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Judgment
Rajesh Sharma Member (Technical)
The Court is convened through video conferencing today.
The sanction of the Tribunal is sought under Sections 230 to 232 and other relevant provisions of the Companies Act, 2013 (the Act) and the Rules framed there-under for the Scheme of Arrangement and Amalgamation amongst Gaayathri City Eye Hospital Private Limited and New Vision Laser Centers (Hyderabad) Private Limited and New Vision Laser Centers (Rajkot) Private Limited and Shree Hi-Tech Clinics Private Limited and New Delhi Centre for Sight Limited and their respective Shareholders (‘the Scheme’).
The Scheme envisages Arrangement and Amalgamation amongst Gaayathri City Eye Hospital Private, the Demerged Company and New Vision Laser Centers (Hyderabad) Private Limited, the Transferor Company 1 and New Vision Laser Centers (Rajkot) Private Limited, the Transferor Company 2 and Shree Hi-Tech Clinics Private Limited, the Transferor Company 3 and New Delhi Centre for Sight Limited, the Transferee Company and their respective Shareholders. 4. We have heard the Learned Counsel for the Petitioner Companies and the Deputy Director, WR, MCA. No objector has come before this Tribunal to oppose the Scheme nor has any party controverted any averments made in the Petition.
Learned Counsel for the Petitioner Companies further submits the following rationale for the Scheme:
i) The Transferee Company (‘NDCFS’) is a leading eye care services provider in India. The group has a pan-India presence through subsidiary companies, which operate health-care clinics, hospitals, laboratories, eye banks & laser treatment centres etc. for provision of eye care services.
ii) The Second, Third and Fourth Petitioner companies (Transferor Companies) are all subsidiaries of NDCFS and are engaged in the same line of business i.e. provision of eye care services. It is now the vision of the management and the ultimate shareholders of the companies that the businesses of all the companies be consolidated into one single entity, for improved synergies and management focus.
iii) The key objective behind this is to create a single business entity, which will in turn help to:
i. streamline the holding structure of the group and ensure focused management in a single combined entity;
ii. derive synergies and achieve economies of scale arising out of consolidation of businesses;
iii. efficiently and optimally utilize resources of all the businesses under a single combined entity;
iv. facilitate administrative and compliance convenience and reduce overhead, operating and administrative costs and consequently improve profitability; and
v. increase the combined net-worth, which will facilitate in attracting funds from investors, if necessary, for future expansions.
Learned Counsel for the Petitioner Companies further submits that the Petitioner Companies are engaged in the business of healthcare running eye hospital.
Learned Counsel for the Petitioner Companies states that resolutions were passed by the Board of Directors of the Petitioner Companies in their respective meetings held on 24th June 2020 and approved the said Scheme of Arrangement and Amalgamation. The Appointed Date fixed under the Scheme is 1st April 2020.
The Company Petition is filed in consonance with Sections 230 to 232 of the Act along with Order dated 27th July 2020 passed in CA (CAA) No. 1031 of 2020 by this Tribunal.
The Learned Counsel appearing on behalf of the Petitioner Companies further states that the Petitioner Companies have complied with all requirements as per directions of the Tribunal, and they have filed necessary affidavits of compliance with the Tribunal. Moreover, the Petitioner Companies undertake to comply with all statutory/regulatory requirements, if any, as required under the Act and the Rules made thereunder. The undertaking given by the Petitioner Companies is accepted.
The Issued, Subscribed and Paid-Up Share Capital of the First Petitioner Company as on as on 31.12.2019 is as under:
Particulars
Amount in Rs.
Authorised Capital
20,00,000 Equity Shares of Rs 10 each
2,00,00,000
Total
2,00,00,000
Issued, Subscribed and Paid-Up Share Capital
19,01,659 Equity Shares of Rs 10 each
1,90,16,590
Total
1,90,16,590
The Issued, Subscribed and Paid-Up Share Capital of the Second Petitioner Company as on as on 31.12.2019 is as under:
Particulars
Amount in Rs.
