Arvutam Enterprises Private Limited Vs

Kuldip Kumar Kareer, Member Judicial

Heard the Learned Counsel for the Petitioner Companies and the Authorised Representative of the Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai. No objector has come before the Tribunal to oppose the Petition and nor any party has controverted any averments made in the Petition.

The sanction of this Tribunal is sought under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 in the matter of Scheme of Arrangement and Amalgamation (“Scheme”) of Arvutam Enterprises Private Limited (“Transferor Company No. 1”), Innovador Traders Private Limited (“Transferor Company No. 2”), Systemtrac Traders Private Limited (“Transferor Company No. 3”) (collectively referred as “Transferor Companies”) with APRN Enterprises Private Limited (Formerly known as Ansapack Private Limited) (“Transferee Company”) and their respective shareholders and creditors under the Companies Act, 2013.

The Learned Counsel for the Petitioner Companies state that the Transferor Companies have approved the Scheme at their respective board meetings held on April 5, 2022 and April 6, 2022. The Learned Counsel for the Petitioner Companies further states that the Transferee Company has approved the Scheme at its board meeting held on April 11, 2022.

The Learned Counsel for the Petitioner Companies state that the business of the Transferor Company No. 1 is consultancy services in property investments and facility management. The Learned Counsel for the Petitioner Companies states that the Transferor Company No. 2 and Transferor Company No. 3 are engaged in the business of general trading in commodities. The Learned Counsel for the Petitioner Companies states that the Transferee Company is engaged in the business of manufacturing and trading in packaging material.

The Learned Counsel for the Petitioner Companies states that the Transferor Companies are wholly owned subsidiaries of the Transferee Company. The Learned Counsel for the Petitioner Companies states that the amalgamation of the Transferor Companies with the Transferee Company shall achieve restructuring, consolidation and streamlining of the Transferor Companies and the Transferee Company and shall achieve the following key objectives/benefits:

a. The amalgamation will result in achieving greater integration and greater financial strength and flexibility and maximize overall shareholders’ value.

b. The amalgamation will enable the commencement and consolidation of the business of managing and recovering borrowings/stressed assets by the Transferee Company.

c. The amalgamation will result in achieving cost savings from more focused operational efforts, rationalization, standardization and simplification of business processes and productivity improvements.

d. The amalgamation will result in greater efficiency in cash management of the amalgamated entity, and unfettered access to cash flow generated by the combined businesses which can be deployed more efficiently to fund growth opportunities and, to maximize shareholders value.

e. The amalgamation will help in consolidating and improving the internal control systems and procedures which will bring greater management and operational efficiency due to integration of various similar functions being carried out by the entities such as human resources, finance, legal, management etc.

f. The amalgamation will result in a significant reduction in the multiplicity of legal and regulatory compliances required at present to be carried out by the Transferor Companies and the Transferee Company.

g. The amalgamation will also enable unified accounting and auditing resulting in reduction of costs, time and efforts involved.

h. The amalgamation will result in simplification of group structure

The Learned Counsel for the Petitioner Companies submits that the Scheme is filed in consonance with Section 230-232 of the Act along with order dated February 3, 2023 in C.A. (CAA)/146 (MB)/2022.

The Learned Counsel for the Petitioner Companies submits that pursuant to the directions contained in the order dated February 3, 2023, the meeting of the shareholders of the Petitioner Companies was dispensed with in view of the fact that, the respective shareholders of the Petitioner Companies had given their consent to the Scheme and for dispensing with the convening and holding of the meeting of the Shareholders by way of consent affidavits which were produced before this Hon’ble Tribunal. The Learned Counsel for the Petitioner Companies further submits that pursuant to the directions contained in the order dated February 3, 2023, the Transferor Companies have issued notice of the Scheme to all their respective unsecured creditors and the Transferee Company has issued notice of the Scheme to all its secured creditors and such unsecured creditors having outstanding amount of more than Rs.10,00,000/-, being equivalent to more than ninety percent in value of the total unsecured creditors of the Transferee Company.

