Wellworth Capital Services Private Limited vs Wellworth Financial Services Private Limited

V. Nallasenapathy, Member (T)

The Petitioner seeks sanction of the tribunal under Sections 230 to 232 of the Companies Act, 2013, to the Scheme of Amalgamation (Merger by Absorption) of Wellworth Capital Services Private Limited (Transferor Company) with Wellworth Financial Services Private Limited having (Transferee Company) and their respective shareholders ('Scheme').

This Court is convened through videoconferencing. Heard the Learned Counsel for the Petitioner Companies and the representative of the Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai. No objector has come before the Tribunal to oppose the Scheme and nor any party has controverted any averments made in the Petition.

The Petitioner Companies have approved the said Scheme by passing the Board Resolutions in their respective board meetings held on 9th December, 2019 which are annexed to the Joint Company Scheme Petition and that thereafter they have approached the Tribunal for sanction of the Scheme.

The Transferor Company is primarily engaged in the business of lending and financing to group companies and investment activities. The Transferee Company is a NBFC registered with Reserve Bank of India under section 45-IA of the Reserve Bank of India Act, 1934 and primarily engaged in lending and related activities.

The Learned Counsel for the Petitioners state that the Joint Company Scheme Petition has been filed in consonance with order passed in C.A. (CAA)/65/MB/2020 of this Tribunal.

Wellworth Capital Services Private Limited and Wellworth Financial Services Limited are both part of the Roha Group. The Merger of the Transferor Company with the Transferee Company would result in the following benefits:

• Business and administrative synergies;

• Avoid duplication of efforts;

• Reduction in multiplicity of legal and regulatory compliances, reduction in overheads, including administrative, managerial and other administrative costs;

• Synergy benefits, such as, enhancement of net worth of the combined business for future growth and expansion.

The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, has filed its report dated 14th July, 2020 inter alia stating therein that save and except as stated in paragraph IV (a) to (i) of the said report, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraph IV of the said report, the Regional Director has stated that:

a) In addition to 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;

b) As per Part I- Definitions Clause 1 (1.3, 1.6 & 1.9) of the Scheme,

"Appointed Date" means the 1st day of April 2019 or such other date as may be fixed or approved by National Company Law Tribunal, Mumbai Bench

"Effective Date" means the last of the dates on which the certified copies of the orders sanctioning this Scheme, passed by the National Company Law Tribunal at Mumbai, are filed with the Registrar of Companies, Mumbai by the Transferor Company and the Transferee Company. Any references in this Scheme to the date of "coming into effect of this Scheme" or "upon the Scheme becoming effective" shall mean the Effective Date.

"Record date" means the date to be fixed by the Board of Directors of the Demerged Company, in consultation with the Resulting Company, for the purpose of determining the members of the Demerged Company to whom NCRPS in the Resulting Company will be allotted under the Scheme.

In this regard, it is submitted that section 232(6) of Companies Act, 2013 states that the Scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not a date subsequent to the Appointed Date. However, this aspect may be decided by the Hon'ble Tribunal taking into account its inherent powers.

Further, the Petitioners may be asked to comply with the requirements as clarified vide circular No. F. No. 7/12/2019/CL-I dated 21.08.2019 issued by the Ministry of Corporate Affairs.

c) The Hon'ble Tribunal may kindly seek the undertaking that this Scheme is approved by the requisite majority of members and creditors as per Section 230(6) of the Act in meetings duly held in terms of Section 230(1) read with subsection (3) to (5) of Section 230 of the Act and the Minutes thereof are duly placed before the Tribunal;

d) Hon'ble NCLT may kindly direct the petitioners to file an affidavit to the extent that the scheme enclosed to Company Application & Company Petition, are one and same and there is no discrepancy/any change/changes are made, for changes if any, liberty be given to Central Government to file further report if any required;

e) 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 Amalgamation. 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).

