Jush Developers And Erectors Private Limited Vs

P.N. Deshmukh, Member Judicial

This Court is convened through video conference.

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 Petitions to the said Scheme.

The sanction of the Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013 to Scheme of Merger by absorption of Jush Developers and Erectors Private Limited (“the First Petitioner Company/ Transferor Company 1”) Rehva Estate Private Limited (“the Second Petitioner Company/ Transferor Company 2”), Sansthita Infrastructure Private Limited (“the Third Petitioner Company/ Transferor Company 3”) by Sampada Natural Resources Private Limited (“the Fourth Petitioner Company/Transferee Company’’) and their respective Share-holders (‘the Scheme’ or ‘this Scheme’), under the provisions of Sections 230 to 232 of the Companies Act, 2013.

The Counsel for the Petitioner Companies states that the resolutions passed by the Board of Directors of the respective Transferor Companies and Transferee Com-pany in their meeting held on 1 January 2020 approved the Scheme. The Appointed Date fixed under the Scheme is April 1, 2019.

The Counsel for the Petitioner s further submits that the Rationale for the Scheme is that with a view to maintain a simple corporate structure and eliminate duplicate corporate procedures it is desirable to merge and amalgamate all the undertakings of Transferor Companies into Transferee Company as they are in the same line of business. The merger of all undertaking of Transferor Companies into the Trans-feree Company shall facilitate consolidation of all the undertakings in order to en-able effective management and unified control of operations. Further, the merger would create economies in administrative and managerial costs by consolidating operations and would substantially reduce duplication of administrative responsi-bilities and multiplicity of records and legal and regulatory compliances.

The Counsel for the Petitioners further submits that the Company Scheme Petition is filed in consonance with Sections 230 to 232 of the Companies Act, 2013 along with the Order passed in Company Scheme Application No. 756 of 2020 by the Tribunal.

The Counsel appearing on behalf of the Petitioner Companies states that the Peti-tioner Companies have complied with all requirements as per directions of the Hon’ble Tribunal and they have filed necessary affidavits of compliance with Hon’ble Tribunal. Moreover, Petitioner Companies undertake to comply with all statutory requirements, if any, as required under the Companies Act, 2013 and the Rules made there under. The said undertaking is accepted.

The Regional Director has filed his report dated May 21 inter alia, stating therein that save and except as stated in paragraph IV of the said report, it appears that the Scheme is not prejudicial to the interest of shareholders and public. In paragraph IV of the said report, the Regional Director has stated that:

IV. The observations of the Regional Director on the proposed Scheme to be consid-ered by the Hon’ble NCLT are as under:

(a) In compliance of AS-14 (Ind AS-103), 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 (Ind AS-8) etc.

(b) As per Definition of the Scheme,

"Appointed Date" For the purpose of this Scheme and for Income Tax Act, 1961, the "Appointed Date" means 1st April, 2019;

"Effective Date" means the last of the dates on which the certified copy of the orders of the National Company Law Tribunal, Bench at Mumbai sanctioning the Scheme are filed with the Registrar of Companies by the Transferor Compa-nies and by the Transferee Company. Any references in this Scheme to the date of "coming into effect of this Scheme" or "effectiveness of this Scheme" or "Scheme taking effect" shall mean the Effective Date;

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 s 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.

(c) 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.

(d) ROC, Mumbai Report dated 23.12.2020 has made following observations:-

In case of Jush Developers and Erectors Private Limited, the com-pany its financial Statement as at 31/03/2019 has shown Reserve & Surplus of Rs. 71,94,890, whereas in the Provisional Financial Statement as at 1st Aug, 2020 attached with the Petition, the Company has shown from Previous Year carried forward Reserve of Rs (-) 2,01,27,221/- which does not give any clarity. It is not known when the Company was having positive Reserves as at 31/03/2019 and how Company carried forward negative Reserves of Rs. (-) 2,01,27,221/-. The Company may clarify the said position.

All the Companies are engaged in the business of trading, and are having huge amount of borrowings and investment mostly in unquoted shares and given loans and Advances. The details of borrowings and loans and Ad-vances are not clearly disclosed in the financial statements attached with the Petition and there has been no interest receipt or payment as per the said Financial Statements.

In this regard, the Petitioner company may be directed to submit proper clarification for the above stated observations of the ROC, Mumbai.

e) 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.

f) It is observed that in Clause-11 of Accounting Treatment of the scheme; it is stated that the difference between the amount of investment in the Equity Shares of the Transferor Company as appearing in the books of the Transferee Company immediately before the Appointed Date and the amount of share capital of the transferor company immediately before the Appointed Date should be adjusted in reserves. In this regard it is submitted that as per Ac-counting Standard 14, surplus if any arising out of the scheme should be cred-ited to the Capital Reserve arising out of amalgamation and deficit if any arising out of the same shall be debited to Goodwill Account of the Trans-feree Company. Such Capital Reserve, arising out of the amalgamation shall not be considered as free reserve and not available for distribution of divi-dend.

g) The Petitioner Company states that the Transferee Company shall be in compliance with provisions of Section 2(1B) of the Income Tax Act, 1961. In this regards, the Petitioner company shall ensure compliance of all the provi-sions of Income Tax Act and Rules thereunder;

