1. The Court is convened by videoconferencing.
2. We heard Learned Counsel appearing for the Petitioner and the Representative of the Regional Director. No objector has come before this Tribunal to oppose the Scheme, nor has any party controverted any averments made in the Petition.
3. The Learned Counsel for the Petitioner Company submits that the Petitioner Company has filed the present Company Petition under Sections 230 to 232 and 234 of the Companies Act, 2013 (“ the”) and other relevant provisions of the read with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and Regulation 9 of the Foreign Exchange Management (Cross Border Merger) Regulations, 2018 seeking sanction of the Scheme of Amalgamation between the Transferor Company and the Transferee Company whereby the Transferor Company will stand merged with the Transferee Company. The Learned Counsel for the Petitioner Company submits that the Transferee Company is the Petitioner Company, the registered office of the Transferee Company is in the State of Maharashtra and the subject matter of the Company Petition is within the jurisdiction of this Tribunal. The Transferor Company has its registered office in the Republic of Seychelles.
4. The Learned Counsel for the Petitioner Company submits that the Board of Directors of the Transferor Company and the Transferee Company/Petitioner Company at their respective meetings held on September 13, 2019, have approved the Scheme. The respective Board Resolutions approving the Scheme for the Transferor Company and the Transferee Company/Petitioner Company are annexed to the Company Petition as Exhibit J.
5. Learned Counsel for the Petitioner submits that the entire shareholding of the Transferor is held by one Aden 1 Trust through its trustee First Island Trust Company Limited. The beneficiaries of the said Trust are the family members of the settlor of the Trust. The Transferee Company is also owned and controlled by members of the family of the settlor of the Aden 1 Trust. Thus, the ultimate beneficial owners of the Transferor are also the ultimate beneficial owners of the Transferee. Since the financial assets of the Transferor can be more effectively used and deployed for furthering the objects of the Transferee it will provide impetus to the operations of the Transferee Company.
6. Learned Counsel for the Petitioner further submits that the rationale of the Scheme is inter alia as follows:
a. The Scheme shall inter alia result in seamless access to the assets of the Transferor, which are in any event held for the benefit of the shareholders of the Transferee Company.
b. The Scheme shall achieve various benefits such as eliminating legal and regulatory compliances required at present to be carried out by the Transferor, reduction in overheads including administrative, managerial and other expenditure, operational rationalisation, organisational efficiency and optimal utilization of resources.
c. The shareholders of the Transferee, who also ultimately hold the beneficial interest in the Transferor, shall have the benefit of the financial assets held by the Transferor in the operation of the Transferee.
7. The Learned Counsel for the Petitioner Company submits that the Company Petition is filed in consonance with Sections 230-232 and 234 and other applicable provisions of the and the order delivered on 24th November 2020 in CA(CAA) No.1048 of 2020 (“CAA Order”).
8. The Learned Counsel for the Petitioner Company submits that the said CAA Order dispensed with the holding and convening meetings of the equity shareholders, secured creditors and unsecured creditors of the Petitioner Company. The CAA Order directed the Petitioner Company to issue notices to the unsecured creditors having dues of Rs.1,00,000/- or above.
9. The Learned Counsel for the Petitioner submits that the Petitioner has complied with all the requirements as per the directions of this Tribunal and have filed the necessary affidavits of compliance with this Tribunal. Moreover, the Petitioner through their Advocates undertake to comply with all statutory requirements, if any, as required under Companies Act, 2013 and the Rules made thereunder as applicable. The said undertaking is accepted.
10. The Learned Counsel for the Petitioner Company submits that by an order dated July 20th, 2021, this Tribunal admitted the Company Petition and fixed September 09th, 2021, as the date for hearing and final disposal. The Learned Counsel further submits that the Petitioner Company had published the notice of hearing of the Company Petition in two Newspapers viz. Nav Shakti (Marathi) and Business Standard (English) both having circulation in Mumbai. Copies of the paper publications have been annexed as Exhibit B & C to the Additional Affidavit filed on 19.08.2022.
