Rico Castings Limited vs Registrar of Companies

,,,,,,

Subrata Kumar Dash, Member (Technical)",,,,,,

This is a Joint First Motion Application filed by Applicant Companies namely; Rico Castings Limited (Applicant Company No. 1/Transferor,,,,,,

Company) and Rico Jinfei Wheels Limited (Applicant Company No. 2/Transferee Company) under Section 230-232 of Companies Act. 2013 (the,,,,,,

Act) and other applicable provisions of the Act read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (the Rules) in",,,,,,

relation to the Scheme of Amalgamation between the Applicant Companies. The said Scheme is also attached as Annexure A to the Application.,,,,,,

The Applicant Companies have prayed for dispensing with the requirement of the convening of the meetings of the Equity Shareholders of,,,,,,

Applicant Company No. 2 and Secured of Applicant Company No. 1. It is further prayed for the convening of meetings of Equity shareholders of,,,,,,

Applicant Company No. 1 and Secured Creditors of Applicant Company No. 2 and Unsecured Creditors of all the Applicant Companies.,,,,,,

The Applicant Company No. 1/Transferor Company is presently engaged in the business of all or any of iron and steel founders, steel melters, steel",,,,,,

makers, steel shapers, steel roller and manufacturers, mechanical, civil electrical and general engineers and fabricators, contractors, tool makers, brass",,,,,,

founders, metal workers, manufacturer or steel metal and malleable grey castings. The Applicant Company No. 2/Transferee Company is presently",,,,,,

engaged in the business of designing, engineering, manufacturing, assembling, buying, selling, exporting, importing and dealing in wholesale & retail in",,,,,,

wheels of all descriptions, including Aluminium wheels for Bicycles, Scooters, Motorcycles and all other kinds of Automobiles including but not limited",,,,,,

to Passenger Cars, Tractors, Light Commercial Vehicles, Buses, Jeeps, All Terrain Vehicles and Off road vehicles etc.",,,,,,

It is submitted that the registered office of the Transferor Company is at B-26, Focal Point, Ludhiana, Punjab-141007 and Transferee Company is",,,,,,

at 38 K.M. Stone, Delhi-Jaipur Highway, Village Khandsa, c/o Rico Auto Industries Limited, Gurugram, Haryana-122001, therefore, both applicant",,,,,,

companies fall within the territorial jurisdiction of this Bench.,,,,,,

The rationale of the scheme is given below:-,,,,,,

i. The Transferor Company is engaged in the business of manufacturing auto components such as engine parts in the form of castings and possess technical,,,,,,

knowhow to manufacture such components. However, due to financial crunch and lack of other adequate resources, the Transferor Company is, however, unable to",,,,,,

leverage its strengths and attain optimum level of scales. Whereas the Transferee Company is engaged in manufacturing of auto components such as alloy wheels of,,,,,,

all descriptions for two wheelers, with leading auto manufacturers as its major customers. However, due to non-availability of non-manufacturing facility near the end",,,,,,

customers facilities, the Transferee Company is not operating at its optimum level. The management of both the Transferor and Transferee Company feels that the",,,,,,

both the companies can leverage its strength and supplement each other’s activities by consolidating the activities of both the companies.,,,,,,

ii. With the proposed amalgamation, the merged entity will be able to combine infrastructural facilities such as space, land, machinery, etc., and optimally utilize the",,,,,,

same for proposed business expansion unlocking growth potential, and simultaneously eliminate inter-company transactions including leasing of land etc.",,,,,,

iii. The amalgamation would also enable the merged entity to benefit from varied technology and expertise coming into pool including technology relating to,,,,,,

casting(s) and also utilization of spare manufacturing capacities of machineries.,,,,,,

iv. On amalgamation, the combined entity will overcome financial constraints and result in improved overall financial position of the combined entity and enable",,,,,,

better leverage of strength and raise further finance with the better asset base to boost future growth of the combined entity. Accordingly, it is proposed to",,,,,,

amalgamate the Transferee Company into the Transferee Company.,,,,,,

v. With the proposed amalgamation, the combined entity will overcome operational and production constraints including availability of work force/employees,",,,,,,

expertise and supervision, other common resources etc, being faced by the industry as such, more from the impact due to COVID-19 pandemic which may last for",,,,,,

long.,,,,,,

vi. The amalgamation would held the combined entity to focus more on expanding its business horizon and shall get benefits of updated technologies and enlarged,,,,,,

plant space. Further, the amalgamation would result in operational and administrative efficiencies, economies of scale, reduction in inter-company transactions and",,,,,,

consequently creation of greater value for shareholders and all other stakeholders;,,,,,,

vii. The amalgamation is also aimed at optimum and efficient utilization of capital, assets and facilities, reduction of overheads, administrative, managerial and other",,,,,,

