Yojana Infrastructure Services Private Limited vs Yojana Infrastructure Services Private Limited

Shyam Babu Gautam, Member (Technical)

Heard learned counsel for parties, none appears before this Tribunal to oppose the Scheme and nor any party has controverted any averments made in the Company Scheme Petition.

The sanction of this Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013 to a Scheme of Merger by Absorption of Scheme of Merger by Absorption of Yojna Infrastructure Services Private Limited ("Yojna" or the "Petitioner Company" or the "First Transferor Company"), Deccan Equipment Management and Services Private Limited ("Deccan" or "Second Transferor Company"), Bhakti Earth Movers Private Limited ("Bhakti Earth" or "Third Transferor Company"), Shiv Bhakti Movers Private Limited ("Shiv Bhakti" or "Fourth Transferor Company") and Swift Lifter Private Limited ("SLPL" or "Fifth Transferor Company") by Equiptrans Logistics Private Limited ("ELPL" or "Transferee Company") and their respective shareholders and creditors (the "Scheme").

The Learned Advocate for the Petitioner Company states that the registered office of the remaining Transferor Companies and the Transferee Company is situated in the State of Gujarat. The remaining Transferor Companies and the Transferee Company have filed necessary proceedings in the Hon'ble National Company Law Tribunal, Ahmedabad Bench for the sanction of the Scheme. The Hon’ble National Company Law Tribunal, Ahmedabad Bench has sanctioned the Scheme on October 5, 2021.

The Learned Counsel for the Petitioner Company states that the Petitioner Company believe that the amalgamation would benefit them and its stake holders on account of following reasons:

i. This merger will result in greater integration and greater financial strength and flexibility for the merged entity, which will in turn result in maximizing overall shareholder value and will improve the competitive position of the merged entity.

ii. This merger will result in greater efficiency in cash management of the amalgamated entity and unfettered access to cash flow generated by the combined business, which can be deployed more efficiently to fund organic and inorganic growth opportunities, to maximize shareholder value.

iii. The merged entity will have improved organizational capability and leadership, arising from the pooling of human capital with diverse skills, talent and vast experience to compete in the increasingly competitive industry.

iv. The merger will result in economies of scale and will play a bigger role as the consolidated entity’s operational efficiency will increase, which will in turn allow the merged entity to compete on a larger scale in the industry, thus benefiting the merged entity and the shareholders.

v. This merger will result in creation of an entity with a substantial asset base and networth and thus increased ability for promotion of business activities as well as for fund raising, if required, for business development.

vi. This merger would lead to reduction/ optimization in overheads, administrative, managerial costs and other expenditure and result in simplification and flexibility of operations.

vii. This merger will provide an opportunity to leverage assets and build a stronger sustainable business. It will help in optimal utilization of existing resources and provide an opportunity to fully leverage stronger asset capabilities, experience, expertise and infrastructure of all the companies.

viii. This merger will result in a value creation for the shareholders and stakeholders of the First Transferor Company or the Petitioner Company, the Second Transferor Company or Deccan, the Third Transferor Company or Bhakti Earth, the Fourth Transferor Company or Shiv Bhakti, the Fifth Transferor Company or SLPL and the Transferee Company or ELPL as the combined amalgamated company will have improved financial structure, larger cash flows and stronger consolidated revenue and profitability. The merger of the First Transferor Company or the Petitioner Company, the Second Transferor Company or Deccan, the Third Transferor Company or Bhakti Earth, the Fourth Transferor Company or Shiv Bhakti, the Fifth Transferor Company or SLPL with the Transferee Company or ELPL would result in consolidation of business activities of all the companies and will facilitate effective management of investments and synergies in operation.

ix. There is no likelihood that any shareholder or creditor or employee of the First Transferor Company or the Petitioner Company, the Second Transferor Company or Deccan, the Third Transferor Company or Bhakti Earth, the Fourth Transferor Company or Shiv Bhakti, the Fifth Transferor Company or SLPL and the Transferee Company or ELPL would be prejudiced as a result of the Scheme. Thus, the merger is in the interest of the shareholders, creditors and all other stakeholders of all the companies and is not prejudicial to the interests of the concerned shareholders, creditors or the public at large.

