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TMI Blog2021 (8) TMI 681X X X X Extracts X X X X X X X X Extracts X X X X ..... : Dharmishta N. Raval and Kalpana K. Raval, Advocates ORDER 1. This present petition is filed jointly by Bhadra Textiles and Trading Private Limited and Villa Trading Company Private Limited with Gujarat Sidhee Cement Limited (hereinafter jointly referred to as the Petitioner Companies) under sections 230-232 of the Companies Act, 2013 (hereinafter referred to as the Act') read with Companies (Compromise, Arrangement and Amalgamations) Rules, 2016 (hereinafter referred to as the rules') seeking sanctioning of Scheme of Amalgamation of Bhadra Textiles and Trading Private Limited ( The. Transferor Company 1 ) and Villa Trading Company Private Limited ( The Transferor Company 2 ) with Gujarat Sidhee Cement Limited ( The Transferee Company ) and their respective Shareholders Creditors (the Scheme'). 2. The Petitioner Companies had filed a joint application being CA (CAA) No. 84 of 2020 before this Tribunal seeking dispensation of the meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors of the Petitioner Transferor Companies and Secured Creditors of the Petitioner Transferee Company and appropriate directions were sought for holding an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quity Shareholders and Unsecured Creditors and publications of the notice of meetings was filed by the Chairman of the meeting. The aforesaid meetings of Equity Shareholders and Unsecured Creditors were duly convened and held on 22nd day of February 2021 at 11:30 A.M and 3:30 PM respectively at its registered office of the Petitioner Transferee Company i.e. Sidheegram, PO-Prashnawada BO, Tal: Via Sutrapada SO Taluka, Pin Code 362275, Dist. Gir Somnath, Gujarat. The Chairman appointed by the Tribunal has filed an Affidavit wherein the Chairman has submitted his report along with the Scrutinizers report for the said meetings. On perusal of the same, the Scheme has been approved by 99.02% Equity Shareholders and 100% Unsecured Creditors of the Petitioner Transferee Company present and voting at the meeting. 5. The Petitioner Companies have jointly filed the present petition being CP (CAA) 20 of 2021 before this Tribunal seeking sanction of the Scheme. 6. This Tribunal by order dated 13th April 2021, admitted the petition and directed issuance of notice of hearing to be advertised in English daily 'Business Standard', Mumbai and Ahmedabad Edition and Gujarati translation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank loan is ₹ 20.87 crores. By Virtue of the present scheme of amalgamation the charge towards the HDFC Bank Loan of ₹ 20.87 crores shall stand transferred to the transferee Company 5. With reference to Para 2(g) of the RD Report, it is submitted that the Petitioner Companies have complied with the provisions of FEMA and RBI guidelines. It is submitted that Transferee company is a manufacturing company and 100% FDI is allowed through automatic route in all manufacturing companies as per the Consolidated Policy on FDI of the Government of India, FEMA (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2017 and accordingly no approval under the FEMA is required. Furthermore, the Petitioner Companies undertake to comply with the provisions of FEMA and RBI guidelines. 6. With reference Para 2(h) of the RD Report and observations of the Registrar of Company ('RoC') in their report wherein it is stated that as per Index of charges in the MCA Portal there are 14 open charges against which 11 are open secured charge IDs are in favour of HDFC Bank Limited amounting to ₹ 2444.46 million and 3 are in favour of Axis Bank Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he foreign investment is under automatic route and no prior approval is required and all compliances in this regard has been made. However, the Petitioner Transferor Company 1 undertake to comply the provisions of FEMA and RBI. 12. With reference to paragraphs 22 to 25 of the OL representation for the Petitioner Transferor Company No. 1, the contents thereof do not require any comments. 13. With reference to clause 26 of OL report for the Petitioner Transferor Company No. 1, the Petitioner Transferor Company No. 1 undertake to preserve their books of accounts, papers and records and it shall not dispose of without prior approval of the Central Government as per Section 239 of the Companies Act. 14. With reference to clause 27 of the OL report for the Petitioner Transferor Company No. 1, the Petitioner Transferor Company No. 1 undertake to ensure statutory compliance of all the applicable laws and on the sanctioning of the Scheme, it shall not absolve from any statutory liability, in any manner. 15. With reference to clause 28 of the OL report for the Petitioner Transferor Company No. 1, it is submitted that the Petitioner Transferor Company No. 1 shall pay relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record, it appears that the requirements of the provisions of Sections 230 and 232 of the Companies Act, 2013 are satisfied. The Scheme appears to be genuine and bonafide and in the interest of the shareholders and creditors. 11. Accordingly, the petition is allowed. The Scheme of Amalgamation, which is at Annexure H to the joint petition is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies, namely, Bhadra Textiles and Trading Private Limited and Villa Trading Company Private Limited and Gujarat Sidhee Cement Limited and their shareholders, and all concerned under the Scheme. 