.3 are Non-Banking Financial Companies duly registered with the Reserve Bank of India and are presently engaged in investing and financing activities. Apart from pursuing its main object, the Transferor Company No.1 and Transferor Company No.4 have made deployment of its funds in other investable instruments. The Transferor Company No..2 and Transferor Company No.5 were Non-Banking Finance Companies Registered with the Reserve Bank of India and subsequently their Certificate of Registration as NBFC was cancelled by the Reserve Bank of India for want of Minimum Net Owned Fund of Rs. 200 Lacs. The business of the Transferor Companies and the Transferee Company can be combined/adjusted and carried forward conveniently with combined strength;

b. The amalgamation will enable the Transferee Company to consolidate its line of business by restructuring and re-organizing its business activities and Capital Structure;

c. The amalgamation will enable the amalgamated company to broad base their business activities under the roof of the Transferee Company;

d. The amalgamation will result in economy of scale including reduction in overhead expenses relating to management and administration in better and more productive utilization of various resources;

e. The business of the Company can be conveniently and advantageously combined together and in general business of the Company concerned and will be carried on more economically and profitably under the said Scheme;

f. The said Scheme of Amalgamation will enable the establishment of a larger company with larger resources and a larger capital base enabling further development of the business of the company concerned. The said scheme will also enable the undertakings and business of the said applicant company to obtain greater facilities possessed and enjoyed by one large company compared with a number of small Company for raising capital, securing and conducting trade on favorable terms and other benefits;

g. The said scheme will contribute in furthering and fulfilling the objects of the Company concerned and in the growth and development of these businesses;

h. The said scheme will strengthen and consolidate the position of the amalgamated company and will enable the amalgamated company to increase its profitability;

i. The said scheme will enable the undertakings concerned to pool their resources and to expand their activities;

j. The said scheme will enable the Companies concerned to rationalize and streamline their management, business and finances and to eliminate duplication of work to their common advantages;

k. The said scheme will have beneficial results for the Companies concerned, their shareholders, employees and all concerned.

(c) The Statutory Auditors of the Petitioner No1 have by their certificate dated 24th March, 2021 have confirmed that the accounting treatment in the Scheme is in conformity with the accounting standards prescribed under Section 133 of the Companies Act, 2013.

(d) There are no proceedings pending under Sections 210 to 227 of the Companies Act, 2013 against the Petitioner(s).(e) The exchange ratio of shares in consideration of the Amalgamation has been fixed on a fair and reasonable basis and on the basis of the Report dated 01st March, 2021 thereon of CA VIDHI CHANDAK , IBBI , Registered Valuer.

(f) By an order dated 3rd December, 2021 in Company Application No C.A( CAA)NO. 85/KB/2021 this Tribunal made the following directions with regard to meetings of shareholders and creditors under Section 230(1) of the Act:-

a) Meetings dispensed: Meeting of Equity Shareholders of the Petitioner Companies, for considering the Scheme are dispensed with in view of all shareholders of Petitioner Companies having respectively given their consent to the Scheme by way of affidavits .

b) As there were nil secured creditors verified by Auditor’s Certificate, the meeting of Secured Creditors of the Petitioner Companies were dispensed with.

c) As there were nil Unsecured Creditors verified by Auditor’s Certificate, the meeting of the Unsecured Creditors of the Petitioner Companies was dispensed with.

(g) Consequently, the Petitioners presented the instant petition for sanction of the Scheme. By an order dated 14th March,2022 the instant petition was admitted by this Adjudicating Authority and fixed for hearing on 28th April,2022 upon issuance of notices to the Statutory / Sectoral Authorities and advertisement of date of hearing. In compliance with the said order dated 14th March, 2022 the Petitioner(s) have duly  served such notices on the Regulatory Authorities viz Upon Income Tax Authorities on 31ST March,2022 and 01st April,2022, Upon Registrar of Companies , Kolkata ,West Bengal on 23rd March, 2022 and Regional Director, Eastern Region on 23rd March, 2022 , Upon Official Liquidator , High Court Calcutta on 23rd March, 2022, Upon Reserve Bank of India on 23rd March, 2022. The Petitioners have also published such advertisements once each in the Financial Express and Dainik Statesman in their respective issues dated 04th April,2022. An affidavit of Compliance duly affirmed on 06th April,2022 has also been filed.

(h) All statutory formalities requisite for obtaining sanction of the Scheme have been duly complied with by the Petitioners. The Scheme has been made bona fide and is in the interest of all concerned.

Pursuant to the said advertisements and notices the Regional Director, Ministry of Corporate Affairs, Kolkata (“RD”), Official Liquidator, High Court have filed their representations before this Tribunal.