In response to the observations made by the Regional Director, the Petitioner Com-panies have filed an Affidavit-in-Rejoinder dated 15 July 2021 and clarified as under:

a. Apropos observations made in paragraph IV (a) of the Report of the Regional Director is concerned, the Petitioner Companies undertake that they will com-ply with AS 14 (Ind AS 103) and shall pass such accounting entries which are necessary in connection with the Scheme to comply with other applicable Ac-counting Standards such as AS-5 (Ind AS-8), etc.

b. Apropos observations made in paragraph IV (b) of the Report of Regional Di-rector is concerned, the Petitioner Companies undertakes that the Appointed Date would be 01st of April, 2019 as mentioned in the Scheme which is in com-pliance with Section 232(6) of the Companies Act, 2013 and the Scheme shall take effect from such Appointed Date. Further, the Petitioner Companies under-take to comply with the requirements clarified vide circular No.7/12/2019/CL-I dated 21.08.2019 issued by the Ministry of Corporate Affairs.

c. Apropos observations made in paragraph IV (c) of the Report of the Regional Director is concerned, Petitioner Companies submit that the setting off of fees paid by the Transferor Companies on its Authorised Share Capital shall be in accordance with the provision of Section 232(3 ) (i) of the Companies Act, 2013.

d. Apropos observations made in paragraph IV(d) of the Report of the Regional Director is concerned, the Petitioner Companies submit and clarify that the Auditor has issued an audit report of Jush Developers & Erectors Private Lim-ited i.e the First Petitioner Company for FY.2014-2015 to F.Y. 2018-2019 wherein diminution in value of long-term investment of equity shares in IMEC Services Limited is of Rs.3,48,24,900/-. Further, the Board of Directors have contended that the diminution in value of investment is temporary in nature. Therefore, the financial statements reflect the negative reserves.

Apropos observations made in paragraph IV (d) (2) of the Report of the Re-gional Director is concerned, the Petitioner Companies submits the following details of borrowings:-

1) Jush Developers & Erectors Private Limited

Name of Party

Amount O/s as on 31st March 2020

a)

Piyali Trading Company Private Limited

3,84,56,000

b)

Shivtarana Trading Company Private Limited

70,000

c)

Snehdeep Impex Private Limited

8,00,000

Total

3,93,26,000

2) Rehva Estate Private Limited

Name of Party

Amount O/s as on 31st March 2020

a)

Anandmangal Investment And Finance Private Limited

7,322,100

Total

7,322,100

3) Sansthita Infrastructure Private Limited

Name of Party

Amount O/s as on 31st  March 2020

a)

Jush Developers and Erectors Private Limited

159480

b)

Shashwat Realty Developers Private Limited

32,12,283

Total

33,71,763

4) Sampada Natural Resources Private Limited

Name of Party

Amount O/s as on

31st  March 2020

a)

Anhad Enterprises Private Limited

70,000

b)

Lucas Meyer Industries Private Limited

112,500,000

c)

Ruchi Stock & Securities Private Limited

2,900,000

d)

Swastik World Wide Private Limited

3,520,000

Total

118,990,000

e. Apropos observations made in paragraph IV (e) of the Report of the Regional Director is concerned, the Petitioner Companies submit that in pursuance of an order dated 1 May 2020 passed by this Tribunal in CA (CAA) No. 756 /MB/2020, the requirement to convene meeting of the members and creditors was dispensed with.

f. Apropos observations made in paragraph IV (f) of the Report of the Regional Director is concerned, the Transferee Company submit that surplus so created shall be treated as Capital Reserve arising out of Amalgamation and it shall not be used for distribution of dividend and other similar purposes. Further, the def-icit if any shall be treated as Goodwill.

g. Apropos observations made in paragraph IV (g) of the Report of the Regional Director is concerned, Petitioner Companies submit that the Petitioner Com-panies shall comply with the provisions of Section 2(1B) of the Income Tax Act, 1961 and all the provisions of Income Tax Act, 1961 and Rules thereunder.

The observations made by the Regional Director have been explained in Para 8 above. The clarifications and undertakings given by the Petitioner Companies have been explained in Para 9 above.

The Regional Director has filed his Supplementary Report dated 24 August 2021, in response to the Affidavit-in-Rejoinder dated 15 July, 2021 stating therein that this Tribunal may decide the matter on its merit.

The Official Liquidator has filed his report dated 9 November 2020 in inter alia, stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved without winding up by the Hon’ble Tribunal.

From the material on record, the Scheme appears to be fair, reasonable and is not violative to any provisions of law nor is contrary to public interest.

Since all the requisite statutory compliances have been fulfilled, the C.P.(CAA)/1042/MB/2020 are made absolute in terms of prayer clauses of the Company Scheme Petition.

The Scheme is hereby sanctioned with the Appointed Date of April 1, 2019.

The Petitioner Companies are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with e-Form INC-28, in addition to physical copy, within 30 days from the date of receipt of the Order duly certified by the Deputy Director or Assistant Reg-istrar, of the National Company Law Tribunal, Mumbai Bench.

The Transferee Company to lodge a copy of this order and the Scheme duly certi-fied by the Deputy Director or the Assistant Registrar, of the National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within a period of 60 days from the date of receipt of the Order.

All concerned regulatory authorities to act on a copy of this Order along with Scheme duly certified by the Deputy Director or the Assistant Registrar, National Company Law Tribunal, Mumbai Bench.

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.