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Judgment
Rahul Bhatnagar, Member (Technical)
This joint petition has been filed by the Applicant Companies under Sections 230 to 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, and the National Company Law Tribunal Rules, 2016, for the purpose of the approval of the Scheme of Amalgamation of the Transferor Company into the Transferee Company. The copy of the Scheme of Amalgamation (hereinafter referred as the “Scheme”), has been placed on record.
The Applicant Company No. 1/Transferor Company – M/s Urja Capital Private Limited bearing Corporate Identification No. (CIN: U65100DL2014PTC264409) was incorporated vide Certificate of Incorporation dated 04.02.2014, having its registered office at F-3/8-A, Krishna Nagar New Delhi-110051. The Authorized Share Capital of the Applicant Company No. 1/Transferor Company is Rs. 3,00,00,000/-(Rupees Three Crore Only) divided into 30,00,000 (Thirty Lakh) Equity Shares of Rs. 10/- (Rupees Ten) each. The present Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 30,10,000/-(Rupees Thirty Lakh and Ten Thousand Only) divided into 3,01,000 (Three Lakh One Thousand) Equity Shares of Rs. 10/- (Rupees Ten) each.
The Applicant Company No- 2 / Transferee Company- M/s SGS Udyog Private Limited is a private limited company incorporated under the provisions of Companies Act, 1956 on 31.01.2001 vide CIN U00000DL2001PTC109434 with Registrar of Companies, NCT of Delhi & Haryana and having its registered office at F-3/8-A, Krishna Nagar New Delhi-110051. The Authorized Share Capital of the Transferee Company is Rs. 14,75,00,000/- (Rupees Fourteen Crore Seventy-Five Lakh Only) divided into 1,47,50,000 (One Crore Forty-Seven Lakh Fifty Thousand) Equity Shares of Rs. 10/-(Rupees Ten) each. The present Issued, Subscribed and Paid-up Share Capital of the Company is Rs. 14,29,90,000/-(Rupees Fourteen Crore Twenty-Nine Lakh Ninety Thousand Only) divided into 1,42,99,000 (One Crore Forty-Two Lakh Ninety-Nine Thousand) Equity Shares of Rs. 10/- (Rupees Ten) each.
The Applicant Companies submitted that the circumstances which justify and necessitate the proposed amalgamation of the Transferor Company with the Transferee Company are, inter alia, as follows:
a) Both the Transferor Company and the Transferee Company are closely held companies controlled by the same promoters. The proposed Scheme of Amalgamation would result in business synergy and consolidation of these companies into one large company with a stronger asset base.
b) The proposed amalgamation would enable pooling of physical, financial and human resource of these Companies for the most beneficial utilization of these factors in the combined entity.
c) The proposed Scheme of Amalgamation will result in usual economies of a centralized and a large company including elimination of duplicate work, reduction in overheads, better and more productive utilization of human and other resource and enhancement of overall business efficiency. It will enable these Companies to combine their managerial and operating strength, to build a wider capital and financial base and to promote and secure overall growth of their businesses.
d) The said Scheme of Amalgamation will contribute in fulfilling and furthering the objects of the Transferor and the Transferee Companies. It will strengthen, consolidate and stabilize the business of these Companies and will facilitate further expansion and growth of their business. The resulting amalgamated company will be able to participate more vigorously and profitably in the competitive market scenario.
e) The proposed amalgamation would enhance the shareholders’ value of the Transferor and the Transferee Companies
f) The said Scheme of Amalgamation will have beneficial I impact on all the Transferor and the Transferee Companies, their shareholders, employees and other stake holders and all concerned
The appointed date as fixed for the proposed scheme of Amalgamation means 01.04.2022 being the date with effect from which this scheme shall be deemed to be effective.
A perusal of the petition discloses that the first motion application bearing CA(CAA)118/(ND)/2022, was jointly filed by the Applicant Companies. Based on the averments made in the said application the Tribunal pass an order on 25.01.2023 dispensing with the requirement of convening all the meetings of Equity Shareholders of Transferor and Transferee Company, Unsecured Creditors of Transferor and Transferee Companies Meeting of Unsecured Creditors of Transferor and Transferee Company. None of the Applicant Companies had any Secured Companies.
