VRP Telematics Pvt Ltd, vs VRP Enterprises Pvt Ltd,

P.S.N Prasad, J

This Petition has been jointly filed by the Petitioner Companies under sections 230 and 232 of the Companies Act, 2013 read with the Companies

(Compromises, Arrangement and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016, for the Sanction of the proposed

Scheme of Arrangement of VRP Telematics Pvt Ltd and VRP Enterprises Pvt Ltd and their respective Shareholders and Creditors (hereinafter

referred to as ""Scheme"" or ""Scheme of Arrangement"").

The Demerged Company VRP Telematics Private Limited having its Registered Office at 3rd Floor, 4, Shankar Vihar, Vikas Marg ,New Delhi-

110092. The company was originally incorporated under the name and style of 'V R Portfolio Ltd.', as a public company vide certificate of

incorporation dated 05th April 2005. The company was converted into a private limited company and the name of the company was changed to 'V R

Portfolio Private Limited' vide fresh certificate of incorporation dated 29th June 2011. Further, the name of the company was changed to its present

name 'V R P Telematics Pvt. Ltd. vide fresh certificate of incorporation dated 23rd June 2015. The Authorized Share Capital of the Demerged

Company is Rs. 7,00,00,000 divided into 70,00,000 Equity Shares of Rs. 10 each. The Present Issued, Subscribed and Paid-up Capital of the

Demerged Company is Rs. 4,39,52,500 divided into 43,95,250 Equity Shares of Rs. 10 each.

The Resulting Company VRP Enterprises Pvt. Ltd incorporated as a public company under the provisions of companies act 2013 vide certificate of

incorporation dated 12th August 2016 having its Registered Office at 3rd Floor, 4 , Shankar Vihar, Vikas Marg, Delhi -110092. The Authorised Share

Capital of the Resulting Company is Rs. 10,00,000 divided into 1,00,000 Equity Shares of Rs. 10 each. The issued, subscribed and paid-up Share

Capital is Rs. 1,00,000 divided into 10,000 Equity Shares Of Rs. 10 each.

The proposed Scheme of Arrangement has previously been approved by the Board of Directors of the Demerged Company and the Resulting

Company in the respective meetings held on 9th Ju1y, 2019.

The Rational of the proposed Scheme of Arrangement as elaborated in the present Company Petition is summarized as under:

a. Both the Demerged Company and the Resulting Company are closely held Group Companies under common shareholding, management and

control.

b. The Demerged Company-VRP Telematics Pvt Ltd is engaged in purchase, sale, import, export and trading of mobile phone, laptops, computers,

accessories and other electronic goods and other related activities. In addition to these core business activities, the Demerged Company has also made

investments in real estate and securities (including investment in other Group Companies). Thus, the Demerged Company has two distinct business

activities, viz., trading of electronic goods and investment business.

c. The Demerged Company is planning to expand its core business. Investment Business has substantially different character than the core business

of the Company.

d. Given the distinct nature of Investment Business from the other business activities, it is proposed to hive-off the entire Investment Business from

the Demerged Company into a separate company.

e. The proposed de-merger will enable the Demerged Company tofocus on its core business segment. It will enable the Demerged Comnanv and the

Resulting Company to raise necessary funds, invite strategic investors and other stakeholders for their respective businesses.

f. The present Scheme of Arrangement will impart better management focus, will facilitate administrative convenience and will ensure optimum

utilization of various resources by these Companies.

g. The proposed de-merger will provide scope for independent expansion of various businesses. It will strengthen, consolidate and stabilize the

business of these Companies and will facilitate further expansion and growth of their business.

h. The Demerged Company has some strategic/non-core promoter shareholders. Since the Demerged Company is an un-listed company, there is no

mechanism/platform available to these Shareholders to sell/dispose-off these shares, if they so wish. In order to provide an exit opportunity to the

strategic/non-core promoter shareholders, it is proposed to re-organise the share capital of the Demerged Company, by cancelling 3,94,900 Equity

Shares of Rs. 10 each held by the strategic/non-core promoter shareholders; and to issue equivalent number of (9% noncumulative) Compulsorily

Redeemable Preference Shares in place of the such cancelled Equity Shares. The proposed reorganization of share capital will provide a permanent

liquidity option for non liquid shares of the Demerged Company.

i. The aforesaid re-organization of Share Capital would not involve either the diminution of any liability in respect of un-paid share capital or payment

to any shareholder of any paid-up share capital. None of the Companies is proposing any buy-back of shares from its shareholders.

