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Judgment
The sanction of the Tribunal is sought under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (the Act) and the Rules framed thereunder for the Scheme of Amalgamation (the Scheme) of East Asiatic Infrastructure Corporation Private Limited, Param Alkalies Private Limited and Indian Bio Fuel Corporation Private Limited (collectively the Transferor Companies) with Urvashi World Wide Private Limited and their respective shareholders.
We have heard the learned counsel for the Petitioner Companies and the Deputy Director, WR, MCA, Mumbai. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petition to the Scheme.
The learned counsel for the Petitioner Companies states that the Petitioner Company No.1 is presently carrying on business of trading and broking of Agro commodities like Wheat, Gram, Yellow Peas, Pulses etc. The Petitioner Company No.2 is presently carrying on business of manufacturers, buyers, sellers, dealers, suppliers, commission agents, importers, exporters, users and distributors of chemicals and alkalies of all kinds, their components, products and intermediates, organic and inorganic chemicals, textile chemicals and presently carrying on no business activities. The Petitioner Company No.3 and Petitioner Company No.4 are also, presently carrying on business of trading and broking of Agro commodities like Wheat, Gram, Yellow Peas, Pulses etc.
The Board of Directors of the Petitioner Companies have approved the Scheme in their respective Board meetings held on 30th January, 2019. The Appointed date fixed under the Scheme is 1st April, 2018.
The rationale for the Scheme would, inter alia, bring all the companies under the same management. The management is of the opinion that the merger will lead to synergies of operations and more particularly the following benefits:
a. The amalgamation will enable the Transferee Company to consolidate the businesses and lead to synergies in operation and create a stronger financial base.
b. It would be advantageous to combine the activities and operations of all companies into a single Company for synergistic linkages and the benefit of combined financial resources. This will be reflected in the profitability of the Transferee Company.
c. The Amalgamation of the Transferor Companies with the Transferee Company will also provide an opportunity to leverage combined assets and build a stronger sustainable business. Specifically, the merger will enable optimal utilization of existing resources and provide an opportunity to fully leverage strong assets, capabilities, experience, expertise and infrastructure of all the companies. The merged entity will also have sufficient funds required for meeting its long term capital needs as provided for in the scheme.
d. The Scheme of amalgamation will result in cost saving for all the companies as they are capitalizing on each others core competency and resources which are expected to result in stability of operations, cost savings and higher profitability levels for the Amalgamated Company.
The Company Petition is filed in consonance with sections 230 to 232 of the Act, along with the Order dated 13th February, 2020 passed in C.A. (CAA) 2923/MB/2019 by this Tribunal.
The learned counsel for the Petitioner Companies states that the Petitioner Companies have complied with all requirements as per directions of the Tribunal, and have filed necessary affidavits of compliance before the Tribunal. Moreover, the Petitioner Companies undertake to comply with all statutory/regulatory requirements, if any, as required under the Act and the Rules made thereunder. The undertaking given by the Petitioners is accepted.
The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, has filed his Report dated 28th January, 2021 inter alia stating therein the observations as stated in paragraph IV (a) to (k) of the report. In response to the observations made by the Regional Director, the Petitioner Companies have given necessary clarifications and undertakings. The observations made by the Regional Director and the clarifications and undertakings given by the Petitioner Companies are summarized in the table below:
Sr.
No. Para
(IV)
RD Report / Observations dated 28th January, 2021
Response of the Petitioner Companies
(a)
In compliance of AS-14 (IND AS-I03), the Transferee Company 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.
So far as the observation in paragraph IV (a) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that in addition to Compliance of AS-14, 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 etc.
(b)
As per Part - A- Definitions and share capital Clause 3(3.6,3.7 & 3.9) of the Scheme.
"The Appointed Date" means 1st April, 2018
or such other date as the National Company Law Tribunal (Tribunal) of judicature at
Mumbai or other competent authority may
otherwise direct/fix.
"The Effective Date" means the date on
which certified copies of the Order(s) of the
National Company Law Tribunal at Mumbai
vesting the assets, properties, liabilities,
rights, duties, obligations and the like of all
the Transferor Companies in the Transferee
Company are filed with the Registrar of
Companies, Maharashtra, after obtaining the
necessary consents, approval, permissions,
resolutions, agreements, sanctions and orders
in this regard.
