Yamuna Commercial Private Limited vs Registrar Of Companies

Subrata Kumar Dash, Member (Technical)

This is a joint second motion company petition filed by the Petitioner-Companies, namely, Yamuna Commercial Private Limited (Petitioner Company No. 1/Transferor Company No. 1) and NVS Builders Private Limited (Petitioner Company No. 2/Transferor Company No. 2) with Psychotropics Leasing and Finance Private Limited (Petitioner Company No. 3/Transferee Company) under Section 230-232 of the Companies Act, 2013 (the Act) read with Companies (compromises, Arrangements and Amalgamations) Rules, 2016 (the Rules) in relation to the Scheme of Arrangement between the petitioner companies.

The Petitioner Companies have prayed for sanctioning of the Scheme of Arrangement between the respective companies. The said Scheme is attached as Annexure -A1 of the petition.

The first motion application seeking directions for dispensing/convening with the meetings of the equity shareholders, secured and unsecured creditors of the applicant companies was filed before this Tribunal by CA (CAA) No.37/Chd/Hry/2020 and based on such an application necessary directions were issued on 12.01.2021. As per the order dated 12.01.2021, the meetings of equity shareholders, Secured and Unsecured Creditors of applicant companies were dispensed with for the reasons recorded in the aforementioned order.

The main objects, date of incorporation, authorized and paid-up share capital and the rationale of the Scheme have been discussed in detail in the order dated 12.01.2021.

In the second motion proceedings, certain directions were issued by this Tribunal by order dated 20.09.2021 and the same were compiled by filing affidavits by Diary No.00093/04 dated 22.10.2021. The notice of hearing was published in “Financial Express” (English, Haryana Edition) and “JanSatta” (Hindi, Haryana Edition), on 01.10.2021 and the original copies of the newspapers are attached as Annexure-6 of the aforesaid affidavit. It has also stated in the affidavits that copies of notices were served upon the (1) Central Government through Regional Director (Northern Region), Ministry of Corporate Affairs; (2) The Concerned Registrar of Companies (3) The Official Liquidator attached to Punjab and Haryana High Court; (4) Competition Commission of India (5) Reserve Bank of India; (6) the jurisdictional Income TaxAuthorities by way of speed post. Original acknowledgement receipts and postal receipts along with tracking reports evidencing service of notices are attached as Annexure- 3, 4 and 5 of the aforesaid affidavit.

It is deposed by the authorized signatory of the applicant companies that no objections has been received from any person in response to the publication made in the newspaper published on 01.10.2021. The aforesaid joint affidavit of petitioner companies has been filed byDiary No. 00093/14 dated 19.09.2022.

In response to the abovementioned notices, the statutory authorities have furnished their responses.

7.1Registrar of Companies (RoC)/Regional Director (RD)

7.1.1 The Registrar of Companies (RoC) has filed its report along with the report of the Regional Director (RD), by Diary No.00093/11 dated 11.07.2022.

7.1.2 It is stated in the report of the Regional Director, that RoC, Delhi has made certain observation in its report dated 05.07.2022 and subsequently after obtaining an explanation from the petitioners, found the same satisfactory on all counts except the following:

i. The issue raised by the Regional Director/Registrar of Companies relates to the transfer of an amount of Rs. 50 lakhs by the Transferor Company No. 2 to the transferee company. The said amount is shown under the head of ‘Non-current investment’ in the Balance Sheet ending on 31.03.2021 of the Transferor Company No. 2. The Regional Director/Registrar of Companies pointed out in their report that the said detail of allotment of shares is not reflected in the MGT-7 of the transferee Company made upto 31.03.2021 filed vide SRN T58749797 dated 16.11.2021 and also not reflected in the Balance Sheet as on 31.03.2021 of the Transferee Company which is clearly the falsification of the accounts of both transferor Company No. 2 and Transferee Company.

7.1.3 The Petitioner Companies have replied to the observations made by the ROC/RD by Diary No.00704/4 dated 21.07.2022, wherein it has been replied that :

i. The Transferor Company No. 2 has made a short term investment of Rs. 50 lakhs in Transferee Company on 24.09.2020 only for two years so the same is shown under the head of “Non-Current Investments”. The same is temporary Short Term Investment of the surplus funds of Transferor Company No. 2 and is not for the allotment of shares of the Transferee Company which are already under the process of merger.

ii. The amount of Rs. 50,00,000/- has been duly depicted under the head ‘Trade Payable’ and there is no concealment and non-disclosure of the amount. As this is a temporary short term investment and permissible under the provisions of the Companies Act, 2013 therefore, it is not to be reflected in the MGT-7 of the Transferee Company made upto 31.03.2021. There may be depiction of wrong head on the part of companies but there is no concealment and no falsification of accounts on the part of companies.

iii. The amount has been refunded back to the Transferor Company No. 2 by the Transferee Company on 29.03.2022 even before the observation raised by the office Regional Director. The transaction of Rs. 50,00,000/- has been properly accounted in the books of companies. Therefore, there is no question of falsification of accounts.

iv. It is further mentioned that as per Clause 11 of the Scheme all the suits, actions and proceeding will be continued and be enforced by/or against the Transferee Company.