f) As per Part II- Clause 13 of the Scheme - Aggregation of Authorised Share Capital. In this regard it is submitted that the same is subject to compliance with the provisions of section 13, 14, 61 and 232 (3)(i) of the Companies Act, 2013 and/or any other applicable provisions of the Act;

g) As Transferor Company is registered NBFC Company with RBI copy of the order sanctioning the Scheme shall be filed with RBI within 30 days from the date of the order;

h) As per Part III- Clause 14 (14.1) Change of name of the Transferee Company, the name of the Transferee Company shall automatically stand changed without any further act, instrument or deed on the part of the Transferee Company to "RohaFinancial Services Private Limited". In this regard it is submitted that the same is subject to compliance with the provisions of section 13 of the Companies Act, 2013 r/w relevant rule(s) of the Company (Incorporation) Rules, 2014;/or any other applicable provisions of the Act;

i) In view of the observation raised by the ROC Mumbai, mentioned at para 16 above Hon'ble NCLT may pass appropriate orders/order as deem fit.

"Para 16: Status of ROC Report: -

Observation of the ROC, Mumbai is as under: -

Interest of the creditors should be protected. May be decided on its merits."

In response to the report of the Regional Director, the Petitioner Companies have filed an undertaking dated 11th August, 2020 and have clarified as under:

a) As far as the observations of the Regional Director, as stated in paragraph IV (a) of the report and reproduced hereinabove is concerned, the Transferee Company through its Counsel undertakes that it shall pass necessary accounting entries in connection with the Scheme as per AS -14 (IND AS-103) as well as comply with other applicable Accounting Standards to the extent applicable.

b) As far as the observations of the Regional Director, as stated in paragraph IV (b) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its Counsel confirms that the Appointed Date mentioned in the Scheme is 1st Day of April, 2019. In this regard, the Petitioner Companies confirm and undertake that upon the Hon'ble National Company Law Tribunal, Mumbai Bench approving the Scheme, the Scheme shall take effect from the Appointed Date i.e. 1st day of April, 2019 in terms of provisions of Section 232(6) of the Companies Act, 2013. Further, the Petitioner Companies through their Counsel undertake that they will comply with the provisions and requirements clarified vide circular No. F. No 7/12/2019/CL-I dated 21-08-2019 issued by the Ministry of Corporate Affairs, if required.

c) As far as the observations of the Regional Director, as stated in paragraph IV (c) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its Counsel states that the meeting of members of Petitioner Companies were held on 24th March, 2020 and the scheme was approved unanimously by the members as per Section 230(6) of the Act in meetings duly held in terms of Section 230(1) read with sub section (3) to (5) of Section 230 of the Act. This Hon'ble Tribunal in its order delivered in C.A.(C.A.A.)/65/2019 directed that the meetings of Secured Creditors of the Petitioner Companies were not required to be held as there were no Secured Creditors and the meeting of Unsecured Creditors of First Petitioner Company was not required to be held as there were no Unsecured Creditors in the First Petitioner Company. The meeting of Unsecured Creditors of Second Petitioner was not required to be held since the Scheme is an arrangement between the Second Petitioner Company and its respective shareholders. The Second Petitioner Company served individual notice of the meeting of the Equity Shareholders of the Second Petitioner Company to all its Unsecured Creditors.

d) As far as the observations of the Regional Director, as stated in paragraph IV (d) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its Counsel undertakes that the scheme enclosed to Company Application & Company Petition, are one and same and there is no discrepancy/any change/changes are made, for changes, if any required.

e) As far as the observations of the Regional Director, as stated in paragraph IV (e) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its Counsel hereby clarify that an affidavit, stating that the notices have been served to concerned authorities as required under Section 230(5) of the Companies Act, 2013, have been annexed with the Company Scheme Petition. 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).

f) As far as the observations of the Regional Director, as stated in paragraph IV (f) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its counsel undertakes that as per Clause 13.3 of the Scheme, the consent of the shareholders to the Scheme shall be deemed to be sufficient for the purpose of aggregating authorised share capital and no further resolution(s) under Sections 13, 14 and 61, respectively, of the Companies Act, 2013 and/or any other applicable provisions of the Act, would be required to be separately passed.