"Record Date" means the date to be fixed by
the Board of the Directors of Urvashi World
Wide Private Limited, for the purpose of issue
and allotment of shares of Urvashi World
Wide Private Limited as may be applicable
and relevant in accordance with this Scheme
of Amalgamations.
In this regard, it is submitted that Section 232
(6) of the Companies Act, 2013 states that the
scheme under this section shall clearly
indicate an appointed date from which it shall
be effective and the scheme shall be deemed
to be effective from such date and not at a
date subsequent to the appointed date.
However, this aspect may be decided by the
Hon'ble Tribunal taking into account its
inherent powers.
Further, the Petitioner may be asked to
comply with the requirements and clarified
vide circular no. F. No. 7/12/2019/CL-I date
21.08.2019 issued by the Ministry of Corporate Affairs.
So far as the observation in paragraph IV (b) of the Report of the Regional Director is
concerned, the learned counsel for the Petitioner Companies submits
that the Appointed Date is 1st
April, 2018 from which it shall be
effective and the scheme shall be
deemed to be effective from such
date and not at a date subsequent
to the appointed date.
(c)
The Hon'ble Tribunal may kindly seek the undertaking that this Scheme is approved by the requisite majority of members and creditors as per Section 230(6) of the Act in meetings duly held in terms of Section 230(1) read with subsection (3) to (5) of Section 230 of the Act and the Minutes thereof are duly placed before the Tribunal.
So far as the observation in paragraph IV (c) of the Report of Regional Director is concerned, the Petitioner Companies undertake that this Scheme is approved by the requisite majority of members and creditors as per the consent affidavit submitted to the NCLT.
(d)
Hon'ble NCLT may kindly direct the petitioners to file an affidavit to the extent that the Scheme enclosed to company Application & Company Petition, are one and same and there is no discrepancy/any change/changes are made, for changes if any, liberty be given to Central Government to file further report if any required.
So far as the observation in paragraph IV (d) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the Petitioner undertakes that Scheme enclosed to the Company Application and the scheme enclosed to the Company Petition are one & same there is no discrepancy or deviation.
(e)
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).
So far as the observation in paragraph IV (e) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the scheme by this Hon'ble Tribunal may not deter any authorities to deal with any of the issues arising after giving effect to the scheme and that the decision of authorities is binding on the
Petitioner Companies.
(f)
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 authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital subsequent to the amalgamation and therefore, petitioners to affirm that they comply the provisions of the section.
So far as the observation in paragraph IV (f) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the setting off of fees paid by the Transferor Company on its Authorized Share Capital shall be accordance with provisions of section 232(3)(i) of the Companies Act, 2013.
(g)
As per Part B Clause 13(13.3 & 13.4) of the Scheme (Account Treatment), if there is a surplus arising as a result of the difference, if any, of the value of the assets over the value of the liabilities of the Transferor Companies, in accordance with this Scheme, the same shall be credited to the Capital Reserve Account of the Transferee Company and in the event of deficit, if any, the same shall be debited to the Goodwill Account of the Transferee Company.
In case of any differences in the accounting policies between the Transferor Companies and the Transferee Company, the impact of the same till the Appointed Date of amalgamation will be quantified and adjusted in the Free/General Reserve of the Transferee Company to ensure that the financial statements of the Transferee Company, reflects, the financial position on the basis of consistent accounting policies.
In this regards it is submitted that the reserve so created shall be treated as Capital Reserve arising out of Amalgamation and it shall be treated as Capital Reserve arising out of Amalgamation and it shall not be available for distribution of dividend and other similar purposes.
So far as the observation in paragraph IV (g) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the Capital Reserve arising out of Amalgamation will be treated as Capital Reserve arising out of Amalgamation and that it shall not be available for distribution of dividend and other similar purposes.