The Official Liquidator has filed his report dated 26/04/2022  and concluded as under:-

“Para 8: That the Official Liquidator has not received any complaint against the proposed Scheme of Amalgamation from any person/party interested in the Scheme in any manner till the date of filing of this Report.

Para 10: That the Official Liquidator on the basis of information submitted by the Petitioner Companies is of the view that the affairs of the aforesaid Transferor Companies do not appear to have been conducted in a manner prejudicial to the interest of its members or to public interest as per the provisions of the Companies Act, 1956/the Companies Act, 2013 whichever is applicable.”

The RD has filed his reply affidavit dated 27th  April,2022  (“RD affidavit”) which has been dealt with by the Petitioner(s) by their Rejoinder affidavit dated 27th April,2022 (“Rejoinder”). The observations of the RD and responses of the Petitioner(s) are summarized as under:-

Paragraph 2 (a) of RD Affidavit

It is submitted that on examination or the report of the Registrar of Companies, West Bengal, it appears that no complaint and /or representation regarding the proposed Scheme of Amalgamation has been received against the Petitioner Companies, Further, as per available records, all the petitioner companies are updated in filing their Statutory Returns for the year ended 31.03.2021.

Paragraph 2 (a) of the Rejoinder

No adverse comments made by the Registrar of Companies, West Bengal in his report to the Regional Director. Further the Registrar of Companies, West Bengal has not received any Complaint and / or representation from any person on the proposed Scheme. Hence no comments are offered.

Paragraph 2 (b) of RD Affidavit

It is submitted that the Petitioner Transferee Company namely M/s. Sita Nirman Private Limited and Transferor Company namely M/S Pawanputra Trading Private Limited are registered with RBI as NBFC Companies . But, no “ NOC “ from RBI has been provided yet in the matter.

Paragraph 2 (b) of the Rejoinder

The Petitioner Transferee Company namely – Sita Nirman Private Limited is a NBFC Company duly Registered with Reserve Bank of India . Further the Petitioner Transferor Company namely – Pawanputra Trading Private Limited is also a NBFC Company duly Registered with Reserve Bank of India.

The Petitioner Transferee Company namely – Sita Nirman Private Limited have vide their letter delivered to Bank on 20.04.2022, 30.12.2021 and 29.11.2021 have sought NOC from the Bank for the proposed Scheme of Amalgamation .

The Petitioner Transferor Company namely Pawanputra Trading Private Limited have vide their letter delivered to Bank on 30.12.2021 and 29.11.2021 have sought NOC from the Bank for the proposed Scheme of Amalgamation .

Further the Petitioner Companies have also Complied with order passed by the Hon’ble Tribunal at dispensation stage and also in the direction order at Petition Stage .

Further the Petitioner Transferee Company namely – Sita Nirman Private Limited is a NBFC Company and it shall continue to be a NBFC Company even after the sanction of the Scheme. It shall comply with all directions and notifications issued by the Bank from time to time to the fullest satisfaction of the Bank .

Copies of Letter addressed to the Bank is collectively annexed marked –Annexure – B.

Paragraph 2 (c) of RD Affidavit

It is submitted that this deponent has received two separate emails along with few pages of attachments from Shri Ashok Kumar Jhunjhunwala, Advocate of High Court, Mumbai wherein he has made some observation / views and other non-compliances of the Companies Act , 2013 on Financial Statements in respect of M/ s Sita Nirman Private Limited (Transferee Company) and M/s Anderson Dealtrade Private Limited (Transferor Company). On receipt of the said observation/ views, this Deponent, by issuing letters from time to time had taken up the matter with concerned Registrar of Companies, West Bengal for his examination and for submission of his representation / report in the matter. The Report of the Registrar of Companies, West Bengal is awaited.

Paragraph 2 (c) of the Rejoinder

The Petitioners would like to say that Shri Ashok Kumar Jhunjhunwala has written letters to the registrar of Companies, is neither a Creditor nor a shareholder in any of the Petitioner Company . Further the issues that he has raised are being attended to by the Registrar of Companies . The Registrar Of Companies have neither issued nor made any comments in their observation made in their report addressed to the Regional Director . Hence such letters should not come in the way of sanctioning the Scheme.

Paragraph 2 (d) of RD Affidavit

Petitioner company should undertake to comply with the provisions of section 232(3)(i) of the Companies Act,2013 through appropriate affirmation.

Paragraph 2 (d) of the Rejoinder

The Transferee Company undertakes that it shall comply with the provisions of Sec 232(3)(i) of the Companies Act, 2013 in regard to adjustment of fees upon clubbing of Authorized Share Capital(s) of the Transferor Companies with the Authorized Share Capital of the Transferee Company in post-amalgamation and shall file a detailed statement thereof with the Registrar of Companies at the time of filing of INC – 28.

