Mars Dealcomm Pvt. Ltd. & Anr. Vs

Bidisha Banerjee, Member (Judicial)

The court convened through hybrid mode.

The instant petition has been filed under Section 230(6) read with Section 232(3) of the Companies Act, 2013 (“Act”) for sanction of the Scheme of Amalgamation of Mars Dealcomm Private Limited (hereinafter referred to as the Transferor Company/ Petitioner Company No. 1) with R S Plasfab Private Limited (hereinafter referred to as the Transferee Company/ Petitioner Company No. 2) whereby and whereunder the Transferor Company is proposed to be amalgamated with the Transferee Company from the Appointed Date, viz. 1st April 2017 or such other date as the Hon’ble National Company Law Tribunal, Kolkata Bench may direct or fix from which date the schemes comes into operation from which date undertakings of the Transferor Company as hereinafter defined shall be transferred or deemed to be transferred without may further act or deed to the Transferee Company in the manner and on the terms and conditions stated in the said Scheme of Amalgamation (“Scheme”).

The Copy of the said Scheme of Amalgamation is annexed to the Company Petition being – Annexure –A, in Volume-I on Page No(s). 15-47.

This Petition has now come up for a final hearing. Ld. Counsel for the Applicants submits as follows: -

(a) The Scheme was approved by the respective Board of Directors of the Petitioner Companies at their meetings held on 15th December 2017 respectively.

The copies of the resolution passed by the applicant companies are annexed with the Company Petition being – Annexure-T, in Volume-IV on Page No(s). 733-746.

(b) The circumstances which justify and have necessitated the Scheme and the benefits of the same are, inter alia, as follows: -

i. The proposed amalgamation of the Transferor Company with the Transferee Company in accordance with the Scheme would enable the Amalgamating Companies to realize benefits of greater synergies between their business and avail of the financial resources as well as the managerial, technical, distribution and marketing resources of each other in the interest of maximising the shareholders’ and stakeholders’ value;

ii. The proposed amalgamation shall ensure a streamlined group structure by reducing the number of legal entities in the group structure which will significantly reduce multiplicity of legal and regulatory compliance requirements and costs and will enhance the business oversight and eliminate duplicative communication and co-ordination efforts across multiple entities;

iii. Realization of benefits of greater synergies and economies of scale for the businesses of the Transferee Company, yielding beneficial results and pooling and optimal utilization of financial resources as well as managerial, technical, distribution and marketing resources of each other in the interest of maximizing value to their shareholders and other stakeholders. It will further enable greater efficiency in cash management and unfettered access to cash flow generated by the combined businesses, which can be deployed more efficiently for better debt management;

iv. Simplification of management structure, better administration and reduction in administrative and operational costs over a period of time, standardization and simplification of business processes, better utilization of common facilities, sharing of best practices and cross functional learning, the elimination of duplication and multiplicity of compliance requirements and rationalization of administrative expenses;

v. The proposed amalgamation also aims to enable better tax planning at a combined level and also assist in leveraging resources of the overall downstream combined entity;

vi. The amalgamation shall aid in reducing time and efforts for consolidation of financials at the group level; and

vii. Further, the proposed amalgamation aims to create value for stakeholders including respective shareholders, customers, lenders and employees.

The Statutory Auditor of the Transferee Company has by their certificates confirmed that the accounting treatment in the Scheme is in conformity with the accounting standards prescribed under Section 133 of the Companies Act, 2013 which is annexed with the Company Petition being- Annexure- L in Volume-IV at Page No.706.

No proceedings are pending under Sections 210 to 227 of the Companies Act,2013 against the Petitioners.

The shares of the Petitioner Companies are not listed on any stock exchanges.

By order dated 5th April, 2019 in Company Application (CAA) No. 132/ KB / 2019, this Tribunal has dispensed with the meetings of the Equity Shareholders of the Transferor Company and Transferee Company and also recorded that the holding of separate meeting of Secured and Unsecured Creditors of the Transferor Company does not raised in view of the fact that the Transferor Company have NIL Secured and Unsecured Creditors verified by the certificates from the Statutory Auditors.

