Treasure Retail Private Limited Vs

Shyam Babu Gautam, Member (Technical)

This bench is convened by video conference today.

Learned Counsel for the Applicant Companies states that the present Scheme is a Scheme of Arrangement between Treasure Retail Private Limited (Applicant Company 1 / Demerged Company) and Wonderchef Home Appliances Private Limited (Applicant Company 2 / Resulting Company) and their respective shareholders and creditors.

Learned Counsel for the Applicant Companies further submits that the Scheme has been approved by the Board of Directors of the Applicant Companies vide their respective board resolutions dated 17th August 2022. The Appointed Date fixed under the Scheme is 01st April 2022.

The Learned Counsel submits that the Applicant Company 1 is engaged in the business of retail trading including but not limited to institutional sales, of kitchen utensils, cookware appliances and other allied products to end consumers, which are sold under the brand name of “Wonderchef” (brand owned by Resulting Company) and operates through both, physical mode i.e., retail outlets viz. brick and mortar stores, which are either company operated or franchise operated, as well as via digital mode through e-commerce platforms, television and similar ancillary modes (B2C E-commerce Business Undertaking).

The Learned Counsel submits that the Applicant Company 2 is primarily engaged in the business of wholesale trading of kitchen and cookware appliances and other allied products under the brand name of “Wonderchef”. In addition to wholesale trading of Wonderchef products, the Resulting Company also undertakes wholesale trading of products of other brands, which is at a very nascent stage. Furthermore, the Resulting Company also undertakes retail trading of Wonderchef branded products through identified physical stores, being franchise operated.

Rationale of the Scheme:

Demerger of Retail Business Undertaking from Demerged Company into Resulting Company

The Resulting Company is hence envisaging the acquisition of B2C E-commerce Business Undertaking of the Demerged Company and consolidation of business operations run via franchise operated stores, including but not limited to institutional sales (collectively referred to as the “Retail Business Undertaking”).

It is expected that such restructuring will be beneficial for the Demerged Company, the Resulting Company and their respective shareholders and creditors, as it would result into the following:

- scaling the business of Wonderchef branded products, with the aim to achieve economies of scale and achieve operational efficiencies.

- unlocking the growth potential of business pertaining to Wonderchef products.

- bifurcation of business arrangements pertaining to functioning of Company Operated Stores and Franchise Operated Stores, wherein all arrangements for Franchise Operated Stores shall stand aggregated with Resulting Company and in case of Company Operated Stores operations with the Demerged Company.

- benefit of financial resources, managerial, technical and marketing expertise

Re-organisation of Capital Structure of the Resulting Company

The management of the Resulting Company intends to realign and streamline its existing capital structure in a manner, such that

- separate classes of shares be subsumed into single class, in case the shares rank pari-passu in terms of the rights associated with such separate class of shares;

- undertake cancellation of any shares (whether fully paid up and/ or partly paid up), in any manner, in compliance with applicable laws

The Learned Counsel for the Applicant Companies respectfully submits that, upon the Scheme becoming effective and in consideration of demerger, the shareholders of the Demerged Company shall be entitled to fully paid-up equity shares of the Resulting Company in the following swap ratio:

“1 (One) equity share of WHAPL / Resulting Company having face value of INR 10/- each fully paid up shall be issued for every 421 (Four Hundred and Twenty-One) equity shares held in TRPL/ Demerged Company having face value of INR 10/- each fully paid up.”

The Learned Counsel for the Applicant Companies submits that, the Applicant Company 1 has 3 (Three) Equity Shareholders. All 3 (Three) Equity Shareholders of Applicant Company 1 have given their consent via consent affidavits which are annexed as Annexure 13A to 13C to the Joint Company Scheme Application. In view of the fact that, the Applicant Company 1 has obtained the consent affidavits from all its Equity Shareholders, the meeting of the Equity Shareholders of the Applicant Company 1 is hereby dispensed with.

The Learned Counsel for the Applicant Companies submits that, the Applicant Company 2 has 3 classes of Equity Shareholders viz. 1 (One) Series A Equity Shareholder, 1 (One) Series B Equity Shareholder and 25 (Twenty-Five) ordinary Equity Shareholders; and 3 classes of Preference Shareholders viz. 2 (Two) Investor CCPS, 7 (Seven) Series B CCPS and 27 (Twenty Seven) Series C CCPS (together referred to as Preference Shareholders).