Authorised Capital
14,50,000 Equity Shares of Rs 10 each
1,45,00,000
Total
1,45,00,000
Issued, Subscribed and Paid-Up Share Capital
14,39,519 Equity Shares of Rs 10 each
1,43,95,190
Total
1,43,95,190
The Issued, Subscribed and Paid-Up Share Capital of the Third Petitioner Company as on as on 31.12.2019 is as under:
Particulars
Amount in Rs.
Authorised Capital
10,50,000 Equity Shares of Rs 10 each
1,05,00,000
Total
1,05,00,000
Issued, Subscribed and Paid-Up Share Capital
10,16,361 Equity Shares of Rs 10 each
1,01,63,610
Total
1,01,63,610
The Issued, Subscribed and Paid-Up Share Capital of the Fourth Petitioner Company as on as on 31.12.2019 is as under:
Particulars
Amount in Rs.
Authorised Capital
5,50,000 Equity Shares of Rs 10 each
55,00,000
Total
55,00,000
Issued, Subscribed and Paid-Up Share Capital
5,40,525 Equity Shares of Rs 10 each
54,05,250
Total
54,05,250
The Issued, Subscribed and Paid-Up Share Capital of the Fifth Petitioner Company as on as on 31.12.2019 is as under:
Particulars
Amount in Rs.
Authorised Capital
1,83,00,000 Equity Shares of Rs 10 each
18,30,00,000
17,00,000 Preference Shares of Rs.10 each
1,70,00,000
Total
20,00,00,000
Issued, Subscribed and Paid-Up Share Capital
1,05,39,823 Equity Shares of Rs 10 each
10,53,98,230
Total
10,53,98,230
The details of unexercised employee stock options (net of cancellation) of the employees of the Fifth Petitioner Company as on 31.12.2019 are as under:
Unexercised Employees Option
Amount in Rs.
115,276 options entitling equivalent Equity Shares
of Rs.10 each
11,52,760
Total
11,52,760
The financial details/summary of the First Petitioner Company as on 31st December, 2019 is as under:
Sr. No.
Turnover
in Rs.
Profit/(Loss)
in Rs.
31st March, 2019
1,58,65,000
(22,59,000)
31st December, 2019
1,10,53,000
9,01,000
The financial details/summary of the Second Petitioner Transferor Company as on 31st March, 2020 is as under:
Sr. No.
Turnover
in Rs.
Profit/(Loss)
in Rs.
31st March, 2019
6,52,33,000
36,08,000
31st March, 2020
5,76,35,000
51,25,000
The financial details/summary of the Third Petitioner Company as on 31st March, 2020 is as under:
Sr. No.
Turnover
in Rs.
Profit/(Loss)
in Rs.
31st March, 2019
11,68,60,000
85,55,000
31st March, 2020
10,95,79,000
27,08,000
The financial details/summary of the Fourth Petitioner Company as on 31st March, 2020 is as under:
Sr. No.
Turnover in Rs.
Profit/(Loss) in Rs.
31st March, 2019
1,90,92,000
17,86,000
31st March, 2020
2,08,03,000
17,61,000
The financial details/summary of the Fifth Petitioner Company as on 31st March, 2020 is as under:
Sr. No.
Turnover in Rs.
Profit/(Loss) in Rs.
31st March, 2019
1,41,88,54,000
1,26,79,000
31st March, 2020
1,52,39,55,000
84,00,000
The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai has filed his Report dated 27th July, 2021 inter alia stating therein its observations on the Scheme as stated in paragraph V (a) to (j) of the Report. In response to the observations made by the Regional Director, the Petitioner Companies filed an Affidavit in Rejoinder and have given necessary clarifications and undertakings. The Regional Director has also filed a Revised Report dated 9th August, 2021. The observations made by the Regional Director and the clarifications and undertakings given by the Petitioner Companies are summarized in the table below:
RD’s Report / Observations
dated 27th July, 2021
Response of the Petitioner
Companies
Remarks
In paragraph V(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.
