Suchalis Confectionery Private Limited Vs

Harnam Singh Thakur, Member (Judicial)

This is a Joint First Motion Application filed by Applicant Companies namely; SUCHALIS CONFECTIONERY PRIVATE LIMITED (for short hereinafter referred to as “Applicant Company/ Transferor Company No.1”) and MUHAVRA ENTERPRISES PRIVATE LIMITED (for short hereinafter referred to as “Applicant Company/Transferee Company No.2”) under Section 230-232 of the 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 respective companies. The said Scheme is attached as Annexure 3 with the Application.

The Transferor Company is presently engaged in the business of, inter alia, manufacturing, producing, buying, selling and distributing all types and kinds of bread bakery products, confectionery, sweets and namkeen foods products.

The Transferee Company is presently engaged in the business of, inter alia, manufacturing, processing, distributing, marketing and selling goods related to specialty food and beverage products, including, but not limited to coffee products (beverages, roasted beans coffee powder and coffee products), chocolate products and mushrooms and providing services such as saleable drinks in a kiosk format or via delivery for personal and commercial use, throughout India and overseas.

It is submitted that the registered offices of the Applicant Companies are situated in Gurugram, therefore, the territorial jurisdiction of Applicant Companies falls with this Bench.

The rationale of the Scheme is given below: -

a. The Amalgamation between the Applicant Companies (Amalgamation) is expected to achieve cost savings from more focused operational efforts, rationalization and standardization of business processes by way of consolidation.

b. The Amalgamation is expected to achieve business synergies and is expected to enable carrying on the businesses more economically.

c. The Amalgamation is intended to rationalize the business operations and activities, to utilize the potential for growth and diversification and for better optimization of costs and resources.

d. The Amalgamation would result in consolidation to enable better and more efficient management and more opportunities to vigorously pursue growth and expansion.

It is stated that the Board of Directors of the Transferor Company and the Transferee Company, in their meetings held on 02.01.2023 and 20.12.2022, respectively, have considered and unanimously approved the Scheme subject to the sanction of the same by this Tribunal. The copies of the Board Resolutions of the Transferor Company and the Transferee Company are attached as Annexure-4 and Annexure-5 respectively of the Application.

The appointed date of the Scheme is 01.04.2022 as defined in Part-A Clause 1.03 of Scheme of Amalgamation which is attached as Annexure- 3 with the Application.

It is stated that the Transferor Company has filed audited financial statements as on 31 March 2022 and unaudited financial statements as on 31 December 2022 as Annexure-11. It is further stated that the Transferee Company has filed audited financial statements as on 31 March 2022 and unaudited financial statements as on 31 December 2022 as Annexure-12.

It is further submitted that the valuation reports have been submitted by Mr. Subodh Kumar, an Independent Registered Valuer, bearing Registration No. IBBI/RV/05/2019/11705, which are attached as Annexure-6 of the Application. As per the said valuation reports dated 17.12.2022, the following share exchange ratio has been proposed in the Scheme:-

“For 2.426 shares of the Transferor Company, the Transferor Member shall be issued 1 (One) Equity Share of the Transferee Company.”

It is deposed by way of affidavits furnished by authorised signatories of the Applicant Companies that the Application with respect to the Scheme sets out all material facts under Section 230(2)(b) and 230(2)(c) of the Act relating to the Applicant Companies, and that the latest audited accounts of the Applicant Companies as on 31 March 2022 have been filed. Further, there are no material investigations or proceedings pending against the Applicant Companies under the Companies Act, 2013 or any other provision of law which have a material adverse effect on the sanction of the Scheme. There are no material legal proceedings against the Applicant Companies under applicable laws that adversely impact the sanction of the Scheme (Annexure-16 of the Application).

It is deposed by way of affidavits furnished by authorised signatories of the Applicant Companies that notice of the Scheme is to be issued and sent only to the following statutory authorities: 1) the Regional Director, Northern Region, Ministry of Corporate Affairs, 2) the Jurisdictional Registrar of Companies, 3) the Income Tax Department through the Nodal Officer – Principal Commissioner of Income Tax, and 4) the Official Liquidator. Besides the above-mentioned authorities, there are no other sectoral regulators/authorities pertaining to the Applicant Companies (Annexure-18 of the Application).

It is submitted that in the present Scheme of Amalgamation that the do not involve the reduction of share capital in terms of Section 66 of the Companies Act, 2013 and that the Scheme does not provide for any arrangement with the outside creditors and thus thereby Corporate Debt restructuring is not applicable to the Scheme.