The Learned Counsel for the Applicant Companies submits that, Series A Equity Shareholder and Series B Equity Shareholder of Applicant Company 2 have given their consent via consent affidavits which are annexed as Annexure 17A to 17B to the Joint Company Scheme Application. In view of the fact that, the Applicant Company 2 has obtained the consent affidavits, the meetings of the Series A Equity Shareholder and Series B Equity Shareholder of the Applicant Company 2 are hereby dispensed with.

The Learned Counsel submits that there are no Secured Creditors in the Applicant Company 1 and therefore, the question of convening meeting and issuance of notices to them does not arise. The Applicant No.1 has 33 Unsecured Creditors of the value of Rs. 89,42,61,932.94.

The Applicant Company 2 has 2 (Two) Secured Creditor and 523 Unsecured Creditors of the value of Rs. 35,68,41,028. The Counsel for the Applicant Companies further submits that the present Scheme is a Scheme of Arrangement of the Applicant Companies and their respective shareholders as contemplated under Section 230(1)(b) of the Companies Act, 2013 and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no compromise and/or arrangements with the creditors as no sacrifice is called for. In view above, the meetings of the Creditors of the Applicant Companies is hereby dispensed with. However, this bench hereby directs the Applicants to issue notices to its Creditors by Air Mail or Registered Post or Registered or Speed Post or Courier or Hand Delivery or through E-mail (whose email addresses are duly registered with the Applicants), at their last known addresses as per the records of the Applicant Company 2, as may be feasible.

This Bench directs the conduct of meetings of the Applicant Company 2 as follows:

(i) That the below meetings of the Applicant Company 2 will be convened and held as follows:

Sr. No

Category of Shareholders

Date of Meeting

Time of Meeting

1

Ordinary Equity Shareholders

9th June, 2023

11:00 A.M.

2

Preference Shareholders (as defined)

9th June, 2023

02:00 P.M.

(ii) The aforesaid meetings will be convened and held for the purpose of considering and, if thought fit, approving with or without modification(s) the Scheme of Arrangement through video conferencing or other audio-visual means.

(iii) In view of provisions of Section 230(4) read with Section 108 of the Companies Act, 2013 read with Rule 20 and other applicable provisions of the Companies (Management and Administration) Rules, 2014 the Applicant Company 2 proposes to provide the facility of remote e-voting to its shareholders in respect of the resolution to be passed at the aforesaid meetings. The shareholders of the Applicant Company 2, for whom meetings are being convened, are also allowed to avail the facility of e-voting during the aforesaid meetings to be held through video conferencing and/or other audio-visual means.

(iv) That at least 30 (thirty) days before the said meetings of the Applicant Company 2 to be held as aforesaid, separate notices convening the respective meetings at the day, date and time as aforesaid, together with a copy of the Scheme, a copy of Explanatory Statement disclosing all material facts as required under Section 230(3) of the Companies Act, 2013 read with Rule 6 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 shall be sent either by Air Mail/Courier/Registered Post/Speed Post/Hand Delivery/through Email (where e-mail ID is available) to all those shareholders of the Applicant Company 2 for whom meetings are being convened.

(v) That at least 30 (thirty) days before the said meetings to be held as aforesaid, a notice convening the meetings at the day, date and time as aforesaid be published once each in ‘Business Standard’ in English having nation-wide circulation and ‘Navshakti’ in Marathi having circulation in Maharashtra, stating that copies of the Scheme and the said statement required to be furnished pursuant to section 230 (3) of the Companies Act, 2013 can be obtained free of charge by emailing to the Applicant Company 2 at [email protected] .

(vi) This Bench hereby appoints Mr. Milind V. Chakranarayan, Former Regional Director Ministry of Corporate Affairs R/o Flat No. 501 Nandidham CHS, Plot No. 29, Sector 42A, Nerul West Seewood, Navi Mambai – 400706. Mobile No: 7875096167 as Chairperson for the aforesaid meetings of the Applicant Company 2, fees of the Chairman shall be Rs.3,50,000/ -, plus other applicable taxes.

