Esencia Technologies India Private Limited Vs

Heard Learned Counsel for the Petitioner Companies and the Deputy Director, WR, MCA, Mumbai. No objector has come before this Hon’ble Tribunal to oppose the Scheme nor has any party controverted any averments made in the Petitions to the Scheme.

The sanction of this Hon’ble Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013, to a Scheme of Amalgamation of Esencia Technologies India Private Limited (“the First Petitioner/Transferor Company”), Graphene Semiconductor Services Private Limited (“the Second Petitioner/Transferor Company”), Seastar Labs Private Limited (“the Third Petitioner/Transferor Company”), with L&T Technology Services Limited (“the Fourth Petitioner/Transferee Company”) (“Scheme”). This Scheme involves the amalgamation of three wholly owned subsidiaries, i.e., the Transferor Companies into the Transferee Company.

The Learned Counsel for the Petitioner Companies states that the Petitioner Company No. 1 is presently engaged in the business to provide, facilitate, develop, execute, design or otherwise deal with services in the field of video encoding, decoding and analytics, Digital signal process mg and wireless communications, microprocessor, memory subsystems and other peripherals, security, surveillance & custom imaging solutions, compiling IC's and networking services and any other related services including internal product development focused on IP Cores, Fab-less semiconductor in the field of Video and communications. The Petitioner Company No. 2 is presently carrying on business of manufacturing, processing, converting, repairing, servicing, buying, selling, importing, exporting, trading and dealing in Semiconductors, electronic components including Capacitors of all types, inputs required for Semiconductors, Assemblies, Radios, Television sets, Tape recorders, Loud Speakers, Record players, Stereophonic Equipment’s and Assemblies, Computers both Digitals and Analogues, Microwave Equipment’s and Communication Equipment’s and Components of all sorts. The Petitioner Company No. 3 is presently carrying on business of exporters, importers, servicing, consulting, developing, designing, sales and marketing, trading, selling, distributing and licensing computer software and hardware of any description, particularly those used in or in connections with electronic data processing equipment, computers, micro processor based systems and providing software, hardware, programmes, data processing and consultancy services, computer software and hardware programmes, data processing and consultancy services, computer time sharing and CAD/CAM services for preparing, collecting storing, processing and transmitting data of every kind in India as well as abroad and to carry on the computer education institution imparting software & hardware courses & data processing either in India or elsewhere independently or under franchise and to take any type of franchise related thereto from any other companies/institutions/universities & organizations in India or abroad and to impart education by providing teaching and training in the field of information & computer technology, data processing, development of computer hardware and software, data processing and telecommunication technology and to establish and run Computer Training Centre either in India or elsewhere independently or under franchise arrangement for imparting education in information Technology viz Hardware, Software data processing and to act as call centre, mass media, print media and film media and to carry on in India or elsewhere business, as sellers, buyers, distributors, rent out service, marketing, fabricators, assemblers, importers, exporters, agents, stockists, repair & maintenance or otherwise deal in all kinds of computer, computers systems, software, hardware, photo copies and data processing equipment including components, spares, accessories and peripherals and to establish bureaus for providing computer service, to process data and develop systems of all kinds by processing jobs and hiring out machine, time machines and to set up, operate and supervise the operation of the data processing divisions of other companies or organizations in India or elsewhere. The Petitioner Company No. 4 is presently carrying on business of providing a range of Engineering Services and related technologies in the areas of Embedded Systems, Mechanical, Plant & Manufacturing Engineering services such as, Design & Consulting, Prototyping, Valve engineering, Test and Validation, Engineering Process Services, Sourcing support, Maintenance, Sustenance & After Market Support, Electrical and Electronics hardware and software, Technical Publications, Detail Engineering and Asset Information Management.

The Petitioner Companies have approved the said Scheme by passing respective Board Resolutions at the First, Second and Third Petitioner Companies Board meetings held on 20th April 2022 respectively and the Fourth Petitioner Company’s Board meeting held on 21st April 2022 and thereafter approached this Tribunal by the captioned Petition for sanction of the Scheme.

