DVK Investments Private Limited Vs

Kuldip Kumar Kareer, Member (Judicial)

The Court is convened by videoconference today.

Heard Learned Counsel for the Petitioner Companies. No objector has come before this Tribunal to oppose the Scheme and nor has any party 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 (“Act”) to the said Composite Scheme of Amalgamation and Arrangement amongst DVK Investments Private Limited (“DVK” or “Transferor Company 1”) and Aegean Properties Limited (“APL” or Transferor Company 2”) and Fermenta Biotech Limited (“FBL” or “Transferee Company”) and their respective Shareholders (“Scheme”).

The Counsel for the Petitioner Companies submits that the First Petitioner Company holds 51.22% in the equity share capital of the Third Petitioner Company and the Second Petitioner Company is a wholly owned subsidiary of the Third Petitioner Company.

The Learned Counsel for the Petitioner Companies further submits that the First Petitioner Company is non-systemically important, non-deposit taking, non-banking finance company (as defined under the Non-Systemically Important Non-Deposit Taking Company (Reserve Bank) Directions, 2016, dated 01.09.2016, as amended). The Second Petitioner Company is primarily engaged in the business of renting of properties. The Third Petitioner Company is engaged in the business of manufacturing and marketing of chemicals, active pharmaceutical ingredients, enzymes, pharmaceutical formulations and environmental solution products and is also engaged in the business of renting of properties.

The Petitioner Companies have approved the Scheme by passing the Board Resolutions at their respective board meetings held on 31st January, 2022 and have approached the Tribunal for sanction of the Scheme. The Appointed Date fixed under the Scheme is the Effective Date.

Learned Counsel for the Petitioner Companies further submits the rationale for the Scheme that:

The Amalgamation of the Transferor Companies with the Transferee Company is sought to be undertaken to achieve the following benefits –

(i) Simplification of the group structure and consolidation of legal entities;

(ii) Reducing the number of legal entities, resulting into lesser administrative and regulatory compliances;

(iii) Simplification of the shareholding structure and reduction of shareholding tiers thereby providing greater transparency in relation to the Promoters’ direct engagement with the Transferee Company;

(iv) Improved allocation of capital and optimization of cash flows contributing to the overall growth prospectus of the combined entity;

(v) Creation of a larger asset base by consolidation of the assets and facilitation of access to better financial resources;

(vi) The Transferee Company would benefit from freeing up of management time, and related cost savings, as the simplification of the group structure would reduce intra-group transaction reporting requirements that apply to the Transferee Company

(vii) Enable greater / enhanced focus of the management on the business; and

(viii) Creating enhanced value for Transferee Company’s shareholders and allow a focused strategy in operations, which would be in the best interest of all its shareholders, creditors and all other stakeholders.

Learned Counsel for the Petitioner Companies submits that the Company Petition has been filed in consonance with the order passed in Company Scheme Application C.A. (CAA) 183/MB/2022 on 19th July, 2022 and the Petitioner Companies have complied with all the requirements as per the directions of this Tribunal.

The Counsel for the Petitioner Companies state that the consideration proposed for amalgamation of First Petitioner Company into Third Petitioner Company is as under:

“1,50,75,318 (One Crore Fifty Lakhs Seventy-Five Thousand Three Hundred and Eighteen Only) fully paid-up equity shares of the face value of INR 5 each of the Transferee Company shall be issued and allotted as fully paid-up equity shares to the equity shareholders of the Transferor Company 1, in proportion to their holding in the Transferor Company 1.”

Further, the Learned Counsel submits that the Second Petitioner Company is wholly owned subsidiary of the Third Petitioner Company and upon effectiveness of Scheme, the entire issued, subscribed and paid-up share capital of Second Petitioner Company shall stand extinguished and cancelled and no new shares shall be issued or allotted pursuant to the Scheme.

The Regional Director has filed its Report dated 17th October 2022 (“Report”) praying that this Tribunal may pass such orders as it thinks fit, save and except as stated in Paragraph 2. The observations of Regional Director and the replies given by Petitioner Companies vide Affidavit dated 16th January 2023 and Additional Affidavit dated 23rd February 2023 are as follows:

Para No.

Regional Director’s

Observations

Petitioner Companies’

Responses

2(a)(ii)(a)

As per MCA Master data the paid- up     Share     Capital     of     the Transferee    Company    is    Rs. 14,42,37,000/-  which  does  not agree  with  the  scheme.  As  per Scheme,    the    paid-up    Share Capital is Rs. 14,71,54,935/-

In so far as observations made in paragraph  2(a)(ii)(a)  of  the  Report of Regional Director is concerned, the  Petitioner  Companies  would like  to  submit  that  the  paid-up share     capital     of    the     Third Petitioner   Company   as   per   the Scheme  and  as  per  the  master data   of   MCA   website   is   INR 14,71,54,935.     There     is     no discrepancy  in  the  share  capital amount as per the Scheme and the MCA  website.  The  same  may  be referred  from  clause  7.3  of  the Scheme.   Further,   the   copy   of master  data  reflecting  the  share capital is annexed as Annexure A

to the affidavit.

