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TMI Blog2020 (12) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... ies P. Ltd. (hereinafter referred to as second petitioner/transferor company No. 2 ) and M/s. Tarda Corporation P. Ltd. ( the third petitioner/transferee company ) under section 230-232 of the Companies Act, 2013, praying for the sanction of scheme of amalgamation between transferor company No. 1 and transferor company No. 2 with transferee company in terms of scheme of amalgamation of the companies. The scheme of amalgamation is annexed here with as annexure H, i.e., page Nos. 329-354 to the petition. 2. The averments made in the application are briefly described hereunder : Transferor company No. 1: (a) Karix Mobile P. Ltd., ( the first petitioner-company or transferor company No. 1 ) was originally incorporated on August 8, 2000, under the provisions of the Companies Act, 1956 with the Registrar of Companies, Chennai, in the State of Tamil Nadu under the name and style of AIR2WEB India P. Ltd. and changed its name as mGage India P. Ltd. on March 25, 2014, and subsequently changed the name to Karix Mobile P. Ltd. on January 31, 2018, and shifted the registered office to Hyderabad, in the State of Telangana vide order of regional director dated June 25, 2019. (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed and paid-up share capital of transferor company No. 2. Transferee company: (g) Tank Corporation P. Ltd. ( transferee company or third petitioner-company ) was originally incorporated as on November 16, 1998, under the provisions of the Companies Act, 1956, with the Registrar of Companies, Calcutta, in the State of West Bengal under the name and style of Smartnet Communication Systems P. Ltd. later shifted the registered office to Hyderabad, in the State of Telangana vide order of regional director dated July 25, 2006 and changed its name to Muftithumb Corporation P. Ltd. on 13th day of April, 2013 and subsequently changed the name to Tank Corporation P. Ltd. on July 19, 2015. (h) The transferee company is engaged in the business of providing SaaS-based consumer communication services, such as text messages, voice messages, etc., for enterprises, aggregators and Governmental entities. The copy of memorandum and articles of association are hereto annexed and marked as annexure E to the application. (i) The authorized, subscribed and paid-up share capital of the transferee company as on March 31, 2019 was as under: Particulars ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r company No. 2 with the transferee company shall benefit transferor company No. 1, transferor company No. 2 and transferee company in the following manner: (a) The amalgamation will enable pooling of resources of the companies involved in amalgamation to their common advantage, resulting in more productive utilization of the said resources and achieving economies of scale resulting into cost and operational efficiencies, which would be beneficial for all the stakeholders. (b) The amalgamation would bring synergies in procurement, technology, administration and marketing operations. (c) The amalgamation would help to achieve consolidation, greater integration and flexibility which will maximize overall shareholder value and improve competitive position of the transferee company. (d) The amalgamation would help combining the administrative and marketing functions of the entities involved and consequently result into more efficient functioning of the transferee company in a cost effective manner. (e) The amalgamation is expected to increase the financial strength thereby enabling further growth and development of the transferee company. (f) The amalgamation would re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied out in newspaper on March 11, 2020. The Regional Director, South Eastern Region, MCA, Hyderabad filed his report on May 26, 2020. The observations made by the Regional Director, SER and reply given by the petitioner-companies vide memo are given against each. Sl. No. Observations by Regional Director Reply given by the petitioner-company 3(a). The hon'ble Tribunal may be pleased to direct the petitioner company(s) to preserve its books of accounts and papers and records and shall not be disposed of without the prior permission of the central Government in terms of provisions of section 239 of the Companies Act, 2013. It is submitted that the petitioner-companies will ensure the compliance of the provisions of section 239 of the Companies Act, 2013 and all applicable laws and rule 17(2) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. An undertaking from the petitioner companies to this extent is enclosed in annexure 1. 3(b). The hon'ble Tribunal may be pleased to direct the petitioner-company(s) to ens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor vide our letter dated May 21, 2020 A declaration to this extent is enclosed as annexure 2 along with the necessary documents of the FEMA compliance. 4 The petitioner-companies may give clarification regarding official liquidator report. It has been dealt in the report given by official liquidator. 6 The hon'ble Tribunal may be pleased to direct the petitioner-companies to change the appointed date from April 10, 2019 to any other date as the hon'ble Tribunal deems fit and proper and the petitioner-companies may be advised to amend the said clause and file afresh scheme, duly certified. It is submitted that in the matter of Satkar Fin Cap Ltd, C.P. No. 256 of 2012, High Court of Delhi, it is clear that the situation of registered office on the date of filing of the application is relevant for identifying the jurisdiction of hon'ble Tribunal and not the appointed date In view thereof, the objection raised by the Regional Director is not maintainable under law. It can be said that the appointed date of April 10, 2019 agreed upon by the petitioner companies is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 230 of the Companies Act 2013. As on August 30, 2019, whoever creditor was in existence, transferor company No. 1 has obtained consents from each of them holding 90 per cent, value of debt together in total and as per provision of section 230(9) the Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety per cent, value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement. HDFC bank due as on August 30, 2019, was INR 57,30,36,686. It is pertinent to mention that HDFC bank is the only creditor whose charge is open on MCA and it has already provided consent for scheme. Also, the Kotak Bank loan stands closed on the website of MCA and attached herewith as Annexure 6 is the NOC of bank for charge satisfaction based upon which the said loan was closed from MCA records. In view of above submission, it is clarified that company has complied with provisions of section 230(9) of the Companies Act, 2013. 