Omni Wellness and Nutrition Limited Vs

Shyam Babu Gautam, Member (Technical)

The Court is convened by videoconference today.

Heard Learned Counsel for Petitioner Companies. No objector has come before the Tribunal to oppose the Petition and nor has any party controverted any averments made in the Petition.

The sanction of this Tribunal is sought under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (“Act”), to the Scheme of Amalgamation (Merger by Absorption) of Omni Wellness and Nutrition Limited (“Transferor Company 1”) and Paeon Wellness and Nutrition Limited (“Transferor Company 2”) into OmniActive Health Technologies Limited (“Transferee Company”) and their re-spective shareholders (the “Scheme”).

The Learned Counsel for the Petitioner Companies submits that OWN was formed with an objective of carrying on the business of manufac-turers, producers, buyers, sellers, traders, exporters, importers, whole-salers, retailers, agents, dealers and distributors in nutraceuticals, food supplements, ayurvedic, herbal formulations, pharmaceuticals and cosmetics and provide all related services in the above areas in India and abroad. PAEON was formed with an objective of carrying the business of manufacturers, producers, buyers, sellers, traders, export-ers, importers, wholesalers, retailers, agents, offline and online dealers and distributors in nutraceuticals, food supplements, ayurvedic, herbal formulations, pharmaceuticals, cosmetics and all related services in the above areas in India and abroad both offline and online/e-commerce mode. OAHTL is formed with an objective of carrying out business of buying, selling, producing, import, export, manufacturing and carry-ing on business in phytochemicals, plant actives, plant based medicinal extracts, nutritional products, herbal isolates and actives, plant-based chemicals ingredients.

The Learned Counsel for the Petitioner Companies submits that the rationale mentioned in the Scheme is as under:

a. Greater integration and greater financial strength and flexibility for the Transferee Company, which would result in maximising the overall shareholder value, and will improve the competitive position of the combined entity.

b. Greater efficiency in cash management of the Transferee Company, and unfettered access to cash flow which can be deployed more effi-ciently to fund organic and inorganic growth opportunities in order to maximise shareholder value.

c. Improved organisational capacity and leadership, arising from pooling of human capital who have the diverse skills, talent and vast experi-ence to compete successfully in a competitive industry.

d. Cost savings expected to flow from more focused operational efforts, rationalization, standardization and simplification of business pro-cesses, and elimination of duplication and rationalization of compli-ance costs and administrative expenses.

All the Petitioner Companies have approved the said Scheme by passing their respective Board Resolutions dated 5th February 2020 and subsequently on 1st September 2020 and 14th September 2020 and have approached the Tribunal for sanction of the Scheme.

Learned Counsel for the Petitioner Companies submits that the Petition has been filed in consonance with the order dated 4th May 2020 passed by this Tribunal in CA(CAA) No. 636/MB/IV/2020.

Learned Counsel for the Petitioner Companies states that the Peti-tioner Companies have complied with all the requirements as per the directions of this Tribunal.

The Learned Counsel for the Petitioner Companies states that the shares of the Petitioner Companies are not listed on any stock ex-changes.

The Regional Director has filed its Report dated 31st March 2021 (“Re-port”) praying that this Tribunal may pass such orders as it thinks fit, save and except as stated in Paragraphs IV (a) to (j), the Petitioner Companies have filed an Affidavit in Rejoinder dated April 30, 2021 and have clarified as follows.:

Sr. No. Para

Regional  Direc- tor Report / Ob- servation  Dated 31st March 2021

Response from the Pe- titioner Companies

Supplemantary Re- port of the Regional Director dated  26th October 2021

IV (a)

‘In   addition   to compliance       of AS-14 (IND AS-

103),  the  Trans- feree     Company shall   pass   such accounting     en- tries   which   are necessary  in con- nection  with  the scheme to comply with  other  appli- cable  Accounting Standards    such as    AS-5    (IND AS-8) etc.’

As regards the observa- tion   made   in   Para- graph IV (a) of the said Report,  the  Petitioner Company  3  /  Trans- feree  Company  under- takes  that  in  addition to compliance of AS-14 (IND AS-103), the Petitioner  Company  3  / Transferee    Company shall   pass   such   Ac- counting entries which are  necessary  in  con- nection      with      the Scheme to comply with all applicable Account- ing Standards such as AS-5  (IND  AS-8),  to the extent applicable.