Further by said orders, this Hon’ble Tribunal was pleased to holding the separate meeting vide dated 03.06.2019 of Secured Creditors and Unsecured Creditors of the Transferee Company by appointed Chairperson Mr. Sayan Ganguly, Advocate with the Section 103 of the Companies Act, 2013.

That in the meantime, the Ld. Advocate of the petitioner Company approached to the Chairperson to hold meeting of Secured Creditors and Unsecured Creditors of the Transferee on 20th July 2019 instead of 3rd June 2019 due to having Lawyers Strike and pen down from 24th April 2019 by way of letter dated 14th June 2019 (Page No. 593 in Annexure “I”).

That accordingly the Ld. Chairperson was pleased to hold the meeting of the Secured Creditors and Unsecured Creditors of the Transferee Company on 20th July 2019 as per request of the Ld. Advocate of the Petitioner by way of letter to the Ld. Advocate of the Petitioner dated 17th June, 2019 (Page No. 594 in Annexure “I”). That in the meantime the said orders, notices were directed to be served under Section 230(5) of the Act on the Statutory / Sectoral Authorities and leave was given to the Petitioner Company to file the petition for sanction of the Scheme. Consequently, by order dated 5th April, 2019 in Company Application (CAA) No. 132/KB/2019, the Hon’ble Tribunal was pleased to direct upon the petitioner Companies to published the paper publication and accordingly the Petitioner Company have also published such advertisements once each in the English daily newspaper namely “Financial Express” and Bengali daily newspaper namely “Aajkal” on 20th July, 2019.

The Petitioner Company has duly sent the said notices on 18th December, 2019 and filed an affidavit of service on proving the same. (Page 691-705 in Annexure “K”) .

Accordingly the meeting of the Secured Creditors and Unsecured Creditors of the Transferee was held on 20th July 2019 and report submitted by the Chairperson dated 19th August 2019 clearly stated that the Secured Creditor namely Andhra Bank has given its No objection being a Secured Creditor of the Transferee Company and all unsecured Creditor of the Transferee Company were given their consent to approved the proposed Schemed without any modification (Page No. 595 in Annexure “J”).

That thereafter, Petitioner Company presented the instant petition for sanction of the Scheme and By an order dated 26th July, 2021, the instant petition being CP(CAA)/741/KB/2020 was admitted by this Hon’ble Tribunal by allowing the delay of filing of this instant petition of total 127 days and this Hon’ble Tribunal was fixed for hearing on 23rd September, 2021 upon issuance of further notices to the Statutory Authorities and advertisement of date of hearing. In compliance with the said order dated 26th July, 2021, that this Hon’ble Tribunal was also pleased by an order dated 26th July 2021 to comply the Section 230(5) of the Act and allowed to served notices on the Statutory / Sectoral Authorities and also direct to mention the date of next hearing by the Petitioner Company and the Petitioner Company have duly served such notices on the Regional Director (Eastern Region), Ministry of Corporate Affairs, Kolkata; Registrar of Companies, West Bengal; and Assistant Commissioner of Income Tax, Circle 1(1) Ayakar Bhavan .

All statutory formalities requisite for obtaining sanction of the Scheme have been duly complied with by the Petitioners. The Scheme has been made bona fide and is in the interest of all concerned.

Pursuant to the said advertisements and notices, no objection has been received from the Official Liquidator; High Court at Calcutta. Further, the Regional Director, Ministry of Corporate Affairs, Kolkata(“RD”) have filed their representations before this Tribunal.

