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Judgment
Rajesh Sharma, Member (Technical)
The Court is convened through video conferencing today.
The sanction of the Tribunal is sought under sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (the Act) to the Scheme of Amalgamation of Viloma Equity Services Private Limited, the First Transferor Company; Shri Shyam Advisory Services Private Limited, the Second Transferor Company with Gajgamini Investments and Finance Private Limited, the Transferee Company and their respective Shareholders.
The Scheme envisages Amalgamation of Viloma Equity Services Private Limited, the First Transferor Company; Shri Shyam Advisory Services Private Limited, the Second Transferor Company with Gajgamini Investments and Finance Private Limited, the Transferee Company.
We have heard the Learned Authorised Representative for the Petitioner Companies and the Deputy Director, WR, MCA. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petition.
Learned Authorised Representative for the Petitioner Companies further submits that the Transferor Company 1 is in the business of consultancy services, Transferor Company 2 is presently not carrying on activities but is currently generating income from investments made out of idle funds and the Transferee Company is engaged in the Business of financial advisory and consultancy.
The Board of Directors of Petitioner Companies have approved the scheme at their respective Board Meetings conducted on 3rd November, 2020. The appointed date of the scheme is 1st April, 2020.
The learned Counsel for the Petitioner Companies further submitted the following rationale for the Scheme:
a) The entire shareholding and management of the Transferor Companies and the Transferee Company is owned by one family. These Companies are closely held and are directly or indirectly in the same line of business activities. In order to consolidate and effectively manage the Transferor Companies and the Transferee Company in a single entity, which will provide several benefits including synergy, economies of scale, attain efficiencies and cost competitiveness, it is intended that the Transferor Companies be amalgamated with Transferee Company. Shareholders will stand to benefit by the consolidation of the strengths of all the Companies. Furthermore, the multiple requirements of compliances under the various applicable laws for the Transferor Companies will not arise.
b) The Transferor and Transferee Companies are willing to merge into a single entity to eliminate the cross holding of shares and cancellation of shares within the entities and also to eliminate the Inter-corporate loans between the Companies.
c) Lastly, the Transferor Companies are not actively engaged into main business activities but are generating revenue from their investments. The Transferor Companies may attract the provisions of Non-Banking Finance Company which would require registration with the Reserve Bank of India. Therefore, it is proposed to merge both the Transferor companies with the Transferee Company as the combined entity may not attract the criteria of Non-Banking Finance Company.
The Company Petition is filed in consonance with Sections 230 to 232 of the Act along with the order dated 17th February, 2021 passed in CA (CAA) No. 1136/MB/2020 by this Tribunal.
The Learned Authorised Representative appearing on behalf of the Petitioner Companies submits that upon this Scheme becoming effective, the Transferee Company shall, issue and allot Equity Shares to the extent indicated below, to the members of the Transferor Companies holding fully paid up equity shares in the following ratio:
To the shareholders of Transferor Company 1:
“2 Two) fully paid-up Equity Shares of face value of Rs.10/- (Rupees Ten Only) of the Transferee Company for every 1 (One) fully paid-up Equity Share of Rs.10/-(Rupees Ten Only) held in the Transferor Company 1.”
To the Shareholders of Transferor Company 2:
“203 (Two Hundred Three) fully paid-up Equity Shares of face value of Rs.10/-(Rupees Ten Only) of the Transferee Company for every 1 (One) fully paid-up Equity Shares of Rs.10/- (Rupees Ten Only) held in the Transferor Company 2.”
The Learned Authorised Representative appearing on behalf of the Petitioner Companies stated that the Petitioner Companies have complied with all requirements as per directions of the Tribunal and have filed necessary affidavits of compliance with the Tribunal. Moreover, the Petitioner Companies undertake to comply with all statutory/regulatory requirements, if any, as required under the Act and the Rules made thereunder. The undertaking given by the Petitioner Companies is accepted.