9. As per paragraph 6(b) of the order of the hon'ble Tribunal in C.A. (CAA) No. 237/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Law Tribunal to the effect that there would be no retrenchment of any employee, consequent to the merger, who were in service as on appointed date (i.e., April 10, 2019). Undertaking from all applicant companies is attached herewith as Annexure 1 b. That, the accounting treatment contained in the scheme vide clauses 13.1 and 13.2 (2 clauses) of the scheme is found to be not supported by the auditor certificate dated September 19, 2019, as it refers and rely on clause No. 13.3 as well, which is not found in the scheme. 1.1. In the draft scheme the language of 13.3 was as follows: Hence, the content of the Scheme may be different as forwarded to the auditor. Further, pooling of interest method may be required to be adopted in terms of paragraphs 3 and 8 of Appendix C of Ind AS-103, in the absence of any consideration payable and allocable to assets on their fair value basis and it being not a transitory merger or transitory control but merger of entities under common control already existed as on appointed date (April 10, 2019) due to pre-existing acquisition by Tank Solutions Ltd. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here there is transitory control, acquisition method of accounting is to be followed. 1.5. Considering the above and rationale of amalgamation mentioned in the para. 3 of the Scheme, the petitioner companies submit that acquisition of transferor company No 1 and transferor company No 2 by Tarda Solutions Ltd. was Transitory as the same was proposed to be consolidated with the business of the transferee company In view of the above, it is respectfully submitted that the Accounting Treatment provided in paragraph 13 of the Scheme filed with hon'ble Tribunal and duly certified by the statutory auditor is in accordance with Ind AS 103 With regard to this chartered accountant Shri Ramasamy Koteswara Rao and CO LLP has issued a certificate stating that c (c) That, as per clause 16.1 of the Scheme, the name of the transferee company sought to be changed to the name of the transferor company No 1, i.e., Kanx Mobile P. Ltd. , hence, it is required to comply the provisions of rule 8A(1)(w) of the Companies (Incorporation) Rules, 2014 by way of obtaining specific direction from the competent authority Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt or share purchase agreement, etc., entered into were not known/furnished. Further, details of FEMA/RBI compliance for such acquisition on April 10, 2019, were not known/furnished. Hence, the hon'ble National Company Law Tribunal may be pleased to direct the transferor and transferee companies to furnish the above details to the official liquidator to cause necessary verification and submit further report. Transferor company No. 1 hereby confirms that company has complied with all the provisions of the FEMA/RBI Guidelines and documents as requested by the official liquidator and the same are attached herewith as annexure 2 . g. That, the statutory auditor of respective transferor companies vide their report(s) June 26, 2019 for the year 2018-19 has reported vide paragraph (iii) that amount overdue from more than 90 days is INR 71,49,987 in respect of transferor company No. 1 and INR 36,100 in respect of transferor company No. 2 and the said amounts have been written off during the year considering the non-recoverability. The hon'ble National Company Law Tribunal may be pleased to direct the transferor company to furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be agreed upon between the parties to the scheme. 1.3. Ind AS 103 requires the business combination to be accounted as on the acquisition date. Further, as explained above in paragraph 2, acquisition of transferor company No. 1 and transferor company No. 2 by Tanla Solutions Ltd. was Transitory . Accordingly, the date of acquisition of shares of transferor company No. 1 and transferor company No. 2 by Tanla Solutions Ltd., i.e., April 10, 2019 has been fixed as appointed date for the scheme. 1.4. The appointed date of April 10, 2019, agreed upon by the petitioner-companies is also in accordance with the clarification provided by the MCA in its Circular mentioned above, as the same is linked to the event of acquisition of the transferor company by Tanla Group, i.e., April 10, 2019. 1.5. In this regard, the petitioner-companies humbly submit that in past the hon'ble High Court of Andhra Pradesh had sanctioned the Scheme of Amalgamation of Surya Kiran International Ltd. (SKTL or amalgamating company) and Surya Lakshmi Cotton Mills Ltd. (SLCML or amalgamated company) with the appointed date as April 1, 2013, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed merger is sought to be made under the provisions of sections 230 to 232 of the Companies Act, 2013, and the same if sanctioned by this hon'ble Bench at Hyderabad of the National Company Law Tribunal, will take effect from the April 10, 2019 the appointed date as provided in the scheme. This Tribunal do the order: 1. While approving the scheme of amalgamation, we make it clear that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payable in accordance with law or in respect of any permission/compliance with any other requirement which may be specially required under law; 2. The whole of the property, rights and powers of the transferor companies be transferred without further act or deed to the transferee company and accordingly the same shall pursuant to section 232 of the Companies Act, 2013, be transferred to and vest in the transferee company for all the state and interest of the petitioner company and accordingly the same shall pursuant to section 232 of the Companies Act, 2013, be transferred to and become the liabilities and duties of the transferee company; and 3. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 2013; 14. The petitioner-companies should ensure statutory compliance with all applicable laws and also on sanctioning of the present scheme the applicant-company shall not be absolved for any of its statutory liability in any manner; 15. The petitioner-companies involved in the scheme to comply with rule 17(2) of the Companies Rules, 2014 with respect to filing of order for confirmation of scheme to be filed in Form. INC-28 with the office of the Registrar of Companies (H); 16. The companies shall until the completion of the scheme of arrangement, file a statement in such form and within such time as prescribed with the Registrar every year duly certified by a Chartered Accountant or a Cost Accountant or a Company Secretary to the effect that the scheme of arrangement is being complied in accordance with the orders of the Tribunal as required under section 232(7) of the Companies Act, 2013; 17. Upon the scheme becoming effective, transferee company shall, without undue delay undertake to comply with the provisions of section 13 of the Companies Act, 2013 and applicable rules thereof; 18. Upon the scheme becoming effective, transferee company name shall be chan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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