The Petitioner Company
hereby undertakes to 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.
No objections received.
Paragraph V(b)-
“As per Definition of the Scheme,
‘Appointed Date’ means April 1,
2020.
‘Effective Date’ means the
Appointed Date or the date on
which the last of conditions
referred to in Clause 32 hereof
have been fulfilled, whichever is
later. 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 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 Petitioners 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.”
The Petitioner Company
humbly states and submits
that the in accordance with
Section 232(6) of the
Companies Act, 2013, the
Composite Scheme of
Arrangement and
Amalgamation amongst the
Petitioner Companies clearly
indicate an Appointed Date
i.e. April 1, 2020 from which
it shall be effective and the
scheme shall deemed to be
effective from such date and
not at a date subsequent to the
appointed date.
Accordingly, the Petitioner
Company will be in
compliance 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.
No objections received.
Paragraph V(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.”
The Petitioner Company hereby undertake to comply with section 232(3)(i) of Companies Act, 2013, where the Transferor Companies are dissolved, the fee if any, paid by the respective Transferor Companies 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, the Petitioner Companies affirm that they shall comply the provisions of the
section.
No objections received.
Paragraph V(d)-
“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.”
The Petitioner Company humbly states and submits that vide Order dated July 27, 2020 passed by the Hon’ble National Company Law Tribunal (the “NCLT”), Mumbai the meetings of the shareholders and secured creditors of the Petitioner Companies was dispensed with in view of the consent affidavits obtained by the Petitioner Companies and annexed thereto from Annexure ‘A-23’ to ‘A-28A’ and Annexure ‘A-29’ to ‘A34’, respectively in the First Motion Application dated June 29, 2020. Further, the meeting of the unsecured creditors of the Petitioner Companies was not required to be convened upon issue of notice to all the unsecured creditors with a value of ₹1,00,000/- (Rupees one lakh only) and above, by the respective Petitioner Company.
No objections received.
Paragraph V(e)-
“Accounting Treatment of the
scheme; Accounting Treatment
clause 7.3 (iii) (in the books of
Transferee Company for the
accounting of demerged
company) stated that The
difference, if any, between the
assets and liabilities,
consideration issued (as per
Clause 6.1 above) shall be
transferred to goodwill or capital
reserve account (as the case may
be) in the books of NDCFS and
Accounting Treatment clause
18.1 (v) (in the books of
Transferee Company for
Transferor Companies) stated
that The difference, if any,
arising between carrying value of
assets and liabilities and reserves
pertaining to the Transferor
Companies and the carrying value of investments in the books of NDCFS shall be transferred to capital reserve account in the books of NDCFS.”
The Petitioner Company
hereby undertakes that as per
Accounting Standard 14 and
as stated in the Composite
Scheme, such surplus if any
arising out of the scheme shall
be credited 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 Transferee
Company. The Petitioner
Company undertakes that
such Capital Reserve, arising
out of the
amalgamation/Demerger
shall not be considered as free
reserve and not be available
for distribution of dividend.
No objections received.
Paragraph V(f)-
“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 regard, the petitioner company shall ensure compliance of all the provisions of Income Tax Act and Rules thereunder.”
The Petitioner Companies hereby undertakes that the Transferee Company shall comply with provisions of Section 2(1B) of the Income Tax Act, 1961. In this regard, the Petitioner Companies hereby undertakes that it shall comply with all the provisions of Income Tax Act and Rules
thereunder.
No objections received.
Paragraph V(g)-
“It is submitted that the Petitioner Company is stated that the scheme is in compliance of Section 2(19AA), in this regard, Petitioner Company may be directed to place on record that as to how this scheme is in compliance of Section 2(19AA) of
the Income Tax Act, 1961.”