Counsel for the Petitioner Companies further submits that the Transferor Companies are wholly owned subsidiaries of the Transferee Company.

Counsel for the Petitioner Companies further submits that the proposed Scheme will be beneficial to the Transferor Companies and the Transferee Company and their respective shareholders, creditors, employees and other stakeholders. The proposed amalgamation encapsulated in the Scheme will have the following benefits:

• The Transferor Companies and the Transferee Company are collectively operating in the business of providing Engineering Research & Development solutions to its customers in same geographies with similar profiles and can be conveniently combined and managed by the Transferee Company for leveraging superior delivery to customers and financial capability of the Transferee Company for mutual benefit;

• One of the chief reasons necessitating the amalgamation is that the Transferor Companies are wholly owned subsidiaries of the Transferee Company. Resultantly, the management of the Transferor and Transferee Companies have evaluated the plan and strategy for all the four Companies and feel that amalgamating the entities will be effective in obtaining synergy in the operations of all the four Companies;

• The management has decided to consolidate the various business lines of the Transferor Companies and the Transferee Company to enable cost competitiveness;

• The Scheme is commercially and economically viable and feasible and is in fact fair and reasonable;

• The proposed Scheme will also help to streamline the entire management structure and channelize resources to focus on the growing businesses. A lean management structure will also lead to focused administration and prospectively a reduction in costs for accounting, compliance, auditing, board meetings, secretarial procedures and administration, organizational efficiencies, reduction in overheads, personnel costs, costs of ERP, compliance cost and other administrative expenses. It will prevent cost duplication and will result in synergies in operations;

• The proposed Scheme will also stabilize the operating cost of entities and result in synergies, efficient utilization of capabilities and resources.

This Company Petition is filed in consonance with Sections 230 to 232 of the Companies Act 2013 along with the Order passed in the connected CA (CAA) No. 208 of 2022 by this Tribunal.

Counsel for the Petitioner Companies states that the Petitioner Companies have complied with all requirements as per the directions of the Tribunal and have filed necessary Affidavits of compliance before the Tribunal. Moreover, the Petitioner Companies undertake to comply with all the statutory/regulatory requirements if any, as required under the Companies Act, 2013 and the Rules made thereunder whichever is applicable. The undertakings given by the Petitioner Companies are hereby accepted.

The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, has filed his Representation dated 23rd February 2023 inter alia stating therein that, the statement made in paragraph 1 is true to the best of his knowledge and those made in paragraph 2 (a) to (k) are information derived from the records of the case for the consideration and disposal of the case as deemed fit and proper in the facts and merits of the case. 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 2

RD Representation/Observations dated 23rd February 2023

Response    of    Petitioner Companies

(a) 2

That on examination of the report of the Registrar of Companies, Mumbai dated    22.02.2023    for    Petitioner Companies  (Annexed  as  Annexure A-1)     that     that     the     Petitioner Companies       falls       within       the jurisdiction  of  ROC,  Mumbai.  It  is submitted    that    no    representation regarding   the   proposed   scheme   of Amalgamation   has   been   received against   the   Petitioner   Companies. Further,   the   Petitioner   Companies has filed Financial  Statements up to 31.03.2022.

….2.  It  is  submitted  that  as  per  the provisions  of  Section  232(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 subsequent3 to    the    amalgamation.    Therefore, remaining  fee, if  any  after  setting-off the fees already paid by the transferee company on the increased authorized capital        subsequent        to        the amalgamation.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai as stated in paragraph 2 (a) (2), the Fourth  Petitioner  Company  states  that  the fee paid by the Transferor Companies on its authorised   share   capital   shall   be   set   off against  any  fees  payable  by  the  Transferee Company  on  its  authorised  share  capital subsequent    to    the    amalgamation    and dissolution of the Transferor Company.

(a) 3

Interest   of   the   Creditor   should   be protected.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai as stated in paragraph 2 (a) (3), the Fourth  Petitioner  Company  states  that  as per   the   preamble   of   the   Scheme,   the Scheme is in the interest of the creditors of each  of  the  respective  companies  and  the present   Scheme   does   not   call   for   any compromise  or  sacrifice  from  any  of  the creditors     of     each     of     the     Petitioner Companies and the interest of the creditors

is protected.

