Mahindra Trucks And Buses Limited And Ors vs Mahindra Two Wheelers Limited

Rajasekhar V.K., J

The Court convened through video-conferencing today.

Heard learned Counsel for the Petitioner Companies and the representative of the Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai. No objector has comebefore this Tribunal to oppose the Scheme and nor has any partycontroverted any averments made in the Petition.

The Petitioner Companies have approved the said Scheme bypassing Board Resolution at their meeting held for the same on 16th January 2020 and thereafter they have approached the Tribunal with the captioned Petition for sanction of the Scheme.

The sanction of the Tribunal is sought under sections 230 to 232 and other applicable provisions of the Companies Act, 2013 for the sanction of Scheme of Merger by Absorption of Mahindra Trucks and Buses Limited and Mahindra Automobile Distributor Private Limited with Mahindra Two Wheelers Limited and their respective Shareholders.

The First Petitioner Company with CIN:U63040MH1994PLC079098is a company incorporated under the Companies Act, 1956 having its registered office at Gateway Building, Apollo Bunder, Mumbai 400001, Maharashtra. The First Petitioner Companyis engaged in the business of trading in spare parts and accessories and deals in parts required for the range of certain (light, medium and heavy) commercial vehicles manufactured and sold by its holding company i.e. M&M. The First Petitioner Company undertakes procurement, warehousing management, logistics and sale of spare parts and accessories.

The Second Petitioner Company with CIN:U34100MH2005PTC153702is a company incorporated under the Companies Act, 1956 having its registered office at Gateway Building, Apollo Bunder, Mumbai 400001, Maharashtra. The Second Petitioner Company is engaged in the business of trading in spare parts and accessories and deals in parts required for certain four-wheeler vehicles. The Second Petitioner Company undertakes procurement, warehousing management, logistics, supply chain management and sale of imported and local spare parts and also exports spare parts.

The Third Petitioner Company with CIN:U35911MH2008PLC 185462 is a company incorporated under the Companies Act, 1956 having its registered office at Mahindra Towers, P.K. Kurne Chowk, Worli, Mumbai 400018, Maharashtra. The Third Petitioner Companyis in the business of trading in spare parts and accessories and deals in parts required for two wheelers. The Third Petitioner Company undertakes procurement, warehousing management, logistics, supply chain management and sale of imported and local spare parts and also exports spare parts in small quantities.

The Learned Counsel for the Petitioner Companies further submits that the rationale of the proposed merger is as under -

MTBL, MADPL and MTWL are engaged in similar and complementary businesses and combining the businesses in a single entity shall bring scale to its operations, will rationalize costs and hence will result in enhancing shareholder value;

Reorganizing the legal entities in the group structure that is more aligned with the business and to obtain cost savings and/or simplification benefits;

Significant reduction in the multiplicity of legal and regulatory compliances required at present to be carried out by MTBL and MADPL (hereinafter collectively referred to as "Transferor Companies");

The proposed corporate restructuring mechanism by way of a scheme of merger by absorption under the provisions of the Act is beneficial, advantageous and not prejudicial to the interests of the shareholders, creditors and other stakeholders of all the companies involved.

The Learned Counsel further states that the Petitioner Companies has complied with all the directions contained in theorder dated 21.02.2020 passed in the connected Company Application bearing CA (CAA) 330/MB.V/2020and thatthe present Company Petition has been filed in consonance with the said order.

This Tribunal had directed the Petitioner Companies toissue notice of the Scheme to the statutory authorities, viz. (i) concerned Income Tax Authority of the First Petitioner Company having jurisdiction at Assistant Commissioner of Income Tax, Circle 2 (2) (2), Aaykar Bhavan, M. K. Road, Mumbai - 400020 with PAN AAACM7863L, the Second Petitioner Company having jurisdiction at ITO WD 2(2)- 3, Aaykar Bhavan, M.K. Road, Mumbai - 400020 with PAN AAECM2999P and the Third Petitioner Company having jurisdiction at Assistant Commissioner of Income Tax, Circle 7 (2) (1), Aaykar Bhavan, M. K. Road, Mumbai - 400020 with PAN AAFCM6870J; (ii) the Central Government through the office of Regional Director, Western region, Mumbai; (iii) Registrar of Companies, Mumbai; (iv) Concerned Creditors; and (v) Official Liquidator by the Transferor Companies. The notices were duly served upon all thestatutory authorities and the concern creditors.

