Translate
Text Highlighter

Bookmark

PDF

Share

Report a problem
AMICUS AI
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Tapan Deshpande, i/b Cyril Amarchand Mangaldas, Advocates, for the Applicants;
Judges
  • Rajasekhar V.K., Member (Judicial)
  • V. Nallasenapathy, Member (Technical)
Acts
Are you a practicing lawyer?
Enhance your digital presence and reach by creating a Casemine profile.
Upload pleading to use the new AI search
Click here to upload
Cites
Cited by
Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
  • Mr. Tapan Deshpande, i/b Cyril Amarchand Mangaldas, Advocates, for the Applicants;
Judges
  • Rajasekhar V.K., Member (Judicial)
  • V. Nallasenapathy, Member (Technical)
Acts
See more information ...
Smart Summary

Structured Summary of the Tribunal's Common Order

Factual and Procedural Background

Bench: Rajasekhar V.K., Member (Judicial). The Court convened by videoconferencing.

This Common Order disposes of IA No. 1015/MB.IV/2020 in CA (CAA) No. 1024/MB.IV/2020 and also deals with CA (CAA) No. 1024/MB.IV/2020 (the main Company Application).

IA No. 1015/MB.IV/2020 was filed by the Applicant Companies seeking the Tribunal's sanction to amend the Scheme of amalgamation by substituting Clause 22 with a revised clause. The material change in Clause 22 concerns the Share Exchange Ratios to be issued by the Amalgamated Company to L&T Finance Holdings Limited (LTFH): the existing ratios in the Scheme provided for 185 shares for every 100 of Amalgamating Company 1 and 49 shares for every 100 of Amalgamating Company 2; the proposed substituted clause provided for 201 shares for every 100 of Amalgamating Company 1 and 50 shares for every 100 of Amalgamating Company 2. The proposed substitution also contained related provisions on fractional entitlements, issuance only to LTFH (and cancellation of jointly held shares), compliance with Sections 62 and 42 of the Companies Act, evidence of title for heirs/successors, pari passu ranking, adjustments on corporate actions, and treatment of shares in abeyance.

The Applicant Companies' boards approved the amended Scheme on 15.07.2020. The applicants stated the Scheme had not been served on any statutory or governmental authority prior to this amendment application.

The applicants explained that the Covid-19 pandemic materially affected valuations used to determine consideration under the Scheme and that a fresh valuation (dated 15.07.2020) had been obtained from the same valuer who prepared the earlier report (dated 20.03.2020, based on financials to 31.12.2019). On the basis of the revised valuation, the applicant boards approved the amended clause.

The main Company Application, CA (CAA) No. 1024/MB.IV/2020, seeks sanction of a scheme providing for merger by absorption of L&T Housing Finance Limited and L&T Infrastructure Finance Company Limited into L&T Finance Limited (the Transferee Company). The transferor and transferee companies are wholly‑owned subsidiaries of LTFH. The application included affidavits, lists of shareholders, and auditor certificates quantifying secured and unsecured creditor claims as at 31 May 2020. The Tribunal considered both the IA and the Company Application and issued directions (set out below) concerning substitution of Clause 22, notices to stakeholders and regulators, publication, appointment of advisers to the Official Liquidator, and related compliance steps.

Legal Issues Presented

  1. Whether this Tribunal should permit the Applicant Companies to amend the Scheme by substituting Clause 22 to change the Share Exchange Ratios and related provisions.
  2. Whether convening and holding meetings of equity shareholders, secured creditors and unsecured creditors to seek approval of the Scheme is required in the circumstances, given affidavits of consent and the applicants' averments regarding the Scheme's non-prejudicial effect on creditors (with reference to section 230 of the Companies Act, 2013).
  3. What procedural directions (service of notices upon creditors, statutory authorities, stock exchanges, publication, and scrutiny by the Official Liquidator / appointed chartered accountants) should be given in respect of the Company Application.

