BRGD Sponge & Iron Private Limited Vs

Rohit Kapoor, Member (Judicial):

The instant petition has been filed under Section 230(6) read with Section 232(3) of the Companies Act, 2013 (“Act”) for sanction of the Scheme of Amalgamation of BRGD Promoters Private Limited, being the Petitioner No.2 above named ("Transferor Company No. 1" or “Petitioner No.2”), Balgopal Tie-Up Private Limited, being the Petitioner No.3 above named ("Transferor Company No. 2" or “Petitioner No.3”), Balmukund Reality Private Limited, being the Petitioner No. 4 above named ("Transferor Company No. 3" or “Petitioner No. 4”) with BRGD Sponge & Iron Private Limited, being the Petitioner No. 1 above named ("Transferee Company" or “Petitioner No. 1”), whereby and whereunder the Transferor Companies are proposed to be amalgamated with the Transferee Company from the Appointed Date, viz 01.04.2021 in the manner and on the terms and conditions stated in the said Scheme of Amalgamation (“Scheme”).

The Scheme was approved unanimously by the respective Board of Directors of the Petitioner Nos. 1, 2, 3 and 4 at their meetings held on 04.01.2022.

The circumstances which justify and/or have necessitated the Scheme and the benefits of the same are, inter alia, as follows:-

a. In order to integrate the fields of activities of the companies and for improving overall business efficiency, to streamline administration of the Companies and in the overall interest of future growth and diversification of the business of the Companies the present Scheme is proposed to amalgamate the Transferors Companies with the Transferee Company. The Scheme will be complimentary to the companies for their mutual benefit and interest.

b. The proposed Scheme will result in economies of scale, reduction in overheads and other expenses, and reduction in administrative procedural work, elimination of duplication of work, better and more productive and effective utilization of the combined resources of all the companies and will enable the amalgamated companies to effect internal economies and optimize productivity.

c. The said Scheme will result in optimum growth and development of the business of the companies concerned and exploration of the potential thereof. The said Scheme will enable the undertaking and business of all the Companies to contain greater facilities for raising capital, securing and conducting trade on favorable terms and other benefits.

d. The said Scheme will enable the companies concerned to rationalize and streamline their management, business and finances and will pave way for better, more productive and economical control of the running of the operations.

e. The business of all the companies will be carried on more economically and profitably under the Scheme.

f. The said Scheme will contribute in furthering and fulfilling the objects of all the companies and in the growth, expansion and development of their business.

g. The said Scheme will have beneficial results for the companies their shareholders, employees and all concerned.

The Statutory Auditors of the Petitioner Nos. 1, 2, 3 and 4 have by their certificates dated 04.01.2022 confirmed that the accounting treatment in the Scheme is in conformity with the accounting standards prescribed under Section 133 of the Companies Act, 2013.

The exchange ratio of shares in consideration of the Amalgamation has been fixed on a fair and reasonable basis and on the basis of the Report thereon of Mr. Surendra Kumar Agarwal, Registered Valuer with Regn. No. IBBI/IPA-001/IP-P00825/2017-18/11401.

The shares of the Petitioner Nos. 1, 2, 3 and 4 are not listed in any stock exchanges.

By an order dated 23.03.2022 in Company Application being C.A.(CAA) No. 6/KB/2022, this Tribunal made the following directions with regard to meeting(s) of shareholders and creditors under Section 230(1) read with Section 232(1) of the Act:-

a. Meeting(s) dispensed: Meeting of Equity Shareholders of the Petitioner Company Nos. 1 2, 3 and 4, for considering the Scheme were dispensed with in view of all shareholders of Petitioner Companies having respectively given their consent to the Scheme by way of affidavits. Meeting of Secured Creditors of the Petitioner Company no. 1, for considering the Scheme were dispensed with in view of all Secured Creditors of Petitioner Company No. 1 having respectively given their consent to the Scheme by way of affidavits. Meeting of Unsecured Creditors of the Petitioner Company nos. 1, 2 and 3 for considering the Scheme were dispensed with in view of all Unsecured Creditors of Petitioner Company Nos. 1, 2 and 3 having respectively given their consent to the Scheme by way of affidavits. There are no Secured Creditors of Petitioner Company Nos. 2, 3 and 4, and there are no Unsecured Creditors of Petitioner Company no. 4.