(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.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (c),  the Fourth  Petitioner  Company  undertakes  to comply  with  the  provisions  of  Section  232 (3)  (i)  of  the  Companies  Act,  2013  insofar as   it   relates   to   the   fees   payable   by   the Transferee  Company  for  increase  of  share capital on              account  of merger/amalgamation   of   the   Transferor

Companies.

(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.

With   regard   to   the   observation   of   the

Regional      Director,      Western      Region,

Mumbai as  stated  in  paragraph  2  (d),   it  is stated  that  the  Fourth  Petitioner  Company shall,    in    addition    to    complying    with accounting   treatment   under   AS-14   (IND AS-103),  also  pass  such  accounting  entries as   are   necessary   in   connection   with   the Scheme   to   comply   with   the   Accounting Standards notified under Section 133 of the Companies Act, 2013 as may be applicable including AS-5 (IND AS-8).

(e)

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.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (e),  the Fourth      Petitioner      Company      hereby undertakes  and  confirms  that  the  Scheme enclosed  to  the  Company  Application  and the Company Scheme Petition are one and the  same  and  there  is  no  discrepancy  or change  made  therein  and  has  also  filed  an Affidavit in regard thereto.

(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.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (f),  the Fourth   Petitioner    Company    states   and confirms that it has served notices to all the concerned   authorities   and   undertakes   to address  any  issues  that  may  arise  after  the Scheme is sanctioned.

(g)

As per Definition of the Scheme,

“Appointed Date” for the purposes of the  Scheme  means  1st  April  2022  or such  other  date(s)  as  the  National Company Law Tribunal at Mumbai, Maharashtra     or     the     National Company Law Appellate Tribunal at New Delhi or such other Appropriate Authority may approve;

“Effective Date” shall mean the latter of the dates on which certified copy of the  order(s)  sanctioning  the  Scheme passed   by   the   National   Company Law      Tribunal      at       Mumbai, Maharashtra    is    filed    with    the Registrar   of   Companies,   Mumbai, Maharashtra.     Reference     in     the Scheme  to  the  date  of  “coming  into effect of this Scheme” or “effectiveness of    this    Scheme    shall    mean    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-I  dated 21.08.2019 issued by the Ministry of Corporate Affairs.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (g),  the Fourth  Petitioner  Company  hereby  states and   confirms   that   the   Appointed   Date mentioned  in  the  Scheme  is  1st  April  2022

and  that  the  Effective  Date  shall  mean  the

latter  of  the  dates  on  which  the  certified copy of the order(s) sanctioning the Scheme passed   by   the   National   Company   Law Tribunal  at  Mumbai,  Maharashtra   is  filed with the Registrar of Companies, Mumbai, Maharashtra.   In   this   regard,   the   Fourth Petitioner  Company  further  confirms  that upon  the  Hon'ble  National  Company  Law Tribunal,      at      Mumbai,      Maharashtra approving  the  Scheme,  the  Scheme  shall take effect from the Appointed Date i.e., 1st April 2022 in terms of provisions of Section 232(6)  of  the  Companies  Act,  2013.  The Fourth  Petitioner  Company  undertakes  to 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.

(h)

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

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (h),  the First/Second/Third  Petitioner  Companies do not have any specific sectoral regulator.

(i)

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

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (i),  the Fourth  Petitioner  Company  undertakes  to comply  with  the  directions  of  the  Income Tax department, if any.