The Regional Director, Eastern Region, Kolkata Vide his representation dated 27th June 2022 (“RD Representation”) which has been dealt with by the Petitioners by Rejoinder/Undertaking notarised on 9th January 2023 (“Rejoinder”). The observations of the RD and responses of the Petitioner(s) are summarized as under:

(a) Paragraph No. 2(b) of RD affidavit: -

Appointed Date is 1st April 2017 which is much older and since all the Petitioner Companies have already filed subsequent Financial Statements upto the financial year ended 31 /03/2021, this Appointed Date apparently lacks relevance to the Scheme, as it appears. Hon'ble Tribunal may peruse the same and issue order as deemed fit and proper, keeping in view the present circumstances.

Paragraph No. 6 of Rejoinder

With reference to paragraph 2(b) of the said reply made by the Ministry of Corporate Affairs, Kolkata it has been realized that the date of appointed is 1st April 2017 which so past to conclude the approval of the Scheme of Amalgamation However, this Hon'ble Tribunal may consider the proposed date of Appointed as dated 1 April 2023 instead of 1st April 2017 as it is admitted fact that the Petitioner Companies have already filed subsequent Financial Statements upto the Financial Year ended 31.03.2021, Therefore, there is no impediment to consider the Appointed Dated as 1st April 2023.

(b) Paragraph No. 2(c) of RD affidavit: -

The Petitioner Companies should be directed to provide list/details of Assets, if any, to be transferred from the Transferor Companies to the Transferee Company upon sanctioning of the proposed Scheme.

Paragraph No. 7 of Rejoinder

With reference to paragraph 2(c) of the said reply made by the Ministry of Corporate Affairs, Kolkata where the list of Assets is required to be produced by the Petitioners Companies which to be transferred from Transferor companies to Transferee Company and in this regard and in answer it would be proper to say that there are no such assets or property to be transferred from transferor to transferee Companies.

(c) Paragraph No. 2(d) of RD affidavit: -

Petitioner company should undertake to comply with the provisions of section 232(3)(i) of the Companies Act, 2013 through appropriate affirmation.

Paragraph No. 8 of Rejoinder

With reference to paragraph 2(d) of the said reply made by the Ministry of Corporate Affairs, Kolkata where the question was to comply with the provisions of Section 232(3)(i) of the Companies Act, 2013 has to be followed and the answer is that no such transferor Company yet been dissolved.

(d) Paragraph No. 2(e) of RD affidavit: -

That the Transferee Company should be directed to pay applicable stamp duty on the transfer of the immovable properties from the Transferor Companies to it.

Paragraph No. 9 of Rejoinder

With reference to paragraph 2(e) of the said reply made by the Ministry of Corporate Affairs, Kolkata where the question raised by the Department that Transferee Company should be directed to pay applicable stamp duty on the transfer of the immovable properties from the Transferor Company to the Transferee Company and the answer is that the said issued to be decided by the Hon'ble Tribunal by its direction while transferring of any property from Transferor Company to Transferee Company. Therefore, it is the matter of Hon'ble Tribunal to decide the said issued.

(e) Paragraph No. 2(f) of RD affidavit: -

The Hon'ble Tribunal may kindly direct the Petitioners 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.

Paragraph No. 10 of Rejoinder

With reference to paragraph 2(10) of the said reply made by the Ministry of Corporate Affairs, Kolkata where the issue is that the Scheme enclosed to the Company Application and the Company Petition are same and identical or not and in answer it is obvious from the face of record of the Company Application and the Company Petition that the Scheme which has been attached are same and identical and there is no discrepancy at all.

(f) Paragraph No. 2(g) of RD affidavit: -

The Transferor Company, Mars Dealcomm Private Limited, reported short term loans and advances of Rs.308 lakhs as "other" in its balance sheet as at 31.3.2021, which is of significantly matcrial extent (about 68% of total assets of the company). No specification or details of the said short term loans and advances were furnished contrary to the requirements of schedule III to the Companies Act 2013 read with section 129 of the said Act. The financial statement is flawed and hence this deponent is not in a position to give further representations on the state of affairs of the said transferor company in view of the company refraining from making legitimate disclosures of material aspects of its state of affairs on its financial statements.

