Esencia Technologies India Privatelimited vs Registrar of Companies

P.N. Deshmukh, Member (Judicial)

Perused the Company Scheme Application, along with separate Affidavits dated 28th July 2022 of Mr. Kartik Kumar, Authorized Representative of the First, Second and Third Applicant Companies and Ms. Prajakta Powle, Authorized Representative of the Fourth Applicant Company in support of the Company Scheme Application and heard Counsel for the Applicant Companies.

The Counsel for the Applicant Companies submits that the proposed Scheme provides for the amalgamation of the First, Second and Third Applicant Companies into and with the Fourth Applicant Company pursuant to the provisions of Sections 230 to 232 of the Companies Act, 2013.

The Counsel for the Applicant Companies further submits that:

a. Esencia Technologies India Private Limited is inter-alia engaged in the business all IT/telecom related technologies/solutions like software and hardware development, services, consultancy, implementation and maintenance, networking, Data Processing, Infrastructure Solutions, Storage solutions, E-Commerce solutions, internet related technologies, Enterprise Resource Planning (ERP), implementation and maintenance and Outsourcing activities like Business Processing Outsourcing (BPO), Knowledge Process Outsourcing (KPO), Information Technology Outsourcing (ITO) in and outside India.

b. Graphene Semiconductor Services Private Limited is inter alia, engaged to carry 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.

c. Seastar Labs Private Limited is inter alia, engaged to carry 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 computers, 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.

d. L&T Technology Services Limited is inter alia, engaged to carry on business to provide 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 Counsel for the Applicant Companies further submits that the Transferor Companies are wholly owned subsidiaries of the Transferee Company.

The Applicant Companies have preferred instant Joint Application for the reliefs sought in the Application.

The rationale and benefits of the Scheme are, inter alia as follows:

• 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;

The Counsel for the Applicant Companies further submits that the Board of Directors of the Applicant Companies have approved the Scheme by unanimously passing resolutions at the First, Second and Third Applicant Companies Board meetings held on 20th April 2022 respectively and the Fourth Applicant Company’s Board meeting held on 21st April 2022. The Appointed Date fixed for the scheme is 1st April 2022.

The Scheme is in the interest of and in no manner whatsoever prejudicial to the shareholders, creditors, lenders and various other stakeholders of respective companies.

The Counsel for the Applicant Companies submits that a Letter has been addressed to the National Stock Exchange of India Ltd. and BSE Ltd. intimating the stock exchanges of the proposed Scheme on 21st April 2022 and 20th October 2021, annexed at Exhibits “X-1” and “X-2” of the Company Scheme Application.

The entire equity share capital of the First Applicant Company is held by the Fourth Applicant Company along with its nominee. The First Applicant Company submits that the equity shareholders of the First Applicant Company have given their consent to the Scheme of Amalgamation. Consent Affidavits of the Equity Shareholder and its nominee are annexed at Exhibits “K-1” and “K-2” of the Company Scheme Application. Therefore, no meetings of the Equity Shareholders of the First Applicant Company are required to be convened.

The entire equity share capital of the Second Applicant Company is held by the Fourth Applicant Company along with its nominee. The Second Applicant Company submits that the equity shareholders of the Second Applicant Company have given their consent to the Scheme of Amalgamation. Consent Affidavits of the Equity Shareholder and its nominee are annexed at Exhibits “L-1” and “L-2” of the Company Scheme Application. Therefore, no meetings of the Equity Shareholders of the Second Applicant Company are required to be convened.

The entire equity share capital of the Third Applicant Company is held by the Fourth Applicant Company along with its nominee. The Third Applicant Company submits that the equity shareholders of the Third Applicant Company have given their consent to the Scheme of Amalgamation. Consent Affidavits of the Equity Shareholder and its nominee are annexed at Exhibits “M-1” and “M-2” of the Company Scheme Application. Therefore, no meetings of the Equity Shareholders of the Third Applicant Company are required to be convened.

The Counsel for the Applicant Companies further submits that being an amalgamation of wholly owned subsidiary companies into and with its holding company, no shares would be issued or allotted as consideration pursuant to the amalgamation. Accordingly, the rights of the members of the Fourth Applicant Company, i.e. the Transferee Company are not affected since there will be no issue of shares pursuant to the Scheme and there would be absolutely no change in the Equity Share Capital of the Transferee Company. Also, the present Scheme will not result in any dilution in shareholding of the public shareholders of the Transferee Company. The existence of the Transferee Company will remain as before without any change in shareholding pattern pursuant to the Scheme. Further, the present case is similar to the facts in CSA No. 243 of 2017 in the matter of Housing Development Finance Corporation Limited and therefore, no meeting of the Equity Shareholders of the Fourth Applicant Company is required to be convened.

The First Applicant Company has no Secured Creditors as on 31st March 2022. The letter certifying that the First Applicant has no Secured Creditors is annexed at Exhibit “O” of the Company Scheme Application.

The  Second  Applicant  Company  has  no  Secured Creditors as on 31st March 2022. The letter certifying that the Second Applicant has no Secured Creditors is annexed at Exhibit “P” of the Company Scheme Application.