The Petitioner Companies hereby undertakes that the scheme is in compliance of Section 2(19AA) of the Income Tax Act, 1961. The Composite Scheme involves demerger of the Demerged Undertaking of Gaayathri City Eye Hospital Private Limited (“First Applicant Company” or “Demerged Company”) into New Delhi Centre for Sight Limited (“Fifth Applicant Company” or “Transferee Company”) on a going concern basis.
No objections received.
Conditions / manner provided under section 2(19AA) of ITA
Applicant Remarks
"demerger", in relation to companies, means the transfer, pursuant to a scheme of arrangement under sections 391 to 394 of the Companies
Act, 1956 (1 of 1956), by a demerged company of its one or more undertakings to any resulting company in such a
manner that—
The Scheme provides for transfer of the Demerged Undertaking by Demerged Company to New Delhi Centre for Sight Limited (‘NDCFS’ or ‘resulting company’), which should be regarded as resulting company for the purposes of Section
2(19AA) of ITA).
No objections received.
(i) all the property of the
undertaking, being transferred
by the demerged company,
immediately before the
demerger, becomes the
property of the resulting
company by virtue of the
demerger;
Definition of ‘Demerged
undertaking’ provided in Para
1.6 of the Scheme, includes all
assets of the Demerged
undertaking.
Further, as per Para 5.1 of the
Scheme, upon the Scheme
coming into effect the
Demerged undertaking
(includes all assets) shall stand
transferred to the resulting
company.
Accordingly, this condition is
satisfied.
No objections received.
(ii) all the liabilities relatable
to the undertaking, being
transferred by the demerged
company, immediately before
the demerger, become the
liabilities of the resulting
company by virtue of the
demerger
Definition of ‘Demerged
undertaking’ provided in Para
1.6 of the Scheme, includes all
liabilities of the Demerged
undertaking.
Further, as per Para 5.1 of the
Scheme, upon the Scheme
coming into effect the
Demerged undertaking
(includes all liabilities) shall stand transferred to the resulting company.
Accordingly, this condition is satisfied.
No objections received.
(iii) the property and the
liabilities of the undertaking
or undertakings being
transferred by the demerged
company are transferred at
values appearing in its books
of account immediately
before the demerger:
Provided that the provisions
of this sub-clause shall not
apply where the resulting
company records the value of
the property and the liabilities
of the undertaking or
undertakings at a value
different from the value
appearing in the books of
account of the demerged
company, immediately before
the demerger, in compliance to the Indian Accounting Standards specified in Annexure to the Companies (Indian Accounting
Standards) Rules, 2015;
As per Clause 7.2 (i) of the
Scheme, Demerged Company
shall reduce the carrying value
of assets and liabilities
pertaining to the Demerged
undertaking. Accordingly, the
property and liabilities are
transferred at values
appearing in its books of
accounts immediately before
the demerger.
Further, as per Clause 7.3 (i),
Resulting Company shall
record the assets and liabilities
at fair value in accordance
with Ind AS 103, which is
specifically permissible as per
the proviso to section
2(19AA)(iii) of the ITA.
Accordingly, this condition is satisfied.
No objections received.
(iv) the resulting company
issues, in consideration of the
demerger, its shares to the
shareholders of the demerged
company on a proportionate
basis except where the
resulting company itself is a
shareholder of the demerged
company;
Resulting company to issue
shares to all shareholders of
demerged company (except
shares held by resulting
company itself) pursuant to
Para 6.1 of the Scheme.
Accordingly, this condition is
satisfied.
No objections received.
(v) the shareholders holding
not less than three-fourths in
value of the shares in the
demerged company (other
than shares already held
therein immediately before
the demerger, or by a
nominee for, the resulting
company or, its subsidiary)
become shareholders of the
resulting company or
companies by virtue of the demerger, otherwise than as a result of the acquisition of the property or assets of the demerged company or any undertaking thereof by the resulting company;
Resulting company to issue
shares to all shareholders of
demerged company (except
shares held by resulting
company itself) pursuant to
Para 6.1 of the Scheme.
