Uni Design Elite Jewellery Private Limited Vs

Prabhat Kumar, Member (Technical)

Heard Learned Counsel for the Petitioner Companies. No objector has come before the Tribunal to oppose the Petition and nor has any party controverted any averments made in the petition.

The sanction of this Tribunal is sought under Sections 232 r/w section 230 read with Section 66 and other applicable provisions of the Companies Act, 2013 (‘Act’) in the matter of the Scheme of Amalgamation of M/s. Uni-Design Jewellery (India) Private Limited (Transferor Company) and M/s. Uni Design Elite Jewellery Private Limited (Transferee Company) and their respective Shareholders (“Scheme”).

The Petitioner Company 1/ Transferor Company is presently carrying on Jewellery business for domestic market purpose. The Petitioner Company 2/ Transferee Company is engaged in Jewellery business for export purpose.

The rationale of the Scheme is as under:

a. The Transferor Company has inter alia the business of Jewellery and real estate renting, whereas Transferee Company is engaged in the business of Jewellery business for export purpose.

b. Transferor has expertise into the Jewellery business mainly in domestic/ market, whereas Transferee has expertise into the export market. The merger of Transferor company into the Transferee company shall expand the scope of business for the transferee company and use the expertise, resources and technology available with the Transferor Company for expanding its reach into local market for the maximization of value for the shareholders.

c. The Amalgamation of Transferor Company into the Transferee Company, pursuant to this Scheme (as defined hereinafter) would, inter alia, result in the following benefits for the Transferor Company and the Transferee Company:

(a) attracting different sets of investors, strategic partners, lenders and other stakeholders having a specific interest in the business.

(b) The Scheme will result in cost saving for both the companies as they are capitalizing on each other’s core competency and resources which are expected to result in stability of operations, optimisation of cost and higher profitability levels for the Transferee Company

(c) Both the businesses carry certain kind of recognition, brand and intellectual proprietary value before various stakeholders; hence both Transferor and Transferee will be able to enhance a unified brand and will enable simplification of operational structure

d. The Scheme is in the best interests of the shareholders, employees and the creditors of each of the Transferor Company and the Transferee Company.

In view of aforesaid benefits, it is proposed that the Transferor Company be amalgamated with the Transferee Company, followed by dissolution without winding-up of the Transferor Company held by the Transferor Company in the Transferee Company, pursuant to Section 230 to 232 read with Section 66 of the Companies Act, 2013 and Rules framed thereunder.

e. There is no likelihood of the interest of any shareholder or creditor of Transferor and Transferee Companies being prejudiced in any manner as a result of the Scheme.

Consideration:

a. “On the basis of valuation and in view of the shares of the Transferor

Company standing at Rs. 161/- and the Transferee Company standing at Rs. 1,123/- per share, a swapping ratio of 0.143366: 1 was established between the Transferor Company and the Transferee Company which means that the Transferor Company is entitled to 1 share of Transferee Company for each 6.975155 of Transferor Company. Therefore, in this manner, 9,90,000 shareholders for the

equity shares of Rs. 10/- each of Transferor Company will get 1,41,932 shares of Transferee Company of Rs. 10/- each."

b. Upon this Scheme becoming effective, in part or in whole, and as an integral part of the Scheme, the paid-up equity share capital of the Transferee Company shall be reclassified as under: -

From:

Rs. 99,00,000 divided into 9,90,000 Equity shares having face value of Rs. 10 each.

To:

Rs. 1,13,19,320 divided into 11,31,932 Equity shares having face value of Rs. 10 each

c. Upon the Scheme becoming effective and pursuant to the reclassification/ reorganization of the authorized share capital of the Transferor Company as set out in this Scheme but prior to the issuance and allotment of shares by Transferee Company as Paragraph 16 above, the authorized share capital of the Transferor Company, shall be deemed to be consolidated with the authorized share capital of the Transferee Company without any requirement of a further act, deed, resolution or writing (including payment of stamp duty and / or fees payable to the relevant Registrar of Companies). Such that upon the effectiveness of this Scheme, the resultant authorised share capital of the Transferee Company shall comprise of equity share capital of Rs. 2,00,00,000/- (Rs. Two Crores Only) consisting of 20,00,000 (Twenty Lacs) equity shares of Rs. 10/- (Rs. Ten