Arguments of the Parties

Applicant Companies' Arguments

  • The Boards of the respective Applicant Companies approved the amended Scheme (including substitution of Clause 22) at meetings on 15.07.2020.
  • There was a need to amend the Scheme because the Covid-19 pandemic materially affected valuations used to determine the consideration under the Scheme. The market value of comparable NBFCs declined significantly after the Scheme was originally approved.
  • The Applicant Companies appointed the same valuer to prepare a fresh valuation report dated 15.07.2020 that reflected the post‑pandemic market conditions; the boards considered and adopted the revised valuations on 15.07.2020.
  • The Scheme, as amended, contemplates issuance of Amalgamated Company shares only to LTFH in respect of shares held individually by it; shares jointly held with nominees would be cancelled; fractional entitlements would be rounded off; and the allotment would be deemed to comply with Sections 62 read with 42 of the Companies Act and other applicable provisions.

The opinion does not contain a detailed account of any opposing party arguments or objections in relation to the IA; no adversarial submissions are recorded in the text.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal's reasoning with respect to the IA and the Company Application is set out concisely in the order. The Tribunal proceeded as follows:

  1. IA (Amendment to Clause 22)
    • The Tribunal noted the applicants' factual matrix: board approvals dated 15.07.2020 and the fresh valuation dated 15.07.2020 prepared in light of the Covid‑19 pandemic and its disruptive effect on NBFC valuations and earnings.
    • On the basis of the applicants' submissions and the material placed on record (board resolutions and the revised clause in Exhibit 'E'), the Bench concluded that the proposed amendment should be allowed.
    • The Tribunal therefore allowed the primary prayers of the IA (prayers (a) and (b)), directed substitution of existing Clause 22 with the revised Clause 22 (as extracted in the order), and recorded ancillary directions: the substitution must be reflected by way of a footnote on the relevant page of the Scheme; revised affidavits of shareholders consenting to the amendment must be filed along with the Company Petition or the petition shall not be considered.
    • Prayer (c) in the IA, being an alternative to (b), was held to have become infructuous.
    • IA No. 1015/MB.IV/2020 was disposed of accordingly.
  2. CA (CAA) No. 1024/MB.IV/2020 — Main Company Application
    • The Tribunal perused the Company Application and supporting affidavits (dated 6 June 2020 and 22 July 2020) and the applicants' submissions.
    • It summarized the scheme's purpose: merger by absorption of two transferor companies (L&T Housing Finance Limited and L&T Infrastructure Finance Company Limited) into L&T Finance Limited (Transferee Company), all being subsidiaries of LTFH, and recorded the stated rationale and benefits (consolidation of lending entities, operational and managerial efficiencies, reduced multiplicity of NBFCs and compliance burdens, larger capital and asset base, synergies, pooling of expertise).
    • On the procedural question whether meetings of equity shareholders and creditors were required, the Tribunal applied the following analysis:
      • Equity shareholders: since all equity shareholders of the applicant companies had filed separate affidavits of consent (Exhibits “O-1” to “O-7” and “Q-1” to “Q-7”) and in view of averments in the Company Application (paras 22–23), convening meetings of equity shareholders to seek approval was not required.
      • Secured and unsecured creditors: in view of averments in the Company Application (paras 24–30) and paragraphs 5–12 of the Further Affidavit stating that the Scheme is a merger by absorption that is not prejudicial to secured or unsecured creditors, and that it does not propose any compromise or diminution of creditors' liabilities or variation of their rights, the Tribunal concluded that convening meetings of secured and unsecured creditors was not required. The Tribunal expressly referred to the provisions of Section 230 of the Companies Act, 2013 in this context.
    • Despite not requiring meetings, the Tribunal directed that notice of filing of the Company Application and passing of the order be served upon specified categories of creditors and stakeholders so they could submit representations within 30 days if any:
      • All secured creditors as on 31 May 2020 (for each relevant applicant company).
      • Unsecured creditors with claims exceeding Rs. 15,00,000 (fifteen lakh) as on 31 May 2020 — for Applicant Company‑1 (covering 99.92% of its unsecured creditors) and Applicant Company‑2 (covering 99.97% of its unsecured creditors).
    • The Tribunal issued specific directions to serve notices (with copies of the Company Application and the order) upon the following authorities and bodies, allowing them 30 days from receipt to make representations to the Tribunal (copy to the applicant companies); if no response is received within 30 days it will be presumed they have no objection:
      • Central Government through the Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai;
      • Registrar of Companies, Maharashtra, Mumbai;
      • Income‑tax authorities within whose jurisdiction the assessments of the respective applicant companies are made (specific PAN details and addresses were recorded in the order for each applicant company);
      • Securities and Exchange Board of India, Mumbai;
      • Reserve Bank of India, Mumbai;
      • Official Liquidator, High Court, Bombay — with appointment of M/s BN Kedia & Co., Chartered Accountants to assist the Official Liquidator in scrutinising the books of accounts, and with the Transferor Companies directed to pay an aggregate fee of Rs. 2,00,000 to that firm within two weeks of receipt of certified copy of the order;
      • National Housing Bank (notice to be served by Applicant Company‑1);
      • National Stock Exchange of India Limited (notice to be served by the Applicant Companies);
      • BSE Limited (notice to be served by Applicant Company‑2).
    • The Tribunal directed that the notice of filing and copy of the order be published in the Free Press Journal (Mumbai edition) in English and in Marathi translation in Loksatta (Mumbai edition), and also that the notice be published on the applicant companies' respective websites, if any. The order further required filing a compliance report with the registry in lieu of customary affidavit of service, given the lockdown situation.
    • The Tribunal recorded that notice to the Competition Commission of India was not required in view of averments in paragraph 33 of the Company Application.