Paragraph No. 11 of Rejoinder

With reference to paragraph 2(g) of the said reply made by the Ministry of Corporate Affairs, Kolkata Petition where the issue is raised by the office of the Regional Director that the short term loans and advances of Rs. 308 Lakhs is showing in the balance sheet of the Transferor Company namely Mars Dealcomm Private Limited as on 31.03.2021 where no specification or details of the said short terms loans and advances were furnished and the answer is that the said amount of Rs. 308 Lakhs of short term loan and advance had been given to the Transferee Company namely R S Plasfab Private Limited which would be not contrary to the requirements of Schedule III to the Companies Act 2013 read with Section 129 of the said Act because the short terms loan and advance made between the Transferor and Transferee Company where there is no involvement of third party interest out of that loan and advance and as a result of that there would be no possible chance to create any ambiguity for the purpose of approval of Scheme of Amalgamation between the Transferor and Transferee Company.

(g) Paragraph No. 2(h) of RD affidavit: -

The Transferor Company, Mars Dealcomm Pvt Ltd, reported short term loans and advances of Rs.308 lakhs as "other" in its balance sheet as at 31.3.2021. The said sum of short-term loans and advances is shown for last several years (as on 31.3.2016, 31.3.2017, 31.3.2018, 31.3.2019, 31.3.2020 and 31.3.2021) as unchanged. No recovery of the loans/advances has been made over the many years which signifies lack of recoverability of the loans/advances. The state of financial affairs of the company is therefore not properly portrayed in the financial statements of the company. The scheme is based on the underlying state of affairs of the company and therefore the scheme is objected upon.

Paragraph No. 12 of Rejoinder

With reference to paragraph 2(h) of the said reply made by the Ministry of Corporate Affairs, Kolkata Petition where the issue is raised by the office of the Regional Director that the short term loans and advances of Rs. 308 Lakhs is showing in the balance sheet of the Transferor Company namely Mars Dealcomm Private Limited as on 31.03.2021 which is repetition of paragraph No. g under the clause No. 2 of the affidavit filed, Therefore, there is no requirement to state further comments in regard to that issue because that loan and advance would not affect upon the sanction of Scheme of Amalgamation because the said transaction were made between the Transferor and Transferee Company which would not ever effect on the approval of the said Scheme of Amalgamation.

(h) Paragraph No. 2(i) of RD affidavit: -

The Transferor Company, Mars Dealcomm Pvt Ltd, reported Inventories of Rs. 133,99,600/-as on 31.3.2021, 31.3.2019, 31.3.2018, 31.3.2017, 31.3.2016, 31.3.2015, 31.3.2014. The inventories are therefore non-moving items over the long many years and hence their realizability is questionable. The company has also not shown any expenses towards rent for keeping the inventories and it has no property to keep the inventories, signifying that existence of the inventories is also questionable. The state of financial affairs of the company is therefore not properly portrayed in the financial statements of the company. The scheme is based on the underlying state of affairs of the company and therefore the scheme is objected upon..

Paragraph No. 13 of Rejoinder

With reference to paragraph 2(i) of the said reply made by the Ministry of Corporate Affairs, Kolkata Petition where the issue is raised by the office of the Regional Director that the Transferor Company namely Mars Dealcomm Pvt. Ltd had reported inventories of Rs. 1,33,99,600/- as on 31.03.2021 since 31.03.2014 where out of total holding of Rs. 1,33,99,600/-, 99% of holding of share of Transferee Company namely R.S. Plasfab Pvt Ltd held by the Transferor Company and rest of holding in the name of Cosmo Polymers, Therefore, there is no ambiguity arising out of that holding which is shown as inventories in the Books of the Transferor Company as the after approval of scheme, that account treatment would be resolved in accordance with law and it is interrelated for which there would be no effect on approval of Scheme of Amalgamation as sought application by the applicants Company.

