1. Heard the learned Counsel for the Petitioners and the representative of the Regional Director Western Region, Ministry of Corporate Affairs, Mumbai. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petition, except as otherwise stated hereunder.

2. The sanction of the Tribunal is sought under sections 232 r/w Section 230 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, to the Scheme of Merger by Absorption of Gamma Pizzakraft Private Limited (“Transferor Company 1”) and Gamma Pizzakraft (Overseas) Private Limited (“Transferor Company 2”) with Sapphire Foods India Limited (“Transferee Company”) and their Respective Shareholders.

3. The First Petitioner Company is currently engaged in is engaged in food and beverage business in India, the Second Applicant Company is currently engaged in food and beverage business along-with management consultancy and the Third Applicant Company is principally engaged in the franchisee business of KFC and Pizza Hut restaurants in India. Further, it is engaged in the activities of running restaurants, food outlets, refreshment rooms for food and beverages, delivery outlets, etc.

4. The proposed Scheme of Merger by Absorption was approved by the Board of Directors of the respective Petitioner Companies on 11th February, 2022. The Board of Directors of the respective Petitioner Company believe that the Scheme is in the best interests of the respective entities and their respective stakeholders including its shareholders, employees, and creditors. The Appointed Date for the Scheme of Merger by Absorption is 1 st day of April 2022.

5. The joint Company Petition have been filed in consonance with the order dated 04 th October 2023, passed by this Tribunal in the connected Company Scheme Application bearing C.A.(CAA)/127/MB-I/2023 and the Petitioner Companies have complied with all requirements as per directions of this Tribunal and they have filed necessary Affidavits of compliance with this Tribunal. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, if any, as may be required underthe Companies Act, 2013 and the Rules made there under. The said undertaking is accepted by the Petitioner Companies.

6. By sanction of this Scheme of Merger by Absorption the Petitioner Companies will be able to achieve the following:

• Consolidation of businesses of the group.
• Reduction in number of companies and regulatory compliances thereof.
• Streamlining the holding structure.
• Ease of management.
• Integration and efficiency of operations, economies of scale and financial position.
• Reduction of overheads including administrative, managerial, and other expenditure, optimal utilization of resources; and
• Greater financial strength and flexibility for the merged entity.

7. The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, has filed his Report dated 14.02.2024 making certain observations (“Report”). The Petitioner Companies have submitted/undertaken that:

a. No Inquiry, inspection, investigation, prosecution & complaint under Companies Act, 2013 is pending against the Petitioner Companies;

b. The fee, if any, paid by the Transferor Companies on its authorized capital shall be set off against any fees payable by the Transferee Company on its authorized capital subsequent to the amalgamation;

c. The interest of creditors will be protected;

d. The transferee Company shall comply with the other applicable Accounting Standards, such as AS-5 (IND AS-8) etc., to the extent applicable;

e. The Scheme enclosed to the Company Application and Company Petition are one and same and there is no discrepancy, or no change is made;

f. That the approval of the Scheme by the Tribunal will not deter any sectoral/regulatory authorities to deal with any of the issue arising after giving effect to the Scheme. The decision of such authorities shall be binding on the Petitioner Companies concerned unless appealed further by the Petitioner Companies in accordance with the law;

g. The Petitioner Companies states that the Scheme is in compliance with the circular no. F. No. 7/12/2019/CLI dated 21.08.2019 issued by the Ministry of Corporate Affairs, the Scheme was filed/ presented before this Hon’ble NCLT within one year of the Appointed Date. i.e., April 01, 2022.

h. The Petitioner Companies shall continue to comply with the provisions of section 90 of Companies Act, 2013 read with the Rules as and when applicable;

8. The Official Liquidator has filed his report on 14th February 2024, inter alia stating their observations. The Petitioner Companies have filed an Affidavit in rejoinder to the report filed by the Official Liquidator with this Tribunal on 15th February 2024 providing clarification/undertakings to the observations made by the Official Liquidator are as under:

a. The fees, if any, paid by the Transferor Companies on its Authorised share capital shall be set-off against any fees payable by the Transferee Company on its Authorised share capital subsequent to the Amalgamation, the deficit fee, if any, after setting-off the fees already paid by the Transferor Companies on their Authorized share capital, will be paid by the Transferee Company.