This Tribunal vide order dated 14.02.2023 directed the Applicant Companies to issue notices to the (i) Regional Director, Ministry of Corporate Affairs, (ii) Registrar of Companies, NCT of Delhi and Haryana, (iii) Official Liquidator, Lok Nayak Bhavan, Delhi (iv)concerned Income Tax Department and (v) Reserve Bank of India. Further, the petitioner companies were directed to carry out the publication of advertisement in Delhi editions of ‘Business Standard’ (English, Delhi Edition) and ‘Business Standard’ (Hindi, Delhi Edition). The Applicant Companies have filed affidavit of service dated 25.03.2023 evidencing the service of notice to the concerned statutory authorities and proof of publication of the advertisement in Delhi editions of ‘‘Business Standard’ (English, Delhi Edition) and ‘Business Standard’ (Hindi, Delhi Edition) on 23.02.2023
Pursuant to the notice issued to the Statutory Authorities, Income Tax Department, Official Liquidator and RD appeared and filed their respective report.
The Income Tax Department has filed its report dated 24.02.2023 wherein the department has issued No Objection Certificate on the proposed Amalgamation between the Applicant Companies.
The Official Liquidator has filed his report dated 17.03.2023, wherein no specific objection has been raised against the approval of the Scheme. It has been submitted in the report that the Official Liquidator has not received any complaint against the proposed Scheme from any shareholders, unsecured creditors or other stakeholders related to the Scheme in any manner.
The RD has filed his report dated 20.03.2023, wherein following observations were made with respect to the approval of the Scheme.
Para
Observations in the RD Report
Response of the Applicant Company
10(1)
As per Auditors Report for year ended 31.03.2022 in respect of Transferee company, it has been stated that "The company has granted loans, secured or unsecured to companies, firms or other parties, covered in the register maintained under section 189 of the Companies Act, 2013 and Receipt of the principal amount and interest are also regular in general except in the case of GM Overseas otherwise company has no overdue amount receivable more than rupees one Lakh
It correctly observed in the Auditors' Report for the year ended 31st March 2022, the regular interest payment is not received by the Transferee Company – M/s SGS Udyog Private Limited from GM Overseas since there was default on the part of GM Overseas, the Transferee Company had filed a recovery suit against GM Overseas. Further the matter was referred to the Delhi Mediation Centre Tis Hazari Courts, Delhi. The matter was settled between the parties at Delhi Mediation Centre, Tis Hazari Courts, Delhi and GM Overseas paid the amount as settled at the Delhi Mediation Centre. The copy of the order dated 8th September 2022 is enclosed herewith
10(2)
The Transferor company is an NBFC company, whereas the Transferee company is not registered as NBFC. Thus, it is not clear as to whether the resultant company will carry any NBFC activity or not.
Since the Transferor Company shall be dissolved pursuant to the Scheme of amalgamation, the Transferee Company shall take up the business carried by the Transferor Company, thus after approval of the Scheme of Amalgamation, the Transferee Company shall make an application to Reserve Bank of India for getting Registration of NBFC. Further, the Terms & Conditions as detailed in the copy of the NOC received from RBI is reproduced as under: “SGS Udyog Limited, if it satisfies the Principal Business Criteria (PBC), shall apply afresh for Certificateof Registration (COR) with Reserve Bank of India in terms of Section 45 IA of RBI Act, 1934” Copy of NOC received from RBI is enclosed
10(3)
In the clause 3.2 of the Scheme, it has been stated that "this scheme shall be effective from the last of the dates, on which the certified copy of the Order of 'the Hon'ble National Company Law Tribunal under section 230 and 232 of the Companies Act, 2013 read with Companies(Compromises,Arrangements and Amalgamations) Rules, 2016 and other applicable provisions are filed in the office of the Registrar of Companies. Such date is called as the Effective Date." However, as per section 232(6) of the Companies Act, 2013 "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."
The section 232(6) provides for the Appointed date. The extract of the said subsection 232(6) is reproduced herewith: Section 232(6) 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. Whereby it is meant that the Scheme of amalgamation will take effect i.e. the transfer of assets and liabilities of the of the Transferor Company to the Transferee Company will take effect from the appointed date. Further same is intended by clause 3(2) of the approved Scheme of Amalgamation, which is reproduced asunder
Clause 3.2 Though this Scheme shall become effective from the Effective Date, the provisions of this Scheme, so far as they relate to the transfer & vesting of undertaking(s) of the Transferor Company into the Transferee Company, shall be applicable and come into operation from the Appointed Date.
10(4)
As per Annual Return filed for year ended 31.03.2022 by the Transferor and Transferee company, both companies are having HUF shareholders. However, no form MGT-6 has been filed by respective companies.
The Form MGT-6 is required to with filed in accordance with the provisions of section 89 of the Companies Act, 2013 i.e. with respect to Declaration in respect of Beneficial Interest in respect of Share held by any person in the Company, since the section requires declaration by the person holding the shares as the registered holder, in respect of the Beneficial Interest in the said shares.