The Learned Counsel for the Petitioner Companies state that the Petitioner Companies have complied with all the requirements as per the direction of the Tribunal and they have filed necessary affidavits to demonstrate compliance with the Tribunal. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, if and to the extent applicable, as may be required under the Companies Act, 2013 and the rules made thereunder. The said undertaking is accepted.

The Learned Counsel for the Petitioner Companies submits that the Transferor Companies are wholly owned subsidiaries of the Transferee Company and therefore, there shall be no issue of shares as consideration for the amalgamation of the Transferor Companies with the Transferee Company. The Learned Counsel for the Petitioner Companies submit that upon the Scheme becoming effective, all equity shares of the Transferor Companies held by the Transferee Company shall stand cancelled without any further application, act or deed.

The Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai has filed a Report dated July 11, 2023 (“Report”). The observations made by the Regional Director on the Scheme are made in paragraphs 2 and 3 of the Report. In response to same, the Petitioner Companies have filed their Affidavit dated July 24, 2023 (“Affidavit in Reply to the Report”) giving necessary clarifications and undertakings. The observations made by the Regional Director and the clarifications and undertakings given by the Petitioner Companies are summarised in the table below:-

Para

Observations by the Regional Director

Undertakings     of     the Petitioner    Companies/

Reply

2(a)(ii)(1)

i.   That   the   ROC   Mumbai   in   his   report   dated 18.04.2023  has  also  stated  that  No  Inspection, Investigation,   Inquiry,   Prosecutions,   Technical Scrutiny  and  Complaints  under  CA,  2013  have been pending against the Petitioner Companies.

ii.  Further ROC has mentioned as follows:-

There are no secured creditors of the Transferor Companies and there are 3 secured creditors as of 31st December 2021 in Transferee Company.

.

The  Practising  Chartered Accountants      of      the Transferor      Companies have   by   its   Certificate dated    April    6,    2022

certified  the  number  of secured  creditors  of  the respective  Transferor Companies, a copy which is   annexed   as   Exhibit “OO” to Exhibit “QQ” to the   captioned   Company Scheme   Application. Similarly,  the  Practising Chartered Accountants of the  Transferee  Company by   its   Certificate   dated April  13,  2022  certified the   number   of   secured creditors   of   the Transferee   Company,   a copy of which is annexed at  Exhibit  “RR”  to  the captioned    Company

Scheme Application

2(a)(ii)(2)

There are 3 unsecured creditors in 1st Transferor Company,    2nd    Transferor    Company    has    6 unsecured Creditors and 3rd Transferor Company has 9 secured creditors.

That the Transferee Company has 717 unsecured creditors.

The Practising Chartered Accountants     of Transferor  Nos.  1  and  2 Companies  have  by  its Certificate dated April 6, 2022 certified the number    of    unsecured creditors as on December

31,  2021  of  Transferor Nos. 1 and 2 Companies, a copy which is annexed as   Exhibit   “UU”   and Exhibit    “TT”    to    the captioned   Company Scheme  Application. Further,  The  Transferor No.  3  Company  has  9 unsecured creditors as on December  31,  2021  and the  same  is  certified  by the  Practising  Chartered Accountant of Transferor No.  3  Company  by  its Certificate dated April 6. 2022, a copy of which is annexed      at      Exhibit. “UU”  to  the  captioned Company      Scheme Application.  As  regards the number of unsecured creditors   of   the Transferee Company, the same  has  been  certified by Certificate dated June 21,  2022  issued  by  the Practising   Chartered Accountant of the

Transferee  Company,  a copy of which is annexed at   Exhibit   “A”   to   the Additional   Affidavit dated July 21, 2022 to the captioned   Company

Scheme Application.

2(a)(ii)(3)

As per provisions of section 232 (3)(i) of CA, 2013 where the transferor company is dissolved, the fee, if  any,  paid  by  the  transferor  company  on  its authorised capital shall be set off against any fees payable    by    the    transferee    company    on    its authorized capital shall be set off against any fees payable    by    the    transferee    company    on    its authorized capital subsequent to the amalgamation.    Therefore,  remaining  fee,  if  any after   setting   off   the   fees   already   paid   by   the transferor company  on its authorized capital, must be paid by the transferee company on the increased authorized capital subsequent to amalgamation.

