Trugrit Comex Private Limited Vs

Kishore Vemulapalli, Member (Judicial)

The Bench convened through video conferencing.

Heard the learned Counsel for the Petitioners and the representative of the Regional Director Western Region, Ministry of Corporate Affairs, Mumbai. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petition.

The sanction of this Tribunal is sought under Sections 230 to 232 read with Section 66 and other applicable provisions of the Companies Act, 2013 to the said Trugrit Comex Private Limited with Peaberry Language Private Limited and their respective shareholders.

The Petitioner Companies have approved the Scheme by passing the Board Resolutions at their respective board meetings held on 20th July, 2021 and have approached the Tribunal for sanction of the Scheme.

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

The First Petitioner Company and the Second Petitioner Company are companies within the same group. The proposed Scheme will result in organizational efficiencies, reduction in over-heads, administrative, operational costs and other expenses and optimal utilization of various resources. It will prevent cost duplication and the resultant operations would be substantially cost-efficient.

The Learned Counsel for the Petitioner Companies further submits that the First Petitioner Company is engaged in the business of manufacturing and trading of Coal and Coke products, Metal & Metal Scrap and all kinds of industrial fuels and the Second Petitioner Company is engaged in the business of providing language translation services. Also, the Second Petitioner Company has started the business of manufacturing and trading of Coal and Coke products, Metal & Metal Scrap and all kinds of industrial fuels.

The Learned Counsel for the Petitioner Companies further submits that the present Company Petition is filed in consonance with Section 230-232 of the Companies Act, 2013 and in terms of order pronounced on 17.08.2021 in CA(CAA)/184/MB/2021.

Learned Counsel appearing on behalf of the Petitioner Companies has stated that the Petitioner Companies have complied with all requirements as per directions of this Tribunal and they have made requisite filings to demonstrate compliance with this Tribunal. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, if and to the extent applicable, as may be required under the Companies Act, 2013 and the rules made thereunder. The said undertaking is accepted.

Cancellation of Equity Shares of the Transferee Company held by the Transferor Company:

On the Scheme becoming effective, the equity shares of the Transferee Company held by the Transferor Company shall stand cancelled. Accordingly, the share capital of the Transferee Company shall stand reduced to the extent of the face value shares held by the Transferor Company in the Transferee Company.

Such reduction of share capital of the Transferee Company as provided in Clause above shall be effected as an integral part of the Scheme and the orders of the NCLT sanctioning the Scheme shall be deemed to be an order under Section 66 of the Act confirming the reduction and no separate sanction under Section 66 of the Act will be necessary. The Transferee Company shall not be required to add the words “and reduced” as a suffix to its name consequent upon such reduction.

The Authorised, Issued, Subscribed-and Paid-up Share Capital of the Transferor Company as on 31st March 2020 as under:

Particulars

Amount

Authorized Capital

1,00,00,000 Equity shares of Rs.10/- Each

10,00,00,000

Total

10,00,00,000

Issued Subscribed and Paid-up Capital

5,00,000 Equity shares of Rs.10/- each

50,00,000

Total

50,00,000

The Authorised, Issued, Subscribed-and Paid-up Share Capital of the Transferee Company as on 31st March 2020 as under:

Particulars

Amount

Authorized Capital

1,00,000 Equity shares of Rs.10/- Each

10,00,000

Total

10,00,000

Issued Subscribed and Paid-up Capital

10,000 Equity shares of Rs.10/- each

1,00,000

Total

1,00,000

Learned Counsel appearing on behalf of the Petitioner Companies submits that pursuant to the Scheme becoming effective and consequent Amalgamation of the Transferor Company with the Transferee Company, the Authorised Share Capital of the Transferee Company would be increased and reclassified as under:

Particulars

Amount

Authorized Capital

1,01,00,000 Equity shares of Rs.10/- Each

10,10,00,000

Total

10,10,00,000

The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, has filed a Report dated 17th December, 2021 inter-alia stating in paragraphs IV (a) to (h). In response to the observations made by the Regional Director, the Petitioner Companies have also given necessary clarifications and undertakings vide their Rejoinder Affidavit dated 2nd June, 2022. In

response to the reply of the Petitioner Companies, the Regional Director has filed his Supplementary Report dated 2nd June, 2022. The observations made by the Regional Director and the clarifications and undertakings given by the Petitioner Companies and the observations of the Regional Director in the Supplementary Report is summarized in the table below:

Sr. No. Para (IV)

RD

Report/Observations

Response of the Petitioner Companies

Observation  of Regional Director in Supplementary

Report

IV(a)

In   compliance   of   AS-14 (IND        AS-103),        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.

