1. The present joint Company Petition has been filed by the Applicant Companies under Sections 230 – 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, seeking approval of the Scheme of Arrangement in the nature of Demerger of the undertaking of Business Unit 1 pertaining to manufacturing of sleeve and carrybag business of Bullion Flexipack Private Limited (“Petitioner Demerged Company”) into Truder Packaging Private Limited (“Petitioner Resulting Company”) and their respective Shareholders with the effect from the Appointed Date, i.e. 1st April 2021 as mentioned in the Scheme.

2. As per the Scheme of Arrangement, the Business Unit 1/ Demerged Undertaking of the Demerged Company, shall be transferred to the Resulting Company, along with entire assets and liabilities pertaining to the Business Unit 1/ Demerged Undertaking, with effect from the Appointed Date of the Scheme.

3. The Petitioner Companies had filed a joint application before this Tribunal being CA (CAA) No. 47 of 2021, sought dispensation of the meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors of both the Petitioner Companies. This Tribunal, vide order dated 16.11.2021, dispensed with the meetings of Equity Shareholders and Unsecured Creditors of both the Petitioner Companies as well as the Secured Creditors of the Resulting Company. However, a direction for holding and convening of meeting of the Secured Creditors of Demerged Company as per law was given by this Tribunal.

4. In pursuance to the order dated 16.11.2021, the Notice of the meeting indicating the day, date, place and time together with a copy of the Scheme pursuant to Section 102 of the Companies Act, 2013 read with Sections 230 to 232 of the Companies Act, 2013 and Rule 6 of the Companies (CAA) Rules, 2016 along with prescribed form of proxy, attendance slip, etc. was sent individually via E-mail on 30.11.2021 as well as personally delivered through courier on 01.12.2021 to all the Secured Creditors of the Demerged Company. The notice of the meeting of the Secured Creditors of the Demerged Company was also published in Gujarati Daily, Divya Bhaskar, Vadodara Edition on 01.12.2021 and in English Daily, Business Standard, Ahmedabad Edition on 02.12.2021.

5. The meeting of the Secured Creditors of the Demerged Company was held on Monday, 03.01.2022 at 03:00 P.M., at Bank of Baroda, SME Branch, 28, GIDC Estate, Makarpura, Vadodara, Gujarat – 390 010. The chairman report dated 12.01.2022 is filed as per Rule 14 of the Companies (CAA) Rules, 2016 on 13.01.2022. The said meeting was attended by 2 (two) Secured Creditors of the Demerged Company entitled to Rs. 3,29,26,494/- (Rupees Three Crores Twenty-Nine Lacs Twenty-Six Thousand Four Hundred and Ninety- Four Only) representing 100% of total value of secured debt of the Demerged Company. In the said meeting of the Secured Creditors, both the Secured Creditors casted their votes in favour and thereby approved and agreed for the proposed scheme of demerger of the Demerged Company into the Resulting Company. Secured Creditors of the Demerged Company have approved the Scheme, by requisite majority of 100% in value and majority in number.

6. By the order dated 16.11.2021, passed in CA (CAA) 47 of 2021, this Tribunal had directed the Petitioner Companies to serve Notice of the Scheme in compliance with Section 230(5) of the Companies Act, 2013 in the Form No. CAA.3 along with disclosures mentioned under Rule 6 to (i) the Central Government through the Regional Director, North Western Region, (ii) the Registrar of Companies, Gujarat and (iii) the Income-tax authorities concerned and (iv) Official Liquidator, stating that representations, if any, to be made within a period of 30 days from the date of receipt of such notice, failing which it shall be presumed that the authorities have no representation to make on the proposed Scheme. In compliance with the order dated 16.11.2021, the Petitioner Companies have served notices to the Central Government through the Regional Director, North Western Region, the Registrar of Companies, Gujarat, the concerned Income-tax authorities and the Official Liquidator on 06.12.2021.

7. Thereafter, the Petitioner Companies have jointly filed this petition (second motion) before this Tribunal seeking sanction of the proposed Scheme, along with application bearing I.A. No. 14 of 2022 on 04.02.2022, for condoning delay of 8 (eight) days in filing the present application. The delay in filing the second motion application was condoned and the said application being I.A. No. 14 of 2022 was allowed on 16.02.2022.

8. This Tribunal vide an order dated 22.03.2022, admitted the petition and directed for publication of notice of hearing in “Business Standard” in English and “Divya Bhaskar” in Gujarati having circulation in Gujarat, not less than 10 days before the date fixed for final hearing. This Tribunal also directed to issue notice to (a) Central Government through Regional Director (North – Western Region) at Ahmedabad, (b) Registrar of Companies, at Ahmedabad, Gujarat, (c) to the Income Tax Department along with full details of assessing officer and PAN numbers of both the Petitioner Companies with the copy also to the Chief Commissioner of Income Tax Office and (d) the Official Liquidator, Authorities who may govern the working of the respective Companies involved in the Scheme at least 30 days before the date fixed for hearing of the above Petition.

9. Pursuant to the order dated 22.03.2022 passed by this Tribunal, the Petitioner Companies have published the notice of hearing of the company petition in “Business Standard” (English) and “Divya Bhaskar” (Gujarati) on 13.04.2022. The affidavit of service, on behalf of the Petitioner Companies, dated 19.04.2022, has been filed confirming the publication of the notice in the newspapers as directed and also the notice of hearing of the petition being served upon the concerned statutory authorities.