The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, has filed its Report dated 30th September, 2021 inter alia stating therein its observations on the Scheme as stated in para IV (a) to (g) of the Report. In response to the observations made by the Regional Director, the Petitioner Companies filed an Affidavit in Rejoinder and have given necessary clarifications and undertakings. The Regional Director has also filed a Supplementary Report dated 2nd November, 2021. The observations made by the Regional Director and the clarifications and undertakings given by the Petitioner Companies are summarized in the table below:
Sr.
No. Para (IV)
RD Report / Observation Dated 30th September, 2021
Response of the Petitioner Companies
RD
Supplementary Report dated 2nd November, 2021
a)
In compliance of AS-14 (IND AS-103) the
Transferee 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.
Apropos observation made in paragraph IV (a) of the report of Regional Director is concerned, the Petitioners undertake to comply with AS-14 (IND AS-103) and
such applicable accounting standards for Amalgamation and as per other applicable provisions of the Companies Act, 2013 while passing necessary entries in connection with the Scheme.
The reply of the petitioner Companies seems satisfactory.
b)
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 Compromise or Arrangement. 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).
Apropos observation made in paragraph IV (b) of the report of Regional Director is
concerned, the Petitioner Companies submits that notices were served upon the concerned regulatory authorities in accordance with the provisions of section 230(5) of the Companies Act, 2013. The Petitioners further submits that 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 shall be binding on the Petitioner Companies subject to right of appeal, if available.
The reply of the petitioner Companies seems satisfactory.
c)
Hon'ble NCLT may kindly direct the Petitioners to file an undertaking to the extent that the Scheme enclosed to Company Application & the Scheme enclosed to Company Petition, are one and same and there is no discrepancy or deviation.
Apropos observation made in paragraph IV (c) of the Report of the Regional Director is concerned, the Petitioner Companies submits that Scheme enclosed to the Company Application and the Scheme enclosed to the Company Petition are one and the same and there is no discrepancy or deviation.
The reply of the petitioner Companies seems satisfactory.
d)
As per Definitions of the Scheme.
"Appointed Date” means 01st day of April, 2020 or such other date as may be fixed or approved by the National Company Law Tribunal at Mumbai or such other competent authority;
"The Effective Date" means the date on which certified or authenticated copies of the order sanctioning this scheme, passed by the National Company Law Tribunal at Mumbai are filed with the Registrar of Companies, Maharashtra, Mumbai;
References in this scheme to the date of “coming into effect of this scheme” or “upon the scheme being
effective” shall mean the Effective Date.
Further, the petitioners may be asked to comply with the requirements and clarified vide circular no. F. No.7/12/201-9/CL-1
dated 21.08.2019 issued by the Ministry of Corporate Affairs.
d) Apropos observation of the Regional Director, Western Region, Mumbai, as stated in paragraph IV (d) of his report concerned, the Petitioners confirms that the definition “Appointed Date” means 01st day of April, 2020. Further, Clause 1.2 of the Scheme specifies that the appointed date shall be 1st April, 2020. Further, the Petitioners confirms that the “Effective Date” shall be the date on which certified copies of the Order(s) of the National Company Law Tribunal, Mumbai Bench and vesting the assets, property, liabilities, rights, duties, obligations and the such other assets of the Transferor Company and the Transferee Company are filed with the Registrar of Companies, Maharashtra, Mumbai as required under
the provisions of the Companies Act, 2013. The Petitioner Companies further undertakes to comply with the circular no. F. No.7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs. The Petitioner Companies clarify that the amalgamation as embodied in the Scheme shall take effect from the Appointed Date i.e. 1st April 2020.
The reply of the petitioner Companies seems satisfactory.
e)
Petitioner Company have to undertake to comply with section 232(3)(i) of the Companies Act, 2013, where the transferor company is dissolved, the fee, if any, paid by the 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 and
therefore, petitioners to affirm that they comply the provisions of the section.
Apropos observation made in paragraph IV (e) of the report of Regional Director is concerned, the Petitioner Companies undertake to comply with the provisions of Section 232(3)(i) of the Companies Act, 2013.