Paragraph 2 (e) of RD Affidavit

That the Transferee Company should be directed to pay stamp duty, if any, applicable on the transfer of the immovable properties from the Transferor Companies to it.

Paragraph 2 (e) of the Rejoinder

The Transferee Company undertakes that it shall pay applicable stamp duty on the transfer of the immovable properties from the Transferor Companies to it.

Paragraph 2 (f) of RD Affidavit

The Hon'ble Tribunal may kindly direct the Petitioners to file an affidavit the extent that the Scheme enclosed to the Company Application and Company Petition are one and same and there is no discrepancy or no change is made.

Paragraph 2 (f) of the Rejoinder

The Deponent duly authorised by the Petitioner Companies hereby affirms that the Scheme enclosed to the Company Application and Company Petition are one and same and there is no discrepancy or no change is made.

Paragraph 2 (g) of RD Affidavit

The Transferor Company, Apeksha Vyapaar Pvt Ltd’ certificate of registration under section 45IA of the Reserve Bank of India Act 1934 was cancelled by RBI on 13.08.2018 . But still the company has been continuing with NBFC activities. The company’s activities therefore violate the provisions of the Reserve Bank of India Act 1934. Comments of RBI in the matter is desirable , as it appears. The latest financial statement for 2020-21 shows the company is functioning as NBFC as follows:-

Total

Asset (Rs)

Financial asset(Rs.)

Total

Income (Rs)

Financial Income (Rs)

689.46

lakhs

629.32

[non-current investments, short term loans]

12.77

Lakhs

12.05

lakhs (interest received)

The company is NBFC, but not having been registered with Reserve Bank of India under section 4SIA of the Reserve Bank of India Act 1934. NOC from Reserve Bank of India shall of crucial relevance in respect of the: application for the merger of the said Transferor companies.

Paragraph 2 (g) of the Rejoinder

The Petitioner Transferor Company namely, Apeksha Vtapaar Private Limited was a NBFC Company duly Registered with Reserve Bank of India . Its Certificate of Registration was cancelled by the said Bank as the Company failed to achieve the Net Owned Fund of Rs 200 lacs as on 31.03.2017 . The said fact has already been disclosed in the body of the Scheme under item No A(2) in Part I “Ggneral” under sub heading Description of Companies and background. Since the business carried on by the Company cannot be wound up overnight to non achievement of NOF of Rs 200 lacs , the Petitioner Transferor decided to merge with Sita Nirman Private Limited which is a NBFC Company . A fact which has also been communicated to the Bank at the time of seeking NOC via Scheme. Hence the Petitioner Companies see no relevance of RBI in this matter as the Transferee Company has already applied for issuance of NOC.

Paragraph 2 (h) of RD Affidavit

The Transferor Company, Anderson Dealtrade Pvt Ltd is functioning as a Non-Banking Financial Company. Its financial statement as at 31.03.2021 exhibit that more than 50% of its total assets were financial assets and more than 50% of its income was financial income as follows: -

Totalasset

(Rs)

Financial asset(Rs)

Total

Income

(Rs)

Financial

Income

(Rs)

2113.91

1699.29

65.45

65.45

( interest

on loan )

[non-current investments,

inventory   of   shares and short term loans]

The company is NBFC, but not having been registered with Reserve Bank of India under section 45IA of the Reserve Bank of India Act 1934. NOC from Reserve Bank of India shall of crucial relevance in respect of I h‹: application for the merger of the said Transferor companies.

Paragraph 2 (h) of the Rejoinder

The Reserve Bank of India has given options to Companies which are carrying on NBFC activities without having a valid Certificate of Registration :

i. To Merge with another NBFC Company

ii. To discontinue the NBFC business.

iii. To apply for issuance of Certificate of Registration.

In the instant case the Petitioner Transferor Company namely, Anderson Dealtrade Private Limited is merging with Sita Nirman Private Limited which is a NBFC Company. Hence the Petitioner Companies see no relevance of RBI in this matter as the Transferee Company has already applied for issuance of NOC.

A copy of the letter issued by the Bank in similar instance is annexed herewith and marked – Annexure – C.

Paragraph 2 (I) Of RD Affidavit

It Is Submitted That As Per Instructions Of The Ministry Of Corporate Affairs, New Delhi, A Copy Of The Scheme Was Forwarded To The Income Tax Department On 21/01/ 2022 With A Request To Forward Their Comments / Observations / Objections, If Any. However, The Same Is Still Awaited.

Paragraph 2 (i) of the Rejoinder

The Income Tax authorities have not made any observations on notice served by the office of the Regional Director. Further the Petitioner Companies have also complied with the directions contained in the order passed by the Hon’ble Tribunal and have effected service upon the Income Tax Department.