The Petitioner Companies    agree    that where    the    Transferor Companies     are dissolved,  the  fee,  paid by the Transferor Companies     on     their respective authorised capital   shall   be   set-off against any fees payable by the Transferee Company  on  its authorised capital subsequent to the amalgamation   in compliance with Section 232(3)(i)   of   the Companies   Act,   2013. The Affidavit in Reply to the     Report     may     be treated as an undertaking on      behalf      of      the Petitioner  Companies  in terms      of      paragraph 2(a)(ii)(3) of the Report.

2(a)(ii)(4)

Interest of the Creditors should be protected.

Under   the   Scheme   no compromise is offered to any of the creditors of the respective   Petitioner Companies      and      no liability  of  the  creditors under    the    Scheme    is being reduced or extinguished. The creditors of the respective    Petitioner Companies  will  be  paid off in the ordinary course of business as and when their dues become payable  as  per  law  and thus    the    interests    of creditors are duly protected.

2(c)

c)  Transferee  company  should  undertake  to  comply with   the   provisions   of   section   232(3)(i)   of   the Companies     Act,     2013     through     appropriate affirmation in respect of fees payable by Transferee Company for increase of share capital on account of merger of transfer of companies

.

The     Transferee Company  undertakes  to comply  with  provisions of  Section  232(3)(i)  of the Companies Act, 2013 in respect of fees payable by the Transferee Company for increase in share  capital  on  account of     the     merger.     The Affidavit in Reply to the Report may be treated as an undertaking on behalf of  the  Petitioner Companies  in  terms  of paragraph   2(c)   of   the Report.

2(d)

d) In compliance of Accounting Standard-14 or IND- AS 103, as may be applicable, the resultant company shall   pass   such   accounting   entries   which   are necessary in connection with the scheme to comply with    other    applicable    Accounting    Standards including AS-5 or IND AS-8 etc.

The     Transferee Company  undertakes  to pass    such    accounting entries which are necessary  in  connection with    the    Scheme    to comply  with  applicable Accounting     Standards. The Affidavit in Reply to the     Report     may     be treated as an undertaking on      behalf      of      the Transferee  Company  in terms  of  paragraph  2(d)

of the Report.

2(e)

e)   The   Hon'ble   Tribunal   may   kindly   direct   the Petitioner  Companies  to  file  cm  affidavit  to  the extent  that  the  Scheme  enclosed  to  the  Company Application and Company Petition are one and same and there is no discrepancy, or no change is made.

The  Scheme  annexed  to the  captioned  Company Scheme   Application contained  certain typographical   errors   in clause  3.1(ii)  and  clause

7   of   the   Scheme.   By resolutions dated April 6, 2023    passed    by    the respective     Board      of Directors   of   the Petitioner Companies (Exhibits “Z-1” to “Z-4” to  the  captioned Petition), the said typographical   errors were      rectified.      The rectified    copy    of    the Scheme was shared with the    Regional    Director vide    Transferee Company’s  letter   dated April  10,  2023  (Exhibit “JJ”   to   the   captioned Petition).   The   rectified copy  of  the  Scheme  is annexed  as  Exhibit “W”

to  the  captioned Company      Scheme Petition.  Apart  from  the above   typographical errors,      the      Scheme enclosed to the Company Scheme Application and Company      Scheme Petition are one and same and there is no discrepancy      or      any

change in the Scheme.

2(f)

f)  The   Petitioner   Companies   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   the   Amalgamation   or arrangement. Further, the approval of the scheme by the 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 shall   be   binding   on   the   petitioner   companies concerned.

