North East Garments Pvt. Ltd vs Cheviot International Ltd

P.S.N. Prasad, J

This Joint application has been filed by the Applicant Companies under sections 230 and 232 of the Companies Act, 2013 read with the Company (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016, for the purpose of approving the Scheme of Amalgamation, as contemplated between the Transferor Companies with Transferee Company.

Both Transferor Company as well as Transferee Company have their registered offices which lie within the jurisdiction of this Tribunal.

A perusal of the petition discloses that the Board of Directors of the Transferor Company and Transferee Company had jointly filed the first motion application bearing C.A. No. (CAA) 179(ND)/2019. The Tribunal vide its order dated 17.12.2019 had dispensed with the meetings of the equity shareholders and unsecured creditors of the applicant Companies in view of their consent affidavits being on record.

There were no secured creditors in either of the Applicant Companies.

The Applicant companies have now initiated the Second Motion. An affidavit dated 28.01.2020 discloses that the petitioners have effected publication in the daily newspapers "The Indian Express" in English and "Jansatta" in Hindi, both dated 17 January, 2020 and having circulation in Delhi inviting objections if any to the proposed Scheme of Amalgamation. The affidavit further discloses that due notice of the proposed scheme had been served on the Registrar of Companies, Regional Director, Northern Region, Income Tax Dept. and the Official Liquidator in compliance with the order of the Tribunal.

Pursuant to the Publication in the daily newspapers, for listing of the matter before this Bench, no objector has appeared before us.

Additionally, it has been deposed that no objection to the proposed Scheme has been received by the Applicant Companies or their counsel.

We have heard the counsels for the Applicant and also considered the representation made by the Regional Director, Northern Region. The initial observation of them was regarding the shareholding and status of the Applicant Companies to be Holding and Subsidiary Company. That the Application Companies in support of its contention had filed a rejoinder affidavit dated 8 February, 2020 enclosing the Form SH-4 clarifying the status of the Applicant Companies as Holding and Subsidiary Company. The Regional Director, Northern Region in response to the same filed an affidavit dated 20 February, 2020 certifying the position of the Applicant Companies as Holding and Subsidiary Company.

The report of the statutory auditors certifying that the Accounting Standards as required u/s 133 of the Companies Act 2013 had been adhered to is on record. The Audited Financial Statements for the year ended 31st March, 2019 of all the applicant companies have been filed.

Since the Transferor Company is the wholly owned Subsidiary Company by direct and indirect holding of transferee company, therefore all shares of the Transferor Company shall stand cancelled and no shares of the Transferee Company shall be allotted in lieu or exchange of its holding in the Transferor Company and the entire issued, subscribed and paid-up share capital of the Transferor Company held by the Transferee Company and its nominees. Therefore inter-company shareholding will stand cancelled.

In view of the foregoing, and upon considering the approval accorded by the members and creditors of both the companies to the proposed Scheme of Amalgamation, and no observation being raised by the office of the Regional Director or the Income Tax Deptt. or Official Liquidator, there appears to be no legal impediment in granting sanction to the Scheme. Consequently, sanction is hereby granted to the Scheme under sections 230-232 of the Companies Act, 2013. The sanctioned Scheme of amalgamation shall be binding on the Transferor Company and the Transferee Company and on all their respective stakeholders. The Applicant Company shall also be bound to comply with the statutory requirements in accordance with law.

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, albeit, in accordance with law, against the concerned persons, directors and officials of both the petitioner companies.

While approving the Scheme as above, we further clarify that this order should not be construed as an order in any way granting exemption from payment of stamp duty, Statutory dues 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.

This tribunal doth further order that upon scheme of Amalgamation by way of Merger coming into effect;

a. That Transferor Companies shall stand dissolved without being wound up.

b. That the entire business, properties and assets of the Transferor companies, 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 vest in the Transferee company, but subject nevertheless to all charges now affecting the same;

c. That all the assets and liabilities including Income Tax and all other Statutory dues, if any, of the Transferor companies, 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;

d. All employees of the Transferor Companies in service on the effective date shall become the employees of the Transferee Company on and from such date without any break or interruption in service and upon terms and conditions not less favorable than those subsidiary with the Transferor Company on that date. That all proceedings now pending by or against the transferor companies, be continued by or against the transferee company;

That petitioners 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 companies shall be dissolved and the Registrar of Companies shall place all documents relating to the transferor company and registered with them and shall consolidate the files of the companies, is accordingly duly approved and sanctioned in terms of the above.

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