10. In response to the notices served upon the Statutory Authorities, the office of the Regional Director, North-Western Region (RD) has filed its representation dated 29.04.2022 (sent to this Tribunal on 04.05.2022) wherein the RD had made several observations along with the report of the Registrar of Companies (RoC), which are as under:-

i) That as per consideration provided in the scheme, further increase in authorized share capital of the Petitioner Resulting Company will be required since the authorized share capital of the Resulting Company is not sufficient to issue and allot new equity shares of the Resulting Company to the shareholders of the petitioner Demerged Company through this scheme. There is requirement to increase in the authorized capital of the petitioner Resulting Company. The company is required to comply with the relevant provisions of the Companies Act, 2013 for increase in authorized share capital of the Resulting Company.

To direct the Resulting Company to comply with the provisions of Section 61 of the Companies Act, 2013 and also as to the payment of stamp duty, registration fees etc. and file the relevant e-form with respective Registrar of Companies.

ii) To direct the petitioner companies to undertake the compliance of Section 2 (19AA) of the Income Tax Act in the matter, since this is a Scheme of Demerger.

iii) The petitioner companies have not attached the list of assets and liabilities in this regard pertaining to the proposed demerged undertaking, with the scheme.

This Tribunal may, therefore, be pleased to direct the petitioner companies to submit the complete list and full details of assets and liabilities which are proposed to be transferred to the Resulting Company through this.

iv) This Directorate has sent letters No. RD (NWR)/230- 232/(524)/2021/2732 to 2733 dated 07.12.2021 and RD (NWR)/230-232/(524)/2021/3858 to 3859 dated 22.02.2022 to the Resulting Company and copy endorsed to Demerged Company at their Registered office seeking certain information/documents in the captioned matter. However, both letters sent to Resulting Company Truder Packaging Private Limited have returned by postal authorities with remark "left". It appears that the Resulting Company is not maintaining its registered office in compliance of the Section 12 of the Companies Act, 2013.

In this regard, this Directorate sent a letter no. RD (NWR)/230- 232/(524)/2021/480 dated 29.04.2022 to the ROC Ahmedabad with requested to take necessary action for violation of Section12 of the Companies Act, 2013

v) Following are the observations of RoC

(1) The Demerged Company has failed to attach Cash Flow Statement with the Financial Statements/ Balance Sheet as at 31.03.2019 as per the requirement of Section 2(40) read with Section 129 of the Companies Act, 2013. It has also failed to attach the extract of the annual return as form part of Board's report in the prescribed form MGT-9 for the Financial Year 2018-19 as per the requirement of Section 134 read with sub-section (3) of section 92 of the Companies Act, 2013.

(2) The Auditors of Demerged Company has given qualified observations in its Auditor Report regarding Employee Benefit and Fixed Assets verification etc. for the financial year 2017-18, 2018-19 and 2019-20. However, the Board of Directors have not given their explanations in the Director‟s Report for the respective financial years as per the requirement of Section 134(3)(f) of the Companies Act, 2013.

(3) As per the Annual Return /MGT-7 for the Financial Year 2017-2018, the Demerged Company has 7 Shareholders as well as per the Annual Return /MGT-7 for the Financial Year 2018-2019, the Demerged Company has 3 Shareholders.

(4) Both the applicant companies have not filed application in prescribed e-form GNL-1 under the MCA 21 portal as per the requirement of Section 398 and Section 232 (2)(b) of the Companies Act, 2013 r.w. Rule 7 of Companies (Registration Office And Fees) Rules, 2014.

(5) As per the para 12(a) of the order dated 16.11.2021 passed by this Tribunal, there are 02(two) Equity Shareholders in the Applicant Company No. 1. Whereas as per the last Annual Return/MGT-7 for the Financial Year 2019-20 filed under the MCA21 portal, the Demerged company/applicant Company No.1 does have 03 shareholders. To direct the Demerged Company to place the fact on the record.

(6) As per the order dated 16.11.2021, there are 02 Secured creditors in the Demerged Company/ Applicant Company No. 1 having value of Rs.3,29,26,494/-. Whereas as per the Index of charges available under the MCA 21 portal, the Demerged company is having 02 open charge ID in favor of 01 Secured creditor namely Bank of Baroda. Thus, it is revealed that the Demerged company has failed to file creation of charge as per the requirement of Section 77 of the Companies Act, 2013 r.w. Rule 3 of the Companies (Register of Charges) Rules, 2014.

In this regard, this Tribunal may kindly direct the company to place the fact on record regarding filing of creation of charges as per the requirement of Section 77 of the Companies Act, 2013 r.w. Rule 3 of the Companies (registration of Charges), Rules, 2014.