The Petitioner Company has approved the said Scheme by passing the Board Resolutions at its board meeting held on December 10, 2019 which is annexed to the Company Scheme Petition.

The Learned Counsel for the Petitioner Company states that this Petition has been filed in consonance with the order dated April 27, 2020 passed by the National Company Law Tribunal, Mumbai Bench in the Company Application bearing CA (CAA) No.144/MB-II/2020.

The Learned Counsel appearing on behalf of the Petitioner Company further states that the Petitioner Company has complied with all requirements as per directions of this Tribunal and they have filed necessary affidavits of compliance. Moreover, the Petitioner Company undertakes to comply with all the statutory requirements if any, as required under the Companies Act, 2013 and the Rules made there under whichever is applicable. The said undertaking is accepted.

The Regional Director has filed his Affidavit stating therein that save and except as stated in paragraphs IV (a) to (i) of the said Affidavit, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraphs IV (a) to (i) of the said Regional Director has stated that:

"a) In compliance of AS-14 (IND AS-103), the Petitioner Companies 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 Definition of the Scheme,

“Appointed Date” means the 1st Day of April, 2019 or such other date as the relevant Adjudicating Body may direct or fix for the purposes of amalgamation of Yojna, Deccan, Bhakti Earth, Shiv bhakti, SLPL with ELPL under this Scheme;

"Effective Date" means the last of the dates on which the certified copy(ies) of the Order(s) sanctioning the Scheme of the relevant Adjudicating Body, are filed with the relevant Registrar of Companies.

All references in this scheme to the date of “coming into effect of the/this Scheme” or “Effectiveness of the Scheme” or “Scheme taking effect” shall mean the Effective Date.

Further, the Petitioners may be asked to comply with the requirements as clarified vide circular no. F. No. 7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs.

c) Petitioner Company have to undertake to comply with section 232(3)

(i) of 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 authorize capital subsequent to the amalgamation and therefore, petitioners to affirm that they comply the provisions of the section.

d) 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).

e) The Hon’ble NCLT may kindly direct to the Petitioners to file an undertaking to the extent that the Scheme enclosed to the Company Application and the scheme enclosed to the Company Petition anre one & same and there is no discrepancy or deviation.

f) As per clause 12 of the Scheme:-

CANCELLATION/ REDUCTION OF SHARE CAPITAL OF ELPL

The entire issued and subscribed share capital of ELPL is held by Yojna along with its nominee(s). The nominee share(s) of ELPL is also held by Yojna jointly with Mr. Girish Sathe in the capacity of a nominee of Yojna and such nominee(s) do not hold the beneficial interest in the shares held by it/them. As part of the Scheme and upon the Scheme coming into effect and upon consequent to the issue and allotment of the New Equity Shares as set out in Clause 8.1 above, all the equity shares held by Yojna in ELPL shall be cancelled and extinguished on and from the Effective Date as an integral part of the Scheme and accordingly, the equity share certificates representing the equity shares held by Yojna in ELPL shall be cancelled and shall be deemed to be cancelled without any further act or deed.

Any issue and allotment of any additional shares by ELPL to Yojna from the Appointed Date till the Effective Date due to conversion of convertible debentures held by Yojna in ELPL shall also be cancelled and extinguished on and from the Effective Date as an integral part of the Scheme and accordingly, such additional equity share certificates representing the equity shares held by Yojna in ELPL shall be cancelled and shall be deemed to be cancelled without any further act or deed.

The cancellation, which amounts to reduction of share capital of ELPL, shall be effected as an integral part of the Scheme itself and shall be deemed to be in accordance with the provisions of Sections 230 to 232 read with Section 66 of the Companies Act, 2013 and other applicable provisions of the Act as the same does not involve either diminution of liability in respect of unpaid share capital or payment to any shareholder of any paid up share capital. The order of the Adjudicating Bodies sanctioning the Scheme shall be deemed to be an order under Section 66 of the Companies Act, 2013 and other applicable provisions of the Act confirming the reduction without imposing a condition on ELPL to add to its name "and reduced"..

