Hinduja Healthcare Limited Vs

The Transferor Company and the Transferee Company state that the present Scheme is a Scheme of Merger by Absorption of Hinduja Healthcare Limited (“Transferor Company” or “Applicant Company - 1”) into Hinduja Realty Ventures Limited (“Transferee Company” or “Applicant Company - 2”) and their respective shareholders under the provisions of Sections 230 to 232 of the Companies Act, 2013.

The Applicant Company - 1 submits that, the Transferor Company is engaged in the business of healthcare services.

The Applicant Company -2 submits that, the Transferee Company is engaged in business of real estate development.

The Applicant Companies submit that the respective Board of Directors had approved the Scheme of Merger by Absorption with Appointed Date as 1st day of July, 2022 vide Board Resolution dated 2nd March 2023. The Board Resolutions approving the Scheme for the Applicant Companies are annexed as Exhibit J and Exhibit K to the Company Scheme Application respectively.

This Scheme inter-alia provides for the transfer and vesting of whole business undertaking of the Transferor Company to the Transferee Company.

The Advocate for the Applicant Companies submits that the Rationale for the Scheme is as under:

• The Transferor Company and the Transferee Company are under the same control and management of the Hinduja Group and in fact, the Transferor Company is a subsidiary of the Transferee Company as is evident from the Financial Statements of the Transferor Company. As the Transferor Company and the Transferee Company are under common control and management, and the Transferor Company is a subsidiary of the Transferee Company, it is proposed to amalgamate Transferor Company with the Transferee Company pursuant to a Scheme under Sections 230 to 232 of the Act (hereinafter defined) read with applicable Rules of Companies (Compromises, Arrangements and Amalgamations), Rules 2016 and other relevant provisions of the Act.

• The proposed corporate restructuring mechanism by way of a scheme of amalgamation is beneficial, advantageous and not prejudicial to the interest of the shareholders, creditors and other stakeholders. The proposed amalgamation of Transferor Company into Transferee Company is in consonance with the global corporate restructuring practices which intends and seeks to achieve flexibility and integration of size, scale and financial strength. The Transferor Company and the Transferee Company believe that the financial, managerial and technical resources, personnel capabilities, skills, expertise and technologies of the Transferor Company and the Transferee Company pooled in the merged entity, will lead to increased competitive strength, cost reduction and efficiencies, productivity gains, and logistic advantages, thereby significantly contributing to future growth. Therefore, the management of the Transferor Company and the Transferee Company believe that this Scheme shall benefit the respective companies and other stakeholders of respective companies, inter-alia, on account of the following reasons:

a) Integration of business operations and enable the Transferee Company to consolidate its business operations and provide significant impetus to its growth;

b) Better administration and cost optimization;

c) Greater efficiency in cash management of the amalgamated entity, and unfettered access to cash flow generated by the combined business which can be deployed more efficiently to fund growth opportunities;

d) Garner the benefits arising out of economies of large scale and lower operating costs;

e) Pooling and rationalization of talents in terms of manpower, management, administration etc. to result in savings of costs;

f) Avoidance of duplication of administrative functions, reduction in multiplicity of legal and regulatory compliances and cost;

g) Integrated operational and marketing strategies, inter-transfer of resources / costs will result in optimum utilization of assets;

h) Merger will result in increase in net worth of Transferee Company, which will facilitate effective and fast mobilization of financial resources for meeting increased capital expenditure;

i) Merger shall result in efficient and focused management control and system.

• There is no adverse effect of Scheme on the directors, key management personnel, shareholders, creditors and employees of Transferor Company and Transferee Company. However, the Board of the Transferor Company upon amalgamation shall stand dissolved. The Scheme would be in the best interest of all stakeholders.

• Due to the aforesaid rationale, it is considered desirable and expedient to enter into this Scheme for amalgamation by absorption of Transferor Company with the Transferee Company, and in consideration thereof issue equity shares of the Transferee Company to the shareholders of Transferor Company in accordance with this Scheme.