(h)
As per Part B Clause 14(14.1 to 14.3) of the Scheme (Combination of Authorized Capital); In this regard it is submitted that the transferee company to comply with the provisions of Section 13, Section 14, Section 61 & Section 232(3)(i) of the Companies Act, 2013 or any other application provision of the Act.
So far as the observation in paragraph IV (h) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the Transferee Company will comply with the provisions of Section 13, Section 14, Section 61 & Section 232(3)(i) of the Companies Act, 2013 or any other application provision of the Act.
(i)
As per Part C Clause 16 of the Scheme (Change of Name of the Transferee Company); Petitioner Companies have proposed that consequent to the amalgamation and upon the Scheme being effective, the name of the Transferee Company shall stand change from "Urvashi World Wide Private Limited" to "East Asiatic Infrastructure Corporation Private Limited" in accordance with Section 13 of the Act, and other relevant provisions of the Act, as applicable.
That the adoption of new name of Transferor Company by the Transferee Company shall create confusion in the minds of general public and other stakeholders. Beside it will also create confusion with that regulators like Income Tax, GST, MCA etc. which give impression that Transferor Company is still in existence however it is not in existence.
In this regards, as per clause 8(2)(8) of the Companies A(Incorporation) Rule, 2014, "The name released on change of name by any company shall remain in data base and shall not be allowed to taken by any other Company including the group company of the Company who has changed the name for the period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation. Hence, the Transferee Company i.e. "East Asaintic Infrastructure Private Limited" may not be allowed to change its name by the name of Transferor Company i.e. "Urvashi World Wide Private Limited" and Petitioner Company have to amend the scheme
according.
So far as the observation in paragraph IV (i) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the Transferee Company will not change its name.
(j)
The Petitioner Companies have to undertake that cross holding of Share held by Transferor Companies and Transferee Company inter-se shall stand cancelled.
So far as the observation in paragraph IV (j) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the Petitioner Company/ Transferee Company have to undertake that cross holding of Share held by Transferor Companies and Transferee Company inter-se shall stand cancelled.
(k)
In view of the observation raised by the ROC Mumbai, mentioned at para 18 above Hon'ble NCLT may pass appropriate orders/orders as deem fit.
So far as the observation in paragraph IV (k) of the Report of the Regional Director is concerned, the learned counsel for the Petitioner Companies submits that the Transferee Company will not change its name.
The observations made by the Regional Director and clarifications & undertakings given by the Petitioner Companies have been verified and accepted.
The Official Liquidator has filed his report on 22nd January, 2021 inter alia, stating therein that the affairs of the Transferor Companies have been conducted in a proper manner not prejudicial to the interest of the Shareholders of the Transferor Companies.
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) 975 of 2020 is made absolute in terms of prayer made in Petition. Hence ordered.
ORDER
The Petition be and the same is allowed subject to the following:
(i) The Scheme, with the Appointed Date fixed as 1st April, 2018 placed at Page Nos. 268 to 290 (Exhibit - I) of the Company Petition is hereby sanctioned. It shall be binding on the Petitioner Companies and all concerned including their respective shareholders, Secured Creditors and Unsecured Creditors/Trade Creditors and Employees.
(ii) The Transferor Companies be dissolved without being wound up.
(iii) The Registrar of this Tribunal shall issue certified copy of this Order along with the Scheme forthwith. Petitioners are 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 receipt of the Order from the Registry.
(iv) The Petitioner Companies shall lodge a copy of this Order and the Scheme duly authenticated by the Registrar of this Tribunal within 60 days from the date of receipt of the Order, with the Superintendent of Stamps concerned, for the purpose of adjudication of stamp duty, if any payable.
(v) The Petitioner Companies shall comply with the undertakings given by them.
(vi) The Petitioner Companies shall, within 15 days of receipt of this order, issue newspaper publications with respect to approval of the Scheme, in the same newspapers in which previous publications were issued.
(vii) The Petitioner Companies shall take all consequential and statutory steps required under the provisions of the Act in pursuance of the Scheme.
(viii) All concerned shall act on a copy of this Order along with the Scheme duly authenticated by the Registrar of this Tribunal.
(ix) Any person interested in the above matter shall be at liberty to apply to the Tribunal for any direction that may be necessary.