Akums Lifesciences Ltd. and Pure and Cure Healthcare Pvt. Ltd. Vs

Ashok Kumar Bhardwaj, Member (J)

The captioned Petition has been preferred under Section 230 to 232 of Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 for approval of the Scheme of Arrangement (hereinafter referred to as ‘Scheme’ for brevity), by the Company namely Pure and Cure Healthcare Private Limited viz. Transferee Company. The copy of the Scheme has been placed on record. The details of the Companies proposed to be amalgamated, as placed on record, are given in the following paragraphs.

Akums  Lifesciences  Limited  (hereinafter  referred  to  as  “the  Non-Petitioner/Transferor Company”) having CIN U24231CH1996PLC017755 is a public limited company incorporated on 22.02.1996 under the provisions of Companies Act, 1956. The Transferor Company was originally incorporated under the name of “Parabolic Drugs Limited ” and its shares were listed with both BSE and NSE. Corporate Insolvency Resolution Process (CIRP) was initiated against the Transferor Company vide order dated 30.08.2018 passed by Chandigarh Bench of this Tribunal in terms of the provisions of Insolvency and Bankruptcy Code, 2016 (IBC). Subsequently, Akums Drugs and Pharmaceuticals Limited had submitted a Resolution Plan which was approved by the CoC. The application filed under Section 30(6) of IBC, 2016 for approval of the plan was allowed by Chandigarh Bench of this Tribunal vide its order dated 12.02.2021. Thus, the Transferor Company became the wholly-owned subsidiary company of Akums Drugs and Pharmaceuticals Limited and from 23.02.2021, and the Transferor Company’s name was changed from “Parabolic Drugs Limited ” to “Akums Lifesciences Limited ”. Subsequently, in terms of the approved Resolution Plan and as per Regulation 3(3)(a) of the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, the Transferor Company had applied for delisting of its equity shares from BSE and NSE both vide letter dated 04.08.2021 which confirmed delisting of its equity shares with effect from 11.08.2021. The registered office of the Transferor Company is presently situated at Godrej Eternia, E3H, 3rd Floor, Tower B, Commercial Complex, Industrial Plot No. 70, Phase-I, Chandigarh-160002. The Authorised Share Capital of the Transferor Company is Rs. 72,00,00,000/- and its Paid-up share Capital is Rs. 5,00,00,000/-.

Pure and Cure Healthcare Private Limited (hereinafter referred to as “the Petitioner/Transferee Company”) having CIN U24232DL2005PTC266385 is a private limited company incorporated on 13.09.2005 under the provisions of the Companies Act, 1956 in the name and style of “Pure and Cure Healthcare Private Limited”. The registered office of the Transferee Company is situated at 305, Third Floor, C-Block, Mohan Place, Saraswati Vihar, New Delhi-110034. The Authorised Share Capital of the Transferee Company is Rs. 2,50,00,000/- and its Paid-up share Capital is Rs. 2,50,00,000/-.

As has been noted hereinabove, the present Petition has been filed by the Transferee Company. The Registered office of the Transferee Company being in Delhi, it is amenable to the territorial jurisdiction of this Bench. The territorial jurisdiction qua the Transferor Company lies with Chandigarh Bench of this Tribunal. Thus, the present order would be confined to Transferee Company.

From the records, it is seen that the First Motion Application was filed by the Petitioner Company for seeking directions for dispensing with the meeting of Equity Shareholders, Secured Creditors and convening the meeting of the Unsecured Creditors of the Company. This Tribunal in the First Motion Application bearing no. C.A.(CAA) 93/ND/2022, passed Order dated 18.11.2022, had dispensed with the requirement of convening the meetings of the Equity Shareholders and Secured Creditors and ordered meeting of the Unsecured Creditors of the Company to be convened, wherein the Chairman was directed to submit his report regarding the result/outcome of the details of voting on proposed Scheme of the Petitioner Company.

The  Appointed  date  as  per  clause  1.4 of  the  proposed  Scheme  of Arrangement is 01.04.2022.