(7) Necessary Stamp Duty on transfer of property/Assets is to be paid to the respective Authorities before implementation

11. The Petitioner Companies had filed a detailed affidavit dated 25.07.2022 inter alia setting out the explanations and/ or various compliances made by the Petitioner Companies pursuant to the observations received from the office of the RD.

i) It is already envisaged that the approval of the shareholders of the Resulting Company shall be deemed to be their consent/ approval also to the consequential alteration of the Memorandum of Association of the Resulting Company. In view of the same, fresh procedure for approval of shareholders of the Resulting Company shall not be necessary. Further, it is also indicated that the Resulting Company shall file the requisite forms with the RoC for alteration of its authorized share capital and shall pay necessary fees as may be required to be paid in accordance with the Law. That in any case, the Petitioner - Resulting Company shall be bound to pay the requisite amounts of stamp duty, registration fees and shall comply with filing requirements for the same. In view of the same, it is not necessary to issue any further directions.

ii) That compliance of Section 2 (19AA) of the Income Tax Act is already envisaged under the proposed Scheme vide Para C of the proposed Scheme. In view of the same, it is not necessary for this Hon'ble Tribunal to give any further instructions.

iii) That it has been duly envisaged in the proposed Scheme that the assets and liabilities to be transferred to the demerged undertaking/ Resulting Company are detailed in Annexure – 1. However, on account of an inadvertence error, the same has not been annexed along with the proposed Scheme. It is submitted that such inadvertent mistake does not affect the scheme of arrangement and demerger in any manner. Under the circumstances, the Petitioner Companies hereby urges before this Hon‟ble Tribunal to place the list/ details of the assets and liabilities proposed to be transferred to the demerged undertaking/ Resulting Company along with the present Affidavit.

iv) The Resulting Company has not received any observations and/ or directions from the office of the Registrar of Companies, Gujarat. Be that as it may, the Petitioner – Resulting Company undertakes to comply with the directions, if any issued by the RoC in pursuance to Section 12 of the Companies Act, 2013, so far as it may be admissible under the facts and circumstances of the case. It is further submitted that the Petitioner – Resulting Company is bound to maintain the registered office of the Petitioner – Resulting Company in compliance of Section 12 of the Companies Act, 2013.

The explanation given by the petitioners on the observation of the RoC are as under:

(1) During the process of scanning the financial statements and attachment thereof to E–form AOC–4, the pages containing the Cash Flow Statement were missed out and thus, inadvertently and without any mala fide intention, the same could not be uploaded in the attachments with E– form AOC–4 for the Financial Year 2018-19.

(2) The provisions pertaining to Secretarial Audit as envisaged under Section 204 of the Companies Act, 2013 were not applicable to the Demerged Company since inception to till date. Thus, any requirement of compliance with respect to the same does not arise at all. Further it is submitted that the auditor of the Demerged Company had not provided any adverse remark in its report for the Financial Years 2017-18, 2018-19 and 2019-20 except some observations which were subject to conditions. Hence, the Demerged Company was not required to include any explanation or comment in the Board‟s report for the abovementioned financial years. In view whereof, it is submitted that there is no violation of the provisions contained under Section 134(3)(f) of the Companies Act, 2013 read with the Rules made thereunder.

(3) It is agreed and admitted that the Demerged Company has failed to disclose the details pertaining to transfer of shares in E–form MGT–7 for the Financial Year 2018-19 solely owing to a clerical error and without any mala fide intention. It is submitted that the Demerged Company declares and undertakes to rectify the default at the earliest and make it good. It is further submitted that the Demerged Company shall be provided reasonable opportunity to rectify a human error occurred while filing the Annual Return in E–form MGT–7 for the Financial Year 2018-19.

(4) It is submitted that both the Petitioner Companies have duly filed E–form GNL–1 before the Registrar of Companies, Gujarat in accordance with the provisions of the Law. In view of the same, it is not necessary to issue any further directions.

(5) It is agreed and admitted that the Demerged Company has failed to disclose the details pertaining to transfer of shares in E–form MGT–7 for the Financial Year 2019-20 solely owing to a clerical error and without any mala fide intention. It is submitted that the Demerged Company declares and undertakes to rectify the default at the earliest and make it good. It is further submitted that the Demerged Company shall be provided reasonable opportunity to rectify a human error occurred while filing the Annual Return in E–form MGT–7 for the Financial Year 2019-20. It is submitted that as on 01.04.2021, there are only 2 (two) shareholders in the Demerged Company, which fact is duly stated in the present petition.

(6) It is submitted that Demerged Company had borrowed money for a Car Loan from one Secured Creditor namely, M/s. Mahindra and Mahindra Financial Services Limited and at the given time, the Demerged Company had queried the said Secured Creditor for creation of charge for the said Loan. However, as per the communication received from the said Secured Creditor, it was mutually agreed that it was not mandatory to create a charge on MCA Portal for a Car Loan. Therefore, it is submitted that the Demerged Company had not created charge for the said Car Loan in pursuance to the communication made with the said Secured Creditor. Be that as it may, if the circumstances so warrant, the Demerged Company declares and undertakes to rectify the default at the earliest and make it good.

(7) I say and submit that the required/ necessary stamp duty shall be paid as per the applicable rate in accordance with the provisions contained under the Gujarat Stamp Act.

12. In view of this affidavit dated 25.07.2022, this Tribunal had called upon the RD and RoC to file a supplementary report, vide an order dated 26.07.2022.