The authorized signatory of Applicant Company has stated that there are no investigations or proceedings of any manner before any authority including under Sections 210 & 226 of the Companies Act, 2013. The relevant paras for the same at Para No. 40 and 41 of the application at Page No. 44.

The Applicant Company have furnished the following documents:-

i. Proposed Scheme of Amalgamation (Annexure 3 with the application).

ii. Certificate of Incorporation along with Memorandum and Articles of Association of the Applicant Companies (Annexure 1 and 2 with the Application).

iii. List of Equity Shareholders of the Applicant Companies duly certified by Swati A Gupta & Associates, Chartered Accountants as on 09.02.2022 (Annexure 7 and 9 with the Application).

iv. List of Secured and Unsecured Creditors dated 19.09.2022 of the Applicant Company duly certified by Swati A Gupta & Associates, Chartered Accountants (Annexure 8 and 10 with the Application).

v. Certificate by the Statutory Auditor to the effect that the Accounting treatment proposed in the Scheme is in conformity with Section 133 of the Companies Act, 2013 (Annexure 13 with the Application).

vi. Audited Financial Statement for financial year 2021-2022 of the Applicant Companies (Annexure 11 and Annexure 12 with the Application).

vii. Unaudited Financial Statements for the period ended on 30.09.2022 of the Applicant Company (Annexure 11 and Annexure 12 with the Application).

viii. Affidavits of sectoral regulators of the Applicant Companies (Annexure 18 with the Application).

ix. Affidavit with regard to no legal proceedings pending against the Applicant Companies (Annexure 17 with the Application).

The Transferor Company/ Applicant Company No. 1 i.e. Suchalis Confectionery Private Limited was incorporated under the provisions of the Companies Act, 1956 on 27.09.2018 bearing CIN U15490HR2018PTC076091 with the Registrar of Companies Delhi & Haryana and The Transferee Company/ Applicant Company No. 2 i.e. Muhavra Enterprises Private Limited was incorporated under the provisions of the Companies Act, 1956 on 26.09.2012 bearing CIN U15492HR2012PTC047234 with the Registrar of Companies Delhi & Haryana.

The Applicant Companies have furnished the details of the Equity Shareholders, Secured Creditors and Unsecured Creditors which are as follows:

Name of the Applicant Companies

Shareholders along with their consent on affidavit

Creditors along with their consents on affidavit

Equity Shareholder

Consents submitted on affidavit

Preference

Shareholders

Consents submitted on affidavit

Secured Creditors

Consents submitted on affidavit

Unsecured Creditors

Consents submitted on affidavit

Applicant Company No. 1

4

Meetings to be convened

NA

NA

INR 1,52,05,44 5/- in value

Meetings to be convened

INR 51,44,921/- in value

Meetings to be convened

Applicant Company No. 2

15

Meetings to be convened

79

Meetings to be convened

INR 20,17,38,1 29/- in value

Meetings to be convened

INR 5,19,62,349/- in value

Meetings to be convened

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 meeting of the Equity Shareholders of the Applicant Company No.1/Transferor Company No.1 be convened as prayed for on 22.07.2023 (Saturday) at 03:30 PM through Video Conferencing with facility of remote e-voting, subject to notice of the meeting being issued. The quorum of the meeting of the Equity Shareholders shall be 2 in number or 40% in value of the Equity Shareholders;

b. The meeting of the Secured Creditors of the Applicant Company No.1/Transferor Company No.1 be convened as prayed for on 22.07.2023 (Saturday) at 10:30 AM through Video Conferencing with facility of remote e-voting, subject to notice of the meeting being issued. Although, the total no. of Secured Creditors is not mentioned in the list attached as Annexure 8. Therefore, the quorum of the meeting of the Secured Creditors shall be 40% in value of the Secured Creditors;

c. The meeting of the Unsecured Creditors of the Applicant Company No.1/Transferor Company No.1 be convened as prayed for on 22.07.2023 (Saturday) at 01:00 PM through Video Conferencing with facility of remote e-voting, subject to notice of the meeting being issued. Although, the total no. of Unsecured Creditors is not mentioned in the list attached as Annexure 8. Therefore, the quorum of the meeting of the Unsecured Creditors shall be 40% in value of the Unsecured Creditors;