Thus, shareholders holding
not less than three-fourths in
value of the shares in the
demerged company (other
than shares already held therein immediately before the demerger, or by a nominee for, the resulting company or, its subsidiary) shall become shareholders of the resulting company or companies by virtue of the demerger.
Accordingly, this condition is satisfied.
No objections received.
(vi) the transfer of the undertaking is on going
concern basis;
Definition of ‘Demerged undertaking’ provided in Para
1.6 of the Scheme, mentions transfer on a going concern basis.
Accordingly, this condition is
satisfied.
No objections received.
(vii) the demerger is in
accordance with the
conditions, if any, notified
under sub-section (5) of
section 72A by the Central
Government in this behalf.
No such conditions have been
prescribed by the Central
Government.
Accordingly, this condition is
satisfied.
No objections received.
Paragraph V(h)-
“The Petitioner Companies be
directed to place on record of this
Tribunal the list of assets and
liabilities to be demerged with
complete details of its assets and
valuation.”
The Petitioner Companies
humbly submits and states
that the Petitioner Companies
have thereby produced the
Provisional Balance Sheet of
Gaayatri City Eye Hospital
Private Limited i.e. the
Demerged Company as on
31st December 2019 placing
on record the list of assets and
liabilities to be demerged. As
regards the valuation of the
Demerged Undertaking is
concerned the same has been
annexed to the First Motion
Application at Annexure ‘A-
22’.
No objections received.
Paragraph V(i)-
“The Petitioner Company to
place on record as to what is the
business left in demerged
company (i.e. Gayathri) after
transfer of Demerged
undertaking.”
The Petitioner Companies
humbly submits that as stated
hereinabove the Petitioner
Companies have thereby
produced the Provisional
Balance Sheet of Gaayatri
City Eye Hospital Private
Limited i.e. the Demerged
Company as on 31st December 2019 placing on record the business left in demerged company (i.e. Gayathri) after transfer of
Demerged undertaking.
No objections received.
Paragraph V(j)-
“Applicant Company vide letter acknowledgement letter 30.07.2021 has served the copy of Company Application bearing No. 13 of 2021, in which the applicant company has prayed to amend the composite Scheme and to withdraw one of the Transferor Company i.e. “CFS Netralaya Private Limited” by way of passing board resolution, which is subject to approval of Hon’ble Tribunal. However, the petitioner companies may be directed to provide full facts in the matter as the present application was filed long back, then why as of now the petitioner company wants to withdraw one of the Transferor Company and also submit all the reasons for the same with proper justification.”
The Petitioner Companies humbly submits that due to the fact that commercial tenets pursuant to which the Demerged Undertaking and the Transferor Companies had unanimously decided to consolidate its business with New Delhi Centre for Sight Limited
(“Transferee/Resulting Company”) having been rendered irrelevant and since the same are now perceived to be unachievable under present circumstances, the Board of Directors of the Petitioner Companies vide Board Resolution dated 21st
December, 2020, 2nd January 2021, 4th January 2021 and 19th January, 2021 has now deliberated and decided to withdraw the name of the Transferor Company 2 i.e. “CFS Netralaya Private Limited” from the proposed Composite Scheme and not be a part of the proposed Composite Scheme. The Petitioner Companies at their respective Board meeting held on 24th June 2020 have approved any modification to the Composite Scheme.
No objections received.
The Petitioner Companies humbly submits that due to the fact that commercial tenets pursuant to which the Demerged Undertaking and the Transferor Companies had unanimously decided to consolidate its business with New Delhi Centre for Sight
Limited
(“Transferee/Resulting Company”) having been rendered irrelevant and since the same are now perceived to be unachievable under present circumstances, the Board of Directors of the Petitioner Companies vide Board Resolution dated 21st December, 2020, 2nd January 2021, 4th January 2021 and 19th January, 2021 has now deliberated and decided to withdraw the name of the Transferor Company 2 i.e. “CFS Netralaya Private Limited” from the proposed Composite Scheme and not be a part of the proposed Composite Scheme. The Petitioner Companies at their respective Board meeting held on 24th June 2020 have approved any modification to the Composite Scheme.