b. Meeting directed to be held:  NIL

c. Consequently, the Petitioner(s) presented the instant petition for sanction of the Scheme. By an order dated 09.06.2022 the instant petition was admitted by this Tribunal and fixed for hearing on 19.07.2022 upon issuance of notices to the Statutory / Sectoral Authorities and advertisement of date of hearing. In compliance with the said order dated 09.06.2022 the Petitioner(s) have duly served such notices on the Regional Director, Eastern Region, Ministry of Corporate Affairs, Kolkata, the Registrar of Companies, West Bengal, the Income Tax Authorities, and the Official Liquidator, High Court, Calcutta on 15.06.2022. The Petitioner(s) have also published such advertisements once each in the “Financial Express”, English newspaper and “Aajkaal”, Bengali newspaper, in their respective issues dated 16.06.2022. An affidavit of compliance in this regard has also been filed by them on 22.06.2022.

All statutory formalities requisite for obtaining sanction of the Scheme have been duly complied with by the Petitioners. The Scheme has been made bona fide and is in the interest of all concerned.

Pursuant to the said advertisements and notices the Regional Director, Ministry of Corporate Affairs, Kolkata (“RD”) and the Official Liquidator, High Court, Calcutta, have filed their representations before this Tribunal.

The Official Liquidator has filed his report dated 22.07.2022 and concluded as under:-

“That the Official Liquidator on the basis of information submitted by the Petitioner Companies is of the view that the affairs of the aforesaid Transferors Companies do not appear to have been conducted in a manner prejudicial to the interest of its members or to public interest as per the provisions of the Companies Act, 1956/the Companies Act, 2013 whichever is applicable.”

The RD has filed his reply affidavit dated 15.07.2022 (“RD affidavit”) which has been dealt with by the Petitioner(s) by their Rejoinder affidavit dated 18.07.2022 (“Rejoinder”). The observations of the RD and responses of the Petitioner(s) are summarized as under:

a. Paragraph No. 2(a) of RD Affidavit: It is submitted that as per available records, it appears that no complaint and /or representation regarding the proposed Scheme of Amalgamation has been received against the Petitioner Companies, Further, as per available records all the petitioner companies are updated in filing their Statutory Returns for the year ended 31/03/2021.”

Paragraph No. 5 of Rejoinder: “the petitioner companies have no comments to offer.”

b. Paragraph No. 2(b) of RD Affidavit: The Petitioner Companies should be directed to provide list/details of Assets, if any, to be transferred from the Transferor Companies to the Transferee Company upon sanctioning of the proposed Scheme.

c. Paragraph No. 2(c) of RD Affidavit: Petitioner company should undertake to comply with the provisions of section 232(3)(i) of the Companies Act, 2013 through appropriate affirmation.”

d. Paragraph No. 2(d) of RD Affidavit: That the Transferee Company should be directed to pay applicable stamp duty on the transfer of the Immovable properties from the Transferor Companies to it.”

Paragraph No. 6 of Rejoinder: The petitioner companies undertakes to provide list/details of Assets, if any, to be transferred from the Transferor Companies to the Transferee Company upon sanctioning of the proposed scheme. The petitioner companies undertakes to comply with the provisions of Section 232(3)(i) of the Companies Act, 2013 and further undertakes to pay applicable stamp duty on the transfer of the immovable properties from the Transferor Companies, if any.

e. Paragraph No. 2(e) of RD Affidavit: The Hon'ble Tribunal may kindly direct the Petitioners to file an 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.