The reply of the petitioner Companies seems satisfactory.
f)
As per Clause 6 of the Scheme
The excess, if any, of the fair value of assets over the fair value of liabilities and after considering adjustments in sub-clauses
(b) & (c) above, shall be credited to the’ Capital Reserve’ Account.
However, in case of there being a shortfall, the same shall be debited to
‘Goodwill’ Account which shall be amortised over a period of five years.
Petitioner Companies have to undertake that the surplus shall be credited to Capital Reserve Account
arising out of
amalgamation and deficits shall be debited to Goodwill Account.
Further Petitioner Companies have to undertake that reserves shall not be available for distribution of dividend.
Apropos observation made in paragraph IV (f) of the report of Regional Director is concerned, the Transferee Company undertakes that the surplus, if any arising out of Amalgamation shall be credited to “Capital Reserve arising out of
Amalgamation” and deficits, if any shall be debited to Goodwill Account and the reserves shall not be available for distribution of dividend and other similar purposes.
The reply of the petitioner Companies seems satisfactory.
g)
ROC, Mumbai Report dated 23.07.2021 has interalia mentioned that there are no prosecution, no technical scrutiny, no inquiry, no inspection and no complaints pending against Petitioner Companies.
Further mentioned that: -
Interest of the Creditors shall be protected.
Hon’ble Tribunal may consider the observations
pointed out by ROC Mumbai in their report and decide the matter on merits.
Apropos observation made in paragraph IV (g) of the report of Regional Director is concerned, the petitioners states that as far as the observation of Registrar of Companies, Mumbai with respect to protection of interest of creditors, the Petitioners undertakes to protect the interest of creditors at all times.
The reply of the petitioner Companies seems satisfactory.
The Official Liquidator has filed his report on 21st December, 2021, inter alia stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that his representation may be taken on record.
From the material on record, the Scheme appears to be fair, reasonable and is not in violation to any provisions of law nor is contrary to public interest/policy.
Since all the requisite statutory compliances have been fulfilled, CP (CAA) No.99/MB-IV/2021 is made absolute in terms of prayer clauses (35.1) to (35.5) of the Company Petition. Hence Ordered.
The Scheme, with the Appointed Date fixed as 1st April, 2020 placed as Exhibit – A of the Company Petition, is hereby sanctioned. It shall be binding on the Petitioner Companies involved in the Scheme and all concerned including their respective Shareholders, Unsecured Creditors/Trade Creditors and Employees.
In case due to this Scheme of Amalgamation the Authorised Share Capital is required to be increased, the same will be done by the Transferee Company by completing all the formalities including fees to be paid to the Registrar of Companies.
The Registrar of this Tribunal shall issue the certified copy of this Order along with the Scheme forthwith. The Petitioner Companies are directed to file a certified copy of this Order along with a copy of the Scheme with the Registrar of Companies concerned, electronically in E-form INC-28 within 30 days from the date of receipt of the Order from the Registry.
All concerned regulatory authorities to act on certified copy of the order and the form of minutes forming part of the Petition, duly certified by the Deputy or Assistant Registrar, National Company Law Tribunal.
The Petitioner Companies are directed to file a copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies, electronically in with E-Form INC-28 within 30 days from the date of issuance of the certified copy of the Order by the Registry.
The Petitioner Companies are to lodge a copy of this order duly certified by the Deputy/Assistant Registrar of this Tribunal, with the concerned Superintendent of Stamps, for adjudication of stamp duty payable, if any, on the same within 60 days from the date of receipt of the certified copy of the Order along with a copy of the scheme.
The Petitioner Companies shall comply with all the undertakings given by them.
The Petitioner Companies shall take all consequential and statutory steps required under the provisions of the Act in pursuance of the Scheme.
Any person interested in the above matter shall be at liberty to apply to the Tribunal for any directions that may be necessary.
Ordered Accordingly. Pronounced in open court today. File be consigned to the record.