Holding and Implications

Holding (core rulings):

  • IA No. 1015/MB.IV/2020 is allowed and disposed of. The Tribunal allowed prayers (a) and (b) of the IA and directed substitution of the existing Clause 22 of the Scheme with the revised Clause 22 (as extracted in the order). Prayer (c) was held to be infructuous.
  • The substitution must be indicated by a footnote on the Scheme page: the footnote wording required by the Tribunal is: “Substituted for the existing clause 22 as per permission accorded by the NCLT, Special Bench, Mumbai, vide para 7 of its order dated 24.07.2020 in IA No. 1015/MB.IV/2020 in CA (CAA) No. 1024/MB.IV/2020”.
  • Revised affidavits of shareholders consenting to the amendment (substitution of Clause 22) must be filed along with the Company Petition; failure to do so will result in the Company Petition not being considered.
  • With respect to CA (CAA) No. 1024/MB.IV/2020, the Tribunal directed extensive procedural steps (service of notices to specified creditors, regulators and authorities, publication and website notices, appointment of chartered accountants to assist the Official Liquidator, payment of their fees, and filing of a compliance report) while concluding that convening formal meetings of equity shareholders and of creditors was not required in the circumstances described in the application.

Implications:

  • Direct effect on the parties: The Applicant Companies may amend the Scheme as directed and must comply with the Tribunal's procedural directions (substitution footnote, filing of revised affidavits, service of notices, publication, appointment/fee payment to the chartered accountants assisting the Official Liquidator, and filing of compliance reports). The IA is disposed and the Company Application proceeds subject to the directed notices and compliance steps.
  • Broader precedent: The order records application of Section 230 of the Companies Act, 2013 in deciding that meetings of shareholders and creditors were not required given the affidavits of consent and the applicants' averments. The opinion does not purport to set or announce a new legal precedent; it applies statutory provisions and fact‑specific reasoning to permit the amendment and to direct procedural steps.

Note: This summary is prepared exclusively from the content of the provided Tribunal order. No information beyond the text of that order has been introduced.

Show full summary ...

    Companies Act, 2013, In Re

    Rajasekhar V.K., Member (Judicial):— The Court is convened by videoconferencing today. This Common Order disposes of IA No. 1015/MB.IV/2020 in CA (CAA) No. 1024/MB.IV/2020 as well as CA (CAA) No. 1024/MB.IV/2020.

    IA 1015/MB.IV/2020 inCA (CAA) 1024/MB.IV/2020

    2. This Interlocutory Application (IA) has been filed by the Applicant Companiesseeking sanction of this Tribunal for amending the Scheme by substitution of Clause 22 as follows:

    For Substitute 22. Issuance of Amalgamated Company Shares for Amalgamation (i) Upon the effectiveness of the Scheme and in consideration of the Amalgamation including the transfer and vesting of the Undertakings in the Amalgamated Company pursuant to this Scheme, the Amalgamated Company shall, on the Effective Date, complete allotment of the Amalgamated Company Shares in favour of the shareholder of the respective Amalgamating Companies such that: (a) 185 (one hundred and eightyfive) Amalgamated Company Shares shall be issued as fully paid-up, for every 100 (one hundred) Amalgamating Company 1 Shares, held by LTFH individually in the Amalgamating Company 1 (the “Share Exchange Ratio 1”); (b) 49 (forty nine) Amalgamated Company Shares shall be issued as fully paid-up, for every 100 (one hundred) Amalgamating Company 2 Shares, held by LTFH individually in the Amalgamating Company 2 (the “Share Exchange Ratio 2”); (ii) Fractional entitlements of shares, if any, will be rounded off to the nearest whole number. The equity shares of the Amalgamating Companies are held individually by LTFH and jointly with its nominees. It is clarified, the Amalgamated Company shall issue Amalgamated Company Shares only to LTFH for the shares held individually by it and no shares will be issued to the nominees who are holding the shares jointly with LTFH and the shares so held jointly in the Amalgamating Companies will be cancelled from the Effective Date without requirement of obtaining any further approval. (iii) The issue and allotment of the Amalgamated Company Shares by the Amalgamated Company to LTFH as provided in this Scheme is an integral part thereof and shall be deemed to have been carried out as if the procedure laid down under Section 62 read with Section 42 of the Act and any other applicable provisions of the Act were duly complied with. (iv) Where Amalgamated Company Shares are to be allotted to heirs, executors or administrators or, as the case may be, to successors of equity shareholders of the Amalgamating Companies, the concerned heirs, executors, administrators or successors shall be obliged to produce evidence of title satisfactory to the Board of the Amalgamated Company. (v) The Amalgamated Company Shares to be issued and allotted by the Amalgamated Company in terms of this Scheme shall be subject to the provisions of the memorandum and articles of association of the Amalgamated Company and shall rank pari passu in all respects and shall have the same rights attached to the then existing equity shares of the Amalgamated Company. (vi) In the event that the any of the Amalgamating Companies or the Amalgamated Company restructures their equity share capital by way of share split/consolidation/issue of bonus shares or other similar action during the pendency of the Scheme, the relevant Share Exchange Ratio shall be adjusted accordingly to take into account the effect of any such corporate actions. (vii) The Amalgamated Company Shares to be issued by the Amalgamated Company in respect of the Amalgamating Companies Shares, the allotment or transfer of which is held in abeyance under Applicable Law shall, pending allotment or settlement of dispute by order of the appropriate court or otherwise, also be kept in abeyance in like manner by the Amalgamated Company. 22. Issuance of Amalgamated Company Shares for Amalgamation (i) Upon the effectiveness of the Scheme and in consideration of the Amalgamation including the transfer and vesting of the Undertakings in the Amalgamated Company pursuant to this Scheme, the Amalgamated Company shall, on the Effective Date, complete allotment of the Amalgamated Company Shares in favour of the shareholder of the respective Amalgamating Companies such that: (a) 201 (two hundred and one) Amalgamated Company Shares shall be issued as fully paid-up, for every 100 (one hundred) Amalgamating Company 1 Shares, held by LTFH individually in the Amalgamating Company 1 (the “Share Exchange Ratio 1”); (b) 50 (fifty) Amalgamated Company Shares shall be issued as fully paid-up, for every 100 (one hundred) Amalgamating Company 2 Shares, held by LTFH individually in the Amalgamating Company 2 (the “Share Exchange Ratio 2”); (ii) Fractional entitlements of shares, if any, will be rounded off to the nearest whole number. The equity shares of the Amalgamating Companies are held individually by LTFH and jointly with its nominees. It is clarified, the Amalgamated Company shall issue Amalgamated Company Shares only to LTFH for the shares held individually by it and no shares will be issued to the nominees who are holding the shares jointly with LTFH and the shares so held jointly in the Amalgamating Companies will be cancelled from the Effective Date without requirement of obtaining any further approval. (iii) The issue and allotment of the Amalgamated Company Shares by the Amalgamated Company to LTFH as provided in this Scheme is an integral part thereof and shall be deemed to have been carried out as if the procedure laid down under Section 62 read with Section 42 of the Act and any other applicable provisions of the Act were duly complied with. (iv) Where Amalgamated Company Shares are to be allotted to heirs, executors or administrators or, as the case may be, to successors of equity shareholders of the Amalgamating Companies, the concerned heirs, executors, administrators or successors shall be obliged to produce evidence of title satisfactory to the Board of the Amalgamated Company. (v) The Amalgamated Company Shares to be issued and allotted by the Amalgamated Company in terms of this Scheme shall be subject to the provisions of the memorandum and articles of association of the Amalgamated Company and shall rank pari passu in all respects and shall have the same rights attached to the then existing equity shares of the Amalgamated Company. (vi) In the event that the any of the Amalgamating Companies or the Amalgamated Company restructures their equity share capital by way of share split/consolidation/issue of bonus shares or other similar action during the pendency of the Scheme, the relevant Share Exchange Ratio shall be adjusted accordingly to take into account the effect of any such corporate actions. (vii) The Amalgamated Company Shares to be issued by the Amalgamated Company in respect of the Amalgamating Companies Shares, the allotment or transfer of which is held in abeyance under Applicable Law shall, pending allotment or settlement of dispute by order of the appropriate court or otherwise, also be kept in abeyance in like manner by the Amalgamated Company.