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IV (b)

As   per   Part-A- Definitions, Clause 1(c) & 1(j) of the Scheme,

“Appointed Date” means the 1st  day  of  Janu- ary 2020 or such other  date  as  the Appropriate  Au- thority   may   di- rect  or  fix  as  the date on which the Scheme        shall

come  into  opera- tion;

“Effective   Date” means   the   date on which the cer- tified  copy  of  the Order     of    Na- tional   Company Law      Tribunal sanctioning    the Scheme is filed by the      Transferor Companies    and Transferee  Com- pany    with    the Registrar of Com- panies, Mumbai, Maharashtra.

Any references in this   Scheme   to the “date of com- ing  into  effect  of this  Scheme”  or “effectiveness    of the   Scheme”   or “Scheme   taking effect” shall mean the         Effective Date.

In  this  regard,  it is  submitted  that Section 232(6) of the     Companies Act,   2013   that the scheme under this  section  shall clearly     indicate an       appointed date  from  which

it  shall  be  effec- tive,     and     the scheme   shall   be deemed  to  be  ef- fective  from  such date and not at a date    subsequent to  the  appointed date.     However, this   aspect   may be decided by the Hon’ble    Tribu- nal   taking   into account its inher- ent powers.

Further, the Peti- tioners   may   be asked  to  comply with  the  require- ments  and  clari- fied  vide  circular no.      F.      No. 7/12/2019/CL-

1                dated

21.08.2019      is-

sued by the Min- istry of Corporate Affairs.’

As regards the observa- tion   made   in   Para- graph IV (b) of the said Report,  the  Petitioner Companies    seek    to clarify as under:

i.        Clause   1(c)   of the   Scheme   provides that    the    Appointed Date means the 1st day of   January   2020   or such  other date as the Appropriate Authority may direct or fix as the

date    on    which    the Scheme shall come into operation,  which is  in compliance   with   the provisions   of   Section 232(6)  of  the  Compa- nies  Act,2013 and the Scheme shall take into effect from that date;

ii.       Clause   1(j)   of the   Scheme   provides that the Effective Date means   the   date   on which    the    certified copy  of  the  Order  of National      Company Law   Tribunal,   sanc- tioning  the  Scheme  is filed by the Transferor Companies and Trans- feree   Company   with the  Registrar  of  Com- panies, Mumbai, Ma- harashtra.  Any  refer- ences in this Scheme to the   “date   of   coming into    effect    of    this Scheme”  or  “effective- ness of the Scheme” or “Scheme taking effect” shall  mean  the  Effec- tive Date.

iii.      Clause 1(c) read with  Clause  4  of  the Scheme  provides  that the transfer and vesting shall take place with ef- fect    from    the    Ap- pointed Date and upon

this   Scheme   coming into effect.

iv.      The    Petitioner Companies   undertake that   they   have   duly complied with the pro- visions   and   require- ments set out vide cir- cular     no.     F.     No 7/12/2019/CL-I dated   21-08-2019   is- sued by the Ministry of Corporate Affairs.

Basis the above, the Pe- titioner       Companies confirm that the obser- vations  made  in  Para IV(b)   of   the   Report have  been  duly  com- plied by it.

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IV (c)

The Hon’ble Tri- bunal           may kindly   seek   the understanding that  this  Scheme is   approved   by the  requisite  ma- jority of members and  creditors  as per           Section 230(6) of the Act in  meetings  duly

held  in  terms  of Section      230(1) read with sub-sec- tions (3) to (5) of Section 230 of the Act     and     the Minutes    thereof are   duly   placed before  the  Tribu- nal.

As regards the observa- tion   made   in   Para- graph IV (c) of the said Report, it is stated that the in view of the affi- davits  of  consent  ob- tained   from   all   the shareholders    of    the Transferor      Compa- nies, Hon’ble Tribunal vide its order dated 4th May    2020    in    CA

(CAA) No.636/MB.IV/2020

was  pleased  to  grant dispensation    of    the meetings  of  the  share- holders  of  the  Trans- feror  Companies.  The Hon’ble Tribunal was also  pleased  to  grant dispensation    of    the meetings  of  the  share- holders   and   creditors on the ground that the Scheme  did not  entail any  reconstructions  or arrangement  with  ei- ther the creditors of the Petitioner   Companies or  shareholders  of  the Transferee Company.