Only) each and 4% Non-cumulative redeemable preference shares of Rs. 3,98,00,000/- (Rs. Three Crores Ninety Eight Lacs only) consisting of 39,80,000 (Thirty Nine Lacs Eighty Thousand) preference shares of Rs. 10/- (Rs. Ten Only) each and 5% Non-cumulative redeemable preference shares of Rs. 4,01,50,000/- (Rs. Four Crores One Lac Fifty Thousands Only) consisting of 40,15,000 (Forty Lacs Fifteen Thousands only) preference shares of Rs. 10/- (Rs. Ten only) each.

The Board of Directors of the respective Petitioner Companies vide resolution dated 24th November, 2021 approved the Scheme and approached the Tribunal for sanction of the Scheme.

The Petition has been filed in consonance with the order dated 20th September, 2022 passed by this Tribunal in CA(CAA)/31/MB/2022 and the Petitioner Companies have complied with all the requirements as per the directions of this Tribunal and they have filed necessary Affidavits of compliance with this Tribunal. Moreover, the Petitioner Companies shall comply with all the statutory requirements, if any, as may be required under the Companies Act, 2013 and the Rules made there under.

The Regional Director has filed his report dated 12.06.2023 making certain observations. The Petitioner Companies have submitted/undertaken that:

a. The Petitioner Companies will comply with Section 232(3)(i) of the Companies Act, 2013, wherein pursuant to the dissolution of the Transferor Company, the fees, if any, paid by the respective Transferor Company on its Authorized Capital shall be set-off against any fees payable by the Transferee Company on its Authorized Capital subsequent to the amalgamation. The Transferee Company shall pay the difference of fees and Stamp duty, if any, after the above mentioned set-off.

b. The Scheme is in conformity with the circular no. F. No. 7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs.

c. The Scheme is in compliance with the provisions of Section 2(1B) of the Income Tax Act, 1961 and undertakes that all the relevant provisions of the Income Tax, 1961 and Rules thereunder to the extent applicable will be complied with. The above matter is also specifically provided in Clause no. 14 of the Scheme.

d. The Transferee Company will comply with Income Tax Provisions in relation to proceedings/claims under Income Tax Act against the Transferor Company; and

e. The Petitioner Companies clarifies that the Income Tax Department has properly assessed the increase of share capital from time-to-time u/s. 68 of the Income Tax Act, 1961 and payment of Income Tax by existing shareholders.

Ms. Rupa Sutar, Deputy Director from the Office of Regional Director of Western Region, Mumbai appeared on the date of hearing and submits that above explanations and clarifications given by the Petitioner Companies in rejoinder are satisfactory and they have no further objection to the Scheme.

The Official Liquidator has filed his report dated 7th June, 2023 inter alia stating therein that the affairs of the Transferor Company has been conducted in a proper manner. Accordingly, the Transferor Company may be ordered to be dissolved without winding up.

The Income Tax Department will be at liberty to examine the aspect of any tax payable as a result of this scheme and it shall be open to the income tax authorities to take necessary action as possible under the Income Tax Law.

From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, Company Petition bearing C.P.(CAA)6/MB/2023 filed by the Petitioner Companies are made absolute in terms of the prayer clauses of the said Company Scheme Petition.

The Scheme is hereby sanctioned with the Appointed Date of 1st April, 2022.

The transferor Company be dissolved without winding up.

The Petitioner Companies are directed to file a certified copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies, electronically along with e-form INC-28 within 30 days from the date of receipt of the Order, duly certified by the Deputy Registrar or the Assistant Registrar, as the case may be, of this Tribunal.

The Petitioner Companies to lodge a copy of this Order along with the Scheme duly authenticated/certified by the Deputy Registrar or the Assistant Registrar, as the case may be, of this Tribunal, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of receipt of the certified Order.

All concerned regulatory authorities to act on a copy of this Order duly certified by the Registrar of Tribunal, along with a copy of the Scheme.

Ordered Accordingly.