Petitioner Company shall undertake to comply with Section 66 of the Companies Act, 2013 read with Section 230 to 232 of the Companies Act, 2013 and other applicable provisions of the Act.

g) as per Clause 13 of the Scheme, The difference between the amount recorded as share capital issued and the amount of share capital of the Transferor Companies will be adjusted in reserves.

In this regards, Petitioner Companies have to undertake that the surplus shall be credited to Capital Reserve Account arising out of amalgamation and deficit shall be debited to Goodwill Account.

Further Petitioner Companies have to undertake that reserve shall not be available for distribution of dividend.

h) ROC, Mumbai Report dated 03.08.2021 has interalia mentioned that there are no prosecutions, no technical scrutiny, no inquiry, no inspection and no complaint is pending against Petitioner Companies.

Further mentioned that:-

Petitioner Company No. 2 to 5 registered with o/0 ROC. Ahmedabad.

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 in merits.

Petitioner Company No. 2 to 5 registered with ROC, Ahmedabad, hence fall under jurisdiction of Hon’ble NCLT, Ahmedabad Bench.

In this regards, Petitioner Company shall undertake to comply the directors of Hon’ble NCLT, Ahmedabad Bench."

In response to the report of the Regional Director, the Petitioner Companies have filed Affidavit in Rejoinder dated 25th October, 2021 and have clarified as under:

"In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (a) of their Representation I would like to say that, the Petitioner Companies undertakes that in addition to compliance of AS-14 corresponding (IND AS-103) accounting treatment it shall also pass necessary accounting entries in connection with the Scheme as well as comply with other applicable Accounting Standards to the extent applicable.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (b) of their Representation I would like to say that,, the Scheme sets out a specific date i.e. 1st April 2019 and was filed on January 10, 2020 i.e. it was filed within one year from the set appointed date Further, the Appointed Date is not based on the occurrence of a trigger event hence, the question of incorporating such an event does not arise. I further state that, the Scheme is in compliance with the said circular.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (c) of their Representation I would like to say that,, the existing Para 8.4 of the Scheme already provides that the fees paid by the Transferor Companies on the authorised share capital of the Transferor Companies shall, without any act or deed, be available as a set off to the Transferee Company in terms of Section 232(3)(i) of the Act.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (d) of their Representation I would like to say that, the notices under Section 230(5) of the Companies Act, 2013 have already been served upon the concerned regulatory authorities. I further submit that the approval of the Scheme by this Tribunal will not deter such regulatory authorities to deal with any issues arising after giving effect to the Scheme and that such issues arising out of the Scheme will be met and answered in accordance with law. The decision of the authorities will be binding on the Petitioner Companies.

In respect of the observation of  the Regional  Director, Western Region, Mumbai in paragraph IV (e) of their Representation I would like to say that, I submit that the existing Para 15.10 of the captioned Company Scheme Petition already provides that the Scheme enclosed to the Company Application and the scheme enclosed to the Company Petition are one & the same, and there is no discrepancy or deviation in the same. I further undertake and confirm that the Scheme enclosed to the Company Application and the Company Petition are one and the same.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (f) of their Representation I would like to say that, as per the explanation provided in Section 230 of the Companies Act, 2013 the provisions of Section 66 of the Companies Act, 2013 does not apply to reduction of share effected in pursuance of the order passed by the Hon’ble Tribunal under this section and is a subtle law in itself. Furthermore, the reduction of share capital as set out in the Scheme is an integral part of the Scheme.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (g) of their Representation I undertake that any surplus between the amount recorded as the capital issued and the amount of share capital of the Transferor Companies will be credited to the Capital Reserve Account arising out of amalgamation and any deficits shall be debited to Goodwill Account. The Petitioner Company further states that, the reserve so created shall not be made available for distribution of dividend.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (g) of their Representation does not warrant any reply since it records the observations of the ROC, Mumbai Report dated August 3, 2021. As per paragraph IV (g) of the Representation the said ROC, Mumbai Report states that there are no prosecution, no technical scrutiny, no inspection and no complaints are pending against the Petitioner Companies.