2(a)(ii)(b)

As   per   Balance   sheet   as   on 31/03/2022   of   the   Transferor Co.   No.   2,   the   Company   has Trade     Payables     &     Current liabilities   of   Rs.   16,500/-   &

26,371/-

In   this   regard,   the   Transferor Company  2  confirms  that  it  has Trade     Payables     &     Current liabilities    of    Rs.    16,500/-    & 26,371/- in the Balance Sheet as on 31st March 2022.

2(a)(ii)(c)

As   per   Balance   sheet   as   on 31/03/2022   of   the   Transferee company,   the    Co   is    having Financial         Liabilities         as Borrowings  of  Rs.  11,468.25/-, Lease  liabilities  of  Rs.  371.77/- and  Trade  Payables  as  Dues  to MSME  of  Rs.  4331.92/-  &  to Creditors of Rs. 1,275.59/- (rs in Lakhs).  Also,  the  Company  has various litigations against it and the    same    are    attached    as ANNEXURE-1 with the Scheme.

In so far as observations made in paragraph  2(a)(ii)(c)  of  the  Report of Regional Director is concerned, the Transferee Company confirms that it has Financial Liabilities as Borrowings   of   Rs.   11,468.25/-, Lease  liabilities  of  Rs.  371.77/- and  Trade  Payables  as  Dues  to MSME   of   Rs.   4331.92/-   &   to Creditors of Rs. 1,275.59/- (Rs. in lakhs).

The  list  of  litigations  against  the Transferee  Company  is  attached as   Annexure   W   to   the   Joint Company  Application  filed by  the

companies.

2(a)(ii)(d)

As per the provisions of Section 232(3)(i)  of  the  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    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, has to be paid by the transferee company on the increased     authorized     capital

subsequent to the amalgamation.

In so far as observations made in paragraph  2(a)(ii)(d) of the  Report of Regional Director is concerned, the  Petitioner  Companies  would like  to  submit  that  the  Petitioner Companies  undertakes  to  comply with  all  applicable  provisions  of section 232(3)(i) of Companies Act, 2013.

2(a)(ii)(e)

Interest  of  Creditors  should  be protected

In so far as observations made in paragraph  2(a)(ii)(e)  of  the  Report of Regional Director is concerned, the        Petitioner        Companies undertakes to protect the interest of the Creditors

2(b)

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.

In so far as the observation of the Regional     Director     made     in Paragraph  2(b)  is  concerned,  the Transferee  Company  undertakes to   comply   with   all   applicable provisions  of  section  232(3)(i)  of Companies      Act,      2013,      as mentioned in the response of point 2(a)(ii)(d) above.

2(c)

In   compliance   of   Accounting Standard  14  or  IND-AS  103,  as may be applicable, the Transferee 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.

In so far as observations made in paragraph  2(c)  of  the  Report  of Regional Director is concerned, the Transferee   Company   undertake that    it    shall    pass    necessary accounting  entries  in  connection with the Scheme as well as comply with  other  applicable  Accounting Standards  such  as  AS-5  or  IND AS-8, etc. to the extent applicable.

2(d)

The Hon’ble Tribunal may kindly direct  the  Petitioner  Companies 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.

In so far as observations made in paragraph 2(d) of the Report of the Regional Director is concerned, the Petitioner Companies submits that the Scheme enclosed in Company Application and Company Petition is  one  and  same  and there  is  no discrepancy/deviation     in     the same.

2(e)

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.

In so far as observations made in paragraph 2(e) of the Report of the Regional Director is concerned, the Petitioner Companies submits that an affidavit of service, stating that the  notices  have  been  served  to concerned authorities as required under    Section    230(5)    of    the Companies  Act,  2013,  have  been annexed     with     the     Company Scheme  Petition.  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 and the same will be dealt by the Petitioner Companies in accordance with the applicable

laws under the respective Acts.

2(f)

As   per   the   Definition   of   the Scheme,

“Appointed   Date”   means   the Effective Date or such other date as may be fixed or approved by the    NCLT    ort    such    other competent authority.

“Effective  date”  means  the  date on   which   the   Scheme   shall become effective upon the filing, as  contemplated  under  clause 18.1(vi) hereof, of certified copies of    the    order    of    the    NCLT approving    the    Scheme.    Any references   in   this   Scheme   to

“coming    into    effect    of    this Scheme”  or  “upon  this  Scheme becoming         effective”         or “effectiveness of this Scheme” or “after    this    Scheme    becomes effective” means and refers to the Effective Date.