    3. Learned Counsel for the Applicants submits that the Board of Directors of the respective companies have approved the amended Scheme at their meetings held on 15.07.2020. The Scheme has not yet been served on any statutory or Governmental authority.

    4. The reasons compelling the proposed amendment have been explained by the Applicant Companies in para 5 of the IA. Learned Counsel appearing for the Applicants reiterated the same during the course of oral hearings. It has been stated therein that due to the present pandemic situation, there was a need to reconsider and rationalise the valuations on the basis of which the consideration for the Scheme was originally determined. The Applicant Companies believe that the Covid-19 Pandemic is likely to disrupt Non-Banking Financial Companies (NBFCs), which is facing serious challenges due to reduced earnings. The earnings of the NBFC sector in India will likely be reduced in the range of 11-65% by 2021-22. This has led to overall downfall in the valuations of listed NBFCs.

    5. The Share Exchange Ratio in clause 22 of the Scheme was arrived at in the valuation report dated 20.03.2020 on the basis of the financial statements as at 31.12.2019. Since the market value of comparable companies has declined considerably in the period post-approval of the Scheme, it became necessary to reconsider the valuations of the companies in the Covid-19 pandemic milieu. The same valuer was appointed, who submitted a fresh Valuation Report dated 15.07.2020. On the same day, i.e., 15.07.2020, the boards of the respective companies met and considered the revised valuations and approved the same. Extracts of the board resolutions passed in this behalf have been placed on record as Exhibits ‘A’, ‘B’ and ‘C’ at pages 10, 11 & 12 respectively of the IA. Exhibit ‘E’ thereof at p. 45 ibid is a Schedule containing the revised clause 22 in place of the existing one, which is extracted in para 2 above.

    6. Considering the submissions made, this Bench is of the opinion that the proposed amendment should be allowed.

    7. In view of the above, the following orders are passed:—

    (a) Prayer (a) and (b) of the IA are allowed.

    (b) The Applicant Companies are directed to substitute the existing clause 22 of the Scheme with the revised clause 22 as indicated in para 2 supra;

    (c) Prayer (c) being the alternative prayer to (b), becomes infructuous;

    (d) The said substitution be marked by way of a footnote to the Scheme on the relevant page itself, as follows:—

    “Substituted for the existing clause 22 as per permission accorded by the NCLT, Special Bench, Mumbai, vide para 7 of its order dated 24.07.2020 in IA No. 1015/MB.IV/2020 in CA (CAA) No. 1024/MB.IV/2020”

    (e) Revised Affidavits from the Shareholders of each of the Applicant Companies, consenting to the amendment by substitution of the existing clause 22 of the Scheme, shall be filed along with the Company Petition, failing which the Company Petition shall not be considered.

    8. IA No. 1015/MB.IV/2020 in CA (CAA) No. 1024/MB.IV/2020 shall stand disposed of accordingly.

    CA (CAA) 1024/MB.IV/2020

    9. Now we come to the main Company Application bearing CA (CAA) No. 1024/MB.IV/2020.

    10. We have perused the Company Application, along with the Affidavits, both dated 6 June 2020 and Further Affidavit in Support dated 22 July 2020 (Further Affidavit), of Ms. Apurva Rathod, the Authorised Signatory of the Applicant Companiesin support of the Company Application and heard the learned Counsel for the Applicant Companies.