(i) Paragraph No. 2(j) of RD affidavit: -

It is submitted that as per instructions to the Ministry of Corporate Affairs, New Delhi, a copy of the scheme was forwarded to the Income Tax Department on 26/06/2019 for their views/ observation in the matter. However the same is still awaited.

Paragraph No. 14 of Rejoinder

With reference to paragraph 2(j) of the said reply made by the Ministry of Corporate Affairs, Kolkata Petition where the issue is involved that the copy of the scheme was forwarded to the Income Tax Department on 26.06.2019 as till today there was no objection raised by the such department, Therefore, this issue is irrelevant to the scope of approval of the scheme of amalgamation as sought by the applicant Companies.

Heard submissions made by the Ld. Counsel appearing for the Petitioner and the representative of RD(ER). Upon perusing the records and documents in the instant we allow the petition and make the following orders: -

(a) That the Scheme of Amalgamation as mentioned in the Petition being Annexure “M” hereto is sanctioned by the Tribunal with the appointed date fixed as 1st April 2023 and shall be binding on Mars Dealcomm Private Limited (herein referred to as Transferor Company) and R S Plasfab Private Limited (herein referred to as Transferee Company) and their Shareholders, creditors and all concerned;

(b) All the property, rights and interests of the Transferor Company including those described in the Scheme be transferred to and vested in without further act or deed in Transferee Company and accordingly the same shall pursuant to Section 230-232 of the Companies Act, 2013 and read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 be transferred to and vested in the Transferee Company for all the estate and interest of the Transferor Company but subject nevertheless to all charges, now affecting the same as provided in the Scheme;

(c) All the liabilities, duties and obligations of the Transferor Company be transferred from the said Appointed Date, without further act or deed to the Transferee Company and, accordingly, the same shall pursuant to Section 230-232 of the Companies Act, 2013, and read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 be transferred to and become the liabilities, duties and obligations of the Transferee Company;

(d) All the employees of the Transferor Company shall be transferred to and be engaged by the Transferee Company, as provided in the Scheme;

(e) All proceedings inquiries and/or suits and/or appeals now pending by or against the Transferor Company be continued by or against the Transferee Company, as provided in the Scheme, for which the necessary records of the transferor companies, as required by law shall be kept preserved by the Transferee Company till the end of said inquiry/proceedings.

(f) Any proceedings by Income Tax authorities on any of the petitioner companies shall be carried on/continued against the transferee company for which the necessary records of the concerned petitioner company, shall be preserved by the Transferee company as required under Section 239 of the Companies ‘Act 2013.

(g) The Transferee Company do issue and allot Shares to the Shareholders of the Transferor Company as envisaged in the said Scheme of Amalgamation and for that, if necessary, to increase the Authorized Share Capital;

(h) Leave is granted to the Petitioners to file the Schedule of Assets & liabilities of the Transferor Company in the form as prescribed in the Schedule to Form No. CAA-7 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within three weeks from the date of the order;

(i) In case of any default including any Provisions of Income Tax Act in this respect of the Transferor Company, the Income Tax Department, the ROC, West Bengal and all other Statutory Department shall be at liberty to initiate appropriate proceedings against the Transferee Company, which after the sanction of the scheme by this Tribunal is in any case responsible for the liabilities/non-compliance of the Transferor Company also. Necessary records pertaining to the Transferor Company shall be preserved by the Transferee Company as required by law.

(j) The Transferee Company and Transferor Company do each within thirty days of the date of the receipt of this order (effective date), cause a certified copy to be delivered to the Registrar of Companies for registration;

(k) The Transferor Company shall stand dissolved without winding up upon the scheme from the effective date, subject to compliance of Section 239 of the Companies Act 2013.

The Petitioners shall supply legible print out of the scheme and schedule of assets in acceptable form to the registry and the registry will upon verification, append such printout, to the certified copy of the order.

Company Petition (CAA) No.741/KB/2020 connected with Company Application (CAA) No.132/KB/2019 is disposed of accordingly.

Certified copy of this order, if applied for, be supplied to the parties, subject to compliance with all requisite formalities.