expenditure and bring about operational rationalization, efficiency and optimum utilization of various resources;",,,,,,

viii. The combined entity will enhance the prospects amongst their existing valuable customers for getting orders of different auto components as Transferee,,,,,,

company has a large customer base than of the Transferor Company;,,,,,,

ix. The amalgamation would allow the Transferee Company to benefit from the complementary skills of the combined management team which will in turn enhance the,,,,,,

overall corporate capability, provide focused strategic leadership and facilitate better supervision of the business; and",,,,,,

x. The proposed consolidation of Transferee Company with and into the Transferee Company is aimed as maximizing shareholder value by increased financial,,,,,,

managerial, technical and marketing resources in the joint business and to achieve higher long-term financial returns by the Transferee Company.",,,,,,

It is stated that the Board of Directors of the Transferor Company and Transferee company in their meetings held on 26.07.2021 have considered,,,,,,

and unanimously approved the Scheme of Amalgamation subject to sanctioning of the same by this Tribunal. The copy of the Board Resolution of the,,,,,,

Transferor Company and Transferee Company is at Annexure C-3 and D-3 respectively of the petition. The Applicant Company No. 1 has authorized,,,,,,

Mr. Samarth Kapur, Director, Shri Om Prakash Aggarwal, Shri Rakesh Kumar Sharma, Shri B.M. Jhamb, Shri Sanjeev Garg and Shri Jagdsih Chand",,,,,,

Dwivedi and Applicant Company No. 2 has authorized Mr. Samarth Kapur, Director, Shri Om Prakash Aggarwal, Shri Rakesh Kumar Sharma, Shri",,,,,,

B.M. Jhamb, Shri Sanjeev Garg, Shri Jagdsih Chand Dwivedi and Shri Hira Lal to do all acts and deeds and things in relations to the Scheme. The",,,,,,

affidavit of Mr. Sanjeev Garg and Mr. Rakesh Kumar Sharma on behalf Applicant Companies have been filed in support of contents of the application,,,,,,

for seeking appropriate orders/directions.,,,,,,

The appointed date of the Scheme is 01.04.2021 as mentioned in the Clause 4.4 of Scheme of Amalgamation attached as Annexure-A of the,,,,,,

application.,,,,,,

It is stated that the Transferor Company and Transferee Company have filed the audited financial statements as on 31.03.2021 at Annexure- C2,,,,,,

and D2, respectively of the application. The provisional Financial Statement of all the applicant companies as on 30.09.2021 is attached as Annexure B",,,,,,

of Diary No. 01198/2 Dated 03.12.2021.,,,,,,

It is submitted that no investigation or proceedings are pending under the provisions of Companies Act, 2013 against any of the Applicant",,,,,,

Companies. It is also submitted that the Scheme does not provide for any Corporate Debt Restructuring against any of the Secured and Unsecured,,,,,,

Creditors of the Applicant Companies.,,,,,,

It is submitted that in pursuance of the proviso to Sec. 230 (7) and Section 232 (3) of the Act, the Applicant Companies has filed the certificates",,,,,,

dated 04.09.2021 and 03.09.2021 respectively issued by Statutory Auditors of Applicant Companies certifying that the Scheme is in compliance with,,,,,,

the Accounting Standards under Section 133 of the Act and the same is attached as Annexure-C-7 and D-7 of the application.,,,,,,

It is further submitted by the counsel for applicant companies that the valuation report has been submitted by Mr. Anil Rustgi, Registered Valuer",,,,,,

IBBI registration No.IBBI/RV/05/2019/12313 and Mr. Vikas Aggarwal, Registered Valuer, IBBI registration No.IBBI/RV/02/2018/10046 which are",,,,,,

attached as Annexure B of the application. As per valuation reports, Both Dated 26.07.2021, the following Share Exchange Ratio is suggested by both",,,,,,

the valuers:-,,,,,,

“1(One) Equity share of Rico Jenfei Wheels Ltd. of INR 10 each fully paid up for every 4(four) Equity shares of Rico Castings Ltd. of INR 10 each fully paid,,,,,,

up.â€​,,,,,,

Name of the

Applicant

Companies",Shareholders along with their consent,,Creditors along with their consents,,,

,"Equity

Shareholder","Consent

submitted on affidavit","Secured

Creditors","Consent

submitted on

affidavit","Unsecure

d Creditors","Consent

submitted on

affidavit

Applicant

Company No.1",9 ( Nine ),"NIL

(Meeting To Be Held)",NIL,NA,"83

(Eighty Three),","NIL,

(Meeting To

Be Held)

Applicant

Company

No.2",8Â ( Eight),"6 ( Six)

Consent          Â

of

94.29% of Value",4 ( Four),"NIL

(Meeting To Be

Held)","244

(Two

Hundred &

Forty Four)","NIL

(Meeting To

Be Held)