11. The Regional Director, Western Region, Mumbai (“RD”) has filed its report dated September 15, 2021 (“Report”) submitting that this Tribunal may consider and dispose the case as deemed fit and proper in the facts and merits of the case. The observations of the RD have been dealt with by the Petitioner Company in its Affidavit in Reply dated October 8th, 2021 filed in this Tribunal and a copy of the said Affidavit was served upon the RD. The observations made by the RD and the reply of the Petitioner Company in its Affidavit dated October 8th, 2021 are mentioned hereinbelow:
| Sr. No. | Observations in RD Report dated September 15, 2021 (Para IV) | Response of the Petitioner Company dated October 8, 2021 |
| 1. | b) In compliance of AS-14 (IND AS-103), the Petitioner Companies shall pass such accounting entries which are necessary in connection with the scheme to comply with other applicable Accounting Standards such as AS-5 (IND AS-8) etc. | As regards the observations made at paragraph IV (b) of Regional Director’s Report, the Petitioner Company undertake to pass such accounting entries which are necessary in connection with the Scheme to comply with the other applicable Accounting Standards such as AS-5 (IND AS-8), etc. |
| 2. | c) The Petitioners under provisions of Section 230(5) of the Companies Act, 2013 have to serve notices to concerned authorities which are likely to be affected by compromise or arrangement. Further, the | As regards the observations made at paragraph IV (c) of the Regional Director’s Report, the Petitioner Company has duly served notices to the concerned |
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| approval of the scheme by this | authorities vide their |
| Hon’ble Tribunal may not | respective letters dated 21st | |
| deter such authorities to deal | December 2020, 22nd | |
| with any of the issues arising | December 2020 and 23rd | |
| after giving effect to the | December 2020 and the | |
| scheme. The decision of such | same have been recorded | |
| Authorities is binding on the | in the Petitioner | |
| Petitioner Company(s). | Company’s Affidavits of | |
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| Service dated 30th January | |
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| 2020, 17th February 2021 | |
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| and Additional Affidavit | |
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| dated 1st February 2022, | |
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| respectively, which is | |
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| already on record before | |
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| this Hon’ble Tribunal. As | |
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| regards the powers of the | |
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| authorities in respect of | |
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| matters arising after | |
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| giving effect to the | |
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| Scheme, the same will | |
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| have to be exercised in | |
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| accordance with | |
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| applicable law. |
| 3. | d) The Hon’ble NCLT may kindly direct to the Petitioners to file an undertaking to the extent that the Scheme enclosed to the Company Application and the scheme enclosed to the Company Petition are one & same and there is no discrepancy or derivation.
In this regard, it is submitted that Section 232(6) of the Companies Act, 2013 states that the scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date. However, this aspect may be decided by the | As regards the observations made at paragraph IV (d) of the Regional Director’s Report, the Scheme annexed to the Company Application and the Scheme annexed to the Company Petition are one and the same and there is no discrepancy or deviation.
As regards the Appointed Date, vide order dated 24th November 2020 passed in the captioned Company Scheme Application, this Hon’ble Tribunal has confirmed and ordered that the Appointed Date for the purpose of the Scheme shall be the date of |
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| Hon’ble Tribunal taking into account its inherent powers.
2. The Petitioner companies have stated the “Appointed Date” in the scheme as the date of Sanction of the Scheme by the Tribunal. The latest financial statements of the Transferor Company submitted its till Financial Year ended on 31/12/2019. The Tribunal may direct the petitioner companies to submit the latest Audited Financial statement of the Transferor Company. | sanction of the Scheme by this Hon’ble Tribunal.
As regards paragraph IV (d) 2 i.e. regarding the latest financial statement, it is submitted that along with the captioned Company Petition, the Petitioner Company has filed audited financial statements of the Transferor Company for the period ending 31st December 2020, at Exhibit C to the Petition. Further, by way of an Additional Affidavit dated 1st February 2022 inter alia the audited Financial Statements for the years 2018 to 2020 of the Transferor Company and the audited Financial Statements for the years 2019 to 2021 of the |
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employees as of the ‘appointed | Transferee Company have been filed.
As regards paragraph IV (d) 3, the assets of the Transferor Company, as required to be disclosed in its financial statements, as per applicable law governing the Transferor Company, are set out in the financial statements of the Transferor Company. The financial statements of the Transferor Company are annexed at Exhibit C to the captioned Petition.