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IV (d)

Hon’ble Tribunal may kindly direct the  petitioners  to file an affidavit to the extent that the Scheme   enclosed to Company Ap- plication & Com- pany      Petition, are  one  and  the same and there is no     discrepancy

/any change/changes are    made,    for changes   if   any, liberty be given to Central   Govern- ment  to  file  fur- ther report if any required.

As regards the observa- tion   made   in   Para- graph IV (d) of this Re- port,    the    Petitioner Companies   undertake and  confirm  that  that the Scheme attached to the  Company  Petition is the Updated Scheme of Amalgamation and the   change   as   com- pared to the Scheme of Amalgamation       at- tached to the Company Application    was    to only       update       the changes in the Author- ised  and  Issued  Share Capital   of   the   Peti- tioner         Companies (Clause  3  and  Clause

14   of   the   Scheme), which   had   occurred during the intervening period i.e. between the date   of   filing   of   the Company  Application and  of  the  Company Petition . Save and ex- cept for the abovemen- tioned change, the Pe- titioner Companies un- dertakes  and  confirm that   the   Scheme   en- closed to Company Ap- plication    and    Com- pany Petition, are one and the same.

On the basis of obser- vations made by the Regional     Director and reply submitted by    the    Petitioner Company    thereon, Hon’ble     Tribunal may  pass  appropri- ate  order/orders  as deem fit on merit.

IV (e)

The    Petitioners under  the  provi- sions   of   Section 230(5)     of     the Companies   Act, 2013     have     to serve   notices   to concerned       au- thorities     which are likely to be af- fected  by  Amal- gamation.    Fur- ther, the approval to  the  scheme  by this Hon’ble Tri- bunal   may   not deter    such    au- thorities   to  deal with any of the is- sues  arising  after giving   effect   to this  scheme.  The decision  of  such Authorities       is

binding   on   the Petitioner   Com- pany(s).

As regards to the obser- vation  made  in  Para- graph IV (e) of this Re- port,    the    Petitioner Companies      confirm that  as  per  the  provi- sions of section 230(5) of the Companies Act, 2013,   the   Petitioner Companies have served notices  to  all  the  con- cerned authorities; Re- gional Director, Regis- trar of Companies, Of- ficial  Liquidator,   In- come Tax Department and  Goods  and  Ser- vices  Tax Department and   the   observations made by the concerned authorities  have  been duly   responded   and

dealt with by the Peti- tioner        Companies, wherever required.

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IV (f)

Petitioner     com- pany have to un- dertake to comply with         section 232(3)(i) of Com- panies Act, 2013, where  the  trans- feror  company  is dissolved, the fee, if any paid by the transferee     com- pany  on  its  au- thorised    capital shall    be    set-off against  any  fees payable   by   the transferee     com- pany  on  its  au- thorised    capital subsequent to the amalgamation and therefore, pe- titioners to affirm that they comply the  provisions  of the section.

As regards to the obser- vation  made  in  Para- graph IV (f) of this Re- port,    the    Petitioner Company  3  /  Trans- feree  Company  under- take that the setting-off of the fees paid by the Transferor  Companies on     its     Authorised Share Capital shall be in accordance with the provisions   of   Section 232(3)(i)  of  the  Com- panies Act, 2013.

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IV (g)

As   per   part   B clause   5(5.5)   of the  Scheme  (Ac- counting    Treat- ment in the books and       financial statements  of  the Transferee  Com- pany),  The  sur- plus/deficit,      if any  arising  after taking  the  effect

of clause 5.1, 5.2

and   clause   5.4, after giving the ef- fect of the adjust- ments  referred  to in clause 5.3 shall be    adjusted    in “Capital        Re- serve”  in  the  fi- nancial       state- ments     of     the transferee    Com- pany:  In  this  re- gard, it is submit- ted  that  the  sur- plus so credited to “Capital  Reserve arising    out    of Amalgamation” shall not be avail- able  for  distribu- tion  of  dividend and other similar purposes.

