Preeti Infrastructure Limited Vs

H.V. Subba Rao, Member (Judicial)

The Bench is conveyed by video conference today.

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

The sanction of the Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 and the rules framed there under for the Scheme of Amalgamation of PREETI INFRASTRUCTURE LIMITED, the Amalgamating Company with KADOLI INVESTMENT LIMITED, the Amalgamated Company.

The Petitioner Companies have approved the said Scheme of Amalgamation by passing the Board Resolution dated 07th October, 2019, which are annexed to the respective Company Scheme Petitions.

The Learned Advocate appearing on behalf of the Petitioners states that the Petitions have been filed in consonance with the Order passed in the Company Scheme Application No.87 of 2020 of this Tribunal.

The Learned Advocate appearing on behalf of the Petitioners further states that the Petitioner Companies have complied with all requirements as per directions of the National Company Law Tribunal, Mumbai Bench and they have filed necessary affidavits of compliance in the National Company Law Tribunal, Mumbai Bench.

The Learned Counsel for the Petitioner Companies states that the First Petitioner Company presently carrying on business of consultancy services and investment in shares and stocks and that the Second Petitioner Company presently is carrying on business of trading / investments in shares / stocks / Bonds etc.

The rationale for the Scheme of Amalgamation of the Petitioner Companies would, inter alia, all the Companies are under the same management. The management is of the opinion that the merger will lead to synergies of operations and more particularly the following benefits:

a. Both the Petitioner Company No.1 and the Petitioner Company No.2 are under the same management and the arrangement of both the Companies shall result into consolidation of activities of two companies into single entity which will specify structure and will result into various benefits including:

b. Integration of operations.

c. Efficient management control and system.

d. To consolidate its business operation and provide significant impetus to growth of the Transferee Company business.

e. The arrangement would result in optimum utilization of resources which would reduce the administrative costs and other overheads which are presently being multiplicated because of separate entities.

f. Enhance values of all stakeholders in the long run.

g. The Sub-Division and reduction of share Capital of the Transferee Company be effected to bring capital within serviceable limits.

The Regional Director has filed their Report dated 12th May, 2021 inter-alia making the following observations in Paragraphs IV (a) to (g) which are reproduced hereunder:

Director

Company / Rejoinder

IV(a)

In compliance of AS-14 (IND AS-I03),  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.

So   far   as   the   observation   in paragraph  IV(a)  of  the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies    submits    that    in addition  to Compliance  of  AS- 14,   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.

IV(b)

As    per    Definition    of    the Scheme.

“Appointed  Date”  means  the 1st  day  of  April, 2019  or  such other     date     as     may     be approved    by    the    Hon’ble National      Company      Law Tribunal,  Mumbai  Bench  or any other appropriate authority.

"Effective   Date"   means   the date  or  last  of  the  dates  on which  certified  copies  of  the Order(s)     of     the     National Company      Law      Tribunal, Mumbai    Bench    sanctioning the  Scheme  are  filed  with  the Registrar      of      Companies, Maharashtra  by  the Transferor  Company  and  by the Transferee Company after obtaining  the  consents, approvals,    permissions,

resolutions,   agreements, sanction  and  orders necessary for     giving     effect     to     the Scheme.

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 be 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.

So   far   as   the   observation   in paragraph  IV(b)  of  the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies   submits   that   the Appointed   Date   is   1st   April, 2019   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  Petitioners Companies  will  be  compliance with requirements clarified vide circular No. F. No.7/12/2019/CL   -   I   dated 21.08.2019     issued     by     the Ministry of Corporate Affairs.

IV(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.

So   far   as   the   observation   in paragraph  IV  (c)  of  the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies   submits   that   the setting  off  of  fees  paid  by  the Transferor    Company    on    its Authorised  Share  Capital  shall be  accordance  with  provisions of    section    232(3)(i)    of    the Companies Act, 2013.

IV(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.

So   far   as   the   observation   in paragraph  IV  (d) of the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies   submits   that   the convening    and    holding    the meeting   of   the   Equity   Share Holders     of     the     Petitioner Companies  for  the  purpose  of considering  and  if  thought  fit, approving    with    or    without modification      the      proposed scheme   of   Amalgamation   of Preeti    Infrastructure    Limited (Transferor     Company)     with Kadoli    Investments    Limited (Transferee Company) is dispensed  with,  in  view  of  the consent  affidavit  given  by  the members     of     the    Petitioner Companies.