J. It is submitted that no creditor of the Demerged Company or the Resulting Company will be adversely affected by the proposed reorganization of

share capital. Compulsorily Redeemable Preference Shares to be issued in terms of this Scheme shall be redeemed in accordance with the provisions

of the Companies Act, 2013, relating to the redemption of preference shares. Hence, such redemption of Preference Shares will not be deemed to be

a reduction of capital of these Companies.

k. The proposed Scheme would enhance the shareholders' value of the Demerged Company and the Resulting Company.

The said Scheme of Arrangement will have beneficial impact on Demerged Company and the Resulting Company, their shareholders, employees

and other stakeholders and all concerned.

m. The Scheme of Arrangement is proposed for the aforesaid reasons. The Board of Directors and Management of the Demerged Company and the

Resulting Company are of the opinion that the proposed Scheme of Arrangement is in the best interest of these Companies and their stakeholders.

It is submitted by the Petitioners that the accounting treatment proposed in the Scheme of Arrangement is in conformity with the accounting

standards prescribed under Section 133 of the Companies Act, 2013. The certificates from the respective Statutory Auditors are annexed.

It is further submitted by the Petitioners that none of the Directors of the Petitioner Companies have any material interest in the Scheme, except to

the extent of shareholding Petitioner companies.

It is further submitted by the Petitioners that the Scheme is not prejudicial to the interest of the Shareholders and Creditors of the Petitioner

Companies and the Petition is made bonafide and is in the interest of both the Petitioner Companies and their Shareholders, Secured Creditors and Un-

secured Creditors as a whole and is also just and equitable.

The Petitioner submits that the Board of Directors of the Petitioner Demerged Company and the Resulting Company have determined the share

exchange ratio as under:

a. The Resulting Company-VRP Enterprises Pvt Ltd will issue I (one) 9% non-cumulative Compulsorily Redeemable Preference Shares of Rs.

10 each, credited as fully paid-up, for every 10 (ten) Equity Shares of 10 each held in the Demerged Company-VRP Telematics Pvt Ltd.

b. In terms of the provisions of Part 3 of the Scheme, the Demerged Company will issue up to 3,94,900 (9% non-cumulative) Compulsorily

Redeemable Preference Shares (CRPS) of Rs.10 each, credited as fully paid-up, in place of 3,94,900 Equity Shares of Rs.10 each in the

Demerged Company on voluntary basis. Consequently, up to 3,94,900 Equity Shares of Rs. l0 each issued by the Demerged Company will

be cancelled.

The Petitioner have filed the valuation report dated 29thJune, 2019 given by Mr Sandeep Kumar Agrawal, a Chartered Accountant and the IBBI

Registered Valuer in respect of Securities or Financial Assets, in relation to the share exchange ratio.

A perusal of the present Petition discloses that initially the Petitioner Companies had filed Company Petition No. 142(ND) of 2019 seeking

directions of this Tribunal to dispense/convene meetings of Shareholders, Secured Creditors and Un-secured Creditors of the Petitioner Companies for

the purpose of the considering and approving, with or without modification, the aforesaid Scheme of Arrangement. Accordingly, this Tribunal vide its

order dated 16th October, 2019 to obtain appropriate orders to dispense/convene meetings of Shareholders, Secured Creditors and Un-secured

Creditors, as the case may be, of these Companies for the purpose of the considering and approving, with or without modification, the aforesaid

Scheme of Arrangement.

On 6th November vide order dated the bench was pleased to pass an order for issuance of notice, in the Second Motion petition in C.AA. No. 149

(ND) 2019 in connection with the scheme amalgamation, to the Regional Director and the Official Liquidator. The Petitioners were also directed to

carry out publication in the newspapers 'Business Standard' (English Delhi edition as well as in 'Business Standard' (Hindi Delhi Edition).