13. Subsequent to which, the office of the RD has filed its supplementary report/ representation dated 27.09.2022 (sent to this Tribunal on 28.09.2022) along with the report of the RoC and the same is considered as the final report of the RD and RoC in the present matter. That in the said representation dated 27.09.2022 the RD has made the following observations along with the report of the RoC. The details of the observations of the said statutory authorities and response of the Petitioner Companies are as under:

(a) At paragraph no. 4 (v), the RD has reported that the RoC has passed Adjudication Order dated 23.08.2022 u/s 454 of the Companies Act, 2013 against the Company and its Officers for default of Section 12(1) of the Companies Act, 2013 and imposed the penalty on the Company and its officers in default under Section 12(8) of the Companies Act, 2013 read with Section 446B of the Companies Act, 2013.

Responding to the same, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that the Resulting Company has already filed an appeal before the Ld. Regional Director, Western Region, Ahmedabad under Form No. ADJ (pursuant to Section 454(5) of the Companies Act, 2013 and Rule 4(1) of the Companies (Adjudication of Penalties) Rules, 2014) challenging the order dated 23.08.2022 passed by the RoC inter alia for setting aside of the impugned order dated 23.08.2022. That the same is pending consideration before the RD and thus, the penalty imposed on the Resulting Company and its officers under Section 12(8) read with Section 446B of the Companies Act, 2013 shall be subject to the outcome of the said appeal. Further, the Resulting Company shall be bound by the order passed in the said appeal by the RD. It is further stated that the Resulting Company is maintaining the registered office at the same address which is mentioned on the portal of Ministry of Corporate Affairs since its inception in compliance of Section 12 of the Companies Act, 2013. Thus, in view of pendency of an appeal before the RD, it is not necessary for this Tribunal to give any further directions.

(b) At paragraph no. 4 (vii), the RD has reproduced the comments of the RoC in response to the additional affidavit dated 25.07.2022 filed by the Petitioner Companies. The adverse comments of the RoC are dealt with as follows by the Petitioner Companies:

(i) Failure to attach Cash Flow Statements:

The RoC has reported that the company has committed the default and confirmed vide its reply dated 22.08.2022 that the pages containing the Cash Flow Statement were missed out and thus, inadvertently and without any mala fide intention, the same could not be uploaded in the attachments with E-form AOC – 4 for the Financial Year 2018 – 19, which is attracted a violation of Section 134(7)/ 137(3) read with Section 2(4) of the Companies Act, 2013 as the case may be. In view of the above it is evident that the company has not complied with the provisions of Section 134(7)/ 137(3) of the Companies Act, 2013. Therefore, the RoC has submitted that the reply given in the rejoinder affidavit by the Demerged Company is contrary to the provisions of the Companies Act, 2013.

In response to the said observation, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that the Petitioner Companies have duly responded in its additional affidavit dated 25.07.2022 that the pages containing the cash flow statement were inadvertently missed out while scanning the financial statements and attachments thereof. Moreover, the said cash flow statement is duly annexed at Page Nos. 18 and 19 along with the additional affidavit dated 25.07.2022. Further, it is pertinent to submit that the financial statements were duly filed by the Petitioner Companies in accordance with the provisions of the Companies Act, 2013. Thus, an inadvertent error of not attaching the cash flow statement shall not be construed as a violation/ contravention of the provisions contained under Section 134(7)/ 137(3) of the Companies Act, 2013.

(ii) Failure to attach extract of the Annual Return as forming part of Board‟s report in the prescribed Form MGT – 9 for the Financial Year 2018 – 19:

The RoC has commented that the company has committed the default and confirmed vide its reply dated 22.08.2022 that Company has failed to attach extract of the Annual Return as form part of Board‟ report in the prescribed form MGT – 9 for the Financial Year 2018-19 on account of a misunderstanding which is attracted a violation of Section 134(7) read with Section 92(3) of the Companies Act, 2013. In view of the above it is evident that the company has not complied with the provisions of the Companies Act, 2013. Therefore, the RoC has submitted that the reply given in the rejoinder affidavit by the Demerged Company is contrary to the provisions of the Companies Act, 2013.

In response to the said observation, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that the said failure had occurred on account of a misunderstanding that the requirement of furnishing the extract of Annual Return in Form MGT – 9 has been dispensed with since the provisions under Section 92(3) of the Companies Act, 2013 were amended with effect from 28.08.2020. However, the Demerged Company has already made good its error by filing Form MGT – 9 at a later stage, which is duly annexed at Page Nos. 20 to 28 along with the additional affidavit dated 25.07.2022. Moreover, the said extract was also served to the shareholders along with the Board‟s Report for the Financial Year 2018 – 19. Thus, as such there is no contravention/ violation of the provisions contained under Section 134(7) read with Section 92(3) of the Companies Act, 2013.

(iii) No details with regards to transfer of shares for Financial Year 2018 – 19:

The RoC has commented that as the Company has committed default in its reply, company is required to file afresh e-form MGT-7 for the financial year 2018-19 following the procedure laid down under section 398 of the Companies Act, 2013 read with Rules made thereunder with the Ministry of Corporate Affairs along with requisite fees/ additional fees as applicable. The RoC has prayed for issuing suitable directions to the Demerged Company as deem fit and proper by this Tribunal.