As far as the observation of the Regional Director, as stated in IV (a) of the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies     undertakes that      it      shall      pass

applicable          necessary accounting     entries     in connection  with  the  AS-

14   (IND   AS-103)   and comply   with   all   other applicable    Accounting Standards     such     AS-5

(IND AS-8) etc.

Reply    of    the Petitioner Companies appears to be satisfactory.

IV(b)

As  per  Definition  of  the Scheme

“Appointed  Date”  means 1st  day  of  April  2020  or such other date as may be fixed  or  approved  by  the National   Company   Law Tribunal   at   Mumbai   or such     other     competent authorities; and

“Effective   Date”   means the   date   on   which   the certified  or  authenticated copies      of      the      order sanctioning   the   Scheme, passed   by   the   National Company   Law   Tribunal at  Mumbai  are  filed  with the           Registrar           of Companies,         Mumbai, Maharashtra.

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 and clarified  vide  circular  no. F.   No.   7/12/2019/CL-I dated   21.08.2019   issued by      the      Ministry      of Corporate Affairs.

As far as the observation of the Regional Director, as stated in IV (b) of the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies  submits  that the  Appointed  Date  i.e. 1st  April  2020  has  been clearly  indicated  in  the Scheme    in    accordance with       provisions       of section    232(6)    of    the Companies     Act     2013 and  the  scheme  shall  be effective        from        the Appointed                Date. Further,   the    Petitioner Companies     undertakes that it will be complying with       the      applicable requirements      of      the circular     no.     F.     No. 7/12/2019/CL-1    dated 21-08-2019 issued by the Ministry    of    Corporate Affairs.

Reply    of    the Petitioner Companies appears to be satisfactory.

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     provision     of     the section.

As far as the observation of the Regional Director, as  stated  in IV (c) of the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies     undertakes that    it    would    comply with   the   provisions   set out  in  Section  232(3)(i) of   the   Companies   Act, 2013  and  that  the  fee,  if any,      paid      by      the Transferor  Company  on its      authorized      share capital   shall   be   set   off against  any  fees  payable by        the        Transferee Company         on         its authorized  share  capital subsequent        to        the amalgamation,               if

applicable.

Reply    of    the Petitioner Companies appears to be satisfactory.

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.

As far as the observation of the Regional Director, as stated in IV (d) of the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies  submits  that the     meeting     of     the Equity   Shareholders   of the       First       Petitioner Company       and       the Second   Petitioner   were dispensed, in view of the consent               affidavits

provided          by          its respective   shareholders. There  were  no  Secured Creditors    in    the    First Petitioner Company and hence,   the   question   of convening   the   meeting did     not     arise.     The Secured  Creditors  of  the Second              Petitioner Company     have     been paid  and  an  affidavit  is filed   by   the   Petitioner Companies         verifying that     all    the    Secured Creditors  of  the  Second Petitioner         Company have  been  paid  on  17th January,  2022.  Further, the     meeting     of     the Unsecured   Creditors   of the       First       Petitioner Company       and       the Second    Petitioner    was also  dispensed  with  and notices  were  sent  to  the Unsecured   Creditors   of the       First       Petitioner Company       and       the Second  Petitioner  as  per the  directions  passed  by this Tribunal in its order dated      17th      August,

2021.

Reply    of    the Petitioner Companies appears to be satisfactory.

IV(e)

Clause-7.l          (e)          of Accounting  Treatment  of the   scheme;   stated   that The  excess  or  deficit,  if any,    of   the    net   assets value       (assets       minus liabilities)          of          the

Transferor          Company transferred         to         the Transferee         Company, after          making          the adjustment  as  mentioned in  sub-clauses  (b)  and  (c) above  and  reserves  taken over, shall be recorded  as and     credited     to     the Capital        Reserve        or debited to Profit and Loss Account  as  the  case  may be,   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  should 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.

As far as the observation of the Regional Director, as stated in IV (e) of the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies       undertake that  the  surplus   arising out     of     amalgamation shall     be     credited     to Capital Reserve Account and    deficits    shall    be debited      to      Goodwill Account.  The  Petitioner Companies            further undertake      that      such Capital Reserve shall not

be  used  for  distribution of dividend.

Reply    of    the Petitioner Companies appears to be satisfactory.

IV(f)

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

Rules thereunder.

As far as the observation of the Regional Director, as  stated  in  IV  (f)  of  the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies       undertake that  it  will  comply  with the provisions of Section 2(1B) of the Income Tax Act,    1961    read    with

Income  tax  Rules,  1962 pursuant to the Scheme.

Reply    of    the Petitioner Companies appears to be satisfactory.

IV(g)

The   petitioner   company may      be      directed      to comply          with          the provisions  of  Section  66 of  the  Companies  Act  as the    petitioner    company has         proposed         the reduction of share Capital in      Clause-6      of      the Scheme.