Second Motion Petition was moved by the Petitioner Company in connection with the Scheme of Arrangement seeking issuance of notice to Regional Director (Northern Region), Registrar of Companies (NCT of Delhi and Haryana) and Income Tax Department, dispensing with requirement of serving notice of the Petition upon the Official Liquidator in view of the fact that the Petitioner Company is the Transferee Company which would continue to be in existence even after the effectiveness of the Scheme, issuance of a direction for publication of notice in “Financial Express” (English, Delhi Edition) and “Jansatta” (Hindi, Delhi Edition) newspapers under Rule 16 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The final relief sought in the petition is to sanction the Scheme of Arrangement/Amalgamation so as to be binding on all shareholders and creditors of the Petitioner Company and for passing an order that the entire business and whole of the undertaking(s), properties and liabilities of the Transferor stand transferred and vested in and/or deemed to be transferred to and vested in the Transferee Company as a going concern so as to become the undertaking(s), properties and liabilities of the Transferee Company. The Petitioner Company has also sought issuance of direction that proceedings pending, if any, against the Non-Petitioner Company (Transferor Company) be continued against the Petitioner Company (Transferee Company) in accordance with the provisions of the Scheme of Arrangement for Amalgamation and subject to and without prejudice to the Resolution Plan approved by the Chandigarh Bench of this Tribunal vide its order dated passed in C.A. No. 389/2019 and CP(IB) No. 102/CHD/2018.

Apparently in terms of the Order dated 30.01.2023 passed by this Tribunal, directions were issued, requiring the Petitioner Company to serve notice upon the Income-Tax Authorities, the Reserve Bank of India, the Registrar, respective Stock Exchanges, the Competition Commission of India and other sectoral regulators or authorities and also to carry out necessary publication with regard to the said Scheme in two nationalised newspapers, one in vernacular and another one in English. As can be seen from record, the Petitioner Company, in compliance of the above stated directions, filed an Affidavit dated 07.03.2023 regarding service of notice of hearing of the Petition upon all the concerned authorities and also publication of the notice of the present petition in “Financial Express” (English, Delhi Edition) and “Jansatta” (Hindi, Delhi Edition) made on 09.02.2023. It is also seen that the Petitioner Company in its affidavit has stated that the requirement to serve notice upon the Reserve Bank of India (RBI)  (in view of Para 4 of RBI Circular No. DNBS.CO. PPD.ROC No. 3/33.08.001/2017-18 dated 02.01.2018), Competition  Commission  of  India  (CCI)  (in  view  of  Regulation  4  of  CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 and Clause 9 of Schedule I of the said Regulation) and stock  exchange  (in  view  of  fact  the  Petitioner  Company  is  an  unlisted company) and obtaining observation/comments/non-objection from the aforesaid authorities is not required.

The Registrar of Companies (RoC) filed its report dated 28.02.2023 and has made observations which reads thus:

“1. As per annexure-I of Auditor Report for the year ended 31.03.2022 statement of arrears of statutory dues outstanding more than 6 month and on account of any disputes has been given.

Refer to clause 2 (2.2) of Part IV of the scheme, the Transferee Company may kindly be directed to comply with the provision of section 232(3)(i) of the Companies Act, 2013 in regard to fee payable on its revised authorized share capital, if applicable.

The valuer and the advisor of the proposed Scheme is same viz. Corporate Professionals. However, as per Model Code of conduct for Registered Valuer under Companies (Registered Valuers & Valuation), Rules, 2017, independence of the registered valuer is to be ensured. Therefore, the Model Code of conduct for Registered valuer is not being followed.”

The Regional Director (RD) also filed its report dated 06.03.2023 and sought clarification from the company with regards the observations made by RoC in its report and made following observation:-

“i. Inspection u/s 206(5) of the Companies Act, 2013 was ordered in the matter of (Transferor Company) Parabolics Drugs Limited (now known as Akums Lifesciences Limited) by the Ministry vide letter no. 7/227/2018/CI-II(NR) dated 10.12.2018 to the deponent. Inspection report u/s 208 of the Companies Act, 2013 was submitted to the Ministry on 20.10.2022 to which Instructions from Ministry is still awaited. Further, Parabolic Drugs Limited has been acquired by the resolution applicant under IBC code 2016. Thus, terms of the resolution are not in the knowledge of the deponent.

