United Seamless Tubulaar Private Limited Vs

H. V. Subba Rao, Member (Judicial)

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

The sanction of this Tribunal is sought under section 230-232 and other applicable provisions of the Companies Act, 2013 (‘Act’) in the matter of Scheme of Amalgamation for merger of United Seamless Tubulaar Private Limited (“USTPL” or the “Transferor Company” or the “First Petitioner Company”) with and into Maharashtra Seamless Limited (“MSL” or the Transferee Company” or the “Second Petitioner Company”) and their respective Shareholders (“the Scheme” or “this Scheme”).

The sanction of this Tribunal is sought under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 (‘Act’) in the matter of Scheme of Amalgamation for merger of United Seamless Tubulaar Private Limited (“USTPL” or the “Transferor Company” or the “First Petitioner Company”) with and into Maharashtra Seamless Limited (“MSL” or the “Transferee Company” or the “Second Petitioner Company”) and their respective Shareholders (“the Scheme” or “this Scheme”).

The Authorized Representative for the Applicant Companies submits that First Petitioner Company is primarily engaged in the business of seamless pipes like gas cylinder, large diameter thin wall, high alloyed OCTG, thick wall mechanical pipes, Large diameter hydraulic cylinder pipes.

The Authorized Representative for the Applicant Companies submits that Second Petitioner Company is engaged in the business of manufacturing of seamless pipes & tubes and wide product range using the CPE technology. MSL also engaged in the ERW pipe category and also started coated facility. The Company has also diversified into renewable power generation and rig operations.

The Authorised Representative for the Petitioner Companies submits that the Board of Directors of the First Petitioner Company and the

Second Petitioner Company vide their resolution dated 16th June 2022, approved the Scheme of Amalgamation of USTPL with and into MSL and their respective Shareholders. The Appointed Date of the Scheme is 1st October 2021.

The Authorized Representative for the Petitioner Companies submits that the companies under this Scheme are part of same group. The First Petitioner Company is a wholly owned subsidiary of Second Petitioner Company. The rationale for amalgamation of First Petitioner Company with Second Petitioner Company is as under:

The amalgamation of the First Petitioner Company with Second Petitioner Company would inter-alia have the following benefits:

i. The amalgamation will result in the consolidation of the business operations undertaken by the Transferor Company and Transferee Company and will create various operational synergies in the com-bined business operations

ii. The amalgamation would facilitate increase in Combined Revenue due to availability of bigger basket of product mix as the combined entity would be able to offer complete range of alloy steel grades

iii. The amalgamation will facilitate consolidation of various depart-ments like Finance, admin, Human Resources, Procurement, etc. leading to time and cost efficiencies

iv. The amalgamation would help in using technology of both the com-panies in a single entity thereby leading to higher yield and reduce process cost

v. The amalgamation would help in combining the product range and quicken the supply / delivery of various products by usage of com-bined supply chain of both the companies, leading to better satisfac-tion of customer demand

vi. The amalgamation will facilitate combining the raw material re-quirements of both the companies thereby resulting in better nego-tiating possibilities with suppliers and overall cost reduction

vii. The amalgamation will facilitate submitting of single bid by com-bined entity for various tenders leading to cost and time efficiencies

viii. The amalgamation will facilitate combining the banking facilities of both the entities leading to efficiencies

ix. Together both companies will be successful in unlocking tremen-dous value in terms of Marketing, Earnings, Cost reduction and Re-source optimisation

x. The amalgamation will result in reduction of the companies leading to reduction in compliance requirements, overheads, administra-tive, managerial and other expenditure and optimal utilisation of various resources due to consolidation of activities

xi. The scheme shall be beneficial and in interests of the shareholders and creditors of the Transferor Company and the Transferee Com-pany and all concerned.

The Authorized Representative for the Petitioner Companies submits that the Company Scheme Petition has been filed in consonance with the order dated 16th December 2022, passed by this Hon’ble Tribunal in C.A.(CAA) / 184 / MB / 2022. Further the meetings of the shareholders and creditors of the Petitioner Companies were dispensed with by the Hon’ble Tribunal vide order dated 16th December 2022 in C.A. (CAA)/ 184 / MB/2022.

The Authorized Representative for the Petitioner Companies states that the Petitioner Companies have complied with all the requirements as per directions of the Hon’ble Tribunal. Moreover, the Petitioner Companies undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 2013 and the Rules made there under. The said undertaking is accepted.

The Authorized Representative for the Petitioner Companies states that the shares of the Second Petitioner Company is listed on BSE Limited and National Stock Exchange of India Limited. The equity shares of the First Petitioner Company are not listed on any stock exchange in India. The First Petitioner Company is a wholly-owned subsidiary of the Second Petitioner Company.