As regards paragraph IV (d) 4, the Transferor Company have no employees and that no |
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| date’ in the transferor | new employees are |
| company and therefore the | planned to be recruited. | |
| impact on the employees of the | Therefore, even on the | |
| Transferor Company does not | date of sanction of the | |
| arise. Hon’ble Tribunal may | Scheme by this Hon’ble | |
| consider the same on merits. | Tribunal, there would not | |
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| be any employees in the | |
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| Transferor Company. | |
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| Thus, there would be no | |
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| impact on the employees | |
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| of the Transferor | |
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| Company. | |
| 4. | e) As per Definition of the | As regards the |
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| Scheme | observations made at |
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| “Appointed Date” means the | paragraph IV (e) of the |
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| open business hours in | Regional Director’s |
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| Mumbai, India on the date on | Report, the Petitioner |
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| which the Scheme is | Company undertakes to |
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| sanctioned by National | comply with the circular |
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| Company Law Tribunal | no.F.No.7/12/2019/CL- |
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| (“NCLT”) or such other date | 1 dated 21.08.2019 issued |
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| as may be fixed or approved by | by the Ministry of |
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| NCLT, or such other | Corporate Affairs. |
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| competent authority; |
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Definition of the “The Effective Date” is not defined in the scheme, hence Petitioner shall undertake to define the same.
Further, the Petitioners may be asked to comply with the requirements and clarified vide circular no. F. No.7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs. |
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| 5. | f) Petitioner Company have to undertake to comply with Section 232(3)(i) of Companies Act, 2013, where the transferor company is dissolved, the fee, if any, paid by the transferor company on its authorised capital shall be set-off against any fees payable by the transferee company on its authorised capital | As regards the observations made at paragraph IV (f) of the Regional Director’s Report, the same is not applicable to an inbound merger where the Transferor Company is a foreign company. |
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| subsequent to the amalgamation and therefore, petitioners to affirm that they comply the provision of the section. |
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| 6. | g) As per Clause 7 of the Scheme the Financial statements of the Transferee will reflect the financial position on the basis of consistent accounting policies. In case of any difference in accounting policies between the Transferor and the Transferee, the accounting policies followed by the Transferee will prevail and impact of the same as on the Appointed Date will be quantified and adjusted in the Reserves/ Goodwill (as the case may be) to ensure that the financial statements of the Transferee reflect the financial | As regards the observations made at paragraph IV (g) of the Regional Director’s Report, the Petitioner Company undertakes that the surplus shall be credited to Capital Reserve Account arising out of amalgamation and deficits shall be debited to Goodwill Account. The Petitioner Company also undertakes that the reserves shall not be available for distribution of dividend. |
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| position on the basis of consistent accounting policies.
Petitioner Companies have to undertake that the surplus shall be credited to Capital Reserve Account arising out of amalgamation and deficits shall be debited to Goodwill Account.
Further Petitioner Companies have to undertake that reserves shall not be available for distribution of dividend. |
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| 7. | h) ROC, Mumbai Report dated 23.08.2021 has inter mentioned that there are no prosecution, no technical scrutiny, no inquiry, no inspection and no complaints pending against Petitioner Companies. | As regards the observations made at paragraph IV (h) of the Regional Director’s Report, the Scheme annexed to the Company Application as well as to the Company Petition is true and correct and the |
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| Further mentioned that:-
| same shall be treated as final scheme.
As regards interest of creditors, it is submitted that the interest of the creditors of the Petitioner Company is not affected by |
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9. As per provisions of Section 234 of the Companies Act, 2013 sub Section (2) Subject to the provisions of any other law for the time being in force, a | the Scheme. There are no secured creditors of the Transferor Company. There are 2 secured creditors of Transferee Company and both have given their consent to the Scheme. As regards the unsecured creditors, in compliance with the order dated 24th November 2020, Petitioner Company has given notice of the Scheme to its unsecured creditors having dues above Rs.1,00,000/-. None of the unsecured creditors have raised any objection in respect of the Scheme.
As regards RBI approval, as per Regulation 9 of the Foreign Exchange Management (Cross Border Merger) |
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| foreign company with the prior approval of the Reserve Bank of India, merge into a company registered under this Act or vice versa the terms and conditions of the scheme of merger may provide, among other things for payment of consideration to the shareholders of the merging Company in cash, or in Depository Receipts, or partly in cash and partly in Depository Receipts, as the case may be as per the scheme to be drawn up for the purpose.