It can be seen from record that the Petitioner Company filed its reply dated 10.03.2023 to the report of the RD dated 06.03.2023 and submitted that the RD has not made any adverse observation in respect of the said Scheme of Arrangement. Nevertheless, for the observation made by the RD inter alia relating to inspection under Section 206(5) of the Companies Act, against the erstwhile management of the Transferor Company i.e. Parabolic Drugs Limited (now known as Akums Lifesciences  Limited),  the  Petitioner  Company  has  clarified  that  the query raised by the RD pertains to the Transferor Company and has further submitted that the Transferor Company responded to the said query which has been duly taken on record by the Chandigarh Bench of  this  Tribunal  while  considering  the  application  of  the  Transferor Company. The Transferee Company has espoused that as per provisions of Section 32A of the Insolvency and Bankruptcy Code, 2016, the liabilities of the Transferor Company for any offence committed prior to commencement of CIRP ceased and since the inspection under Section 206 of the Companies Act, 2016 was ordered in respect of Transferor Company on 10.12.2018 i.e. prior to the commencement of CIRP, all the prosecution/proceedings that were initiated or pending against the Transferor Company stood extinguished. As has been mentioned in report of RD, the Transferee Company also submitted its clarification regarding the observations made by the RoC in its report. The reports of RD/RoC and response thereto by the Petitioner Company leads to following conclusion: -

i. Regarding the statement of arrears of statutory dues, the Transferee Company has submitted that the statement of arrears of statutory dues outstanding for more than six months as mentioned in Para vii(a) of Annexure 1 of Auditor’s report are the Advance Tax which are undisputed and since the Transferee Company will continue as a going concern, it would be able to pay the advance tax as per provisions applicable to it.

ii. Regarding the compliance of provisions of Section 232(3)(i) of the Companies Act, the Transferee Company has submitted that it will comply with the said provision and also the provision of Clause 2.2 of Part IV of the Scheme of Arrangement. The Transferee Company has further submitted that the compliance of provisions of Section 232(3)(i) of the Companies Act is required to be made subsequent to sanction of the scheme and that the fee and duty paid on Authorised Share Capital of the Transferor Company shall be set off against the fee payable on Authorised Share Capital of the Transferee Company .

iii. Regarding the independence of Registered Valuer viz. Corporate Professionals Valuation Services Private Limited, the Transferee Company has explained that neither the Registered Valuer nor any of the current directors/former directors of the Registered Valuer are/were connected/ associated with its law firm i.e. Corporate Professionals, Advisors and Advocates in any manner. It is further clarified that Corporate Professionals-Advisors & Advocates and Corporate Professionals Valuation Services Private Limited are two independent entities and are not connected to each other. The Valuer has also given its undertaking that valuator is not connected with Corporate Professionals -Advisors & Advocates in any capacity and therefore the independence of Valuer is not affected and is not in violation of model code of conduct specified for the Registered Valuers under the Companies (Registered Valuers and Valuation) Rules, 2017.

As can be seen from record, the Official Liquidator on 02.06.2023 made a statement that no comments with respect to Transferee Company are required from the OL.

It is borne out of the record that the Income Tax Department filed its report dated 13.03.2023 under Section 230(5) of the Companies Act, 2016 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 stating therein that there is a combined outstanding Income-tax demand of Rs. 79,12,68,607/- and pending assessment proceedings for A.Y. 2018-19 against Transferor Company; and an outstanding Income-tax demand of Rs. 72,29,035/- in case of Transferee Company. It has further submitted that in view of Hon’ble Supreme Court judgment in Department of Income Tax vs. Vodafone Essar Gujarat Ltd. (2015) 16 SCC 629, the sanction of proposed Scheme shall not prejudice any rights of the Income Tax Department as is available under the Income Tax Act, 1961.