The Learned Counsel further states that the Petitioner Companies has also complied with all the directions contained in the order dated 12.06.2020 passed while admitting the Company Petition bearing CP (CAA) 926/MB.V/2020.

The Learned Counsel further states that the Petitioner Companies has complied with all the requirements as per directionsof this Tribunal and have filed necessary Affidavits and Compliance report with theTribunal confirming such compliance. Moreover, the Petitioner Companies undertakes to comply withstatutory requirements, if any, as required under the CompaniesAct, 2013 and the Rules made there under as applicable.

The Regional Director has filed his report dated 11 June 2020, wherein it is stated that save and except as stated in paragraph IV (a) to (c), it appears that the Scheme is not prejudicial to theinterest of shareholders and public.

The observations of the Regional Director as stated in paragraph IV of his Report are as under:

a) In compliance of AS-14 (IND AS-103), the PetitionerCompanies shall pass such accounting entries which arenecessary in connection with the scheme to comply with other applicable Accounting Standards such as AS- 5 (IND AS-8) etc.

b) As per the definition of the Scheme,

"AppointedDate" means April 1, 2019.

"Effective Date" means the last of the dates on which the last of the consents, approvals, permissions, resolutions and orders as mentioned in Clause 26(b) shall be obtained or passed.

Further, the Petitioners may be asked to comply with therequirements and clarified vide circular. F. No. 7/ 12/ 2019/ CF-I dated 21.08.2019 issued by the Ministryof Corporate Affairs.

c) ROC, Mumbai Report dated 08.06.2020 has inter-alia mentioned that there is no technical scrutiny, no inquiry, no inspection, no complaint pending.

Following observations has mentioned:

Interest of the creditors should be protected.

In this regard, the petitioner company have to undertake to clarify the same.

Apropos the observation of the Regional Director, Western Region, Mumbai, as stated in paragraph IV (a) of his report is concerned the Transferee Company undertakes that in addition compliance of AS- 14, (Ind AS -103) 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), to the extent applicable.

Apropos the observation of the Regional Director, Western Region, Mumbai, as stated in paragraph IV (b) of his report is concerned the Petitioner Companies through their Counsel submit that the Appointed Date of the Scheme is April 1, 2019, which is in compliance with Section 232(6) of the Companies Act, 2013 and the Scheme shall be deemed to be effective from such Appointed Date. Thus, the Petitioner Companies will be complying with requirements clarified vide circular No. 7/12/2019/CL-I dated 21.08.2019 issued by the Ministry of Corporate Affairs to the extent applicable.

Apropos the observation made by ROC in paragraph III(12) and as reproduced by the Regional Director, Western Region, Mumbai, as in paragraph IV(c) of his report is concerned, the Petitioner Companies submit that the interest of the creditors will be protected andwill be paid off in the ordinary course of business by the Transferee Company.Further, the Petitioner Companies state that they have issued notices to the concerned creditors as directed by this Tribunal and none of the creditors have come forward with any representation.

The observations made by the Regional Director have been explained by the Petitioner Companies in Para 15 to 17 above. The clarifications and undertakings given by the Petitioner Companies are accepted.

The Official Tiquidator has filed his report dated 12th June 2020, 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. The Transferor Companies may be ordered to be dissolved.

From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy.

Since all the requisite statutory compliances have been fulfilled, the Company Petition CP (CAA) 926/MB.V/2020 is made absolute in terms of prayers of the Company Petition.

The Scheme is hereby sanctioned, with the Appointed Date fixed as 1st April 2019. The Transferor Companies stand dissolved without the process of winding up.

The Petitioner Companies are directed to lodge a certified copy of this Order and this Scheme with the concerned Superintendent of Stamps, within 60 working days from the date of receipt of certified copy of order, for adjudication of stamp duty payable, if any, on the above.

The Petitioner Companies are directed to lodge a certified copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies, electronically in Form INC-28, within 30 days from the date of issue of the Order duly certified by the Deputy/Assistant Registrar of this Tribunal.

All concerned regulatory authorities to act upon a copy of this Order duly certified by the Deputy/Assistant Registrar of this Tribunal along with a copy of the Scheme.

Any person interested shall be at liberty to apply to this Tribunal in the above matter for any directions that may be necessary.

Pronounced today (30.06.2020) in Open Court. File be consigned to records.