The Petitioner Companies    have    duly served   notices   of   the Scheme to the concerned authorities  and  the  same has been recorded in the Affidavit     of     Service dated   April   20,   2023 filed   by   the   respective Petitioner Companies (Exhibit     “HH-1”     to “HH-4” to the captioned Petition) which is already on record before this   Hon’ble   Tribunal. As regards the powers of

the authorities in respect of  matters  arising  after giving    effect    to    the Scheme,  the  same  will have  to  be  exercised  in and   will   apply   to   the Petitioner  Companies  in accordance   with applicable law.

2(g)

g) As per Definition of the Scheme,

"Appointed Date" means start of business hours in Mumbai, India on January 1, 2022;

"Effective Date" shall mean a date on which all the conditions  (taken  together)  specified  under  Clause 18 of this Scheme stand satisfied;

"Record  Date"  means  the  date  to  be  fixed  by  the Board   of   Directors   of   APL   to   determine   the shareholders   of   the   relevant   Transferors   (being AEPL, ITPL and STPL) whose names are recorded in the Register of Members of such Transferors as on such  date  and  to  whom  the  equity  shares  of  APL would be issued pursuant to this Scheme.

It is submitted that 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

As    per    Clause    2    of Scheme,     the     Scheme shall  be  effective  from the  Appointed  Date  and become   operative   from the  last  of  the  date  on which  all  the  conditions set  out  in  Clause  18  of Part C of the Scheme are satisfied.   As   such,   the Scheme is in compliance with  circular  no.  F.  No. 7/12/2019/CL-1      dated August   21,   2019   read with the provisions of the Companies    Act,    2013 and    regulations    made thereunder.  As  such,  the Scheme is in compliance

with   the   provisions   of Section  232  (6)  of  the

Companies    Act,    2013 and  all  other  applicable provisions  of  the Companies Act, 2013.

2(h)

h)  Petitioner  Companies  shall  undertake  to  comply with   the   directions   of   the   concerned   sectoral Regulatory, if so required.

The Petitioner Companies  undertake  to comply  with  the directions  of  the

concerned     sectoral

Regulatory,      in accordance    with    law. The Affidavit in Reply to the     Report     may     be treated as an undertaking on      behalf      of      the Petitioner  Companies  in terms  of  paragraph  2(h)

of the Report.

2(i)

i)  It  is  observed  from  financial  statements  as  on 31.03.2022   of   Petitioner   Companies   has   issued shares  at  Security  Premium  and  collected  total

premium as follows:-

The  treatment  given  by the Transferee Company in  respect  of  shares  set out    in    the    paragraph under     reference,     the assessment of the respective      assessment years   wherein   the   said

shares  were  issued  has

Sr.

No.

Date of Issue

No. of shar es

Name   of the Allotee

Par Valu e

Pre miu m

Total premi um

1.

07.03.

2011

4000

Piramal Enterpris es Limited

10

1240

49,60,

000

2.

07.03.

2011

4400

Arvind Agarwal

10

1240

54,56,

000

been   accepted   by   the Income  Tax  Department without     making     any addition   under   Section 68  of  Income  Tax  Act, 1961.  In  any  event,  the notice of the Scheme was duly issued to the Income Tax  Authorities  and  the same  has  been  recorded in     the     Affidavit     of Service  dated  April  20, 2023     filed     by     the respective   Petitioner

Companies   (Exhibit “HH-1”  to  “HH-4”  to

the   captioned   Petition) which    is    already    on record before this Hon’ble      Tribunal. However, no objection or observation    has    been raised by the Income Tax Authorities on the Scheme.

3.

07.03.

2011

6000

Premnat h Agarwal HUF

10

1240

74,40,

000

4.

27.03.

2015

4650

0

Rachna Agarwal

10

79

36,73,

500

5.

27.03.

2015

4900

0

Aditya Agarwal

10

79

38,71,

000

6.

27.03.

2015

4900

0

Gautam Agarwal

10

79

38,71,

000

7.

27.03.

2015

1100

00

Premnat h Agarwal

10

79

86,90,

000

8.

27.03.

2020

3010

752

Emblem Holdings Private Limited

10

83

24,98,

92,41

6

9.