    11. The present Scheme provides for merger by Absorption of L&T Housing Finance Limited (Transferor Company-1) and L&T Infrastructure Finance Company Limited (Transferor Company-2) by L&T Finance Limited (Transferee Company) and for matters consequential thereto. The Transferor Companies and the Transferee Company are wholly-owned subsidiaries of L&T Finance Holdings Limited (LTFH).

    12. The rationale and benefits of the Scheme are, inter alia as follows:

    A. Background and Rationale:

    LTFH, being a core investment company, currently holds multiple lending entities (with different portfolios) and other financial services businesses/entities. While each of the lending entities caters to distinct segments, it is proposed to consolidate the businesses of the lending entities within Transferee Company, which is the flagship operating lending entity within the group, for creation of a single larger unified entity and reduce the number of NBFCswithin the group to achieve optimal and efficient utilisation of any income/capital generated/surplus cash flow from such businesses by the merged entity; and enhance operational and management efficiencies.

    B. Benefits:

    (a) Consolidation of business would achieve simplification of holding structure of entities forming part of the group, improve operational and management efficiencies, streamline business operations and decision-making process and enable greater economies of scale.

    (b) Would lead to creation of a single unified entity with a wider and stronger capital and asset base, having greater capacity for conducting its operations more efficiently and competitively.

    (c) Reduce the number of NBFCs within the group, as well as achieving a reduction in administrative costs, overheads and multiplicity of legal and regulatory compliances.

    (d) Enable access to business relationships and other intangible benefits that the Applicant Companies have built over decades.

    (e) The Applicant Companies and Transferee Company have significant complementarities and the consolidation of the businesses carried on by them is strategic in nature and will generate significant business synergies thereby enhancing stakeholders' value.

    (f) The Applicant Companies and Transferee Company have a proven track record in the respective businesses of credit and consolidation which will lead to pooling of knowledge and expertise.

    13. The Applicant Company-1 hasseven equity shareholders, who hold the entire share capital, as per list of equity shareholders and their respective shareholdingsannexed to the Company ApplicationasExhibit “N”.All the said seven equity shareholders have given their respective affidavits of consent and approval to the Scheme and the same are annexed to the Company Application asExhibits “O-1” to “O-7”.

    14. The Applicant Company-2 has seven equity shareholders, who hold the entire share capital, as per list of equity shareholders and their respective shareholdingsannexed to the Company Application as Exhibit “P”. All the said seven equity shareholders have given their respective Affidavits of consent and approval to the Scheme and the same are annexed to the Company Application as Exhibit “Q-1” to “Q-7”.

    15. The Applicant Company-1 has seventeen Secured Creditors as on 31 May, 2020 having in the aggregate an outstanding amount of Rs. 13180,86,67,890/- (Rupees thirteen thousand one hundred eighty crore eighty-six lakhsixty-seven thousand eight hundred and ninety only). The certified true copy of the certificate dated 19 June, 2020 from an independent auditor certifying the same is annexed to the Further Affidavit dated 22 July, 2020 as Exhibit “D”.

    16. The Applicant Company-1 has 321 Unsecured Creditors as on 31 May, 2020 having in the aggregate an outstanding amount of Rs. 1462,88,22,686/- (Rupeesone thousand four hundred and sixty-two croreeighty-eight lakh twenty-two thousand six hundred and eighty-six only). The certified true copy of the certificate dated 19 June, 2020 from an independent auditor certifying the same is annexed to the Further Affidavit dated 22 July, 2020 as Exhibit “E”.

    17. The Applicant Company-2 has EighteenSecured Creditorsas on31 May, 2020 having in the aggregate an outstanding amount of Rs. 19107,55,53,504 (Rupees nineteen thousand one hundred seven crore fifty-five lakhfifty-three thousand five hundred and four only).The certified true copy of the certificate dated 19 June, 2020 from an independent auditor certifying the same is annexed to the Further Affidavit dated 22 July, 2020 as Exhibit “G”.

    18. The Applicant Company-2 has 145 unsecured creditors of the Applicant Company-2 as on 31 May, 2020 having in the aggregate an outstanding amount of Rs. 61,58,07,18,466/- (Rupees six thousand one hundred fifty-eight crore seven lakh eighteen thousand four hundred and sixty-six only).The certified true copy of the certificate dated 19 June, 2020 from an independent auditor certifying the same is annexed to the Further Affidavit dated 22 July, 2020 asExhibit “H”.

