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TMI Blog2019 (5) TMI 1840X X X X Extracts X X X X X X X X Extracts X X X X ..... WAMY, MEMBER (J) 1. The Present Company Petitions i.e. CP(CAA)No. 42/230/HDB/2018; CP(CAA)No. 44/230/HDB/2018 and CP(CAA) No. 46/230/HDB/2018, are filed under section 230 to 232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, seeking sanction of Scheme of Amalgamation ( Scheme in short) between the Petitioner Companies i.e. Pennar Engineered Building Systems Limited (Transferor Company-I) and Pennar Enviro Limited (Transferor Company-II) with Pennar Industries Limited (Transferee Company) and their respective Shareholders, Creditors and Employees. 2. Brief facts leading to the filing of present case are as follows: I. In respect of Transferor Company-I: The Transferor Company-I viz., Pennar Engineered Building Systems Limited, was incorporated as a public limited company under the name and style 'Pennar Engineered Building Systems Limited' in the State of Telangana on 17 January 2008, vide Corporate Identity Number L45400TG2008PLC057182. The equity shares of the Transferor Company-I are listed on BSE Limited ('BSE') and the National Stock Exchange of India Limited ('NSE'). The Registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company-II as on 31.03.2018 is ₹ 9,00,00,000/- divided into 90,00,000 Equity Shares of ₹ 10/-each. The paid up capital of the Transferor Company-II as on 31.03.2018 is ₹ 8,36,82,590/- divided into 83,68,259 fully paid up Equity Shares of ₹ 10/- each. As per the Certificates given by M.M. Reddy Co, Chartered Accountants, the Transferor Company-II has 11 Shareholders, 2 secured creditors amounting to ₹ 7,90,51,207/- and 301 unsecured creditors amounting to ₹ 23,15,70,709/-. III. In respect of Transferee Company: The Transferee Company viz., Pennar Industries Limited, the Transferee Company, was originally incorporated as a public limited company under the name and style 'Pennar Steels Limited' in the State of Andhra Pradesh on 8th August, 1975, vide Corporate Identity Number L27109AP1975PLC001919. Subsequently, the name was changed to 'Pennar Industries Limited' and a fresh certificate of incorporation consequent upon change of name was issued by the Registrar of Companies, Andhra Pradesh on 30th September, 1998. The equity shares of the Transferee Company are listed on BSE Limited ('BSE') and the National Stock Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transferor Company-I be held on 14.12.2018 at 11:00 AM and on 15.12.2018 at 11:00 AM respectively, at Hotel Raddison, Gachibowli, Miyapur Road, Chota Anjaiah Nagar, Hyderabad - 500032 and appointed Mr. V. Venkata Rami Reddy, Advocate as Chairperson and Mr. P. Srikanth Kumar, Practicing Company Secretary as the Scrutinizer for convening the meeting of the Equity Shareholders and Mr. G. Bhupesh, Advocate, as Chairperson and Mr. Manish Kumar Singhania, Practicing Company Secretary as the Scrutinizer for convening the meeting of the Unsecured Creditors of the Transferor Company-I; (iii) directed that a meeting of the Equity shareholders and Unsecured Creditors of the Transferor Company-II be held on 14.12.2018 at 05:00 PM and on 15.12.2018 at 05:00 PM respectively, at Hotel Raddison, Gachibowli, Miyapur Road, Chota Anjaiah Nagar, Hyderabad - 500032 and appointed Mr. G. Kalyan Chakravarthy, Advocate as Chairperson and Mr. K. V. Raman, Advocate as the Scrutinizer for convening the meeting of the Equity Shareholders and Mr. P. Anil Mukherjee, Advocate as Chairperson and Mr. Lalith Jogi, Advocate as the Scrutinizer for convening the meeting of the Unsecured Creditors of the Transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 14.12.2019 at 11:00 AM at Hotel Raddison, Gachibowli, Miyapur Road, Chota Anjaiah Nagar, Hyderabad - 500032 and Mr. V. Venkata Rami Reddy, Chairperson, filed his report. From the report of the Chairperson, it is seen that the meeting was attended by 109 equity shareholders holding 2,69,49,664 equity shares constituting 78.63% of the total equity capital of the Transferor Company-I out of which 104 equity shareholders holding 2,69,47,452 equity shares voted in favour of the Scheme and 4 members holding 2,194 equity shares voted against the Scheme and the votes cast by 1 member holding 10 shares was treated as invalid. Thus, it is clear that the members present and representing 99.99% equity shares voted in favour of the Scheme and members present and representing 0.01% equity shares voted against the Scheme. 7. Similarly, a meeting of the equity shareholders of the Transferor Company-II was convened on 14.12.2019 at 05:00 PM at Hotel Raddison, Gachibowli, Miyapur Road, ChotaAnjaiah Nagar, Hyderabad - 500032 and Mr. G. Kalyan Chakravarthy, Chairperson, filed his report. From the report of the Chairperson, it is seen that the meeting was attended by 8 equity shareholders hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 38/-representing 74.25% of total value of the unsecured creditors of the Transferor Company-II out of which 68 unsecured creditors entitled to ₹ 17,05,28,030/- voted in favour of the Scheme and 3 unsecured creditors entitled to ₹ 99,073/- voted against the Scheme and the vote cast by 1 unsecured creditor entitled to ₹ 13,04,435/- was treated as invalid. Thus, it is clear that the unsecured creditors present and representing 99.94% of the value of unsecured debt voted in favour of the Scheme and unsecured creditors present and representing 0.06% of the value of unsecured debt voted against the Scheme. 