The  Regional  Director,  Western  Region  on behalf  of  the  Central Government has filed its Report dated 21st February 2023 (‘Report’) praying that this Tribunal may pass such orders as it thinks fit and proper in the facts and merits of the case The observations of the Central Government on the Scheme are submitted as paragraph 2 (a) to (g) of the Report. In response to the observation made by the Central Government, the Petitioner Companies have also given necessary undertakings and clarification vide their rejoinder affidavit dated 22nd February 2023. The observations made by the Central Government and the clarifications and undertakings given by the Petitioner Companies are summarized in the table below:

Para No.

Observations  as  per  the  re- port of the Central Govern- ment   dated   21st   February 2023

Response      of      the      Peti- tioner Companies

2

(a)

“(a)    In  compliance  of  AS-14 (IND   AS-103),   the   Petitioner Companies  shall  pass  such  ac- counting entries which are neces- sary   in   connection   with   the scheme to comply with other ap- plicable   Accounting   Standards such as AS-5(IND AS-8) etc.”

Apropos the observation of the Regional    Director,    Western Region,  Mumbai,  as  stated  in paragraph 2 (a) of the report is concerned,      the      Petitioner Companies  undertakes  that in addition to compliance of AS-14  (IND  AS-103)  and  gener- ally  accepted  accounting  prin- ciples,  the  Petitioner  Compa- nies  undertakes  to  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., if applicable for ac- counting of the Scheme.

2

(b)

(b)      As  per  Definition  of  the Scheme,

“Appointed Date” means 1st Oc- tober 2021, or such other date as may be fixed or approved by the National Company Law Tribu- nal  at  Mumbai  or  such  other competent Authorities; And

1.7  “Effective  Date”  means  the date on which the certified or au- thenticated  copies  of  the  order sanctioning this Scheme, passed by the National Company Law Tribunal,  Mumbai  Bench  are filed with the Registrar of Com- panies,  Maharashtra  at  Mum- bai, having jurisdiction over the Transferor   Company   and   the Transferee Company;

In this regard, it is submitted that Section 232 (6) of the Companies Act, 2013 states that the scheme under this section shall clearly in- dicate  an  appointed  date  from which it shall be effective and the

scheme shall be deemed to be ef- fective from such date and not at a   date   subsequent   to  the   ap- pointed  date.  However,  this  as- pect   may   be   decided   by   the Hon’ble Tribunal taking into ac- count its inherent powers.

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 Minis- try of Corporate Affairs.

Apropos the observation of the Regional    Director,    Western Region,  Mumbai,  as  stated  in paragraph 2 (b) of the report is concerned,      the      Petitioner Companies undertakes that the Appointed  Date  was  fixed  as 1st  day  of  October  2021,  as mentioned   in   Clause   1.5   of Definitions   of   the   Scheme, which  is  in  compliance  with Section  232(6)  of  the  Compa- nies  Act,  2013  and  the  same shall be deemed to be effective from   such   Appointed   Date. The same therefore, meets the requirements clarified vide cir- cular          no.          F.          No. 7/12/2019/CL-I              dated 21.08.2019 issued by the Min- istry of Corporate Affairs. Fur- ther, the Petitioner Companies undertakes to comply with the requirements clarified vide cir- cular          no.          F.          No. 7/12/2019/CL-I              dated 21.08.2019 issued by the Min- istry of Corporate Affairs.

2

(c)

“(c) 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 7 subsection (3) to  (5)  of Section  230 of the  Act and the Minutes thereof are duly placed before the Tribunal.”

Apropos the observation of the Regional    Director,    Western Region,  Mumbai,  as  stated  in paragraph 2 (c) of the report is concerned,      the      Petitioner Companies  hereby  states  the meeting  of  the  members  and creditors  were  dispensed  with by the Hon’ble Tribunal, in ac- cordance   with   directions   of this Hon’ble Tribunal in Com- pany Scheme Application No.

C.A.  (CAA)  /  184  /  MB  / 2022    dated    16th    December 2022.   The  Petitioner Compa- nies have complied with direc- tions  issued  by  this  Hon’ble Tribunal in C.A. (CAA) / 184

/ MB / 2022.