In response to the said observation, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that the Petitioner Companies have duly admitted that there had been a failure on their part to disclose the details pertaining to transfer of shares in E-form MGT – 7 for the Financial Year 2018 – 19 solely owing to a clerical error and without any mala fide intention. The Petitioner Companies have also declared and undertaken to rectify the default and make it good at the earliest. Further, it is stated that in the present Scheme, the latest shareholding pattern of the Petitioner Companies is taken into consideration and hence, the same shall have no bearing in deciding the present case, in as much as the said default can also be made good even after the sanctioning/ approval of the Scheme by this Tribunal. Thus, it is stated that the said issue is not germane to the present proceedings and hence, it is not necessary for this Tribunal to give any further directions.

(iv) Increase in Authorised Share Capital of the Resulting Company:

The RoC has commented that the Resulting Company must be complied with the provisions of Section 61 r/w Section 64 of the Companies Act, 2013 and necessary e-form/ MOA/ AOA under the MCA portal to increase its Authorised Capital should be filed along with payment of Fee/ Additional Fee and necessary Stamp Fee as per the requirement of the aforesaid provisions of the Companies Act, 2013 and Rules made thereunder. The RoC has prayed for issuing suitable directions to the Petitioner Companies in this regard.

In response to the said observation, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that vide Clause 9.2 and 9.3 of the Scheme, it is already envisaged that the approval of the shareholders of the Resulting Company shall be deemed to be their consent/ approval also to the consequential alteration of the Memorandum of Association of the Resulting Company. In view of the same, fresh procedure for approval of shareholders of the Resulting Company shall not be necessary. Further, it is also indicated that the Resulting Company shall file the requisite forms with the RoC for alteration of its authorised share capital and shall pay necessary fees as may be required to be paid in accordance with the Law. It is stated that in any case, the Resulting Company shall be bound to pay the requisite amounts of stamp duty, registration fees and shall comply with filing requirements for the same. In view of the same, it is not necessary to issue any further directions.

v) Disparity with regards to No. of Shareholders:

The RoC has commented that the company has committed the default and confirmed vide its reply dated 22.08.2022 so as company is required to file afresh e-form MGT-7 for the financial year 2019-20 following the procedure laid down under Section 398 of the Companies Act, 2013 read with Rules made thereunder with the Ministry of Corporate Affairs along with requisite fees/ additional fees as applicable. The RoC has prayed for issuing suitable directions to the Demerged Company as deem fit and proper by this Tribunal.

In response to the said observation, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that there are only 2 shareholders in the Demerged Company and the same is taken into consideration in the present Scheme. That the Petitioner Companies have duly admitted that there had been a failure on their part to disclose the details pertaining to transfer of shares in E-form MGT – 7 for the Financial Year 2019 – 20 solely owing to a clerical error and without any mala fide intention. The Petitioner Companies have declared and undertaken to rectify the default and make it good at the earliest. Further, it is stated that in the present Scheme, the latest shareholding pattern of the Petitioner Companies is taken into consideration and hence, the same shall have no bearing in deciding the present case, in as much as the said default can also be made good even after the sanctioning/ approval of the Scheme by this Tribunal. Thus, it is stated that the said issue is not germane to the present proceedings and hence, it is not necessary for this Tribunal to give any further directions.

(vi) Non-registration of Charge:

The RoC has commented that as per the requirement of Section 77 of the Companies Act, 2013, it shall be the duty of company creating a charge within or outside India, on its property or assets (including motor vehicle), situated in or outside India, to register the particulars of the charge with the Registrar within thirty days of its creation. In the instant case of Demerged Company, the charge so created would be considered as „unregistered‟ and does not give any such rights to the charge holder, which attracted a violation of Section 77 of the Companies Act, 2013. Therefore, the RoC has submitted that the reply given in the rejoinder affidavit by the Demerged Company is contrary to the provisions of the Companies Act, 2013.

In response to the said observation, the Petitioner Companies in the reply/ further affidavit dated 17.11.2022 have stated that the Demerged Company had borrowed money for a Car Loan from one Secured Creditor namely, M/s. Mahindra and Mahindra Financial Services Limited and at the given time, the Demerged Company had queried the said Secured Creditor for creation of charge for the said Loan. However, as per the communication received from the said Secured Creditor, it was mutually agreed that it was not mandatory to create a charge on MCA Portal for a Car Loan. Therefore, the Demerged Company had not created charge for the said Car Loan in pursuance to the communication made with the said Secured Creditor. Be that as it may, if the circumstances so warrant, the Demerged Company has declared and undertaken to rectify the default at the earliest and make it good. Also, it is stated that the said issue shall have no bearing in deciding the present case, in as much as the said default can also be made good even after the sanctioning/ approval of the Scheme by this Tribunal. Thus, it is stated that the said issue not being germane to the present proceedings, it is not necessary for this Tribunal to give any further directions.

14. The Official Liquidator (OL) has filed his observations dated 30.06.2022 (sent to this Tribunal on 01.07.2022) wherein the OL has made few observations which are enumerated herein below along with the response of the Petitioner Companies:

(a) At paragraph no. 17, the OL has observed that there is no specific clause mentioned with regards to the effect of the Scheme on the employees of the Demerged Undertaking/ unit.

