1. The present Company Petitions under section 230 to 232 of the Companies Act, 2013 read with the Companies ( Arrangements and Amalgamation) Rules, 2016 are filed seeking sanction of the proposed Scheme of Amalgamation (“the Scheme') between the Petitioner Companies and their respective shareholders and creditors.

2. The Registered Office of the Petitioner Companies are situated in the state of Telangana and therefore within the jurisdiction of this Tribunal. 

3. Details of the Petitioner Companies are as follows: 

I. In respect of Transferor Company

The Authorised Share Capital of the Transferor Company as on 31.03.2019 is Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up equity share capital is Rs.18,22,000/- divided into 1,82,200 equity shares of Rs.10/- each. The main objects of the Transferor Company are to carry on the business as manufacturers of and dealers in pharmaceutical, medicinal, herbal, bacteriological, biological, chemical, industrial and other preparations, articles and preparations, articles and compounds and as chemists and druggists etc.,

II. In respect of Transferee Company:

4. The Authorised Share Capital of the Transferee Company as on 31.03.2019 is Rs.65,00,000/- divided into 6,50,000 equity shares of Rs.10/-. The issued, subscribed and paid up equity share capital is Rs.63,00,000/- divided into 6,30,000 equity shares of Rs.10/- each. The main objects of the Transferee Company are to carry on the business of manufacturer, buy, sell, import, export and generally deal in all types of pharmaceuticals, drugs and intermediaries etc. 

5. The Petitioner Companies have filed Company Applications bearing CA(CAA)No.222/230/HDB/2019 and CA(CAA)No.224/230/HDB/2019 respectively before the Hyderabad Bench of the National Company Law Tribunal (“Tribunal”), seeking dispensation of convening meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors of both the Applicant Companies. The Tribunal vide its order dated 08.01.2020 dispensed with convening the meetings of the Equity shareholders, Secured and Unsecured Creditors of both the Petitioner Companies. 

The Petitioner Companies then filed the present Company Petitions before this Tribunal seeking sanction of the Scheme with appointed date as 01.04.2019. Thereafter, this Tribunal admitted the Petition and vide its order dated 20.08.2020 ordered that notice of the hearing of the Petition shall be advertised in daily newspaper i.e. Business Standard (in English) and Nava Telangana (in Telugu). Further directed the Petitioner Companies to issue notice of hearing to the statutory authorities. Accordingly, the Petitioner Companies published notice of hearing of the Petition on 03.09.2020 in English News Paper i.e. Business Standard and Telugu News Paper i.e. Nava Telangana. Further, notice of hearing of the Petition was served on the Regional Director (SER), Ministry of Corporate Affairs; Registrar of Companies and Official Liquidator by RPAD on 03.09.2020. The Petitioner Companies also served the notice on the Income Tax Authorities by hand on 28.08.2020. 

6. Accordingly to the Petitioner Companies they are companies of the same group. The Group wishes to consolidate its investments at the Group Holding Company level and in view of the above, it is proposed to amalgamate the Transferor Company into Transferee Company. The main benefits of the Scheme are as under: a) It will lead to synergies of operations and a stronger and wider capital and financial base for future growth and expansion. b) It will lead to achieve greater efficiency in cash management, real estate and unfettered access to cash flows generated by the combined investment business which can be deployed more effectively to fund organic or inorganic growth opportunities. c) It will enable appropriate consolidation of the activities of the Transferor Company and the Transferee Company with pooling and more effect in utilization of their resources, greater economies of scale, reduction in overheads and other expenses and improvement in various operating parameters: 

7. Heard Learned Counsels appearing for the Petitioners, RD and OL and perused the records. 

8. The · Official Liquidator vide his Report dated 25.09.2020 while reiterating the averments made in the Petition submitted that the affairs of the Petitioner Companies appears to have not been conducted in a manner pre-judicial to the interests of the members or to the public, subject to the following observations. The Petitioner Companies vide reply dated 22.10.2020 submitted the following:

Table:-

9. The Petitioner Companies, to substantiate their contentions/submissions, filed further reply dated 10.11.2020 to the Report of the Official Liquidator, and submitted that in relation to the Group Holding Company, the words were removed from the Scheme of Amalgamation at Clause 5(i) and modified Scheme is submitted to the this Tribunal for its consideration. This was not mentioned in the above said reply dated 22.10.2020. A fresh Accounting Treatment certificate issued by the Auditors with regard to Pooling of Interest Method used for maintaining the books of accounts under Accounting Standards is also enclosed with this Reply. 

10. The Petitioner Companies have filed IA No.1057/2020 and IA No.1058/2020 on 04.11.2020 respectively seeking permission of this Tribunal to file the amended Scheme of Amalgamation. The IA's are duly served on the ROC, RD and OL. The Board Resolution dated 12.10.2020 approving amended Scheme of Amalgamation is enclosed with the IA's along with consent Affidavits of the shareholders. For the reasons mentioned in the IA’s, the same were allowed and the Revised Scheme is taken on record. 