(j)

Petitioner   Companies   has   foreign shareholders;       hence       Petitioner Companies shall undertake to submit acknowledged copy of notice served to

RBI,  FEMA,  FERA  u/s.  23.0(5)  of

CA, 2013 in form CAA-3.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (j),  the Transferee    Company,    i.e.,    the    Fourth Petitioner Company states that the Scheme

contemplates a merger of the wholly owned subsidiaries   with   their   holding   company (First,     Second     and     Third     Petitioner Companies   shall   merge  with   the   Fourth Petitioner Company)  and there is  no  share exchange  ratio  involved.  In  view  thereof, all  the  shareholders  (including  the  foreign shareholders)    of    the    Fourth    Petitioner Company shall not receive any shares from the   First,   Second   and   Third   Petitioner Companies.  Thus,  no  separate  intimation has  been  given  to  the  RBI  and/or  under FEMA  u/s.  230(5)  of  the  Companies  Act

2013 in form CAA-3.

(k)

Transferee     Company     is     listed company,          hence          Petitioner Companies shall undertake to comply with                  listing/SEBI/LODR Regulations with observations of BSE & NSE, if any, in this regards.

With   regard   to   the   observation   of   the Regional      Director,      Western      Region, Mumbai  as  stated  in  paragraph  2  (k),  the Fourth   Petitioner   Company   states   that considering   that   the   First,   Second   and Third   Petitioner   Companies   are   wholly owned subsidiaries of the Fourth Petitioner Company,  an  intimation  had  to  be  filed with   BSE   Limited   and   National   Stock Exchange  of  India  Limited  in  accordance with  Regulation  37  of  the  SEBI  (Listing Obligations  and  Disclosure  Requirements) Regulations,   2015   and   the   SEBI   Master Circular                                                        No. SEBI/HO/CFD/DIL1/CIR/P/2021/0000

000665   dated   November   23,   2021.   The Fourth  Petitioner  Company  vide  its  letters dated 21st April 2022 and 20th October 2021 intimated BSE Limited and National Stock Exchange     of     India     Limited     ("Stock Exchanges”)  about  the  particulars  of  the Scheme. The Fourth Petitioner Company is exempted  from  obtaining  a  NOC  from  the Stock Exchanges considering that the First, Second   and   Third   Petitioner   Companies are    wholly    owned    subsidiaries    of    the

Fourth Petitioner Company.

The observations made by the Regional Director and clarifications & undertakings given by the Petitioner Companies have been verified and accepted.

The Official Liquidator, High Court, Bombay has filed his report on 28th February 2023 stating therein that the affairs of the Petitioner Company Nos. 1, 2 and 3 have been conducted in a proper manner.

No objections were received from the Income Tax Department of the Petitioner Companies.

The Petitioner Companies through their Counsel submit that all tax queries will be met and answered in accordance with law.

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 interest.

As the entire Issued, Subscribed and Paid-up equity share capital and preference share capital of the Petitioner Company Nos. 1, 2 and 3 as the case may be is held by the Petitioner Company No. 4 and its nominees, upon the Scheme being effective, notwithstanding anything contrary in this Scheme, the said share capital of the Petitioner Company Nos. 1, 2 and 3 will stand automatically cancelled and there will be no issue and allotment of fresh shares to the Petitioner Company No. 4 as the Petitioner Company No. 4 and its nominees are the only shareholders of the Petitioner Company Nos. 1, 2 and 3.

Since all the requisite statutory compliances have been fulfilled, the Company Petition in CP (CAA) No. 29 of 2023 is made absolute in terms of the prayer clause of the Company Petition. Hence ordered.

ORDER

The Petition be and the same is allowed subject to the following:

i. The Scheme is hereby sanctioned, and the Appointed Date is fixed as 1st April 2022 as defined in Clause 5.4 of the Scheme. It shall be binding on the Petitioner Companies and all the concerned including their respective shareholders, Creditors /Trade Creditors and Employees.

ii. The Petitioner Company Nos. 1, 2 and 3 be dissolved without being wound up.

iii. The Registrar of this Tribunal shall issue certified copy of this Order along with the Scheme forthwith. Petitioner Companies are directed to file a copy of this order along with a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically, along with 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 30 working days from the date of receipt of the Order, with the concerned Superintendent of Stamps, if necessary for the purpose of adjudication of stamp duty payable, if any.

v. All concerned regulatory/public authorities shall act on a copy of this Order along with the Scheme duly authenticated by the Registrar of this Tribunal.