The Advocate for the Applicant Companies further submits that upon merger of the Transferor Company with the Transferee Company, the following consideration shall be discharged by the Transferee Company for the merger by absorption to the Transferor Company under the Scheme:

“29.3576 equity shares of the face value Rs.10/- each of HRVL shall be issued and allotted as fully paid up for every 10,000 equity shares of the face value of Rs. 10/- each fully paid up held in HHL”.

However, the Bench observes that a company cannot issue/hold its own shares. Hence, the Bench directs that no consideration shall be paid/issued in respect of shares of Transferor Company already held by the Transferee Company and such investment shall stand cancelled/extinguished.

The Advocate for the Applicant Company - 1 submits that meeting of Equity Shareholders of the Applicant Company - 1 be convened and held at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 on 20th May, 2024 at 11:30 a.m. for the purpose of considering and if thought fit, approving, with or without modification(s) the proposed Scheme of Merger by Absorption between Hinduja Healthcare Limited and Hinduja Realty Ventures Limited and their respective Shareholders.

The Advocate for the Applicant Company – 2 submits that meeting of Equity Shareholders of the Applicant Company – 2 be convened and held at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 on 20th May, 2024 at 1 p.m. for the purpose of considering and if thought fit, approving, with or without modification(s) the proposed Scheme of Merger by Absorption between Hinduja Healthcare Limited and Hinduja Realty Ventures Limited and their respective Shareholders.

That at least 30 days before the said meetings of the Equity Shareholders of the Applicant Companies to be held as aforesaid, a notice convening the said Meeting at the place, date and time as aforesaid, together with a copy of the Scheme of Merger by Absorption, a copy of the Explanatory statement required to be sent under Section 230(3) of the Companies Act, 2013 read with Rule 6 of the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 and the prescribed Form of Proxy, shall be sent by courier/ registered post/ speed post or through E-mail or by hand delivery to each of the Equity Shareholders of both the Applicant Companies at their respective registered or last known addresses or, by email to the registered email addresses of the Equity Shareholders as per the records of the Applicant Companies.

That at least 30 days before the meetings of the Equity Shareholders of the Applicant Companies to be held as aforesaid, a notice convening the said Meetings, indicating the place, date and time of meetings as aforesaid, be published as per (13) below stating that the copies of the

Scheme of Merger by Absorption and the statement required to be furnished pursuant to Section 230(3) of the Companies Act, 2013 read with Rule 6 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the Form of Proxy can be obtained free of charge at the Registered offices of the Applicant Companies as aforesaid.

That the Notice of the Meetings of the Applicant Companies shall be advertised in two local newspapers viz. “Free Press Journal” in English and “Navshakti” in Marathi, both circulated in Mumbai not less than 30 days before the date fixed for the meeting.

The Applicant Companies undertakes to:

i. Issue Notices convening the meetings of the equity shareholders as per Form No. CAA.2 (Rule 6 of the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016;

ii. Issue Statements containing all particulars as per Section 230 of the Companies Act, 2013;

iii. Issue Forms of Proxy as per Form No. MGT-11 (Rule 19 of the Companies (Management and Administration) Rules, 2014; and

iv. Advertise the Notices convening the meeting as per Form No. CAA.2 (Rule 7 of the Companies (Compromises, Arrangements & Amalgamations) Rules, 2016.

The undertaking is accepted.

That Mr. Jeet Chugani, Director authorized by the Applicant Company – 1 and failing him Dr. Avinash Supe, Director of the Applicant Company – 1 shall be the Chairperson of the above-mentioned meeting of the Equity Shareholders of the Applicant Company 1 to be held at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 on 20th May, 2024 at 11:30 a.m. or any adjournment or adjournments thereof.

That Mr. V. Gurnani, Director authorized by the Applicant Company – 2 and failing him Mr. Jeet Chugani, Director of the Applicant Company – 2 shall be the Chairperson of the above-mentioned meeting of the Equity Shareholders of the Applicant Company - 2 to be held at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 on 20th May, 2024 at 1 p.m. or any adjournment or adjournments thereof.

That Ms. Feni Shah, Practicing Company Secretary, is hereby appointed as Scrutinizer of the meeting of the Equity Shareholders of the Applicant Company -1 to be held at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 on 20th May, 2024 at 11:30 a.m. as well as Applicant Company – 2 to be held at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 on 20th May, 2024 at 1 p.m.