12. The Scheme of Amalgamation as approved by us forms part of this order and is attached herewith. 13. The sanction/approval of the Scheme does not come on the way of any Competent Authority(ies) to take any action in the event of violation of any law for the time being in force. 14. It is further ordered that the Petitioner Companies shall comply with Rule 17(2) of Companies (Compromise, Arrangements and Amalgamations) Rules, 2016 with respect to filing of order, if any, for confirmation of the Scheme in Form INC-28 with the Registrar of Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Companies: a) Harnessing and optimization of the synergy benefits and to carry on businesses more economically and efficiently with better utilization of common and combined resources. b) To reduce the overlaps and administration and the managerial cost. c) The amalgamation will result in the promoter group of the Transferor Companies directly holding shares in the Transferee Company, which will lead to simplification of the shareholding structure and reduction of shareholding tiers of the Transferee Company: d) The promoter group of the Transferee Company is desirous of streamlining its holding in the Transferee Company Simultaneously, the transferee company-is also desirous of consolidating its investment in only wholly owned subsidiary company. As a step towards such rationalization, it is proposed to merge the Transferor Companies into the Transferee Company; e) The promoters would continue to hold the same percentage of shares in the Transferee Company, pre and post the amalgamation. There would also be no change in the financial position of the Transferee Company. All cost, charges and expenses relating to the Scheme would be borne out of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' or administrative authority, body or other organization to the extent that the rules and standards, requirements, procedures or orders of such authority, body or other organization have the force of law including the Registrar of Companies. Regional Director, NCLT and such other sectoral regulators or authorities as may be applicable: Board or Board of Directors means the Board of Directors of the Transferor Companies or of the Transferee Company as the context may require and shall, unless it be repugnant to the context or otherwise, include a committee of directors or any person(s) authorized by the Board of Directors or such committee of Directors: Effective Date means last of the dates on which the certified copies of the order sanctioning this Scheme of Amalgamation passed by the NCLT is filed with the Registrar of Companies by the Transferor Companies and the Transferee Company- and if the certified copies are filed on different dates, last of such dates: Record Hate means the date fixed by the Board of Directors or committee thereof, if any, of the Transferee Company for the purpose of determining the members of the Transferor Companies to whom N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E CAPITAL The share capital of the Transferor Company 1 as on 31st March, 2020 is as under: Subsequent to 31st March, 2020 and till the dale of approval of the Scheme by the Board of Directors of the Transferor Company 1, there has been no change in the issued, subscribed and paid-up capital of the Transferor Company. The share capital of the Transferor Company 2 as on 31st March, 2020 is as under: Subsequent to 31st March, 2020 and till the date of approval of the Scheme by the Board of Directors of the Transferor Company 2, there has been no change in the issued, subscribed and paid-up capital of the Transferor Company. The share capital of the Transferee Company as on 31st March, 2020 is as under: Subsequent to 31st March 2020 and till the date of approval of the Scheme by the Board of Directors of the Transferee Company, the Transferee Company has on 17.4.2020, allotted 647051 equity shares of ₹ 10 Each to its employees under its ESOP'S scheme. Further, the Transferor Company I holds 4,88,00,000 no. of equity shares of ₹ 10 each fully paid up in the Transferee Company representing about 55.82% of the total paid up share capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany I shall also, without any further act, instrument or deed be transferred to and vested in and assumed by and/or deemed to be transferred to and vested in and assumed by the Transferee Company pursuant to the provisions of Sections 230 to 232 of the Act, so as to become the liabilities of the Transferee Company and further that it shall not be necessary to obtain the consent of any third party or other person who is a party to any contract or arrangement by virtue of which such liabilities have arisen, in order to give effect to the provisions of this Clause. This Scheme has been drawn up to comply with the conditions relating to amalgamation as specified under Section 2(1B) of the Income-tax Act, 1961. If any terms or provisions of the Scheme are inconsistent with the provisions of Section 2(1B) of the Income-tax Act, 1961, the provisions of Section 2(1B) of the Income-tax Act, 1961 shall be to the extent of such inconsistency prevail and the Scheme shall stand modified to that extent to comply with Section 2(IB) of the Income-tax Act, 1961: such modification to not affect other parts of the Scheme. Upon the Scheme becoming effective, the Transferee Company shall be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y rights, titles, permissions, if