“Further, the procedure with respect to RBI Notification No.FEMA.389/2018 – RB dated 20.03.2018 states at Para No.9 (1) that “any transaction on account of cross border undertaken in | Regulations, 2018 issued under notification No.FEMA.389/2018-RB (“Cross Border Regulations”) any transaction on account of a cross border merger undertaken in accordance with the Cross Border Regulations shall be deemed to be have prior approval of the Reserve Bank of India as required under Rule 25A of the aforesaid Amalgamation Rules. Regulation 9 of the Cross Border Regulations is extracted below : “9. Deemed approval (1) Any transaction on account of a cross border merger undertaken in accordance with these Regulations shall be |
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| accordance with these Regulations shall be deemed to have prior approval of the Reserve Bank as required under Rule 25A of the Companies (Comprises, Arrangement and Amalgamation) Rules. 2016. However, the company has not submitted RBI approval of the Scheme, only Notice served to RBI is attached.
10. Interests of the Creditors shall be protected.
Hon’ble Tribunal may consider the observations pointed out by ROC, Mumbai in their Report and decide the matter on merits. | deemed to have prior approval of the Reserve Bank as required under Rule 25A of the Companies (Compromises, Arrangement and Amalgamations) Rules, 2016. (2) A certificate from the Managing Director/Whole Time Director and Company Secretary, if available, of the company(ies) concerned ensuring compliance to these Regulations shall be furnished along with the application made to the NCLT under the Companies (Compromises, Arrangement or |
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| Amalgamation) Rules, 2016.”
Pursuant to Regulation 9(2) of the Cross Border Merger Regulations, the directors of the Transferor as well as the Transferee have issued certificates certifying that the Scheme is in compliance with the Cross Border Merger Regulations, which are annexed at Exhibits Y and Z to the captioned Company Scheme Application. In view of these certificates, it is submitted that the requirements of the Cross Border Merger Regulations stand complied with and the proposed merger and amalgamation of the |
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| Transferor and Transferee is deemed approved by the RBI under Regulation 9(1) of the Cross Border Merger Regulations read with Rule 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules 2016. |
12. The observations made by the RD have been explained by the Petitioner Company in paragraph 11 above. The Representative of the RD has submitted that the explanation and clarifications given by the Petitioner Company are found satisfactory and they have no objection to the same. The RD has also filed a Supplementary Report and have stated that RD has no further objections. The Affidavit dated October 8th, 2021 filed by the Petitioner Company setting out the clarifications and undertakings given by the Petitioner Company are accepted by this Tribunal and the Petitioner Company is directed to comply with the same.
13. Further, as directed by the Tribunal during the hearing on March 24th, 2022, by way of an Additional Affidavit dated March 25th, 2022, the Petitioner Company has undertaken to comply with the applicable guidelines of Foreign Exchange Management Act, 1999 and/ or rules, regulations and guidelines prescribed by the Reserve Bank of India in that regard as applicable. The said undertaking is accepted.
14. Further, by way of an order dated May 6th, 2022, the Tribunal had sought certain documents and clarifications from the Petitioner Company. By way of an Additional Affidavit dated August 8th 2022, the Petitioner has placed on record the required documents and clarifications as sought by the Tribunal and the same are found to be satisfactory and are accepted.
15. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy.
16. Since all the requisite statutory compliances have been fulfilled, the captioned Company Scheme Petition is made absolute in terms of prayer clause (a).
17. The Scheme hereby is sanctioned. As per the Scheme, the Appointed Date is fixed as the date of the sanction to the Scheme by this Bench. Accordingly, the date of this Order shall be the Appointed Date for the Scheme.
18. The Petitioner is directed to lodge a copy of this Order and Scheme duly certified by the Deputy Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable on the same, if any, within 60 (sixty) days from the date of receipt of the certified copy of the Order.
19. The Petitioner is further directed to file a copy of this Order along with a copy of the Scheme with the concerned Registrar of Companies electronically along with E-Form INC 28 in addition to physical copies as per the relevant provisions of the Companies Act, 2013 within 30 days from the date of receipt of this Order.
20. All concerned regulatory authorities to act on a copy of this Order along with the Scheme duly authenticated by the Deputy Registrar or the Assistant Registrar, National Company Law Tribunal, Mumbai Bench.
21. Accordingly, Scheme is hereby approved and CP(CAA)69/MB/2021 is allowed.