In response to the said observation, the Petitioner Companies in the reply/ common additional affidavit dated 25.07.2022 have stated that it has been already envisaged at Clause 1.2(i) of the proposed Scheme that the Demerged Undertaking/ Resulting Company shall include all the employees of the Demerged Company employed/ engaged in the business unit 1 pertaining to manufacturing of Sleeve and Carrybag business of the Demerged Company. Thus, the existing employees of the Demerged Company and their employment shall be continued after the approval of scheme of arrangement and demerger. In view of the same, it is stated that it is not necessary to issue any further directions.

(b) At paragraph nos. 21 and 22, the OL has prayed for directions to be issued to the Demerged Company to preserve its books of accounts, papers and records and shall not be disposed of without prior permission of Central Government as per the provisions of Section 239 of the Companies Act, 2013. Further, the OL has prayed for directions to be issued to ensure Statutory compliance of all applicable laws and also on sanctioning of the present Scheme, the Demerged Company shall not be absolved from any of its Statutory liabilities, in any manner.

In response to the said observations, the Petitioner Companies in the reply/ common additional affidavit dated 25.07.2022 have duly undertaken to comply with all the applicable Laws for the time being in force.

(c) At paragraph no. 23, the OL has prayed for directions to be issued to the Demerged Company to pay cost of proceedings of Rs. 10,000/- or such amount as may be determined by this Tribunal towards expenses to the Office of OL by way of Demand Draft/ Banker‟s cheque only drawn on any nationalized scheduled Bank in favour of the OL, payable at Ahmedabad.

In response to the said observation, the Petitioner Companies in the reply/ common additional affidavit dated 25.07.2022 have duly undertaken to pay the cost of proceeding and related office expenses of the office of the OL for submitting the said report, that may be considered appropriate by this Tribunal.

(d) At paragraph nos. 24 and 25, the OL has prayed for directions to be issued to the Petitioner Companies to lodge a certified copy of order along with the scheme, with the concerned Superintendent of Stamps for the purpose of adjudication of stamp duty payable, if any. Further, the OL has prayed for directions to be issued to comply with provision of Section 232(5) of the Companies Act, 2013 with respect to filing of certified copy of order sanctioning scheme with RoC within 30 days from date of passing of order.

In response to the said observations, the Petitioner Companies in the reply/ common additional affidavit dated 25.07.2022 have once again duly undertaken to comply with all the applicable Laws for the time being in force.

15. The Income-tax Department has filed its report dated 26.07.2022 stating that there are no outstanding dues in relation to the Petitioner Companies. Further, no other observations have been made by the Income-tax Department. Moreover, during the course of hearing, the counsel of the Income-tax Department has stated that they have no objection if the said Scheme is sanctioned by this Tribunal.

16. The Petitioner Companies have placed on record the valuation report obtained from an Independent – Registered Valuer.

17. The Petitioner Companies have also filed their audited financial statements as on 31st March 2020.

18. The certified copies of Board Resolution of the Petitioner Companies approving the Scheme of Demerger is annexed to the petition. At the first motion petition, an affidavit is filed by Mr. Yogesh Shahani, being authorised representative of the Petitioner Companies stating that there is no investigation instituted or pending in relation to the Petitioner Companies under Chapter XIV of the Companies Act, 2013 or under the corresponding provisions of Sections 235 to 251 of the Companies Act, 1956. Also, no winding up proceedings or Insolvency Petition have been filed or pending against the Petitioner Companies.

19. In compliance with the proviso to sub-section (7) of Section 230 of the Companies Act, 2013, the Petitioner Companies have placed on record the certificate of statutory auditor confirming that the accounting treatment envisaged under the Scheme of Demerger is in compliance with the applicable accounting standards notified by the Central Government in Section 133 of the Companies Act, 2013.

20. Both the Petitioner Companies are substantially under the same management and are closely held companies. Both the Companies are engaged in related types of and/ or nature of activities. The demerger of the undertaking of unit pertaining to manufacturing of sleeve and carrybag business of the Demerged Company would broaden the capital base of the Resulting Company which can diversify into various other profitable businesses keeping in mind the changed economic and business conditions and opportunities in India. Further, due to developments of the factors and entries of second line of new generation of the key promoters, the re-organization has become essential to ensure better operational management, accelerated growth of individual units, new products introductions which will ensure higher returns to the shareholders, creditors, employees and is also in general public interest and focuses on the key activities. The demerger would enable greater/ enhanced focus of the management in their business whereby facilitating the management to efficiently exploit opportunities for its businesses.

21. Heard Ld. Counsel Mr. Jaimin Dave for the Petitioner Companies also gone through the records.

22. Considering the above affidavits in reply filed by the Petitioner Companies, the observations made by the Regional Director in his representations dated 29.04.2022 followed by supplementary report dated 27.09.2022, the representation of the Official Liquidator dated 30.06.2022 and the report of the Income Tax Department stands satisfied.

23. On the basis of the above facts and submissions made by the learned counsel and by considering the entire facts and circumstances of the aforesaid company petition and on perusal of the Scheme and the proceedings, it appears that the requirements of the provisions of Sections 230 and 232 are satisfied by the Petitioner Companies. We are of the considered view that the proposed Scheme of Demerger is bona fide and in the interest of the shareholders and creditors. In the result, Company Petition No. CP (CAA) 14 of 2022 is allowed. The Scheme envisages demerger of the undertaking of Business Unit 1 pertaining to manufacturing of sleeve and carrybag business of Bullion Flexipack Private Limited into Truder Packaging Private Limited. It is declared that the said sanctioned scheme shall be binding on the Petitioner Companies and their shareholders, creditors and all concerned under the scheme.

24. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal to the scheme will not come in the way of action being taken, albeit, in accordance with the law, against the concerned persons, directors and officials of the Petitioners.

25. While approving the Scheme as above, we further clarify that this order should not be construed as an order in granting any exemption from payment of stamp duty, taxes including income tax, GST, etc. or any other charges, if any, and payment in accordance with law or in respect of any permission/ compliance with any other requirement which may be specifically required under any law.

26. The scheme is approved with the following directions:

ORDER

(i) The Scheme of Demerger as annexed herewith as “Annexure A” is hereby sanctioned and it is declared that the same shall be binding on the Demerged Company, the Resulting Company, and their Shareholders and Creditors and all concerned under the Scheme.

(ii) All the properties annexed herewith in the schedule as “Annexure B”, rights and powers of the Demerged Company specified in the schedule hereto and all the other property, rights and powers of the Demerged Company be transferred without any further act or deed to the Resulting Company and accordingly the same shall, pursuant to Section 232 of the Act, be transferred to and vested in the Resulting Company for all the estates and interest of the Demerged Company, therein but subject nevertheless to all charges now affected the same, if any.

(iii) Consideration

(a) Upon the coming into effect of this Scheme and in consideration of the transfer and vesting of the Demerged Undertaking into Truder Packaging Private Limited (TPPL) pursuant to the provisions of this Scheme, TPPL shall, without any further act or deed, issue and allot to each shareholder of Bullion Flexipack Private Limited (BFPL), whose name is recorded in the register of members and records of the depositories as members of BFPL, on the Record Date 4,78.285 (Four Lacs Seventy Eight Thousand Two Hundred and Eighty Five only) equity shares of Rs. 10/- (Rupees Ten Only) each of TPPL credited as fully paid up for 600000 (Six Lacs) equity shares of Rs. 10/- (Rupees Ten Only) each held by such shareholder in BFP PL (New Equity Shares). The ratio (0.797:1) in which equity shares of TP PL are to be issued and allotted to the shareholders of BFPL is referred to as the "Share Entitlement Ratio". It is clarified that no cash consideration shall be paid by TPPL to BFPL or its shareholders.

(b) The New Equity Shares to be issued and allotted as provided in Clause 81 above shall be subject to the provisions of the Memorandum and Articles of Association of TPPL and shall rank pari-passu in all respects with the then existing equity shares of TPPL after the Record Date including with respect to dividend, bonus entitlement, rights shares entitlement, voting rights and other corporate benefits.

(c) In case any shareholder's shareholding in BFPL is such that such shareholder becomes entitled to a fraction of an equity share of TPPL, TPPL shall not issue fractional share certificates to such shareholder but shall consolidate such fractions and issue and allot the consolidated shares directly to a trustee nominated by the Board of Directors of TPPL in that behalf, who shall sell such shares in the market at such price or prices and on such time or times as the trustee may in its sole discretion decide and on such sale, shall pay to TPPL, the net sale proceeds (after deduction of applicable taxes and other expenses incurred), whereupon TPPL shall, subject to withholding tax, if any, distribute such sale proceeds to the concerned shareholders of BFPL in proportion to their respective fractional entitlements.

(d) The New Equity Shares to be issued pursuant to Clause 8.1 above shall be issued in Paper form by TP PL, unless otherwise notified in writing by the shareholders of BFPL to TPPL on or before such date as may be determined by the Board of Directors of BFPL. In the event that such notice has not been received by TPPL in respect of any of the shareholders of BFPL, the New Equity Shares shall be issued to such shareholders in Paper form provided that the shareholders of TPPL. In the event that TPPL has received notice from any shareholder that the New Equity Shares are to be issued in physical form or if any shareholder has not provided the requisite details relating to his/hers/its account with a depository participant or other confirmations as may be required or if the details furnished by any shareholder do not permit electronic credit of the shares of TP PL, then TPPL shall issue New Equity Shares in physical form to such shareholder or shareholders.

(e) The New Equity Shares issued and/or allotted pursuant to Clause 8.1, in respect of such of the equity shares of BFPL which are held in abeyance under the provisions of Section 126 of the Act shall, pending settlement of dispute by order of court or otherwise, be held in abeyance by TPPL.

(f) The New Equity Shares issued pursuant to Clause 8.1, which TPPL is unable to allot due to applicable Laws (including, without limitation, the non-receipt of approvals of Governmental Authority as required under applicable Law) or any regulations or otherwise shall, pending allotment, be held in abeyance by TPPL and shall be dealt with in the manner as may be permissible under the applicable Law and deemed fit by the Board of Directors of TPPL including to enable allotment and sale of such New Equity Shares to a trustee as mentioned in Cause 8.3 above and thereafter make distributions of the net sales proceeds in lieu thereof (after deduction of taxes and expenses incurred) to the eligible shareholders of BFPL, in proportion to their entitlements as per the process specified in Clause 8.3 above. If the above cannot be effected for any reason, TP PL shall ensure that this does not delay implementation of the Scheme; and shall, take all such appropriate actions as may be necessary under applicable Laws. TPPL and/or the depository shall enter into such further documents and take such further actions as may be necessary or appropriate in this regard and to enable actions contemplated therein.