Paragraph No. 7 of Rejoinder: The petitioners hereby declare that the scheme enclosed to the Company Application and Company Petition is one and same and there is no discrepancy or no change is made.

f. Paragraph No. 2(f) of RD Affidavit: The Transferor Company, Balmukund Reality Private Limited has reported in its financial statement for 2020-21 that as on 31.3.2021 total loans given by it was Rs. 248.06 lakhs. The Company’s paid-up capital and reserves & surplus as on 31.03.2021 were Rs. 34.33 lakhs and Rs.214.62 lakhs respectively, Therefore the company had given loans in excess of the limit laid down in section 186(2) of the Companies Act 2013. But the company has not filed any Form MGT-14 in regard to any resolution passed by its members giving prior sanction to such lending in excess of limit, indicating no such resolution was passed. The loans given by the company were therefore in violation of the provisions of section 186 of the Companies Act 2013. The said loans being the main asset of the company, the scheme of merger is also therefore impacted.

Paragraph No. 8 of Rejoinder: It is denied that the loans given by the company were in violation of the provisions Section 186 of the Companies Act, 2013. It is further denied that the scheme of amalgamation will be impacted due to the said loans. The said MGT-14 was not filed due to inadvertent mistake on part of the management of the 3rd Transferor Company. The said petitioner undertakes to comply with the same at the earliest.

g. Paragraph No. 2(g) of RD Affidavit: “It is submitted that a copy of letter no. 75067/01/2021-22 dated 21/06/2022 addressed to the Chief Commissioner of Income Tax, Patna has been received from the Income Tax Department, Patna. A copy of which marked as Annexure-I is enclosed herewith for perusal and ready reference.”

Paragraph No. 9 of Rejoinder: The petitioners have no comments to offer.

Heard submissions made by the Ld. Counsel appearing for the Petitioner and that by Joint Director appearing for the office of RD(ER). Upon perusing the records and documents in the instant proceedings and considering the submissions, we allow the petition and make the following orders:-

a. The Scheme of Amalgamation mentioned in paragraph 1 of the petition, being Annexure "A-1" is hereby sanctioned by this Tribunal with Appointed Date as 1st day of April, 2021 (“Appointed Date”) and shall be binding on BRGD Promoters Private Limited ("Transferor Company No. 1"), Balgopal Tie-Up Private Limited ("Transferor Company No. 2") and Balmukund Reality Private Limited ("Transferor Company No. 3") with BRGD Sponge & Iron Private Limited (“Transferee Company”), their respective shareholders, creditors and all concerned;

b. All the properties, rights and interest of the ‘Transferors Companies’ be transferred to and be vested without further act or deed in Transferee Company and accordingly the same shall pursuant to Section 232 of the Companies Act, 2013 be transferred to and be vested in Transferee Company for all the estate and interest of ‘Transferors Companies’ but subject nevertheless to all Charges now affecting the same;

c. All the liabilities and duties of ‘Transferors Companies’ be transferred without further act or deed to the ‘Transferee Company’ and accordingly the same shall pursuant to Section 232 of the Companies Act, 2013 be transferred to and become the liabilities and duties of ‘Transferee Company’;

d. all proceedings and/or suits and/or appeals now pending by or against ‘Transferors Companies’ be continued by or against ‘Transferee Company’;

e. The transferor companies shall file appropriate form MGT-14 as brought out herein above.

f. Leave is granted to the Petitioner(s) to file the Schedule of Assets and liabilities of the Transferor Companies in the form as prescribed in the Schedule to Form No. CAA7 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within three weeks from the date of receiving a copy of this order;

g. The Transferee Company do without further application issue and allot shares to the shareholders of the Transferor Companies, the shares in the Transferee Company to which they are entitled in terms of the Scheme;

h. The ‘Transferors Companies’ and ‘Transferee Company’ within 30 days of the date of receipt of this order cause a certified copy of this order to be delivered to the Registrar of Companies, West Bengal for registration and on such certified copy being so delivered the ‘Transferors Companies’ shall be dissolved without winding up and the Registrar of Companies, West Bengal shall place all documents relating to the ‘Transferors Companies’ and registered with him on the file kept by him in relation to the Transferee Company and the files relating to the said companies shall be consolidated accordingly.

The Petitioner(s) shall supply legible print out of the scheme and schedule of assets and liabilities in acceptable form to the Registry and the Registry will append such printout, after verification, to the certified copy of the order.

Company Petition being C.P. (CAA) No. 63/KB/2022 is disposed of accordingly.

Urgent certified copy of this order, if applied for, be supplied to the parties, subject to compliance with all requisite formalities.