2

(d)

“(d)   The   Petitioner  Company states  that  the  Transferee  Com- pany shall be in compliance with provisions of Section 2(1B) of the

Income Tax Act, 1961. In this re- gards,   the   petitioner   company shall ensure compliance of all the provisions  of  Income  Tax  Act and Rules thereunder;”

Apropos the observation of the Regional.   Director,   Western Region,  Mumbai,  as  stated  in paragraph 2 (d) of the Report is

concerned, it is submitted that

the Petitioner Companies have drawn up the Scheme to com- ply   with   the   conditions   laid down  under  the  provisions  of Section  2(1B)  of  the  Income- tax  Act,  1961  in  relation  to “amalgamation”  or  “merger”. The     Petitioner     Companies hereby  undertakes  to  comply with conditions laid down un- der  Section  2(1B)  of  the  In- come-tax  Act,  1961  read  with Income-tax   Rules,   1962,   as may be applicable with respect to the present Scheme.

2 (e)

“(e)     Petitioner Company have to undertake to comply with Sec- tion 232(3)(i) of Companies Act, 2013, where the transferor com- pany  is  dissolved,  the  fee  and stamp duty paid by the transferor company on its authorised capi- tal shall be set-off against fees and stamp duty payable by the trans- feree company on its authorised capital subsequent to amalgama- tion and therefore, petitioners to undertake   that   the   transferee company shall pay the difference of fees and stamp duty.”

Apropos the observation of the Regional    Director,    Western Region,  Mumbai,  as  stated  in paragraph  2  (e)  is  concerned, the Petitioner Companies sub- mits that the setting off of fees paid  by  the  Transferor  Com- pany  on  its  Authorised  Share Capital   shall   be   accordance with    provisions    of    section 232(3)(i)   of   the   Companies Act,  2013  for  payment  of  dif- ferential  RoC  fees,  if  any  on the increased authorised share capital.  The  aggregate  author- ised share capital of the Trans- feree Company shall automati- cally stand increased to that ef- fect by simply filing the requi- site e-form INC-28 with the rel- evant  Registrar  of  Companies without any further act, instru- ment  or  deed  on  the  part  of Transferee Company. Further,

in the event of any increase in

the authorised share capital of Transferor  Company  and/  or Transferee    Company    before the   Effective   Date,   such   in- crease  shall  be  given  effect  to while  aggregating  the  author- ised share capital of the Trans- feree Company.

2 (f)

“(f)     It  is  observed  that  trans- feree  company  is  a  listed  com- pany,  therefore,  petitioner  com- pany may be directed to place on record, the proof of disclosure of present scheme to NSE and BSE, as  required  under  SEBI  regula- tion  and  comply  with  NSE  & BSE observations in the matter.”

Apropos the observation of the Regional    Director,    Western Region,  Mumbai,  as  stated  in paragraph 2 (f) of the Report is concerned,   the   Second   Peti- tioner Company, being a com- pany listed on stock exchanges submits  that  the  Second  Peti- tioner Company in accordance with the applicable SEBI Reg- ulations   and   Listing   Agree- ments    have     disclosed     the Scheme  to  the  BSE  Limited (‘BSE’) and the National Stock Exchange   of   India   Limited (‘NSE’). The copy of the letters filed  with  BSE  and  NSE  are annexed  as  Exhibit  ‘H1’  and ‘H2’ to  the  Company  Scheme Petition. The Scheme provides for amalgamation of a wholly- owned    subsidiary    with    its Holding Company; hence, the Second   Petitioner   Company has  made  all  adequate  disclo- sures in accordance with SEBI Regulations read with applica- ble Circulars framed in this re- gard. Without prejudice to the above,  the  Second  Petitioner Company  has  also  served  no-

tices   upon   BSE,   NSE   and

SEBI, under Section 230(5) of the Companies Act, 2013. The Second   Petitioner   Company undertakes to comply with di- rections of BSE and NSE, if is- sued and applicable in this re- gard.

2 (g)

“(g)    That  on  examination  of the  report  of  the  Registrar  of Companies,     Mumbai     dated 17.02.2023 (Annexed as Annex- ure  A-1)  that  all  the  Petitioner Companies fall within the juris- diction  of  ROC,  Mumbai.  It  is submitted  that  there  is  no  com- plaint is pending against the pe- titioner Companies and /or there is no representation regarding the proposed  scheme  of  Amalgama- tion has been received against the Petitioner  Companies.  Further, the   petitioner   companies   have filed Financial Statements up to 31.03.2022  further  observations in ROC report are as under:-

Apropos the observation of the Regional    Director,    Western Region,  Mumbai,  as  stated  in paragraph 2 (g) of the Report is concerned,       the       contents thereof  are  correct  factual  ob- servations  and  thus,  does  not require any response. Further, the  First  Petitioner  Company confirm,  that  they  have  filed AOC-4   and   MGT-7   up   to 31.03.2022.