(g) In the event of there being any pending share transfers, whether lodged or outstanding, of any shareholders of BFPL, the Board of Directors of BFP PL shall be empowered prior to or even subsequent to the Record Date, to effectuate such transfers in BFPL as if such changes in registered holders were operative as on the Record Date, in order to remove any difficulties arising to the transferors of the shares in relation to the shares issued by TPPL. The Board of Directors of BFPL shall be empowered to remove such difficulties that may arise in the course of implementation of this Scheme and registration of new shareholders in TP PL on account of difficulties faced in the transition period.

(h) The issue and allotment of the New Equity Shares in terms of this Scheme shall be deemed to have been carried out as if the procedure laid down under Section 62 of the Act and any other applicable provisions of the Act have been complied with.

(i) TPPL shall if and to the extent required to, apply for and obtain any approvals from the Governmental Authorities including Reserve Bank of India, for the issue and allotment of New Equity Shares by TPPL to the non-resident equity shareholders of BFPL.

There shall be no change in the shareholding pattern or control in TPPL between the Record Date and the listing of the equity shares on the Stock Exchanges.

(iv) The Business Unit 1 pertaining to manufacturing of sleeve and carry bag business of the Demerged Company shall, together with all its property, rights and powers be transferred without further act or deed to the Resulting Company and accordingly the same shall, pursuant to Section 232 of the Act, stand transferred to and vest in the Resulting Company for all the estate and interest of the Business Unit 1.

v) All licenses, permissions, permits, approvals, certificates, clearances, authorities, leases, tenancy, assignments, rights, claims, liberties, special status, other benefits or privileges and any power of attorney relating to the Business Unit 1 shall stand transferred to and vest in the Resulting Company, without any further act or deed. The Resulting Company shall be bound by the terms thereof, the obligations and duties thereunder, and the rights and benefits under the same shall be available to the Resulting Company.

vi) All the liabilities of the Business Unit 1 of the Demerged Company be transferred, without further act or deed, to the Resulting Company and accordingly the same shall pursuant to Section 230 and 232 of the Companies Act, 2013, be transferred to and become the liabilities and duties of the Resulting Company.

(vii) All contracts, agreements, insurance policies, bonds and all other instruments of whatsoever nature or description, of the Business Unit 1 of the Demerged Company, shall stand transferred to and vested in the Resulting Company and be in full force and effect in favour of the Resulting Company and may be enforced by or against it as fully and effectually against the Resulting Company.

viii) All taxes paid or payable by the Business Unit 1 of the Demerged Company including existing and future incentives, un-availed credits and exemptions, benefit of carried forward losses and other statutory benefits, shall be available to and vest in the Resulting Company.

(ix) All proceedings now pending by or against the Business Unit 1 of the Demerged Company shall be continued by or against the Resulting Company.

(x) All employees in the service of the Business Unit 1 of the Demerged Company shall be deemed to have become the employees and the staff of the Resulting Company on date on which the scheme finally takes effect on the basis that their services shall be deemed to have been continuous and not have been interrupted by reasons of the said transfer and on terms and conditions no less favourable than those on which they were/ are engaged, as on the Effective Date.

(xi) The Petitioner Companies are directed to lodge a copy of this Order, the approved Scheme and the Schedule of Assets of the Demerged Company duly authenticated by the Registrar of this Tribunal, with the concerned Superintendent of Stamps, for adjudication of stamp duty, and pay requisite stamp duty payable, if any, within 60 days from the date of this Order.

(xii) The Petitioner Companies are further directed to file a copy of this order along with the copy of the Scheme with the concerned Registrar of Companies, electronically, along with e-form INC-28 in addition to physical copy within 30 days from the date of issuance of the certified copy of the Order by the Registry as per relevant provisions of the Act.

(xiii) All concerned Authorities to act on copy of this order along with the Scheme authenticated by the Registrar of this Tribunal. The Registrar of this Tribunal shall issue the certified copy of this order along with the Scheme immediately.

(xiv) The legal fees/ expenses of the office of the Regional Director are quantified at Rs.10,000/- each in respect of the Petitioner Companies. The said fees to the Regional Director shall be paid by the Demerged Company.

(xv) The legal fees and expenses of the office of the Official Liquidator are quantified at Rs.10,000/- in respect of the Demerged Company. The said fees to the Official Liquidator shall be paid by the Demerged Company.

xvi) Any person aggrieved shall be at liberty to apply to the Tribunal in the above matter for any direction that may be necessary.

xvii) Filing and issuance of drawn up orders are dispensed with. All concerned authorities to act on a copy of this order along with the Scheme duly authenticated by the Registrar of this Tribunal. The Registrar of this Tribunal shall issue the authenticated copy of this order along with Scheme immediately.

27. The Company Petition CP (CAA) No. 14 of 2022 connected with CA (CAA) No. 47 of 2021 is allowed and stands disposed of, in terms of the above order.