The Transferee Company has duly filed its reply dated 14.03.2023 to the report of Income Tax Department and submitted that Clause 8(iv) of Part III of the Scheme of Arrangement provides that all taxes payable by the Transferor Company will be transferred to Transferee Company and Clause 8(vii) stipulates that tax proceedings will not be prejudicially affected by reason of the amalgamation. It further submitted that the outstanding Income Tax demand of Rs. 72,29,035/ - in respect of Transferee Company and the demands with respect to Transferor Company will be paid by the Transferee Company in normal course of business in accordance with law including Income Tax Act, 1961.

As can be seen from record, in terms of order of this Tribunal dated 22.09.2023, the Ld. Counsel appearing for RD submitted that it has no objection to approval of proposed Scheme subject to compliance of undertaking given by the Petitioner Company in Para 5(ii)(e) of its affidavit dated 10.03.2023. Subsequently, the Jurisdictional Assessment Officer (ITO) also submitted its non-objection in view of undertaking given by the Petitioner Company in Para 5(h) of affidavit dated 14.03.2023. The Income Tax Department has also submitted it has no serious objection to approval of the proposed Scheme.

In view of the foregoing facts and discussion and upon considering the approval accorded by the Members of the Petitioner Company to the proposed Scheme the sanction is hereby granted to the Scheme of Arrangement proposed by the Petitioner Company under Section 230 to 232 of the Companies Act, 2013, subject to fulfilment of following conditions:-

(i) the Transferee Company shall meet all the statutory demands particularly the outstanding Income Tax demand of Rs. 79,12,68,607/- against the Transferor Company and of Rs. 72,29,035/- against the Transferee Company;

(ii) the Transferee Company shall comply with the provisions of Section 232(3)(i) of the Companies Act, 2013.

The sanctioned Scheme of Arrangement shall be binding on the Transferor Company and Transferee Company and their Shareholders and Creditors. The Petitioner Company shall 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 Authority to the Scheme will not come in the way of action to be taken, albeit, in accordance with law, against the concerned persons, Directors and Officials of the Petitioner Company.

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 other statutory dues, 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. Further the approval of the Scheme would in no manner affect the tax treatment of the transactions under the Income Tax Act, 1961 or serve as any exemption or defence for the Petitioner Company against tax treatment in accordance with the provisions of Income Tax Act, 1961.

THIS  TRIBUNAL  FURTHER  DIRECTS  with  respect  to  Transferee Company that:

(i) Upon the sanction becoming effective from the appointed date of amalgamation i.e., 01.04.2022, the Transferor Company shall stand dissolved without undergoing the process of winding up.

(ii) All benefits, entitlements, incentives and concessions under incentive schemes and policies that the Transferor Company are entitled to including 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;

(iii) All contracts of the Transferor Company, 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 favor of the Transferee Company and may be enforced by or against it as fully and effectually as if, instead of the Transferor Company, the Transferee Company had been a party or beneficiary or obliged thereto;

(iv) All the employees of the Transferor Company 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 favorable than those on which they are engaged by the Transferor Company, 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;

(v) All liabilities of the Transferor Company, shall, pursuant to the provisions of section 232(4) and other applicable provisions of the Company Act, 2013, to the extent they are outstanding as on the Effective Date, without any further act, instrument or deed stand transferred to and be deemed to be the debts, liabilities, contingent liabilities, duties and obligations etc. as the case may be, of the Transferee Company and shall be exercised by or against the Transferee Company, as if it had incurred such liabilities.

(vi) All proceedings now pending by or against the Transferor Company be continued by or against the Transferee Company.

(vii) The Income Tax department is permitted to retain its recourse for recovery in respect of demand and any other future liabilities of the transferor Company and the transferee company, in respect of the assets sought to be transferred under the proposed scheme.

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

The conditions stipulated in para 16 shall be complied with within 3 months. The Petitioner Company shall within thirty days of the date of the receipt of this Order or on sanction of the Scheme with respect to Transferor Company, whichever is later, cause a Certified Copy of this Order to be delivered to the Registrar of Company for registration and on such Certified Copy being so delivered, the Transferor Company shall be dissolved and the Registrar of Company shall place all documents relating to the Transferor Company on the file kept by him in relation to the Transferee Company and the files relating to the Petitioner Company shall be consolidated accordingly.

The Company Petition stands allowed in respect of Transferee Company only on above terms. Let the copy of the order be served to the parties.