Accordingly, the directions of this Bench in the present case are as under:-",,,,,,

I.  In relation to Applicant Company No.1/Transferor Company:,,,,,,

a. The meetings of the Equity Shareholders be convened as prayed for on 10.04.2022 at 10:00 AM through Video Conferencing with facility of remote,,,,,,

e-voting, subject to notice of meeting being issued. The quorum of the meeting of the unsecured creditors shall be 4 in number or 40% in value of the",,,,,,

Equity Shareholders;,,,,,,

b. Since, there are no Secured Creditors in the Applicant Company No.1. Therefore, there is no scope for any meeting;",,,,,,

c. The meetings of the Unsecured Creditors be convened as prayed for on 10.04.2022 at 12:30 PM through Video Conferencing with facility of,,,,,,

remote e-voting, subject to notice of meeting being issued. The quorum of the meeting of the unsecured creditors shall be 34 in number or 40% in",,,,,,

value of the unsecured creditors;,,,,,,

II. In relation to Applicant Company No.2/Transferee Company,,,,,,

a. The meetings of the Equity Shareholders is dispensed with keeping in view the shareholding and ownership pattern of the company and the fact that,,,,,,

the consent by way of affidavits has been received;,,,,,,

b. The meetings of the Secured Creditors be convened as prayed for on 10.04.2022 at 11:00 AM through Video Conferencing with facility of remote,,,,,,

e-voting, subject to notice of meeting being issued. The quorum of the meeting of the secured creditors shall be 2 in number or 40% in value of the",,,,,,

unsecured creditors;,,,,,,

c. The meeting of the Unsecured Creditors is to be convened as prayed for on 10.04.2022 at 2:30 PM through Video Conferencing with facility of,,,,,,

remote e-voting, subject to notice of meeting being issued. The quorum of the meeting of the unsecured creditors shall be 98 in number or 40% in",,,,,,

value of the unsecured creditors;,,,,,,

III. In case the required quorum as noted above for the meetings is not present at the commencement of the meeting, the meeting shall be adjourned",,,,,,

by 30 minutes and thereafter the persons present and voting shall be deemed to constitute the quorum.,,,,,,

IV. Mr. S.K. Garg Narwana, Senior Advocate, address: Kothi No. 2024, Sector 21-C, Chandigarh-160022, Mobile No. 9841044861, email id:",,,,,,

skgarg24@yahoo.com, Â is appointed as the Chairperson for the meeting to be called under this order. An amount of ₹2,00,000/- (Rupees Two Lakhs",,,,,,

Only) be paid for his/her services as the Chairperson.,,,,,,

V. Mr. Nahush Jain, Advocate, Office Address: 898, First Floor, Phase-IV, Mohali- 160059, Mobile No. 9914012447, e-mail id:n .jain@lexlit.in  is",,,,,,

appointed as the Alternate Chairperson for the meeting to be called under this order. An amount  of ₹1,50,000/-(Rupees One Lakh Fifty Thousand",,,,,,

Only) be paid for his/her  services as the Alternate Chairperson.,,,,,,

VI. Mr. Rattan Lal, FCS, address: 3rd Floor, SCF-14, I-Block Market, Opposite  Durga Mata Mandir, Saraba Nagar, Ludhiana-",,,,,,

141001, Mobile No.  8284000886, email id:r attanchanjotra@gmail.com, is appointed as the Scrutinizer for the above meeting to be called under",,,,,,

this order. An amount of  ₹1,00,000/- (Rupees One Lakh Only) be paid for his/her services as the  Scrutinizer.",,,,,,

VII. The fee of the Chairperson, Alternate Chairperson and Scrutinizer and other out of pocket expenses for them shall be borne jointly by the",,,,,,

Applicant Company No.1/Transferor Company and Applicant Company  No.2/Transferee Company.,,,,,,

VIII. It is further directed that individual notices of the said meetings shall be sent by Applicant Company No.1/Transferor Company andÂ,,,,,,

Applicant Company  No.2/Transferee Company through registered post or speed post or through  courier or e-mail, 30 days in advance before",,,,,,

the schedule date of meeting, indicating the day, date, the place and time as aforesaid, together with a copy of the Scheme, copy of explanatory",,,,,,

statement with Valuation Report as discussed in paras 4 of this order required to be sent under the Companies Act, 2013 and the applicable Rules and",,,,,,

any other documents as may be prescribed under the Act shall also be duly sent with the notice.,,,,,,

IX. It is further directed that along with the notices, Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee",,,,,,

Company shall also send, statements explaining the effect of the scheme on the creditors, key managerial personnel, promoters and non-promoter",,,,,,

members etc. along with effect of the arrangement on any material interests of the Directors of the Company or the debenture trustees, if any, as",,,,,,

provided under sub-section (3) of Section 230 of the Act.,,,,,,

X. It is also directed that the provisional accounting statement of Applicant Company No.1/Transferor Company and Applicant Company,,,,,,