As regards to the obser- vation  made  in  Para- graph IV (g) of this Re- port,    the    Petitioner Company   3/   Trans- feree  Company  under- takes    that    the   sur- plus/deficit,    if    any arising after taking the effect of clause 5.1, 5.2 and  clause  5.4,  after giving the effect of the

adjustments referred to in  clause  5.3  shall  be adjusted   in   “Capital Reserve”  and  shall  be treated as Capital Re- serve   arising   out   of Amalgamation  which shall  not  be  available for distribution of divi- dend and other similar purposes.

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IV (h)

As Part C Clause- A14(14.1 to 14.5)

&   Clause-B)   of the Scheme (Con- sideration Of Au- thorised      Share

Capital         and Amendments   in Memorandum, of  Association  of the      Transferee Company) In this regard  it  is  sub- mitted   that   the fee payable by the Transferee  Com- pany  shall  be  in

accordance   with the  provisions  of Section  13,  Sec-

tion  14,  Section

61,  and  Section 232(3)(i)   of   the Companies    Act 2013,   further   if any stamp duty is payable  then  the same   should   be paid   in   accord- ance  with  appli- cable  laws  of  the State;

As regards to the obser- vation as stated in Par- agraph  IV  (h)  of  this Report,  the  Petitioner Company   3/   Trans- feree   Company   sub- mits that as per Clause 14 of the Scheme, upon the  Scheme  becoming effective,   the   Author- ised   Capital   of   the Transferor  Companies shall  get  merged  with that  of  the  Petitioner Company   3/   Trans- feree  Company  with-

out  payment  of  addi- tional  fees  and  stamp duties    as    the    said fees/duties    have    al- ready been paid by the Transferor  Companies and    the    Authorised Capital   of   the   Peti- tioner  Company  3  / Transferee    Company will   be   increased   to that effect and that no separate   procedure   is required to be followed as per the provisions of Section 13, Section 14, Section 61 and Section 232(i) or any other ap- plicable   provisions   of the   Companies   Act, 2013.

On the basis of obser- vations made by the Regional     Director and reply submitted by    the    Petitioner Company    thereon, Hon’ble     Tribunal may  pass  appropri- ate  order/orders  as deem fit on merit.

IV (i)

Since   the   Peti- tioner         Com- pany/ Transferee Company    have non-resident shareholders, therefore,    it    is subject    to    the compliance       of Section 55 of the Companies   Act, 2013  the  FEMA

Regula- tions/RBI Guidelines by the Transferee  Com- pany.

As regards to the obser- vation as stated in par- agraph  IV  (i)  of  this Report,  the  Petitioner Company   3/   Trans- feree   Company   sub- mits  that  the  Scheme does   not   provide   for any  issue  or  redemp- tion     of     preference shares    and    accord- ingly, the provisions of Section 55 of the Com- panies Act, 2013 shall not  apply  to  the  Peti- tioner   Company   3/ Transferee   Company. Further,   the   Scheme does   not   provide   for any   issue/transfer   of

any equity instruments to/from  the  non-resi- dent   shareholders   of the   Petitioner   Com- pany       3/Transferee Company and thus no compliance is required under FEMA Regula- tions   /   RBI   Guide- lines.

On the basis of obser- vations made by the Regional     Director and reply submitted by    the    Petitioner Company    thereon, Hon’ble     Tribunal may  pass  appropri- ate  order/orders  as deem fit on merit.

IV (j)

In view of the ob- servation    raised by     the     ROC Mumbai,    men- tioned in para 16 above             the

Hon’ble    NCLT may  pass  appro- priate    order/or- ders as deem fit;

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The Petitioner Com- panies has not men- tioned  anything  re- garding  observation made  in  Paragraph IV   (j)   of   the   Re- gional   Director   in their    reply.    Peti- tioner       Company may  be  directed  to submit  undertaking regarding    observa- tion   raised   by   the ROC         Mumbai, mentioned  in  Para 16 of the report and on the basis of obser- vations made by Re- gional         Director Hon’ble     Tribunal may  pass  appropri- ate  orders/order  as deem fit on merit.