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

a. The meeting of the Equity Shareholders and all categories of Preference Shareholders of the Applicant Company No.2/Transferee Company be convened as prayed for on 23.07.2023 (Sunday) at 03:30 PM through Video Conferencing with facility of remote e-voting, subject to notice of the meeting being issued. The quorum of the meeting of the Equity Shareholders shall be 38 in number or 40% in value of the Equity Shareholders ;

b. The meeting of the Secured Creditors of the Applicant Company No.2/Transferee Company be convened as prayed for on 23.07.2023 (Sunday) at 10:00 AM through Video Conferencing with facility of remote e-voting, subject to notice of the meeting being issued. Although, the total no. of Secured Creditors is not mentioned in the list attached as Annexure 10. Therefore, the quorum of the meeting of the Secured Creditors shall be 40% in value of the Secured Creditors;

c. The meeting of the Unsecured Creditors of the Applicant Company No.2/Transferee Company be convened as prayed for on 23.07.2023 (Sunday) at 01:00 PM through Video Conferencing with facility of remote e-voting, subject to notice of the meeting being issued. Although, the total no. of Unsecured Creditors is not mentioned in the list attached as Annexure 10. The quorum of the meeting of the Unsecured Creditors shall be 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 Raghu Nayyar, Former Member (Technical) NCLT, Chairperson, address: A45 Retreat Apartments, Plot No. 20, IP Extension, New Delhi - 110092, Mobile No. 9811066745, Email id: raghunayyar@yahoo.com is appointed as the Chairperson for the meetings to be called under this order. An amount of ₹ 2,00,000/- (Rupees Two lakhs Only) be paid for his services as the Chairperson.

V. Ms.Ekakshra Mandhar, Advocate, address: House Number-1081, Sector-8,Chandigarh, Mobile No. 9814166666, e-mail id: Ekakshra@amcpro.in, is appointed as the Alternate Chairperson for the meetings to be called under this order. An amount of ₹1,25,000/- (Rupees One Lakh Twenty Five Thousand Only) be paid for her services as the Alternate Chairperson.

VI. Mr. Salil Yadav,Chartered Accountant, address: SCO 13 (2nd Floor) Industrial Area, Phase-9, Mohali-160062, Mobile No.7814036887, email id: casalilyadav@gmail.com, is appointed as the Scrutinizer for the above meetings to be called under this order. An amount of ₹1,00,000/- (Rupees One Lakh Only) be paid for his 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 by Applicant Company jointly. It is further directed that along with the notices, Applicant Companies shall also send, statements explaining the effect of the scheme on the creditors, key managerial personnel, promoters and non-promoter members, etc. along with the effect of the scheme of amalgamation 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.

VIII. It is also directed that the Provisional Account statements of Applicant Companies as on 31.12.2022 or as on a subsequent date be also circulated for the aforesaid meeting(s) in terms of Section 232 (2) (e) of the Act.

IX. That the Applicant Companies shall publish an advertisement with a gap of at least 30 clear days before the aforesaid meeting, indicating the day, date and place and time of the meeting as aforesaid, to be published in “Financial Express” (English) and “Jansatta” (Hindi), both in Delhi NCR Edition. The publication shall also indicate that the explanatory statement required to be furnished pursuant to Sections 230 & 232 read with Section 102 of the Companies Act, 2019 can be obtained free of charge at the registered office of the Applicant Companies. Applicant Companies shall also publish the notice on its website if any.

X. 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 Companies under the Act and the Rules framed thereunder.

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

XII. 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. The Chairperson would be fully assisted by the authorized representative/Company Secretary of the Applicant Companies and the Alternate Chairperson. The Scrutinizer will assist the Hon’ble Chairperson and Alternate Chairperson in preparing and finalizing the report.

XIII. The Applicant Companies shall individually and in compliance with 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) Jurisdictional Registrar of Companies; (iii) the Official Liquidator; (iv) Income Tax Department through the Nodal Officer – Principal Commissioner of Income Tax, NWR, Aayakar Bhawan, Sector 17-E, Chandigarh mentioning the PAN number of the Applicant Companies; and to such other Sectoral Regulator(s) governing the business of the Applicant Companies, if any, stating that report on the same, if any, shall be sent to this Tribunal within a period of 30 days from the date of receipt of such notice and copy of such report shall be simultaneously sent to the applicant companies, failing which it shall be presumed that they have no objection to the proposed Scheme.

XIV. The Applicant Companies 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.

XV. The authorized representative of Applicant Companies 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.

XVI. 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 Companies

With the aforesaid directions, this First Motion Application is allowed with liberty to Applicant Companies to file Second Motion Petition. A copy of this order be supplied to the learned counsel for the Applicant Company who in turn shall supply a copy of the same to the Chairperson, Alternate Chairperson and the Scrutinizer immediately.