That the quorum for the aforesaid meetings of the Equity Shareholders of the above-mentioned Applicant Companies shall be as prescribed under Section 103 of Companies Act, 2013.

That the voting by proxy/ authorized representative in case of body corporate is permitted, provided that a proxy in the prescribed form/ authorization duly signed by the person entitled to attend and vote at the meeting, is filed with the Applicant Company – 1 at its registered office at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 not later than 48 hours before the meeting, as provided in Rule 10 of Companies (Compromise, Arrangements & Amalgamations) Rules, 2016.

That the voting by proxy/ authorized representative in case of body corporate is permitted, provided that a proxy in the prescribed form/ authorization duly signed by the person entitled to attend and vote at the meeting, is filed with the Applicant Company – 2 at its registered office at TOWER-C, PLOT C-21, G-BLOCK, Bandra Kurla Complex, Bandra (East), Mumbai – 400051 not later than 48 hours before the meeting, as provided in Rule 10 of Companies (Compromise, Arrangements & Amalgamations) Rules, 2016.

That value and number of the shares of each Equity Shareholder shall be in accordance with the books/register of the Applicant Companies and do report this Tribunal that the direction regarding the issue of notices has been duly complied with.

The Advocate for the Applicant Companies submits that there are no Secured Creditors in the Applicant Company – 1 as on March 15, 2024. Therefore, the question of convening and holding of the meeting of the Secured Creditors of the Applicant Company – 1 does not arise.

The Advocate for the Applicant Companies submits that as on March 15, 2024, there were 2 Unsecured Creditors in the Applicant Company– 1 having aggregate value of Rs. 1,57,26,63,397/-. The said amount included an Inter-Corporate Deposit of Rs. 1,50,00,00,000/- obtained from Hinduja Leyland Finance Limited, a group company on January 02, 2024 and Rs. 7,26,63,397/- towards inter-company balances i.e. the amount owed to Applicant Company – 2 and interest thereon.

In so far as the Inter-Corporate Deposit of Rs. 1,50,00,00,000/-obtained from Hinduja Leyland Finance Limited, is concerned, the No Objection Certificate with respect to the same was obtained and submitted to the Hon’ble Bench.

Further, in so far as the inter-company balances are concerned, Clause 3.12 of the Scheme of Merger by Absorption deals with the treatment of inter party transactions between the Transferor Company and the Transferee Company. Clause 3.12 of the Scheme of Merger by Absorption is reproduced hereinbelow for ease of reference:

“3.12 All inter party transactions between the Transferor Company and the Transferee Company which as may be outstanding on the Appointed Date or which may take place subsequent to the Appointed Date and prior to the Effective Date, shall be considered as intra party transactions for all purposes from the Appointed Date. Any loans or other obligations, if any, due inter-se i.e., between the Transferor Company and the Transferee Company as on the Appointed Date, and thereafter till the Effective Date, shall stand automatically extinguished.”

The Scheme of Merger by Absorption is annexed at Exhibit “I” to the Company Scheme Application.

The certificate issued by Sparks & Co., an independent chartered accountant, dated March 15, 2024, confirming the above-mentioned details of Secured Creditor and Unsecured Creditors as on March 15, 2024 of the First Applicant Company was submitted to the Hon’ble Bench.

Therefore, in accordance with the aforementioned paragraphs, the question of convening a meeting or issuing notice to such creditors does not arise.

The Advocate for the Applicant Companies submits that as on March 15, 2024, there are 3 Secured Creditors of the Applicant Company – 2 of value of Rs. 410,64,75,240/- (Rupees Four Hundred Ten Crores Sixty-Four Lakhs Seventy-Five Thousand Two Hundred Forty Only). The Advocate for the Applicant Companies submits that present Scheme of Arrangement is only between the Transferor Company and the Transferee Company and their respective Shareholders under Section 230(1)(b) of the Companies Act, 2013. There is no compromise or arrangement with any creditors and no sacrifice of any amounts due to creditors is called for. Further, the rights and interests of the creditors of Applicant Company - 2 will not be prejudicially affected by the Scheme of Arrangement and therefore meeting of the Secured Creditor is not required to be convened.