However Income Tax Department have not made any observation on the said notices delivered to their office .

This Tribunal received a mail from the Reserve Bank of India informing that the said Bank has not issued No Objection to the proposed Scheme of Amalgamation on the following reasons :

a) The Transferee Company , M/s Sita Nirman Private Limited and one of the Transferor Companies , M/s Pawanputra Trading Private Limited have changed more than 30% of its management without prior approval of the Bank.

b) Besides, Certificate of Registration of two other transferor Companies , M/S Apeksha Vyapaar Private Limited and M/s Ultramarine Impex Private Limited was cancelled for non maintenance of required amount of Net Owned Fund of consecutive years .

The Ld. Counsel appearing for the Petitioners submit that :

a. As regards the Petitioner Transferee Company namely M/s Sita Nirman Private Limited and one of the Petitioner Transferor Company namely M/S Pawanputra Trading Private Limited , they have vide letter delivered to bank on 20.04.2022 informed the Bank that all documents for regularisation and ratification have been delivered to their office on 24.03.2022.

b. As regards cancellation of Certificate of Registration of two Petitioner Transferor Companies namely M/s Apeksha Vyapaar Private Limited and M/s Ultramarine Impex Private Limited the same has disclosed in the face of the Scheme at Part I under heading “General”, sub heading Description of Companies and background at A( 2 ) and A ( 5) .

Heard submissions made by the Ld Counsel appearing for the Petitioner and the Joint Director from the office of Regional Director (ER), MCA, Kolkata. We are satisfied with the explanations given by the Petitioners. Upon perusing the records and documents in the instant proceedings and considering the submissions, we allow the petition and make the following orders:-

i. The Transferee Company shall comply with all requirements of the Reserve Bank of India even after post-Merger, to the fullest satisfaction of the Bank for issuance of No Objection.

ii. The Scheme of Amalgamation mentioned in paragraph 1 of this petition, being Annexure “A” thereto, is hereby sanctioned by this Tribunal with the Appointed Date fixed as 1st April, 2020 and shall be binding on Anderson  Dealtrade  Private  Limited,  Apeksha  Vyapaar  Private Limited, Pawanputra Trading Private Limited, Sunrise Retails Private Limited and Ultramarine Impex Private Limited (“Transferor Companies”) with Sita Nirman Private Limited (“Transferee Company”) and their shareholders and all concerned;

iii. All the properties, rights and interest of the Transferor Companies including those described in the Schedule of Assets herein, be transferred from the said Appointed Date, without further act or deed, to the Transferee Company and, accordingly, the same shall pursuant to Section 232(4) of the Companies Act, 2013, be transferred to and vest in the Transferee Company for all the estate and interest of the Transferor Companies therein but subject nevertheless to all charges now affecting the same, as provided in the said Scheme;

iv. All the debts, liabilities, duties and obligations of the Transferor Companies be transferred from the said Appointed Date, without further act or deed, to the Transferee Company and, accordingly, the same shall pursuant to Section 232(4) of the Companies Act, 2013, be transferred to and become the debts, liabilities, duties and obligations of the Transferee Company.

v. Leave is granted to the Petitioners to file the Schedule of Assets & liabilities of the Transferor Companies in the form as prescribed in the Schedule to Form No.CAA7 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within three weeks from the date of receiving a copy of this order.

vi. The employees of the Transferor Companies shall be engaged by the Transferee Company, as provided in the Scheme.

vii. All proceedings and/or suits and/or appeals now pending by or against the Transferor Companies be continued by or against the Transferor Companies as provided in the Scheme.

viii. All other matters covered by then Scheme shall take effect subject to and in terms of the Scheme.

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

x. The Transferor Companies and the Transferee Company shall each within thirty days of the date of the receipt of this order, cause a certified copy thereof to be delivered to the Registrar of Companies for registration and on such certified copies being so delivered, the Transferor Companies shall be dissolved without winding up with effect from the date of filing of the certified copies of the order, as aforesaid (Effective Date) and the Registrar of Companies shall place all documents relating the Transferor Companies and registered with him on the file kept by him in relation to the Transferee Company and the files relating to the said company shall be consolidated accordingly.

xi. The Petitioners shall supply legible print out of the Scheme and schedule of assets and liabilities in acceptable form to the Registry and the Registry will append such printout, upon verification to the certified copy of the order.

The Company Petition C.P (CAA) No. 16 / KB / 2022 connected with Company Application C.A(CAA) NO 85 / KB / 2021 is disposed of accordingly.

Urgent certified copy of this order, if applied for, be supplied to the parties, subject to compliance with all requisite formalities.