The said ROC, Mumbai Report also reflects that the Petitioner Companies No. 2 to 5 are registered with o/o ROC, Ahmedabad, and the Hon’ble Regional Director of the Western Region, Ministry of Corporate Affairs, Government of India, Ahmedabad, have also submitted their report in the matter of scheme of amalgamation of Yojna, Deccan, Bhakti Earth, Shiv Bhakti, SPLP with EPLP, where there were no adverse observations. The Hon’ble NCLT, Ahmedabad Bench has passed an order dated October 5, 2021 sanctioning the Scheme. I further undertake that the Petitioner Company protects the interest of the creditors and shall even after the sanction of the Scheme continue to protect the interest of the creditors. .

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph IV (g) of their Representation, I submit that the Transferor Companies 2 to 5 and the Transferee Company have filed the necessary proceedings with the National Company Law Tribunal, Ahmedabad Bench for the sanction of the Scheme (the National Company Law Tribunal, Ahmedabad Bench has sanctioned the Scheme on October 5, 2021) and the Scheme shall come into effect after approval from this Hon’ble Tribunal."

The Regional Director has filed its Supplementary Report dated 26th October, 2021 and stated that:

"2 That the company in its Affidavit in Rejoinder dated 14.10.2021 has  submitted  replies  on  all  the  observations  made  by  the Regional   Director   in   its   Report/   Representation   dated 30.09.2021, in para IV(a) to (i). Copy of Affidavit in Rejoinder of the Company is enclosed herewith and marked as Annexure ‘A’

3 That since the complaint related to illegal business activities in violation of building construction, the Petitioner Company be directed to state on affidavit its reply about the allegation.

4 The Petitioner Company to state on Affidavit that it has complied with all applicable SEBI rules and regulations as a listed entity"

In response to the report of the Regional Director, the Petitioner Companies have filed Affidavit in Rejoinder dated 25th October, 2021 and have clarified as under:

"In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph 2 of their Supplementary Report I would like to say that, the replies set out in the Affidavit has been acknowledged and is deemed accepted by the Regional Director.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph 3 of their Supplementary Report, I state that there is no such complaint against the Petitioner Company in relation to any illegal business activities in violation of building construction. The Regional Director has inadvertently erred in stating that there is any such complaint against the Petitioner Company.

In respect of the observation of the Regional Director, Western Region, Mumbai in paragraph 4 of their Representation I would like to say that, the Petitioner Company is a private company incorporated under the Companies Act, 2013, hence the question of applicability of SEBI Rules and Regulations do not arise. The Regional Director has again inadvertently erred in stating that the Petitioner Company is a listed company."

The clarifications and undertakings given by the Petitioner Company are accepted by the Tribunal.

No objections were received from the Jurisdictional Income Tax Department of the Petitioner Companies.

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.

All the assets and liabilities including taxes and charges, if any and duties of the Petitioner Company, shall pursuant to section 232 of the Companies Act, 2013, be transferred to and become the liabilities and duties of the Transferee Company.

Since all the requisite statutory compliances have been fulfilled, the Company Scheme Petition No.1066 of 2020 filed by the Petitioner Company is made absolute in terms of prayer clauses 16 (a) to (i). The Petitioner Company is ordered to be dissolved without winding up.

The Petitioner Company is directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, in e-form INC-28, within 30 days from the date of issuance of the certified Order along with the Scheme by the Registry.

The Petitioner Company to lodge a authenticated/certified copy of this Order along with the Scheme 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 from the Registry.

All authorities concerned to act on a authenticated/certified copy of this Order.

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

The Scheme is Sanctioned. Ordered Accordingly.