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-1                dated 21.08.2019     issued     by     the Ministry of Corporate Affairs and appointed dated should be prior to   08/09/2021   as   application before the Hon’ble NCLT filed on

09/09/2022.

In so far as observations made in paragraph 2(f) of the Report of the Regional Director is concerned, the Petitioner  Companies  clarify  that the Appointed Date specified in the Scheme  is  Effective  Date.  As  per Circular  No.  F.No.7/12/2019/CL

–  I  dated  21-08-2019  issued  by Ministry    of    Corporate    Affairs, Appointed Date can be tied to an occurrence of event and need not necessarily be a specific calendar date.   In   the   present   case,   the Appointed  Date  is  linked  to  the event of filing certified copies of the

Order of Hon’ble Tribunal with the

Registrar  of  Companies,  Mumbai and  therefore,  is  in  compliance with   the   provisions   of   Section 232(6).   Further,   the   Petitioner Companies  undertakes  that  they would comply with the provisions and   requirements   clarified   vide circular no. F. No 7/12/2019/CL- I dated 21-08-2019 issued by the Ministry  of  Corporate  Affairs,  if required.

2(g)

Petitioner      Companies      shall undertake  to  comply  with  the directions   of   the   Income   tax department, if any

In so far as observations made in paragraph 2(g) of the Report of the Regional Director is concerned, the Petitioner Companies undertake to comply   with   the   directions   of Income-tax   department,   to   the extent      applicable      and      in compliance   with   the   applicable

laws.

2(h)

Petitioner      Companies      shall undertake  to  comply  with  the directions of the concerned sector Regulator, is so required.

In so far as observations made in paragraph 2(h) of the Report of the Regional Director is concerned, the Petitioner Companies undertake to comply  with  the  directions  of  the concerned  sectoral  regulatory,  to

the extent applicable and required.

2(i)

Petitioner Companies (Transferor Co  no-2  is  Public  Limited  and Transferee  Company  is  Listed) need  to  undertake  comply  with the  directions  of  the  BSE  letter dated 30/05/2022 as attached.

In so far as observations made in paragraph 2(i) of the Report of the Regional Director is concerned, the Petitioner     Companies     hereby submits that Transferor Company 2 is a public limited company but unlisted          company. The observation  letter  issued  by  BSE Limited requires compliance by the Transferee Company, i.e. the listed entity.  Therefore,  the  Transferee Company  undertakes  to  comply with  the  directions  of  BSE  letter dated 30th May, 2022.

2(j)

Petitioner   company   (Transferor Company  no-1)  is  required  to comply with directions of the RBI NOC letter dated 02/05/2022, as attached with the scheme.

In so far as observations made in paragraph 2(j) of the Report of the Regional   Director   is   concerned, Transferor Company 1 undertakes to  comply  with  the  directions  of

RBI NOC dated 02nd May, 2022.

2(k)

Petitioner  Company  (Transferor Company-2)     is     required     to submit   approvals   of   RERA,   if needed  or  if  the  company  has launched any real estate project with  the  RERA  registration  till date.

In so far as observations made in paragraph 2(k) of the Report of the Regional Director is concerned, the Petitioner Companies submits that the   Transferor   Company   2   is engaged in the business of renting of immovable properties. It has not launched any real estate project till date  which  requires  approval  of RERA. Therefore, the requirement of  this  point  is  not  applicable  on the Transferor Company 2.

The clarifications and undertakings given by the Petitioner Companies are accepted by this Tribunal. Ms. Rupa Sutar, Authorised representative of the Regional Director, MCA (WR), Mumbai, who was present at the time of Final hearing has submitted that the clarifications, submissions and undertakings given by the Petitioner Companies are hereby accepted and that they have no objection for approving the scheme by the Tribunal.

The Official Liquidator has filed his report dated 07th October 2022 and has stated that the affairs of the First and the Second Petitioner Company have been conducted in a proper manner and not prejudicial to the interest of its members or to the public interest and there are no instances of misapplication/ misappropriation and breach of trust on the part of the management.

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.

Since all the requisite statutory compliances have been fulfilled, C.P.(CAA) 191/MB/2022 connected with C.A.(CAA)/183/MB/2022 is made absolute in terms of the prayer clauses of the said Company Scheme Petition.

The Scheme is hereby sanctioned, with the Appointed Date as Effective date.

The First and the Second Petitioner Company be dissolved without winding up.

The Petitioner Companies are directed to lodge 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 the certified copy of order by Petitioner Companies.

The Petitioner Companies are directed to lodge a certified copy of this order and the Scheme duly authenticated by the Designated Registrar of this Tribunal, with the concerned Superintendent of Stamps for adjudication of stamp duty payable, if any, within 60 days from the date of receipt of certified copy of the certified order from the Registry of this Tribunal.

All concerned regulatory authorities to act on a copy of this Order duly certified by the Designated Registrar of this Tribunal along with copy of the Scheme.

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

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

Ordered Accordingly.