As far as the observation of the Regional Director, as stated in IV (g) of the report    and    reproduced hereinabove                    is concerned, the Petitioner Companies   submit   and clarify          that          the provisions     relating     to Section      66      of      the Companies act, 2013 are technically         complied with    in    view    of    the explanation  provided  in Section     230     of     the Companies Act, 2013.

Reply    of    the Petitioner Companies appears to be satisfactory.

IV(h)

STATUS       OF       ROC REPORT:-

ROC,    Mumbai    Report dated      11.11.2021      has interalia   mentioned   that there  are  no  prosecution, no  technical  scrutiny,  no inquiry,     no     inspection and        no        complaints pending against Petitioner Companies.

Further mentioned that:-

The         Transferor Company       has       other Current     Liabilities     i.e. Advance  from  Customers

of  Rs.  81,49,69,488  in  its Balance     Sheet     as     at 31/03/2020          attached with the scheme.

Interest      of      the Creditors       should       be protected.

As far as the observation of the Regional Director, as  stated  in  IV  (h)(1)  of the           report           and reproduced   hereinabove is  concerned,   Petitioner Companies  confirm  that it  has  current  liabilities

i.e.       Advance       from Customers        of        Rs. 81,49,69,488       in       its Balance     Sheet     as     at 31/03/2020  which  is  in furtherance        to        its primary                business activities.     Further,     as mentioned  in  para  4(iv)

above,          the          First Petitioner  Company  has sent     notices     to     the abovementioned creditors     as     per     the directions  passed  by  this Tribunal    in    its    order dated      17th      August, 2021.

As far as the observation of the Regional Director, as  stated  in  IV  (h)(2)  of the           report           and reproduced   hereinabove is        concerned,        the Petitioner       Companies submit   that   there   were no  Secured  Creditors  in the       First       Petitioner Company.   Further,   the Secured  Creditors  of  the Second              Petitioner Company     have     been paid  off  and  an  affidavit is  filed  by  the  Petitioner Companies         verifying that     all    the    Secured Creditors  of  the  Second Petitioner         Company have  been  paid  on  17th January,       2022.       As regards    the   Unsecured Creditors    of    the    First Petitioner Company and the    Second    Petitioner, notices  were  sent  to  the

Unsecured   Creditors   of the                     Petitioner Companies   as   per   the directions  passed  by  this Tribunal    in    its    order dated      17th      August, 2021.   Accordingly,   the interest      of      all      the creditors          of          the Petitioner       Companies

shall be protected.

Reply    of    the Petitioner Companies appears to be satisfactory.

The observations made by the Regional Director have been explained by the Petitioner Companies in Para 13 above. The clarifications and undertakings given by the Petitioner Companies are accepted by this Tribunal.

The Official Liquidator has filed his report dated 23rd November, 2021 inter-alia, stating therein that the affairs of the Transferor Company have been conducted in a proper manner.

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

As per clause 5 of the Scheme, the Transferee Company shall issue and allot to the shareholders of the Transferor Company, fully paid up equity shares in the following fair share swap ratio:

"10 (Ten) fully paid up equity shares of INR 10/- (Indian Rupees Ten only) of the Transferee Company shall be issued and allotted for every 406 (Four hundred and Six) equity shares of INR 10/-(Indian Rupees Ten only) each held in the Transferor Company.”

The Petitioner Companies submits there are no Corporate Guarantee, Performance Guarantee or Bank Guarantee given or taken by the Petitioner Companies.

The Petitioner Companies submits there are no pending IBC cases or litigation matters.

Since all the requisite statutory compliances have been fulfilled, Company Petition CP(CAA)/163/MB-IV/2021 connected with CA(CAA)/184/MB/2021 is made absolute in terms of prayer in the Petition.

The Scheme is sanctioned hereby, and the Appointed Date of the Scheme is fixed as 1st April, 2020.

The Petitioner Companies are directed to lodge a certified copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies, electronically along with e-Form INC-28, within 30 days from the date of receipt of the order by the Registry, duly certified by the Joint/ Deputy Registrar of this Tribunal.

The Petitioner Companies are directed to lodge a certified copy of this Order and the Scheme duly authenticated by the Joint / Deputy Registrar of this Tribunal, with the concerned Superintendent of Stamps for adjudication of stamp duty payable, if any, within 60 working days from the date of receipt of certified copy of the certified order from the Registry of this Tribunal.

All concerned regulatory authorities to act on a copy of this Order duly certified by the Joint Registrar/Deputy Registrar of this Tribunal along with copy of the Scheme.

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. Files to be consigned to records.