As far as the observation of the Regional Director, as stated in paragraph  2(g)  is  concerned, the     Petitioner     Companies, hereby  further  submit  the  fol-

lowing:

i.        That  the  ROC  Mumbai in  his  report  dated  17.02.2023 has  stated  that  no  Inquiry,  in- spection, investigation & prosecu- tion is pending against the sub- ject applicant companies.

ii.       As  per  the  provisions  of Section 232(3)(i) of the Compa- nies Act, 2013, where the trans- feror  company  is  dissolved,  the

fee, if any, paid by the transferor

company on its authorised capi- tal shall be set-off against any fees payable by the Transferee Com- pany  on  its  authorised  capital subsequent to the amalgamation. Therefore, remaining fees, if any after  setting-off  the  fees  already paid  by  the  transferor  company on its authorised capital, must be paid  by  the  transferee  company on the amalgamation.

iii.      May   be   decided   on   its

merits.”

(i)       So far as the observation of    the    ROC    in    paragraph 2(g)(i)  of  the  Report  is  con- cerned, the contents thereof are correct    factual    observations and thus, does not require any response.

(ii)      So far as the observation of    the    ROC    in    paragraph

2(g)(ii)  of  the  Report  is  con- cerned, the Petitioner Compa- nies submits that the setting off of  fees  paid  by  the  Transferor Company   on   its   Authorised Share  Capital shall be  accord- ance with provisions of section 232(3)(i)   of   the   Companies Act,  2013  for  payment  of  dif- ferential  RoC  fees,  if  any  on the increased authorised share capital.  The  aggregate  author- ised share capital of the Trans- feree Company shall automati- cally stand increased to that ef- fect by simply filing the requi- site e-form INC-28 with the rel- evant  Registrar  of  Companies without any further act, instru- ment  or  deed  on  the  part  of Transferee Company. Further, in the event of any increase in the authorised share capital of Transferor  Company  and/  or Transferee    Company    before the   Effective   Date,   such   in- crease  shall  be  given  effect  to while  aggregating  the  author- ised share capital of the Trans- feree Company.

The observations made by the Regional Director, Western Region on behalf of the Central Government are enlisted herein in Para 11 above along with response of the Petitioner Companies on the observations of the Regional Director, Western Region filed vide affidavit of the Petitioner Companies dated 22nd February 2023. The clarifications and undertakings given by the Petitioner Companies in Para 11 above are accepted by this Tribunal.

The Official Liquidator, High Court, Bombay has filed its report dated 10th February 2023, inter alia, stating therein that the affairs of the First Petitioner Company have been conducted in a proper manner and that the First Petitioner Company may be ordered to be dissolved without winding up by the 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 not contrary to public policy.

The Authorized representative for the Petitioner Companies submits that the entire issued, subscribed and paid-up share capital of the First Petitioner Company is held by the Second Petitioner Company (along with its Nominees). Accordingly, pursuant to this Scheme, no shares of the Second Petitioner Company shall be issued and allotted in respect of shares held by it in the First Petitioner Company. Upon the Scheme becoming effective, the entire share capital of the First Petitioner Company shall be cancelled and extinguished without any further act, deed or instruments as an integral part of this Scheme.

Since all the requisite statutory compliances have been fulfilled, C.P. (CAA) / 8 / MB / 2023 connected with C.A. (CAA) / 184 / MB / 2022 filed by the Petitioner Companies is made absolute in terms of prayer clauses of the said Company Scheme Petition.

The Scheme annexed at Exhibit D to the Company Scheme Petition is hereby sanctioned, and the Appointed Date of the scheme is 1st October 2021. It shall be binding on the Petitioner Companies involved in the Scheme and all concerned including their respective Shareholders, Secured Creditors, Unsecured Creditors/Trade Creditors, Employees and/or any other stakeholders concerned.

The Petitioner Companies are directed to file a certified copy of this Order along with the copy of Scheme with the concerned Registrar of Companies, electronically in e-form INC-28 within 30 days from the date of receipt of the Order duly certified by the designated Registrar of this Tribunal. The Scheme will become effective on filing of the copy of this order with the concerned Registrar of Companies.

The Petitioner Companies shall lodge a copy of this Order along with the Scheme duly certified by designated Registrar of this Tribunal, with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any, within a period of 60 working days from the date of the receipt of the certified copy of the 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 designated Registrar of this Tribunal.

Any person interested shall be at liberty to apply to this Tribunal in the above matter 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. Thus, the Company Scheme Petition with C.P. (CAA) /8/MB/C-I/2023 in C.A. (CAA) /184/MB/C-I/2022 shall stand to be disposed-of.