11. Regional Director (South East Region), Ministry of Corporate Affairs vide his common representation dated 22.10.2020 submitted that the Directorate vide its letter dated 16.09.2020 issued to the Office of the Income Tax Officer, Hyderabad calling for comments/observations giving 15 days' time. However till date no report in the matter has been received. The RD reiterated the averments made by the OL in his Report and prayed this Tribunal to direct the Petitioner Companies to given reply to the OL’s Report. Further, raised the following observations and the Petitioner Companies replied to the same as detailed below: S. RD's Observations Reply of the Petitioner Companies by No. way of Affidavit dated 17.11.2020 The Directorate has received letter dated 16.10.2020 from the ROC, Hyderabad opining no objection to the proposed Amalgamation, but pointed out certain observations as under: 

Table:-

12. Further, the RD filed his Additional Affidavit dated 15.12.2020, reiterated the submissions made by the Petitioner Companies in their Reply Affidavit dated 18.11.2020 and raised the following observation. The Petitioner Companies vide their affidavit dated 23.12.2020 replied as detailed below: S. . RD's Observations Reply of the Petitioner Companies by No. way of Affidavit dated 23.12.2020 The Petitioner Companies are As stated in our reply dated dealing in the business of drugs, 18.11.2020, the amount is collected as pharmaceuticals and Security Deposit during the course of intermediaries. During the course its business for the purpose of securing of business, the supply of the the transaction for supply of material material made to the customers by to the customers. This amount cannot taking security deposits for the be treated as an advance. It is purpose of securing the submitted that Rule 2 of Companies transaction and also for (Acceptance of Deposits) Rules, 2014, recovering the amounts against deals with the definition of the word the material dispatched to the “Deposit” and in the definition it customers of the petitioner clearly excludes certain receipt of companies. For the purpose of amounts as Deposits. The deposits said security, deposits are taken received by the petitioner/transferor while dispatching the deliveries falls under the exclusion category, and said security will be returned more specifically under (xii) which once the invoice is cleared by the reads as under. respective customers. This Any amount received in the course of transaction of receipt of deposits or for the purpose of the business of is an exempted deposit and is not the Company in violation of the Companies a) .......... (Acceptance of Deposit) Rules, b) ......... 2014. Affidavit to this effect was c) as security deposit for the filed that this is not in violation of performance of the contract for the the said Rules. Reply furnished supply of goods or provision of by the Company appears to be not services. satisfactory. Hence, the matter is As per said provision and exception being submitted to ROC for provided under the provided under the examining and to submit his definition, the deposit received by the report. transferor company from its customers is an exempted transaction and there is no violation of any of the rules and it is strictly in confirmation of the rules as detailed in Companies (Acceptance of Deposits) Rules, 2014. 

These Deposits are taken for securing the continuous supply of goods to the customers as per the terms agreed with them. Further, these Deposits are kept till the customers/stockists to the Company and the Deposits are collected from them for the continuous supply of goods and securing the transaction. There is no Deposit of a customer/stockiest to whom company is not supplying the goods. As such the explanation offered by the Company be considered. A copy of the certificate from the Auditors is enclosed with the reply. 

13. It is seen from the Memo filed on 06.01.2021 by the Petitioner Companies that after considering their explanation, the ROC vide their letter dated 31.12.2020, did not raise any further observation and directed them to submit the Auditor's Certificate before this Tribunal for consideration on merits. 

14. Petitioner Companies enclosed Certificates from Auditors namely M/s Venugopal & Chenoy, Chartered Accountants, stating that Accounting Treatment adopted in the proposed Scheme is in conformity with Accounting Standards specified under Section 133 of the Companies Act, 2013. 

15. Considering the entire facts and circumstances of the case and on perusal of the Scheme, reports of the Regional Director, Official Liquidator, and reply/undertakings of the Petitioner Companies thereon and the documents produced on record, the Scheme of Amalgamation appears to be fair and reasonable and is not contrary to public policy and not violative of any provisions of law. All the statutory compliances have been made under Section 230 to 232 of the Companies Act, 2013. 

16. The Company Petition is allowed with the following directions: 

a) The amended Scheme of Amalgamation (which is enclosed as Annexure to the IA No.1057/2020 at Page Nos.6 to 24) is hereby sanctioned and it is declared that the same shall be binding on the Petitioner Companies and their respective Shareholders and Creditors, Employees and all concerned under the Scheme.

b) The Scheme shall become effective from the Appointed date i.e., 01.04.2019 and shall be made operational from the date of filing of the orders with the Registrar of Companies.

c) While approving the Scheme as above, it is further clarified that this order will not be construed as on order granting exemption from payment of stamp duty or taxes or any other charges, if payable, as per the relevant provisions of law or from any applicable permissions that may have to be obtained or, even compliances that may have to be made as per the mandate of law.

d)The Petitioner Companies are directed to preserve their books of accounts and papers and records and not to dispose of without the prior permission of the Central Government in terms of provisions of Section 239 of the Companies Act, 2013.

e) All concerned authorities to act on a copy of this order along with the Scheme duly authenticated by the Registrar of this Tribunal. .Date of Order:02.07.2021 The Registrar of this Tribunal shall issue the certified copy of this order along with the Scheme immediately.

f)The Petitioner Companies are directed to take appropriate steps to submit the said Șcheme to Registrar of Companies within 30 days from the date of receipt of copy of this order.

g) The Petitioner Companies are directed to issue newspaper publication with respect to approval of Scheme of Amalgamation, in the same newspaper in which previous publications were issued in order to ensure transparency/dissemination of complete information to all concerned parties about the approval granted by the Tribunal for the Scheme as proposed.

h)The Petitioner Companies are further directed to take all consequential and statutory' steps required in pursuance of the approved Scheme of Amalgamation under the provisions of the.

i)The Petitioner Companies are also directed to strictly comply with all the Undertakings given by them including those with regard to payment of due taxes and other statutory dues as mentioned in foregoing paragraphs of this order.

j)The Petitioner Companies are directed to strictly adhere to the above directions and applicable provisions of the Companies Act. 

17. Accordingly, the Scheme stands sanctioned and the IA No.1057/2020 and IA No.1058/2020 and the Company Petitions bearing CP (CAA) No.196/230/HDB/2020 and CP (CAA) No.202/230/HDB/2020 stand disposed of.