Considering the fact that the said amount was not an investment in shares and that the account stood square off before the impugned observation by the Regional Director/Registrar of Companies, we are of the view that no adverse conclusion can be drawn with regard to the said transaction.

7.2 Income Tax Department

7.2.1 The Income Tax Department filed its report by Diary Nos. 00093/7 dated 28.04.2022 and Diary No. 00093/9 Dated 28.06.2022 wherein it has been stated that a demand of Rs. 6,76,270/- for A.Y. 2020-21 is pending in respect of the Transferee Company. It is further stated in the report that the Transferor Company No. 2 is a loss-making company and loses of the company will be adjusted against the income of the Transferee Company after Amalgamation. The brought forward losses shall affect the remaining adversely.

7.2.2 The Petitioner Companies have filed a joint response to the reports of the Income Tax Department by Diary No. 00093/12 dated 11.08.2022 stating that the contention raised by Department no longer prevails as the Transferor Company No. 2 has set off its losses in the current financial year 2021-22 as the company has a profit or Rs. 5,00,629/-and the accumulated losses from the previous year has been set off. It is further stated that the applicant companies shall abide by the provisions of Section 72A of the Income Tax Act, 1961. It is further stated that as per Clause 5 of the Scheme all the liabilities of the Transferor Companies will be vested with the Transferee Company and as per Clause 11 all suits, actions and proceedings will be continued and enforced by/ or against the Transferee Company.

7.2.3 In any case, this Tribunal is not shutting out the legitimate interest of the income-tax authorities to recover the lawful dues payable by the petitioner companies which are not being dissolved, and the scheme provides the savings in relation to the liabilities as well, the rights of the tax authorities remain intact, and they can proceed against the companies in accordance with the law, if any amount is found due and payable.

7.3 Official Liquidator

7.3.1 The Official Liquidator has filed his report by Diary No.00093/5 dated 30.11.2021. The Official Liquidator in its report has reproduced the information on the incorporation of the Petitioner Companies, their capital structure, financial highlights, shareholding, etc. The Official Liquidator has also reproduced the extracts of Reports of the Statutory Auditors of the Petitioner Companies on the Financial Statements.

On a perusal of the report, it is seen that the Official Liquidator has made no adverse observation against the petitioner companies.

7.4 Competition Commission of India

7.4.1 The Competition Commission of India filed its report by Diary No. 879 dated 26.10.2021 and has stated that the aforesaid matter has not been filed with the Commission under the provisions of the Act and the Tribunal may seek an undertaking from the companies involved that approval of the Commission is not required for the said matter.

7.4.2 The authorised representatives of the petitioner companies have stated by way of Joint affidavit that no transaction is falling under section 5 of the Competition Act, 2002. The proposed Scheme envisages amalgamation of the Transferor Companies with the Transferee Company and does not meet the threshold limit as specified under section 5 of the Competition Act, 2002 Hence, the same does not qualify as 'Combination' under the Competition Act, 2002 and will not require any filing of notice or obtaining approval from Competition Commission of India.

7.4.3 On a perusal of the report, it is seen that the Competition Commission of India has made no adverse observation against the petitioner companies.

It is further submitted that the Petitioner Company No. 3 has filed an application dated 09.04.2021 for voluntary surrender of NBFC Registration Certificate with the Reserve Bank of India and the Reserve Bank of India has issued cancellation certificate dated 12.04.2021. The copies of application dated 09.04.2021 and cancellation certificate dated 12.04.2021 are attached as Annexure 1 and 2 of Diary No. 00093/2 dated 20.07.2021

Notices were also served on the Reserve Bank of India (RBI). Copy postal receipts along with the tracking report is attached as Annexure- 3 & 4 of Diary No. 00093/04 dated 22.10.2021. As per the orders dated 28.04.2022 & 27.06.2022, the Petitioner Companies were directed to intimate the next date of hearing to RBI through email. The petitioner companies have filed compliance affidavits by Diary No. 00093/10 Dated 04.07.2022 and 00093/8 Dated 22.06.2022 showing the delivery of Emails to the concerned authority. However, despite such intimations there is no reply from the concerned authority during the proceedings. Considering the lapse of time in the matter, it is presumed that the concerned authority has no objection to the proposed Scheme. Moreover, as mentioned above, the Petitioner Company No. 3 has voluntarily surrender the NBFC Registration Certificate on 12.04.2021.

The certificate of the Statutory Auditors with respect to the Scheme between Petitioner Companies to the effect that the accounting treatment proposed in the Scheme is in compliance with applicable Indian Accounting Standards (Ind AS) as specified in Section 133 of the Act, read with rules thereunder and other Generally Accepted Accounting Principles is attached as Annexures-B4, B5 and B6 of the petition.