g) As far as the observations of the Regional Director, as stated in paragraph IV (g) of the report and reproduced hereinabove is concerned, the Transferee Company through its Counsel undertakes that it shall file copy of the order sanctioning the Scheme with RBI within 30 days from the date of the receipt of the order.

h) As far as the observations of the Regional Director, as stated in paragraph IV (h) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its counsel undertakes that as per Clause 14.1 of the Scheme, the consent of the shareholders to the Scheme shall be deemed to be sufficient for the purposes of effecting this amendment, and no further resolution(s) under Section 13 and Section 16 of the Companies Act, 2013 or any other applicable provisions of the Act, would be required to be separately passed.

i) As far as the observations of the Regional Director, as stated in paragraph IV (i) of the report and reproduced hereinabove is concerned, the Petitioner Companies through its counsel undertakes to protect the interest of the creditors.

The observations made by the Regional Director have been reproduced in Para 7 above. The clarifications and undertakings given by the Petitioner Companies have been explained in Para 8 above. The Undertaking filed by the Petitioner Companies in response to the said report, is accepted by this Tribunal.

The Official Liquidator has filed his report on 14th July, 2020 in the C.P. (CAA)/939/MB/2020, inter alia stating therein that the affairs of the Transferor Company have been conducted in a proper manner not prejudicial to the interest of the Shareholders of the Transferor Company and that the Transferor Company may be ordered to be dissolved without winding up by this Tribunal.

The counsel appearing on behalf of the Petitioner Companies further states that the Petitioner Companies have complied with all requirements as per directions of the Hon'ble Tribunal and they have filed necessary affidavits of compliance and Compliance Report to the Hon'ble Tribunal. Moreover, the Petitioner Companies undertake to comply with all statutory requirements if any, as required under the Companies Act, 2013 and the Rules made there under whichever is applicable. The said undertakings given by the Petitioner Companies are accepted.

From the material on record, the Scheme appears to be fair and reasonable and does not violate any provisions of law and is not contrary to public policy or public interest.

Since all the requisite statutory compliances have been fulfilled, C.P. (CAA)/939/MB/2020 have been made absolute in terms of prayer Clause 32(a) of the Petition mentioned therein.

The Scheme of Amalgamation (Merger by Absorption) is sanctioned hereby, and the Appointed Date of the Scheme is 1st April, 2019. The Transferor Company is dissolved without winding up.

The Petitioner Companies are directed to lodge a certified copy of this order and the Scheme of Amalgamation (Merger by Absorption) 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 order.

ORDER

The Petition is allowed subject to the following.

i. The CP (CAA) 939/MB-I/2020 Connected with CA (CAA) 65/MB-I/2020 is hereby sanctioned. It shall be binding on the Petitioners and the Companies involved in the Scheme and all concerned including their respective Shareholders, Secured Creditors, Unsecured Creditors/Trade Creditors and Employees.

ii. The Transferor Company be dissolved without being wound up.

iii. 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 duly certified by the Deputy/Assistant Registrar of this Tribunal.

iv. The Petitioner Companies to lodge a copy of this Order and the Scheme duly authenticated by the Deputy/Assistant Registrar of this Tribunal with the Superintendent of Stamps concerned, for the purpose of adjudication of stamp duty, if any, payable within 60 days from the date of receipt of the Order. v. The Petitioner Company shall comply with the undertakings given by it.

vi. All concerned shall act on a copy of this Order along with Scheme duly authenticated by the Deputy/Assistant Registrar of this Tribunal.

vii. The Petitioner Company is directed to issue newspaper publications with respect to approval of the Scheme, in the same newspapers in which previous publications were issued.

viii. The Petitioner Company shall take all consequential and statutory steps required under the provisions of the Act in pursuance of the Scheme.

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