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TMI Blog2021 (2) TMI 460X X X X Extracts X X X X X X X X Extracts X X X X ..... of Kerala as CP Nos.36/2016 38/2016 seeking sanction of Scheme of Amalgamation of the Petitioner Company M/s Hotel City Plza Private Limited (Transferor Company) with M/s Trivandrum Apollo Towers Private Limited (Transferee Company). On constitution of the National Company Law Tribunal, the Hon ble High Court of Kerala vide order dated 13.3.2017 in CP Nos.36/2016 38/2016 transferred the above Company Petitions to the National Company law Tribunal, Chennai Bench with all the case records, wherein it was numbered as TP(HC)112 113 (Kerala) 2018 and notices were issued to the parties, who entered appearance and contested the matter. 2. On establishment of the NCLT, Kochi Bench, the matter was transferred to this Bench and re-numbered it as TCAA 4 5/KOB/2019. This Bench also issued notice to the parties and they entered appearance. 3. The brief facts leading to the case are as under: TCAA/4/KOB/2019 has been filed by M/s Hotel City Plaza Private Limited and TCAA/5/KOB/.2019 has been filed by M/s Trivandrum Apollo Towers Private Limited under Sections 391 to 394 of the Companies Act, 1956 seeking the following reliefs: (a)That the said arrangement embodied in the Annex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Limited (1st petitioner) as per the last audited accounts as on March 31st, 2015 is ₹ 30,000,000/- (Rupees Three Crores only) divided into 30,000 equity shares of ₹ 1000/- (Rupees One Thousand only) each, out of which 25,176 equity shares are subscribed and fully paid up. The accounts of the Petitioner Company have been and audited up to March 31st, 2015. 6. The authorised share capital of the Petitioner Company M/s Trivandrum Apollo Towers Private Limited (2nd petitioner) as per the last audited accounts as on March 31st, 2015 is ₹ 60,000,000/- (Rupees Six Crores only) divided into 60,000 equity shares of ₹ 1000/- (Rupees One Thousand only) each, out of which 42,769 equity shares are subscribed and fully paid up. The accounts of the Petitioner Company have been audited up to March 31st, 2015. 7. Subsequent to the date of the aforesaid accounts i.e., March 31, 2015, the Ist Petitioner Company has issued 6973 compulsory convertible debentures of aggregate value ₹ 69,73,000/- Rupees sixty-nine lakhs seventy-three thousand only) to 15 individuals. Other than that, there has been no other substantial change in the financial position of the 1st Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial structure to all creditors, facilitate resource mobilization and achieve better cash flows. This would contribute substantially towards enhancement of shareholder's value of the Transferee Company. (d)Duplication of administrative functions will be eliminated together with the multiple record keeping, resulting in reduced expenditure. (e) The banks, creditors and institutions, of both Companies, are not affected by the proposed amalgamation as their security is maintained. (f) The increased asset base of the Transferee Company amid greater revenue inflow would be to the benefit of all the shareholders and creditors of the Transferor Company and the Transferee Company, who would continue to be associated with the Transferee Company. The Transferee Company would have better financial viability and clearer focus, which would be in the interest of all the shareholders, debenture holders and creditors including the shareholders, debenture holders and creditors of the Transferor Company. (g)There shall be impetus to and increase in the area of operations of the Transferee Company apart from reduction in costs. (h) The amalgamation shall result in combination of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 14.59 crores (Paid up capital ₹ 2.51 crores and reserves and surplus is negative) and the Transferee Company received unsecured loan of ₹ 16.14 crores as on 31.3.2015 (paid up capital ₹ 4.27 crores and reserves and surplus is in the negative). Hence the companies have violated the provisions of Sections 73 and 74 of he Act read with the rules framed thereunder. It is also stated in the report filed on 7th February, 2020 that since both companies have violated the provisions of Section 73-76 of Companies Act, 2013 read with Companies (Acceptance of Despots) Rules, 2014 a detailed enquiry is to be conducted for which the companies should produce certain documents such as Books of accounts, Register of Members, Share Transfer Register, Register of Share Certificate etc. for verification. In the report dated 25th February, 2020 it is stated that even though the Registrar of Companies sought the aforesaid documents, the companies have not produced the documents and without verifying the documents, it is not possible to file a final report in the matter. 13. In the report of ROC dated 17.9.2020, it is stated that during the year 2013-14, the transferor company has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 73 to 76A prohibited the private limited companies from accepting or renewing any deposits from shareholders in excess of the aggregate of the paid up capital, free reserves and securities premium amount. The transferor company has not uploaded the Notes forming part of the Accounts in the MCA Portal from 31.3.2014 to 31.3.2019 and has not furnished the said disclosures/information in the physical copy provided to the Regional Director, Chennai. Apart from that the transferor company retained the said amounts without repaying them within a period of three years as prescribed under Section 74 of the Act, which is in violation of Section 74(1)(b) of the Companies Act, 2013. In the One time DPT-3 filed by the transferor company, they have not furnished the required information specially in respect of the deposits received and retained by the Transferor company from the shareholders since 1.4.2014 to 31.3.2019. This would also attract violation of Section 74. Since the amount of outstanding unsecured loans/deposits received is over ₹ 14 crores as compared to the share capital of around ₹ 2.5 crores, it is clearly a material misstatement leading to violation of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinued as a Director of the Transferee Company, without any interruption, till date. 15. Therefore, the petitioners stated that in view of the above, there is no illegality whatsoever with respect to availing unsecured loans amounting to ₹ 77,00,000/- between 1.4.2014 and 31.3.2015 and there is no violation of section 73 or 74 of the Companies Act, 2013 or of Rule 3(3) or any other Rule of the Companies (Acceptance of Deposits) Rules, 2014. 16. It is further stated that even assuming while denying the alleged violations of section 73 or 74 of the Companies Act 2013 or of Rule 3(3) or any other Rule of the Companies (Acceptance of Deposits) Rules, 2014, such alleged violations are not valid grounds for objecting the proposed Scheme of Amalgamation. Hence they prayed for sanction of the proposed Scheme of Amalgamation and to pass such other orders that may be necessary to ensure that the Scheme shall be effectively carried on. 17. The petitioners have referred to a decision of the Hon ble Supreme Court in Miheer H Mafatlal Vs. Mafatlal Industries reported in 1997(1) SCC 579 and has stated that the approval of the Scheme of Amalgamation cannot be held hostage to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that it was received from related parties stating it as Long Term Borrowings. The amount outstanding unsecured loans/deposits is over ₹ 14 crores as compared to share capital of around ₹ 2.5 crores is violation of Section 448 of the Companies Act. Similar violations were committed by the Transferee company also. Even though the petitioners filed a counter to the report of Registrar of Companies denying the allegations regarding violation of Sections 73 or 74 of the Companies Act, they simply stated that they are not valid grounds for objecting the proposed scheme of amalgamation. Their further submission is that prior to 15.9.2015, there was no requirement to disclose the details of the money accepted from the Directors in the Board s report. However, they stated that an inadvertent omission occurred on the part of the company which resulted in the non-disclosure of the details of loans received from the Directors and that the company has not accepted any deposits within the meaning of term as defined under Rule 2(1) of the Companies (Acceptance of Deposits) Rules, 2014. 19. In order to see whether on the basis of the objections raised by the Regional Director, M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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