In present case certain shares were held by HUF in the Petitioner Companies. And in our opinion HUF is separate legal entity and holds shares on its own behalf (i.e. holds the beneficial interest in the same), thus MGT -6 is not required to be filed in case shares are held by HUF as the registered shareholder.
Further the Petitioner Companies undertake to file the necessary Form MGT 6, in case the same is directed by the Tribunal.
10(5)
Transferee company may kindly be directed to comply with the provision of section 232(3)(i) of the Companies Act, 2013 in regard to fee payable on its revised authorized share capital."
The Transferee company has filed an undertaking wherein it has been stated that they will comply with the provisions of Section 232(3)(i) of the Companies Act, 2013.
The Applicant, in its rejoinder, has filed a copy of NOC received from Reserve Bank of India 08.12.2022.
We have gone through the observations made by the RD and the Reply filed by the applicant companies and have heard the submissions made by the Ld. Counsel appearing for parties and this Tribunal is satisfied with the response of the Applicant Company qua the said observations of the Regional Director, Northern Region. However, with respect to the observation made by RD in para 10(4) of its report, we direct the Applicant Company to file MGT 6 as required under section 89 of the Companies Act, 2013.
In this petition it has also been affirmed that no proceeding for inspection, inquiry or investigation under the provisions of the Companies Act, 2013 or under provisions of Companies Act, 1956 is pending against the Petitioner Companies.
Certificates of respective Statutory Auditors of all the petitioner companies, have been placed on record to the effect that Accounting Treatment proposed in the Scheme of Amalgamation is in conformity with the Accounting Standard notified by the Central Government as specified under the provisions of Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies Accounts Rules. 2014 and Companies (Accounting Standards) Amendment Rules, 2016, and other generally accepted accounting principles in accordance with the Companies Act, 2013, as applicable.
The shareholders of the petitioner companies are the best judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by the Tribunal for the reason that it is not a part of the judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme, of which sanction is sought under Section 230-232 of the Companies Act of 2013, will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors.
It has also been affirmed in the petition that the Scheme is in the interest of the transferor company and the transferee company, including their shareholders, creditors, employees and all concerned. In view of the foregoing, upon considering the approval accorded by the members and creditors of the Petitioner companies to the proposed Scheme, there appears to be no impediment in sanctioning the present Scheme.
Consequently, sanction is hereby granted to the Scheme under Section 230 to 232 of the Companies Act, 2013 with the following conditions.
(i) The Petitioners shall however remain bound to comply with the statutory requirements in accordance with the law.
(ii) Notwithstanding the above, if there is any deficiency found or, violation committed, qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme will not come in the way of action being taken in accordance with the law, against the concerned persons, directors and officials of the petitioners.
(iii) While approving the Scheme as above, it is further clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law.
(iv) The Applicant Companies are directed to file MGT 6 as required under section 89 of the Companies Act, 2013.
(v) The appointed date as proposed in the Scheme of Amalgamation i.e., 01.04.2022 by the petitioner companies is confirmed by this Tribunal.
This Tribunal hereby further order
i. That the Transferor Company shall stand dissolved without following the process of winding-up; and
ii. That all the property, rights and powers of all the Transferor Company, be transferred without further act or deed, to the transferee company and accordingly the same shall, pursuant to Section 232 of the Companies Act, 2013, be transferred to and vest in the transferee company; and
iii. That all the liabilities and duties of all the Transferor Company, be transferred without further act or deed, to the transferee company and accordingly the same shall, pursuant to Section 232 of the Act, be transferred to and become the liabilities and duties of the transferee company; and
iv. That all proceedings now pending by or against the Transferor Company, be continued by or against the transferee company; and
v. That all the employees of the Transferor Company in service, on the date immediately preceding the date on which the scheme takes effect, i.e. the effective date, shall become the employees of the transferee company on such date, without any break or interruption in service and upon terms and condition not less favorable than those subsisting in the concerned Transferor Company on the said date; and
vi. That Petitioner companies shall, within thirty days of the date of the receipt of this order, cause a certified copy of this order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered, the Transferor Company shall be dissolved and the Registrar of Companies shall place all documents relating to the Transferor Company registered with him on the file, kept by him in relation to the transferee company and the files relating to all the petitioner companies shall be consolidated accordingly; and
vii. That any person interested shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary.
The petition stands disposed of on the above terms. Let copy of the order be served to the parties.