11. Similarly, a meeting of the Unsecured Creditors of the Transferee Company was convened on 15.12.2019 at 02:30 AM at Hotel Raddison, Gachibowli, Miyapur Road, Chota Anjaiah Nagar, Hyderabad - 500032 and Mr. Amir Ali Bavani, Chairperson, filed his report. From the report of the Chairperson, it is seen that the meeting was attended by 59 unsecured creditors entitled to ₹ 111,69,66,381/-representing 42.38% of total value of the unsecured creditors of the Transferee Company and all of them voted in favour of the Scheme. Thus, it is clear that 100% of the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness, such as enhancement of net worth of the combined business which shall lead to better ability to leverage the business including reduction in cost of capital. e) The Transferee Company will have an improved capital structure, which would enable it to access the Capital Market at better terms and will afford easier access to other resources and at a lower cost. f) The merger in general will have beneficial results for the Companies, their shareholders, employees and all concerned. 16. Upon hearing the matter, this Tribunal admitted the Petitions vide order dated 25.01.2019, and directed the Petitioner Companies publish the date of hearing of the Petition in Business Standard (English Daily) and Andhra Bhoomi (Telugu Daily) at least ten days before the date of the hearing and issue notices to the statutory authorities viz., RD, ROC, OL IT Department, BSE, NSE SEBI. 17. In pursuance of the said Order, the Petitioner Companies have issued the paper advertisement in Business Standard (English Daily) and Andhra Bhoomi (Telugu Daily) informing the date of hearing of the Petition as 06.03.2019 and a copy of the aforesaid petitions were served along with notice upon the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification. Hence, the Hon'ble Tribunal may issue necessary directions to the Petitioner Companies. b) Pennar Engineered Building Systems Limited, Transferor Company No. 1 Pennar Industries Limited, Transferee Company are listed companies. BSE Limited and NSE of India Limited both dated 26.04.2018 have furnished their observations regarding the draft scheme of amalgamation between Transferor and Transferee Companies and furnishing their comments on the draft scheme of arrangement and directed to comply with certain directions. Hence, the Hon'ble Tribunal may be pleased to direct the Petitioner Companies to give an undertaking that they will comply with the directions of BSE, NSE/SEBI. c) As per Company reply at Point No. 19 company has provided the details of shareholding pattern (i.e. list of non-NRIs, Foreign Portfolio Investors, Non Resident Indians non repatriable, Foreign Nationals. Hon'ble Tribunal may therefore, be pleased to direct the Petitioner Company to state whether they have complied/obtained the concerned Sectoral Regulator Approval i.e. FEMA/RBI. d) As per clause vii (c) of Annexure-B to the Independent Auditors Report attached to the Balance S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r amendments approved imposed or directed by NCLT, shall be effective from the appointed date but shall be operative from effective date . From the above clause it is amply clear as stated in Section 232(6) the Schemeis effective from appointed date and that the Regional Director has taken the same objectionin the matter of CP (CAA) No. 418/230IHDB/2018 and after clarification from the Company the Regional Director has accepted the same. e) That the Petitioner Companies undertake that they will comply with directions of BSE, NSE and SEBI. f) That as per the provisions of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017, the Transferee Company is eligible to receive 100% equity under automatic route without any approval. Accordingly as per regulation 9 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 once the Scheme of Amalgamation has been approved by the Hon'ble Tribunal the transferee company is allowed to issue shares to the shareholders of the transferor company resident outside India without seeking any approval upto 100% of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hartered Accountants, and the same are annexed at page no 198 199, at 365 366 and at page no. 279 280 to their respective Petitions. 25. Heard the submissions made by the Counsel representing the Petitioner Companies. 26. At the final hearing took place on 29.04.2019, the counsel for the Regional Director and the counsel for the Official Liquidator have reported No-objections to the Scheme of Amalgamation. 27. During the hearings, this Bench directed the Petitioner Companies to file an Affidavit sworn by the Director of the Petitioner Companies with regard to service of notices of the meetings on the Equity Shareholders and on the Unsecured Creditors. In pursuance to the above directions, Managing Director/Directors of the Petitioner Companies filed Affidavits stating that the Petitioner Companies in accordance with the directions of this Tribunal had served the notice of the meetings of the Equity Shareholders and Unsecured Creditors through Courier/email. It is further stated that the mode of delivery of service of notice of the meetings of the equity shareholders and unsecured creditors is Courier and E-mail , which is specified as one of the alternatives of serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors and all concerned under the Scheme. b) All concerned authorities are directed to act on a copy of this order along with the Scheme duly authenticated by the Registrar of this Tribunal. c) The Transferor Company-I and the Transferor Company-II shall be dissolved without winding up from the date of filing of the certified copy of this order with the ROC. d) Upon receiving the certified copy of this order, the ROC, is directed to place all documents relating to the Transferor Companies with that of the Transferee Company and the files relating to the Transferor Companies shall be consolidated with the files and records of the Transferee Company. e) The Petitioner Companies are directed to take appropriate steps to submit the said scheme to the Registrar of Companies within 30 days from the date of receipt of copy of this Order. f) The Petitioner Companies are directed to take all consequential and statutory steps required in pursuance of the approved Scheme of Amalgamation under the provisions of the Act. g) The Petitioner Companies are directed to issue newspaper publication with respect to approval of Scheme of Amalgamation, in the same newspapers in which prev ..... 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