No objections received.
The Petitioner Companies further humbly submits that the said Amendment would not materially change the substance of the Scheme. The Petitioner Companies further submits that the said Company Application bearing No. 193 of 2021 in which the Applicant Company has prayed to amend the Composite Scheme was filed via e-filing on January 28, 2021 before this Hon’ble Tribunal and a copy of the said Company Application along with a copy of the Amended Scheme was served on the office of the Regional Director on February 1, 2021.
No objections received.
The Registrar of Companies, Mumbai has filed his Report dated 18th February, 2021 inter alia stating therein its observations on the Scheme as follows:
As per para 24 of the Scheme, dissolution of Transferor Companies, it is stated that upon Scheme becoming effective, each of the Transferor Companies shall stand dissolve without being wound up without any further act or deed. However, as per para 1.6, it is stated that Demerged undertaking means the entire Eye Care Services Business of Gaayathri as a going concern as of the appointed date, including all its asset, contracts, identifies investments, rights, approvals, licenses and power and all its debts, which are contrary statement of act in its nature.
Interest of the Creditors should be protected.
The details of assets and liabilities to be demerged are not clearly given. The Petitioner should give the details of asset and liabilities with details of Charge, if any to be demerged clearly as Transferor Company No. 1,3 & 4 has Charges with the Status “Open” as per MCA portal.
May be decided on its merits.
Vide Order dated September 23, 2021, this Tribunal has allowed the CA No. 193 of 2021 and has approved the withdrawal of one of the Transferor Companies i.e. “CFS Netralaya Private Limited” from the proposed Composite Scheme.
The Official Liquidator has filed his report on 26th July 2021, inter alia stating therein that affairs of the Transferor Companies have been conducted in a proper manner and that his representation may be taken on record.
From the material on record, the Scheme appears to be fair, reasonable and is not in violation to any provisions of law nor is contrary to public interest/policy.
Since all the requisite statutory compliances have been fulfilled, CP (CAA) No. 1071/MB-IV/2020 is made absolute in terms of prayer clauses (41.a) to (41.d) of the Company Petition. Hence Ordered.
The Scheme, with the Appointed Date fixed as 1st April, 2020 placed as Exhibit-B of the CA No. 193 of 2021 is hereby sanctioned. It shall be binding on the Petitioner Companies involved in the Scheme and all concerned including their respective Shareholders, Secured Creditors, Unsecured Creditors and Employees.
In case due to this Scheme of Arrangement and Amalgamation the Authorised Share Capital is required to be increased, the same will be done by the Transferee Company by completing all the formalities including fees to be paid to the Registrar of Companies.
The Registrar of this Tribunal shall issue the certified copy of this Order along with the Scheme forthwith. The Petitioner Companies are directed to file a certified copy of this Order duly certified by the Registry of this Tribunal along with a copy of the Scheme, with the Registrar of Companies concerned, electronically in E-form INC-28 within 30 days from the date of receipt of copy of the Order from the Registry.
All concerned regulatory authorities to act on certified copy of the Order and the form of minutes forming part of the Petition, duly certified by the Deputy or Assistant Registrar of this Tribunal.
The Petitioner Companies are to lodge a copy of this Order duly certified by the Deputy/ Assistant Registrar of this Tribunal, with the concerned Superintendent of Stamps, for adjudication of stamp duty payable, if any, on the same within 60 days from the date of receipt of the certified copy of the Order along with a copy of the Scheme.
The Petitioner Companies shall comply with all the undertakings given by them.
The Petitioner Companies shall take all consequential and statutory steps required under the provisions of the Act in pursuance of the Scheme.
Any person interested in the above matter shall be at liberty to apply to the Tribunal for any directions that may be necessary.
Ordered Accordingly. Pronounced in open court today. File be consigned to the record.