It is seen from the records that the Petitioners have filed an affidavit dated 24.12.219 affirming compliance of the order passed by the Tribunal

dated 6th November 2019. A perusal of the affidavit discloses that the petitioners have affected the paper publication as directed in one issue of the

'Business Standard' (English Delhi edition) on 11.19.2019 as well as in 'Business Standard' Hindi edition on 11.12.2019 in relation to the date of hearing

of the petition on 6.11.2019. Further, the affidavit also discloses that copies of present Petition have been duly served to the Registrar of Companies,

Regional Director, Northern Region and the Official Liquidator. Additionally, in the affidavit dated 03.01.2020 the Petitioners have also affirmed that

neither the Petitioners herein nor their Legal Counsels had received any objection/representation against the proposed scheme of Amalgamation till the

date of such affidavit.

The Regional Director has filed its representation/report dated 02.01.2020, along with report of the registrar of Companies, wherein it is stated that

no adverse observations have been made by Registrar of Companies. Hence no objection has been raised by the Regional Director and the Registrar

of Companies to the proposed Scheme of Arrangement.

The Official Liquidator filed report, wherein no objections were raised and he further stated that he did not receive any complaint against the

proposed Scheme from any person/party interested in the Scheme in any manner and that the affairs of the Petitioner companies do not appear to

have been conducted in a manner prejudicial to the interest of its members or to public interest and that none of the demerged and the resulting

company is subject to matter of dissolution pursuant to the Scheme of Arrangement.

The Income Tax Department, Meerut, Uttar Pradesh through Mr. Sanjeev Gupta filed its reply affidavit dated 06.01.2020 furnishing the

reports/comments in respect of both the Petitioner Companies. The Income Tax Department has pointed out that some Income Tax Demands are

pending in the Demerged Company. The Petitioners have filed detailed reply/affidavits in which it was clarified that some demands are under appeal

while other demands have since been paid in full. The Petitioners have also confirmed and undertaken that all the pending Income Tax dues and other

liabilities will be paid by the Demerged Company and/or the Resulting Company, as the case may be, on completion of the on-going

appeals/litigation/reconciliation.

It is further submitted that the present Scheme of Arrangement is for De-merger and none of the Demerged Company or the Resulting Company

is subject matter of dissolution. Hence, the Demerged Company as well as the Resulting Company will remain in existence even after the

implementation of the Scheme. It was further submitted that the Petitioner Demerged Company is a profit-making company and has large amount of

reserves and surplus. Hence, interest of the Income Tax Department will not be adversely affected by sanctioning of the Scheme of Arrangement.

We have heard the learned counsels for the parties and also considered the representations made by the Regional Director, Northern Region and,

report of official liquidator and the affidavit filed by the Petitioners.

In view of the foregoing, upon considering the approval accorded by the members and creditors of the Petitioners to the proposed Scheme, and the

affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, there appears to be no impediment to grant sanction to the

Scheme. Consequently, sanction is hereby granted to the Scheme under section 230 & 232 of the Companies Act, 2013. The Petitioners shall however

remain bound to comply with the statutory requirements in accordance with law.

Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction

granted by this court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons,

directors and officials of the petitioners. It is further clarified that this order should not be construed as an order in any way granting exemption from

payment of stamp duty, taxes or any other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any

other requirement which may be specifically required under any law.

Hence, the proposed Scheme of Arrangement stands approved and sanctioned. Petitioner Companies are required to act upon as per terms and

condition of the sanctioned Scheme and the same to be binding on its Shareholders, Secured Creditors and Un-secured Creditors of the above named

Petitioner Companies with effect from the appointed date, i.e. 1st day of April, 2019.

It is further directed that within thirty days of the date of the receipt of this order, a certified copy of this order shall be duly delivered to the

(a)Registrar of Companies for records, (b) All concerned regulatory authorities.

Any person interested shall be at liberty to apply before this Tribunal in the above matter for such directions as may be necessary.

The Petition stands disposed off in above terms.