We have heard the learned counsel for petitioner companies and have perused the record carefully.

In the context of the above discussion, the Scheme contemplated between the petitioner companies appears to be prima facie in compliance with all the requirements stipulated under the relevant Sections of the Companies Act, 2013. As the observations from the Statutory Authorities have been duly addressed by the Petitioner Companies and since all the requisite statutory compliances have been fulfilled, this Tribunal sanctions the Scheme of Arrangement attached as Annexure -A1 with the petition.

Notwithstanding the submission that no investigation is pending against the petitioner companies, if there is any deficiency found or, the violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with the law, against the concerned persons, directors and officials of the petitioners.

While approving the scheme as above, it is 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, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law.

THIS TRIBUNAL DO FURTHER ORDER:

i. That all the property, rights and powers of the Transferor Companies be transferred, without further act or deed, to the Transferee Company and accordingly, the same shall pursuant to Sections 230 & 232 of the Companies Act, 2013, be transferred to and vested in the Transferee Company for all the estate and interest of the Transferor Companies but subject nevertheless to all charges now affecting the same; and

ii. That all the liabilities and duties of the Transferor Companies be transferred, without further act or deed, to the Transferee Company and accordingly the same shall pursuant to Sections 230 to 232 of the Companies Act, 2013, be transferred to and become the liabilities and duties of the Transferee Company;

iii. All benefits, entitlements, incentives and concessions under incentive schemes and policies that the Transferor Companies are entitled to include under Customs, Excise, Service Tax, VAT, Sales Tax, GST and Entry Tax and Income Tax laws, subsidy receivables from Government, grant from any governmental authorities, direct tax benefit/exemptions/deductions, shall, to the extent statutorily available and along with associated obligations, stand transferred to and be available to the Transferee Company as if the Transferee Company was originally entitled to all such benefits, entitlements, incentives and concessions;

iv. All contracts of the Transferor Companies which are subsisting or having effect immediately before the Effective Date, shall stand transferred to and vested in the Transferee Company and be in full force and effect in favour of the Transferee Company and may be enforced by or against it as fully and effectually as if, instead of the Transferor Companies, the Transferee Company had been a party or beneficiary or obliged thereto;

v. All the employees of the Transferor Companies shall be deemed to have become the employees and the staff of the Transferee Company with effect from the Appointed Date, and shall stand transferred to the Transferee Company without any interruption of service and on the terms and conditions no less favourable than those on which they are engaged by the Transferor Companies, as on the Effective Date, including in relation to the level of remuneration and contractual and statutory benefits, incentive plans, terminal benefits, gratuity plans, provident plans and any other retirement benefits;

vi. That the Appointed Date for the scheme shall be 01.04.2020 as specified in the Scheme;

vii. That the proceedings, if any, now pending by or against the Transferor Companies be continued by or against the Transferee Company;

viii. That the Transferee Company shall, without further application, allot to the existing members of the Transferor Companies shares of Transferee Company to which they are entitled under the said Scheme;

ix. That the fee, if any, paid by the Transferor Companies on their authorized capital shall be set off against any fees payable by the Transferee Company on its authorized capital subsequent to the sanction of the ‘Scheme’;

x. That the carry forward and set off of accumulated losses and unabsorbed depreciation allowance in the Petitioner Companies, if any, shall be subject to applicable provisions of Income Tax including Section 72A and Section 79 of the Income Tax Act, 1961;

xi. That the assessment under the Income Tax Act will be in accordance with the provisions of the Section 170 (2A) of the Income Tax Act, 1961.

xii. That the Transferee Company shall file the revised memorandum and articles of association with the concerned Registrar of Companies and further make the requisite payments of the differential fee (if any) for the enhancement of authorized capital of the Transferee Company; after setting off the fees paid by the Transferor Companies;

xiii. That the Petitioner Companies shall, within 30 days after the date of receipt of this order, cause a certified copy of this order to be delivered to the concerned Registrar of Companies for registration and on such certified copy being so delivered, the Transferor Companies shall be dissolved without undergoing the process of winding up. The concerned Registrar of Companies shall place all documents relating to the Transferor Companies registered with him on the file relating to the said Transferee Company, and the files relating to the Companies and Transferee Company shall be consolidated accordingly, as the case may be; and

xiv. That any person interested shall be at liberty to apply to this Tribunal in the above matter for any directions that may be necessary.

As per the aforesaid directions, formal orders in Form No. CAA-7 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 be issued after the filing of the Schedule of Properties within three weeks from the date of receiving a certified copy of this order by the petitioners.

All the concerned Regulatory Authorities are to act on a copy of this order annexed with the Scheme duly authenticated by the Registrar of this Bench.

The Company Petition CP (CAA) No. 10/Chd/HP/2021 is allowed and disposed of accordingly.