30.03.

2020

4301

07

Emblem Holdings

Private Limited

10

83

3,56,9

8,881

TOTAL

32355

2797

Further,  the  Petitioner  Companies  shall  also  satisfy the Hon'ble Bench about assessment of share capital u/s. 68 of the Income Tax Act, 1961, for issue of shares at fair  value in order to compliance of the scheme on the  merit  particularly  allotment  of  14,400  shares  of Rs.10/- each of premium of Rs.1240/-   per shares on 07.03.2011   as   per   information   furnished   by   the Petitioner Company vide its letter dated 10.04.2023.

2(j) and 3

j)  As  per  shareholding  pattern  as  on  31.03.2022 submitted  by  the  Petitioner  company,  details  of

shareholding is as follows:-

The     Transferee Company      has      been

advised   that   filing   of

Sr. No

.

Petitioner Company

Name    of Sharehol

der

%   of share

s held

Remarks

Form    BEN-2    is    not required in respect of the shares   set   out   in   the paragraph   under reference.  In  any  event, the Petitioner Companies undertake to comply with the provisions of Section 90 of the Companies Act, 2013   read   with Companies   (Significant Beneficial    Owners) Amendment    Rules, 2019, as applicable to the Petitioner Companies.

1.

ANSAPAC K PRIVATE LIMITED

Emblem Holdings Private Limited

64.96

%

No     Form BEN-2  has been    filed by   any   of the Petitioner Companies as    per

records available at MCA21

Portal

No  Form  BEN-2  has  been  filed  by  any  of  the Petitioner  Company  as  per  records  available  at MCA21  Portal,  hence  Petitioner  Companies  shall undertake to comply with the provisions of section 90 of Companies Act, 2013 r/w. Companies (Significant Beneficial    Owners)    Amendment    Rules,    2019, thereunder  and  to  file  Form  BEN-  2  for  declaring name   of   the   significant   beneficial   owner   with

concerned ROC.”

The observations made by the Regional Director have been explained by the Petitioner Companies in paragraph 10 above. The Affidavit dated July 24, 2023 filed by the Petitioner Companies, the clarifications and undertakings given by the Petitioner Companies are accepted by this Tribunal, and the Petitioner Companies are directed to comply with the same. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, if any, as may be required under the Companies Act, 2013 and the Rules made thereunder. The Authorised Representative of the Regional Director, MCA (WR), Mumbai Mr. Gaurav Jaiswal who is present at the time of the hearing has submitted that the explanation and clarifications given by the Petitioner Companies are found satisfactory and he stated that they have no objections for approving the Scheme by the Tribunal.

The Learned Counsel for the Petitioner Companies submits that the Petitioner Companies undertake to comply with the provisions of Income Tax Act and Rules thereunder, as applicable.

Further heard Mr. Gaurav Jaiswal, Company prosecutor of Regional Director, MCA (WR), Mumbai, who is present and reported no objections to allowing the above Company Scheme Petition.

From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy considering that no objection has so far been received from any authority or creditors or members or any other stakeholders.

Since all the requisite statutory compliances have been fulfilled, the captioned Company Scheme Petition is made absolute in terms of prayer clause (A). The Transferor Companies are ordered to be dissolved without winding up.

The Scheme is hereby sanctioned with the Appointed Date of January 1, 2022.

The Petitioner Companies are directed to lodge a copy of this Order and Scheme duly certified by the Deputy Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable on the same, if any, within 60 (sixty) clear working days from the date of receipt of the certified copy of the Order.

The Petitioner Companies are further directed to file a certified copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies electronically along with E-Form INC 28 within 30 days from the date of receipt of this Order.

All concerned regulatory authorities to act on a copy of this Order along with the Scheme duly authenticated by the Deputy Registrar, National Company Law Tribunal, Mumbai Bench.

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

Any concerned Authority shall be at liberty to approach this Tribunal for any further clarification as may be necessary.

Ordered accordingly. C.P. (CAA)/138/MB/2023 is allowed and disposed of.