b. As per financial statement as at 31.03.2023 the Second Petitioner Company has outstanding Trade payables amounting to Rs. 497 (Rs. In Hundred) wherein the entire amount is owed to other Trade Payables who are not registered as MSME vendors, therefore filing of form MSME-1 is not applicable to the Company.

c. Gamma Pizzakraft Lanka (Private) Limited (“Gamma Lanka”), situated at Sri – Lanka, is a wholly-owned subsidiary of the Company. Gamma Lanka is currently engaged in the business of operating restaurants under the brand name of ‘Pizza Hut’ and ‘Taco Bell’ (as the franchisee for the said brands) in Sri Lanka. As on 31st December 2023, the Company, through its subsidiary Gamma Lanka, operates 112 Pizza Hut restaurants and 9 Taco Bell restaurants in Sri Lanka.

d. Gamma Island Food Private Limited (“Gamma Maldives”),situated at Republic of Maldives, is a whollyowned subsidiary of the Company. Gamma Maldives is currently engaged in the business of operating restaurants under the brand name of ‘KFC’ and ‘Pizza Hut’ (as the franchisee for the said brands) in Maldives. As on 31st December 2023, the Company, through its subsidiary Gamma Maldives, operates 2 KFC and 2 Pizza Hut Restaurants in the Republic of Maldives.

e. The Petitioner Companies further informs that during the past few years, Sri-Lanka country has grappled with the worst economic crisis in its entire history. As mentioned hereinabove, the Company has a sizeable business in Sri Lanka and more than 50% of the consolidated revenue of the Company comes from Sri Lanka.

It is evident from the aforementioned that the Company, through its overseas subsidiaries, is predominantly engaged in food and beverage business outside India, inter-alia, in line with its objects.

The facilitation of loans and advances by the Company to its overseas wholly-owned subsidiaries was in connection with the principal business and operational activity i.e. to run/operate restaurants and hence the interest income derived from the Loans and Advances has to be treated in connection with the said principal business and operational activity only.

f. The economic crisis had a major impact on the overseas subsidiary of the Company i.e. Gamma Lanka as it was struggling to run/operate its restaurants. As a responsible parent company, the Company had to fund its overseas subsidiary, Gamma Lanka, by way of Loans and Advances, in order to tide over this struggling times. The sudden spike in Interest income for FY22 and FY23 as compared to previous financial years, is the outcome of the loans and advances financed by the Company to its overseas subsidiaries to keep afloat its business operations.

g. The Company neither in the past nor in the future intend to carry out any kind of financial activity as its principal business and therefore, one of the reasons for this scheme of arrangement/merger by absorption as mentioned in the scheme is to reduce regulatory compliances.

9. We have considered the submissions made by the Petitioner Company before the Official Liquidator and is of the considered view that the financial crisis arising from downfall of Sri Lankan economy may have impact on the financial health of the Petitioner Company being its holding company. However, it cannot impede the process of restructuring as contemplated in the scheme, because losses suffered by the subsidiary company are already accounted for in the consolidated financial statements and are already taken care in such consolidated financial statement.

10. Consideration

“Upon this Scheme becoming effective and Merger of GPPL and GPOPL with SFIL in terms of this Scheme, SFIL shall, following such transfer and vesting of the Undertaking of GPPL and GPOPL, wholly owned subsidiaries of SFIL, into SFIL without any application or deed, no consideration shall be payable by the Transferee Company and the shares of the Transferor Company (or its nominee shareholders) will stand cancelled, without any further act, instrument or deed.”

11. From the material on record, the Scheme appears to be fair and reasonable and is not in violation of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, Company Petition bearing C.P.(CAA)/312/MB-I/2022 filed by the Petitioner Companies are made absolute in terms of prayers clause of the said Company Scheme Petition.

12. The Scheme of Merger by Absorption is hereby sanctioned, and the appointed date of the Scheme is fixed as 1st day of April 2022. The Transferor Companies shall be dissolved without winding up.

13. The Petitioner Companies are directed to file a certified copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with e-Form INC28 in addition to physical copy, within 30 days from the date of receipt of order, duly certified by the Designated Registrar of this Tribunal.

14. The Petitioner Companies to lodge a certified copy of this order and the Scheme duly authenticated by the Designated Registrar of this Tribunal, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of receipt of the certified copy of order.

15. All concerned regulatory authorities to act on a copy of this Order duly certified by the Registry of this Tribunal, along with a copy of the Scheme.