(vii) This Bench hereby appoints Ms. Trupal Trivedi, Company Secretary and Legal Compliance Manager, as Scrutinizer for the aforesaid meetings of the Applicant Company 2. The fee of the professional appointed as Scrutinizer for the meetings of the Applicant Company 2 shall be INR 30,000/- excluding applicable taxes.

(viii) The quorum for each of aforesaid meetings of the Applicant Company 2 shall be as prescribed under Section 103 of the Companies Act, 2013 and would include shareholders present through video conferencing and/or other audio-visual means. In case the required quorum as stated above is not present at the commencement of the meeting, the meeting shall be adjourned by 30 (thirty) minutes and thereafter the persons present shall be deemed to constitute the quorum.

(ix) The voting by proxy shall not be permitted as the meeting would be held through video conferencing and/or other audio-visual means. However, voting by authorised representative in case of body corporate be permitted, provided that the prescribed form/authorization is filed with the Applicant Company 2 at [email protected] not later than 48 hours before the start of the aforesaid meeting as required under Rule 10 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

(x) That the Chairperson appointed for the aforesaid meetings of the Applicant Company 2 to issue the notice of the meeting referred to above. The said Chairperson shall have all powers pursuant to sections 230 and 232 read with other applicable provisions of the Companies Act, 2013, the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and Companies (Management and Administration) Rules, 2014, to the extent necessary and applicable, in relation to the conduct of the meetings including for deciding procedural questions that may arise at or at any adjournment thereof or any other matter including, an amendment to the Scheme or resolution, if any, proposed at the meeting by any person(s).

(xi) That the value and number of the shares of each shareholder shall be in accordance with the register of Members or depository records for shareholders of the Applicant Company 2 and where the entries in the register / depository records are disputed, the Chairperson of the meeting shall determine the value and the number for the purpose of the aforesaid meeting and his/her decision in that behalf would be final.

(xii) That the Chairperson of the meeting to report to this Tribunal, the results of the said meeting of the shareholders of the Applicant Company 2 within 30 (Thirty) days of the conclusion of the meetings.

The Counsel for the Applicant Companies submits that Applicant Company 1 has 33 (Thirty-Three) Unsecured Creditors of the value of INR 89,42,61,933/- and Applicant Company 2 has 523 Unsecured Creditors of the value of INR 35,68,41,028/-. The Counsel for the Applicant Companies further submits that the present Scheme is a Scheme of Arrangement of the Applicant Companies and their respective shareholders as contemplated under Section 230(1)(b) of the Companies Act, 2013 and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no compromise and/or arrangements with the creditors as no sacrifice is called for. The meeting of the Unsecured Creditors of the Applicant Companies is hereby dispensed with. This bench hereby directs the Applicant to issue notice to all its Unsecured Creditors by Air Mail or Registered Post or Registered Post Acknowledgement Due (RPAD) or Speed Post or Courier or Hand Delivery or through E-mail (to those creditors whose email addresses are duly registered with the respective Applicant Companies), at their last known addresses as per the records of the respective Applicant Companies, as may be feasible.

The Applicant Companies are hereby directed to serve notices of the present application along with copy of Scheme in the prescribed form on:

i) Central Government, through Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai;

ii) Registrar of Companies, Maharashtra, Mumbai;

iii) GST Authorities concerned of the Applicant Companies.

iv) The Income Tax Authorities within whose jurisdiction the Applicant Companies are assessed to tax, clearly indicating the PAN of the Applicant Company concerned (for Applicant Company 1 – PAN AADCT1814H Applicant Company 2 – PAN AAACW8651N).

v) Any other applicable regulatory authority pursuant to section 230(5) of the Companies Act, 2013 and as per rule 8 of the Companies (Compromises, Arrangements and Arrangements) Rules, 2016, with a direction that they may submit their representations, if any, within a period of 30 days from the date of receipt of such notice to the Tribunal with copy of such representations shall simultaneously be served upon the Applicant Companies. If no response is received by the Tribunal from such Authorities, within a period of thirty days from the date of receipt of such notice, it will be presumed that such authorities have no objection to the Scheme

The Applicant Companies shall host the notices along with a copy of the Scheme on their respective websites, if any.

The Applicant Companies shall file compliance report with the registry in regard to the directions given in this Order proving service of notices to the regulatory authorities as stated above and do report to this Tribunal that the directions regarding the issue of notices have been duly complied with.

Order accordingly.