However, this Bench hereby directs either to procure consent affidavits of at least Ninety percent of its Secured Creditors as per Section 230(9) of the Companies Act, 2013 and annex the same with the Company petition or convene and hold the meeting of the Secured Creditors of the Applicant Company – 2.

The Advocate for the Applicant Companies submits that as on March 15, 2024, there are 34 Unsecured Creditors of the Applicant Company – 2 of value of Rs. 1045,81,66,527/- (Rupees One Thousand Forty- Five Crores Eighty-One Lakhs Sixty-Six Thousand Five Hundred Twenty-Seven Only) including inter-company balances of Rs. 14,13,25,513/- (Rupees Fourteen Crores Thirteen Lakhs Twenty-Five Thousand Five Hundred Thirteen Only) i.e. amount owed to Hinduja Healthcare Limited, the Transferor Company. The Advocate for the Applicant Companies submits that the present Scheme is an arrangement between the Applicant Companies and its shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 as there is no Compromise and/or Arrangement with the creditors as no sacrifice is called for. Further, the rights and interests of the creditors of the Applicant Company – 2 will not be prejudicially affected by the Scheme of Arrangement and therefore meeting of Unsecured Creditors is not required to be convened. The rights of the Unsecured Creditors will not be affected as the assets of the Applicant Company– 2 post sanctioning the Scheme will be sufficient to pay off all the creditors in the ordinary course of business. The Advocate for the Applicant Companies therefore respectfully submits that the convening and holding of meeting of the Unsecured Creditors is not required as prayed for in relief sought clause (e) of the Company Scheme Application.

However, this Bench hereby directs either to procure consent affidavits of at least Ninety percent of its Unsecured Creditors as per Section 230(9) of the Companies Act, 2013 and annex the same with the Company petition or convene and hold the meeting of the Unsecured Creditors of the Applicant Company – 2.

The certificate issued by M. D. Dumasia & Co., an independent chartered accountant, dated March 18, 2024 confirming the above-mentioned details of Secured Creditor and Unsecured Creditors of the Second Applicant Company as on March 15, 2024 was submitted to the Hon’ble Bench. Further, the Second Applicant Company undertakes to issue individual notices to such of its Secured and Unsecured Creditors as directed by the Hon’ble Tribunal.

The Applicant Company – 1 is directed to serve notices along with copy of scheme upon:- (i) concerned jurisdictional Income Tax Authority for the Demerged Company (ii) the Central Government through the office of Regional Director, Western region, Mumbai (iii) Registrar of Companies pursuant to Section 230(5) of the Companies Act, 2013 as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and applicable Sectoral Regulators or Authorities with a direction that they may submit their representations, if any, within a period of thirty days from the date of receipt of such notice to the Tribunal with copy of such representations shall simultaneously be served upon the Applicant Company – 1 failing which, it shall be presumed that the authorities have no representations to make on the proposals.

The Applicant Company – 1 is also directed to serve notice along with the copy of scheme upon the Official Liquidator, pursuant to section 230(5) of the Companies Act, 2013. If no response is received by the Tribunal from the Official Liquidator within thirty days of the date of receipt of notice, it will be presumed that Official Liquidator has no objection to the proposed Scheme as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

The Applicant Company – 2 is directed to serve notices along with copy of scheme upon:- (i) concerned jurisdictional Income Tax Authority for the Demerged Company (ii) the Central Government through the office of Regional Director, Western region, Mumbai (iii) Registrar of Companies pursuant to Section 230(5) of the Companies Act, 2013 as per Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and applicable Sectoral Regulators or Authorities with a direction that they may submit their representations, if any, within a period of thirty days from the date of receipt of such notice to the Tribunal with copy of such representations shall simultaneously be served upon the Applicant Company – 2 failing which, it shall be presumed that the authorities have no representations to make on the proposals.

The Applicant Companies to file an affidavit of service in the Registry proving dispatch of notices to the Equity Shareholders, advertisements and service of notice to the regulatory authorities as stated above and do report to this Tribunal that the directions regarding the issue of notices have been duly complied with.

Present Company Application is allowed, and stand disposed.