The Third Applicant Company has no Secured Creditors as on 31st March 2022. The letter certifying that the Third Applicant has no Secured Creditors is annexed at Exhibit “Q” of the Company Scheme Application.

The  Fourth  Applicant  Company  has  no  Secured Creditors as on 31st March 2022. The letter certifying that the Fourth Applicant has no Secured Creditors is annexed at Exhibit “R” of the Company Scheme Application.

The First Applicant Company has 1 Unsecured Creditor whose claim is Rs. 20,060/- as on 31st March 2022. The list of Unsecured Creditor of the First Applicant Company is annexed at Exhibit “S” of the Company Scheme Application. Counsel for the Applicant Companies submits that dues of the Unsecured Creditor has been paid off by the First Applicant Company on 20th May 2022. The letter confirming that the dues of the Unsecured Creditor as on 31st March 2022 has been paid off is annexed at Exhibit “S-1” of the Company Scheme Application.

The Second Applicant Company has 2 Unsecured Creditors whose claims are aggregating to Rs. 4,41,927/- as on 31st March 2022. The list of Unsecured Creditors of the First Applicant Company is annexed at Exhibit “T” of the Company Scheme Application. Counsel for the Applicant Companies submits that dues of one of the Unsecured Creditors of Rs. 20,060/- has been paid off by the Second Applicant Company on 26th April 2022. The letter confirming that the dues of one of the Unsecured Creditors as on 31st March 2022 has been paid off is annexed at Exhibit “T-1” of the Company Scheme Application. Counsel for the Applicant Companies further submits that the other Unsecured Creditor of the Second Applicant has consented to the proposed Scheme of Amalgamation. Consent Affidavit of the other Unsecured Creditor is annexed at Exhibit “T-2” of the Company Scheme Application.

The Third Applicant Company has 3 Unsecured Creditors whose claims are aggregating to Rs. 12,73,276/- as on 31st March 2022. The list of Unsecured Creditors of the Third Applicant Company is annexed at Exhibit “U” of the Company Scheme Application. Counsel for the Applicant Companies submits that dues of two of the Unsecured Creditors aggregating to Rs. 1,26,367/- have been paid off by the Third Applicant Company on 25th April 2022. The letter confirming that the dues of two of the Unsecured Creditors as on 31st March 2022 have been paid off is annexed at Exhibit “U-1” of the Company Scheme Application. Counsel for the Applicant Companies further submits that the other Unsecured Creditor of the Third Applicant has consented to the proposed Scheme of Amalgamation. Consent Affidavit of the other Unsecured Creditor is annexed at Exhibit “U-2” of the Company Scheme Application.

The  Fourth  Applicant  Company  has  799  Unsecured Creditors as on 31st March 2022. The list of Unsecured Creditors of the Fourth Applicant is annexed at Exhibit “V” of the Company Scheme Application. Counsel for the Applicant Companies submits that as there is no compromise and/or arrangement with the creditors and as no sacrifice of the creditors is called for by the creditors, the meeting of the unsecured creditors is not required to be convened. Counsel for the Applicant Companies submits that the Fourth Applicant Company may be allowed to issue individual notice by email or registered post or air mail or courier or speed post or hand delivery to all its Unsecured Creditors as on 31st March 2022 as mentioned in paragraphs 42 to 44 of the Company Scheme Application under Section 230(3) of the Companies Act, 2013 with a direction that they may submit their representations, if any, to the Tribunal and a copy of such representation being simultaneously served upon the Fourth Applicant Company.

That the Applicant Companies are directed to serve notices along with a copy of the Scheme upon:- (i) the concerned Income Tax Authority within whose jurisdiction the Applicant Companies assessment is made having address at (i) ITO Circle No. 1(2)(1), Bangalore (PAN:AADCE0215F) with regard to the First Applicant Company; (ii) ITO Circle No. 3(1)(1), Bangalore (PAN:AAFCG1600E) with regard to the Second Applicant Company; (iii) ITO Circle No. 4(1)(1), Ahmedabad (PAN:AAVCS8143A) with regard to the Third Applicant Company; (iv) ITO Circle No. 2(2)(1), Mumbai (PAN: AACCL4310P) with regard to the Fourth Applicant Company; (v) GST Authorities (vi) the Central Government through the office of the Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai, Maharashtra; (vii) the concerned Registrar of Companies, Mumbai, Maharashtra; and (viii) the Official Liquidator, High Court, Bombay with regard to the First, Second and Third Applicant Companies with a direction that they may, if they so wish, submit their representations, if any, within a period of thirty days (30) from the date of receipt of the notice to the Tribunal with a copy of such representations being simultaneously served upon the Applicant Companies, failing which, it shall be presumed that the authorities have no representations to make on the proposed Scheme.

The Applicant Companies are accordingly directed to file an Affidavit of Service in the Registry proving dispatch of notices to the Unsecured Creditors of the Fourth Applicant Company and service of notice to the regulatory authorities as stated above and to report to this Tribunal that the directions regarding the issuance of notices have been duly complied with.