The Counsel for the Petitioner Companies submit that with regards to the observation of the Regional Director in its Supplementary Report in Para IV(j) mentioned in Para 10 above, the Counsel of the Petitioner Companies submitted that the Scheme of Amalgamation is an arrange-ment between the Petitioner Companies and its shareholders and that there is no compromise or arrangement with any of the creditors of any of the Petitioner Companies. The Counsel further submitted that the rights of the creditors are not affected and all the creditors of the Petitioner Companies would all be paid off in the ordinary course of business. Furthermore, this Tribunal vide Order dated 4th May 2020 was pleased to dispense the meeting of the unsecured creditors of Pe-titioner Company 1 and Petitioner Company 2. In accordance with the directions of the Hon’ble Tribunal, the Petitioner Company 1 and Pe-titioner Company 2 had given notices of intimation to its unsecured creditors and no objection has been received thereof to the Scheme of Amalgamation. As far as Petitioner 3 is concerned this Tribunal vide Order dated 4th May 2020, was pleased to dispense the meeting of the creditors. The Counsel of the Petitioner Companies thus submits that an Affidavit dated 2 February 2022 undertaking protection of interests of Creditors is filed with this Tribunal.

The observations made by Regional Director have been explained by the Petitioner Companies in the above Para 10. The clarifications and undertaking given by the Petitioner Companies are hereby accepted by the Tribunal. Moreover, the Petitioner Companies undertake to com-ply with all statutory requirements as may be required under the Com-panies Act, 2013 and the Rules made thereunder. The said undertaking is accepted.

The Counsel for the Petitioner Companies submits that on issuance of notices to the regulatory authorities under Section 230 (5) the Income Tax Department issued a letter dated 5 February 2021 seeking clarifi-cations from the Transferee Company and in regard to the same the Petitioner Companies have duly responded vide letter dated 23 Febru-ary 2021 and the same is brought on record vide Affidavit dated 2 March 2021. Further, the Petitioner Companies clarify and undertake that as per clause 9 of the Scheme all legal proceedings of whatever nature shall be continued, prosecuted and enforced by or against the Transferee Company. The Income Tax Department shall be free to examine the aspect of any tax payable, if any, as a result of the Scheme and their rights remain intact to take out appropriate proceedings if required against the Transferee Company. Further, all tax issues aris-ing under the Scheme shall be dealt with in accordance with law.

The Official Liquidator, High Court, Bombay, has filed his report dated 11th August 2021, inter alia, stating therein that the affairs of the Petitioner Company 1 and Petitioner Company 2 have been conducted in a proper manner, not prejudicial to the interest of the shareholders of the Petitioner Company 1 and Petitioner Company 2 and that the Petitioner Company 1 and Petitioner Company 2 may be ordered to be dissolved without winding up by this Tribunal.

As the Petitioner Company 1 and Petitioner Company 2 are wholly owned subsidiaries of the Petitioner Company 3, no consideration shall be payable pursuant to the amalgamation of Petitioner Company 1 and Petitioner Company 2 into Petitioner Company 3.

Since all the requisite statutory compliances have been fulfilled CP(CAA)/1035/MB-IV/2020 is made absolute in terms of the prayer clauses of the said Company Scheme Petition.

The Scheme is hereby sanctioned with the Appointed Date of 1st Jan-uary 2020.

The Petitioner Companies are directed to file a copy of this Order along with a copy of the Scheme with the concerned Registrar of Com-panies, electronically along with E-Form INC-28 within 30 days from the date of receipt of the certified copy of Order by the Petitioner Com-panies.

On filing of this Order with the Registrar of Companies as instructed in paragraph 18 above, the Petitioner Company 1 and Petitioner Com-pany 2 shall stand dissolved.

The Petitioner Company 3 to lodge a copy of this Order along with the Scheme duly authenticated/certified by the Deputy Director or the As-sistant Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps for the purpose of adju-dication of stamp duty payable, if any, within 60 days from the date of receipt of the certified Order from the Registry of this Tribunal.

All concerned regulatory authorities to act on a copy of this Order along with Scheme duly certified by the Deputy Registrar or the Assis-tant Registrar, National Company Law Tribunal, Mumbai Bench.

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

Any concerned Authorities are at liberty to approach this Tribunal for any further clarification as may be necessary.

Ordered accordingly.