No.2/Transferee Company as on 30.09.2021 or as on a subsequent date be also circulated for the aforesaid meeting in terms of Section 232 (2) (e) of,,,,,,

the Act.,,,,,,

XI. That the Applicant Company No.1/Transferor Company shall publish advertisement in “Financial Express†(English, Chandigarh Edition) and",,,,,,

“Jagbani †(Punjabi, Punjab Edition) and Applicant Company No.2/Transferee Company shall publish advertisement in “Financial Expressâ€",,,,,,

(English, Delhi NCR Edition) and “Financial Express†(Hindi, Delhi NCR Edition) with a gap of at least 30 clear days before the aforesaid",,,,,,

meeting, indicating the day, date and place and the time of meeting as aforesaid. It be stated in the advertisement that the copies of “Schemeâ€​, the",,,,,,

Explanatory Statement required to be published pursuant to Section 230 to 232 of the Act. The Applicant Company No.1/Transferor Company and,,,,,,

Applicant Company No.2/Transferee Company shall also publish the notice on its website, if any.",,,,,,

XII. It shall be the responsibility of the Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee Company to ensure,,,,,,

that the notices are sent under the signature and supervision of the authorized representative of the company on the basis of Board resolutions and that,,,,,,

they shall file their affidavits in the Tribunal at least ten days before the date fixed for the meeting.,,,,,,

XIII. Voting shall be allowed on the “Scheme†through electronic means which will remain open for a period as mandated under Clause 8.3 of,,,,,,

Secretarial Standards on General Meetings to the Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee Company,,,,,,

under the Act and the Rules framed thereunder.,,,,,,

XIV. The Scrutinizer’s report will contain his/her findings on the compliance to the directions given in Para VIII to XIII above.,,,,,,

XV. The Chairperson shall be responsible to report the result of the meeting to the Tribunal in Form No. CAA-4, as per Rule 14 of the Companies",,,,,,

(Compromises, Arrangements and Amalgamations) Rules, 2016 within 7 (seven) days of the conclusion of the meeting. He would be fully assisted by",,,,,,

the authorized representative/Company Secretary of the Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee,,,,,,

Company, and the Scrutinizer, who will assist the Hon’ble Chairperson and Alternate Chairperson in preparing and finalizing the report.",,,,,,

XVI. The Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee Company shall individually and in compliance of,,,,,,

sub-section (5) of Section 230 of the Act and Rule 8 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 send notices in",,,,,,

Form No. CAA-3 along with copy of the Scheme, Explanatory Statement and the disclosures mentioned in Rule 6 of the “Rules†to (i) Central",,,,,,

Government through the Regional Director (Northern Region), Ministry of Corporate Affairs, New Delhi (ii) Registrar of Companies, Punjab and",,,,,,

Chandigarh (In case of Applicant Company No.1); Registrar of Companies, NCT (iii) Official Liquidator; (iv) Income Tax Department through the",,,,,,

Nodal Officer â€" Principal Commissioner of Income Tax, NWR, Aayakar Bhawan, Sector 17-E, Chandigarh by mentioning the PAN number of the",,,,,,

Applicant Companies; and such other Sectoral Regulator(s) governing the business of the Transferee Companies, if any, stating that representation, if",,,,,,

any, to be made by them shall be sent to the Tribunal within a period of 30 days from the date of receipt of such notice and copy of such",,,,,,

representation shall be simultaneously sent to the concerned companies, failing which it shall be presumed that they have no objection to the proposed",,,,,,

Scheme.,,,,,,

XVII. The Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee Company shall furnish a copy of the Scheme,,,,,,

free of charge within one day of any requisition for the Scheme made by any creditor or member/shareholder entitled to attend the meeting as,,,,,,

aforesaid.,,,,,,

XVIII. The authorized representative of the Applicant Company No.1/Transferor Company and Applicant Company No.2/Transferee Company shall,,,,,,

furnish an affidavit of service of notice of meeting and publication of advertisement and compliance of all directions contained herein at least a week,,,,,,

before the proposed meeting.,,,,,,

XIX. All the aforesaid directions are to be complied with strictly in accordance with the applicable laws including forms and formats contained in the,,,,,,

Rules as well as the provisions of the Companies Act, 2013 by the Applicant Company No.1/Transferor Company and Applicant Company",,,,,,

No.2/Transferee Company.,,,,,,

With the aforesaid directions, this First Motion Application stands disposed of. A copy of this order be supplied to the learned counsel for the",,,,,,

Applicant Companies who in turn shall supply a copy of the same to the Chairperson, Alternate Chairperson and the Scrutinizer immediately.",,,,,,