any all accumulated losses, if any, benefits of tax relief including under the Income-tax Act, 1961 such as credit for advance tax, taxes deducted at source, minimum alternate tax and all other rights, title, interest, contracts, consent, approvals or powers of every kind, nature and descriptions whatsoever shall under the provisions of Sections 230 to 232 of the Act and pursuant to the orders of the NCLT or any other Appropriate Authority sanctioning this Scheme and without further act, instrument or deed, but subject to the charges affecting the same as on the Effective Date, shall stand transferred to and/or deemed to be transferred to and vested in the Transferee Company so as to become the properties and assets of the Transferee Company. Without prejudice to Clause 5.1. all movable assets including sundry debtors, receivables, bills, credits, loans and advances, if any whether recoverable in cash or in kind or for value to be received, bank balances, investments, earnest money and deposits with any government, quasi-government local or other authority or body or with any company or other person, the same shall, on and from the Appointed Dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, without any application, act or deed, issue and allot equity shares, credited as fully-paid up to the extent indicated below to the members of the Transferor Company 1 holding fully paid-up equity shares of the Transferor Company 1 and whose names appear in the register of members of the Transferor Company I as on the Record Date, or to such of their respective heirs. executors, administrators or other legal representatives or other successors in title as may be recognized by the Board of Directors of the Transferor Company 1/Transferee Company in the following proportion: 4,88,00,000 fully paid up equity share of ₹ 10 each of the Transferee Company shall he issued and allotted as fully paid up to the equity shareholders of the Transferor Company 1 in proportion of their holding in the Transferor Company 1 . (Equity shares to be issued by the Transferee Company as above are referred to as New Equity Shares ). It is clarified that any positive net assets of the Transferor Company 1 as on the appointed date other than this investment in the shares of the Transferee Company will not affect - alter the share exchange ratio. The Transferor Company I holds 4,88,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with the formalities of the said Stock Exchanges. The Transferee Company shall, if and to the extent required, apply for and obtain any approvals from concerned regulatory authorities for the issue and allotment by Transferee Company of New Equity Shares to the members of the Transferor Company 1 under the Scheme. The approval of this Scheme by the members of the Transferee Company shall be deemed to be due compliance with the applicable provisions of the Act including Section 42 and 62 of the Act for the issue and allotment of New Equity Shares by the Transferee Company to the members of the Transferor Company 1, as provided in the Scheme and under Single window' clearance concept. 7. CANCELLATION OF EQUITY SHARES OF THE TRANSFEREE COMPANY HELD BY THE TRANSFEROR COMPANY 1. Upon the Scheme becoming effective, the issued, subscribed and paid up share capital of GSCL. to the extent of the shares held by Transferor Company 1 in the Transferee Company, shall be automatically cancelled in terms of Section 66 of the Act. The said cancellation shall result in reduction of capital under section 66 of the Act. However, since the aforesaid reduction is consequential and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and aggregated with the corresponding balance of the retained earnings appearing in the books of account of the Transferee Company as on the Appointed Date. The reserves standing in the books of account of the Transferor Companies as on the Appointed Date shall be transferred and vested in the Transferee Company as on the Appointed Date; the identity of reserves of Transferor Companies shall be preserved and that shall appear in the financial statements of the Transferee Company in the same form in which those appeared in the financial statements of the Transferor Companies. As provided under the Scheme, the equity shares of the Transferee Company held by the Transferor Company 1 shall stand cancelled and as a result equivalent equity share capital of the Transferee Company and the book value of investments held by the Transferor Company 1 in the Transferee Company shall also stand cancelled. The aggregate lace value of New Equity Shares issued by the Transferee Company to the shareholders of the Transferor Company 1 pursuant to the Scheme shall be credited to the Equity Share Capital Account of the Transferee Company. As provided under the Scheme, the carrying amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red from the beginning of the comparative period. 