Further Learned Counsel of the Petitioner  Companies  submits that      Hon’ble      NCLT      has dispensed  with  the  meeting  of the  unsecured  creditors  of  the Petitioner  Companies  as  they have given No Objection to the proposed Scheme.

Further Learned Counsel of the Petitioner  Companies  submits that    there    are    no    Secured Creditors  of Petitioners

Companies.

IV(e)

Proposed    Scheme    is     also proposes    the    Reduction    of Share  Capital,  therefore,  the Petitioner  Companies  may  be directed     to     comply     with Section   61   and   66   of   the Companies Act, 2013.

So   far   as   the   observation   in paragraph  IV  (e)  of  the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies   submits   that   they will not pursue the reduction of shares  capital  as  proposed  in

the scheme.

IV(f)

Clause  -  11.3  of  Accounting Treatment    of    the    scheme; stated  that  The  excess,  if  any of the value of the assets over the  value  of  the  liabilities  of the      Transferor      Company transferred   to  and   vested   in the      Transferee      Company pursuant  to  this  Scheme  and recorded    in    the    books    of account    of    the    Transferee Company  and  after  adjusting aggregate    value    of    Equity Shares issued by the Transferee Company to members   of   the   Transferor Company  as  per  clause  11.1 will   be   credited   to   Capital Reserve Account in the books of   the  Transferee  Company. Similarly,  deficit  if  any  may be     debited     to     Goodwill Account  in  the  books  of  the Transferee Company.

In  this  regard  it  is  submitted that      as      per      Accounting Standard  14,  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. Such Capital Reserve,   arising   out   of   the amalgamation   shall   not   be considered as free reserve and not  available  for  distribution of dividend.

So   far   as   the   observation   in paragraph  IV  (f)  of  the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies   submits   that   they shall  comply  with  clause  11  of the   Accounting   Treatment   of the Scheme.

Further   the   Learned   Counsel for   the   Petitioner   Companies submits  that  Guidance  note  as per   Accounting   Standard   14 shall    be    complied    with    by crediting 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.     Such Capital  Reserve,  arising  out  of the  amalgamation  shall  not  be considered  as  free  reserve  and not available for distribution of dividend.

IV(g)

The      Petitioner      Company states    that    the    Transferee Company shall be in compliance with the provisions of Section 2(1B) of the Income Tax Act, 1961. In this    regards,    the    petitioner company shall ensure compliance of all the provisions of Income Tax Act and Rules thereunder.

So   far   as   the   observation   in paragraph  IV  (g)  of  the  Report of   the   Regional   Director   is concerned,  the  Learned Counsel     for     the     Petitioner Companies   submits   that   the Transferee   Company   shall  be in  compliance  with  provisions of Section 2(1B) of the Income Tax Act,1961. Further Learned Counsel     of     the     Petitioner Company   submits   that   they shall  ensure  compliances  of  all the  provisions  of  Income  Tax Act    ,1961    and    Rules    there under.

The observations made by the Regional Director have been explained by the Petitioner Companies in Para 9 above. The Representative of the RD has submitted that the explanations and clarifications given by the Petitioner Companies are found satisfactory and that they have no objection to the Scheme. The affidavit filed by the Petitioner Companies is accepted by this Tribunal and the Regional Director has filed his supplementary report on 09.07.2021.

The Official Liquidator has filed his report on 05th October, 2020 in the Consolidated Company Scheme Petition No.1034 of 2020, inter  alia,  stating  therein  that  the  affairs  of  the  Transferor Company have been conducted in a proper manner not prejudicial to the interest of the Shareholders of the Transferor Company and that the Transferor Company may be ordered to be dissolved by this Tribunal.

From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is notcontrary to public policy.

Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No.1034 of 2020 is made absolute in terms of clauses (a) to (c).

Petitioners are directed to file a copy of this Order along with a copy of the Scheme of Amalgamation with the concerned Registrar of Companies, electronically along with E-Form INC-28, in addition to physical copy within 30 days from the date of receipt of the Order from the Registry.

The Petitioner Companies to lodge a copy of this Order and the Scheme duly authenticated by the Deputy Registrar or Assistant Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable within 60 days from the date of receipt of the Order, if any.

All authorities concerned to act on a copy of this Order along with Scheme duly authenticated by the Deputy Director or Assistant Registrar, National Company Law Tribunal, Mumbai.

The Appointed Date is 1st April, 2019.

Ordered Accordingly.