9B. Accounting Treatment in the Books of Transferor Companies: Notwithstanding anything contained in any other clause in the Scheme. Transferor Company shall give effect to the merger in its books of account as per the applicable accounting principles and as on the date as prescribed under Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, as notified under the Companies (Indian Accounting Standards) Rule, 2015, as may be amended from time to time. 10. COMBINATION OF AUTHORISED SHARE CAPITAL a. Upon sanction of this Scheme, the Authorised Share Capital of the Transferee Company shall automatically- stand increased without any further act instrument or deed on the part of the Transferee Company including therein the payment of stamp duty and fees payable to Registrar of Companies. Gujarat, by the amount of Authorized Share Capital of each of the Transferor Companies as provided below: b. The Memorandum of Association of the Transferee Company (relating to the Authorised Share Capital) shall, without any further act instrument or deed, be and stand altered, modified and am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he accepted principle of Single Window Clearance, it is hereby, provided that the aforesaid alteration in the Memorandum of Association of the Transferee Company viz, Change in the Capital Clause referred above, shall become operative on the Scheme being effective by virtue of the fact that the Shareholders of Transferee Company, while approving the Scheme as a whole by virtue of written consent letters, have also resolved and accorded the relevant consents as required respectively under Sections 13, 14, 61 and 64 of the Companies Act, 2013 or any other provisions of the Act and shall not be required (o pass separate resolutions as required under the Act. 11. CONDUCT OF BUSINESS TILL EFFECTIVE DATE With effect from the Appointed Date and upto and including the Effective Date: a. The Transferor Companies shall be deemed to have been earning on and shall carry on its business and activities and shall be deemed to have held and stood possessed of and shall hold and stand possessed of all its properties and assets pertaining to business of the Transferor Companies for and on account of and in trust for the Transferee Company. The Transferor Companies hereby undertake to hold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Company further agrees that for the purpose of payment of-any retirement benefit/compensation, other terminal benefits, such immediate uninterrupted past services with the Transferor Companies shall also be taken into account. b. In relation to those employees of the Transferor Companies for whom the Transferor Companies are making contributions to the government provident fund or any other fund existing, the Transferee Company shall stand substituted for such Transferor Companies, for all purposes whatsoever, including relating to the obligation to make contributions to the said fund in accordance with the provisions of such fund, bye laws etc. in respect of such employees of the Transferor Companies. 13. LEGAL PROCEEDINGS a. If any suit, appeal or other proceeding of whatever nature by or against the Transferor Companies is pending, the same shall not abate or be discontinued or in any way be prejudicially affected by reason of or by anything contained in this Scheme, but the said suit, appeal or other legal proceedings may be continued prosecuted and enforced by or against the Transferee Company, as the case may be in the same manner and to the same extent as it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions, proceedings, claims and including interests and penalties discharged by the Indemnified Persons which may devolve on Indemnified Persons on account of amalgamation of the Transferor Company 1 and Transferor Company 2 with the Transferee Company but would not have been payable by such Indemnified Persons otherwise, in the form and manner as may be agreed amongst the Transferee Company and the shareholders of the Transferor Companies. 16. SAVING OF CONCLUDED TRANSACTIONS The transfer of properties and liabilities under Clause 4 and 5 above and the continuance of proceedings by or against the Transferor Companies under Clause 13 above shall not affect any transaction or proceedings already concluded by the Transferor Companies on or after the Appointed Date till the Effective Date (both days inclusive), to the end and intent that the Transferee Company accepts and adopts all acts, deeds and things done and executed by the Transferor Companies in respect thereto as done and executed on behalf of the Transferee Company. 17. DISSOLUTION OF THE TRANSFEROR COMPANIES a. On the Scheme becoming effective, the Transferor Company 1 shall stand dissolved automatically with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of persons including the respective members and/or creditors of the Transferor Companies and the Transferee Company as may be directed by the NCLT or any other Appropriate Authority, as may be applicable: b. The Scheme being approved by the public shareholders of the Transferee Company by way of e-voting in terms of Para (I)(A)(9)(a) of Annexure I of SEBI Circular no. CFD/DIL3/CIR/2017/21 dated March 10, 2017: provided that the same shall be acted upon only if the votes cast by the public shareholders in favor of the proposal are more than the number of votes cast by the ''public shareholders against it; c. The sanction or approval of the Appropriate Authorities concerned being obtained and granted in respect of any of the matters in respect of which such sanction or approval is required: d. The sanction of the Scheme by the NCLT or any other authority under Sections 230 to 232 and other applicable provisions of the Act. 21. EFFECT OF NON-RECEIPT OF APPROVALS In the event of any of the said sanctions and approvals referred to in the preceding clause not being obtained and/or the Scheme not being sanctioned by the NCLT or such other competent authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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