    19. The Applicant Companies have submitted to this Tribunal that convening and holding of the meetings of the equity shareholders, secured creditors and unsecured creditor of the Applicant Companies to seek their approval to the Scheme are not required, in view of - (a) the Affidavits of Consent from all the equity shareholders, which are annexed to the Company Application and in view of the averments made in paragraphs 22 and 23 of the Company Application; and (b) in view of the averments made in paragraphs 24 to 30 of the Company Application and paragraphs 5 to 12 of the Further Affidavit, stating therein that the present Scheme is a scheme of amalgamation by merger by absorption among the Applicant Companies and the Transferee Company and is in no manner prejudicial to the interests of the secured creditors and the unsecured creditors of the Applicant Companies and that, under the Scheme, neither any compromise is proposed with any of the secured creditors and/or the unsecured creditors of the Applicant Companies nor any liability of the respective secured creditors or unsecured creditors of Applicant Companies are proposed to be reduced or extinguished and that the Scheme does not contemplate any variation in the rights of the respective secured creditors and unsecured creditors of the Applicant Companies in any manner whatsoever. In view of the foregoing and in view of the provisions of section 230 of the Companies Act, 2013, the following directions are issued:

    20. The convening and holding the meetings of the equity shareholders of the Applicant Companies to seek their approval to the Scheme, arenot required in view of the averments made in paragraphs 22 and 23 of the Company Application and theseparate Affidavits of Consent and approval to the Scheme given by all the equity shareholders of the Applicant Companies, which are annexed to the Company Application as Exhibits “O-1” to “O-7” and Exhibits “Q-1” to “Q-7” thereto.

    21. The convening and holding meetings of therespective secured creditors and unsecured creditors of the Applicant Companiesto seek theirapproval to the Scheme arenot required, in view of the averments made inparagraphs 24 to 30 of the Company Application and paragraphs 5 to 12 of the Further Affidavit. However, the Applicant Companies are directed to issue notice of filing of the present Company Application and passing of this order upon their respective secured creditors and unsecured creditors, details of which are as under:

    (a) To all the secured creditors of the respective Applicant Companies, as on 31 May, 2020;

    (b) Applicant Company-1 to all its unsecured creditors having their outstanding above Rs. 15,00,000/- (Rupees fifteen lakh only) as on 31 May, 2020 - covering 99.92% of the Unsecured Creditors; and

    (c) Applicant Company-2 to all its unsecured creditors having their outstanding above Rs. 15,00,000/- (Rupees fifteen lakh only), as on31 May, 2020 - covering 99.97% of the Unsecured Creditors; with a direction that they may submit their representations to this Tribunal, if any.

    22. The Applicant Companies to serve notice of filing of the present Company Application (along with copy of the Company Application) and a copy of this order, upon—

    (1) theCentral Government through the Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai;

    (2) Registrar of Companies, Maharashtra, Mumbai;

    (3) Income Tax Authority within whose jurisdiction the assessments of the respective Applicant Companies are made, clearing indicating the PAN of the company concerned, as follows:—

    i. PAN: AAACW1328G;ACIT, Corp Circle 4(1), Room No. 430, Fourth Floor, Chennai Main Building, MG Road (Nungambakkam High Road), Nungambakkam, Chennai 400034 in the case of Applicant Company-1;

    ii. PAN: AABCL2283L;DCIT, Circle 14(2)(1), Room no 475, Fourth Floor, Aaykar Bhavan, MK Road, Mumbai 400020, in the case of Applicant Company-2;

    (4) Securities and Exchange Board of India, Mumbai; and

    (5) Reserve Bank of India, Mumbai; andstating therein that theymay submit their representations in relation to the Scheme, if any, to this Tribunal within 30 (thirty) days from the date of receipt of the notice, with a copy thereof to the Applicant Companies. If no response is received by the Tribunal from within thirty days of the date of receipt of the said notice, it will be presumed that such authorities have no objection to the Scheme.

    23. The Applicant Companies to also serve notice along with copy of the Company Application and a copy of this order, upon the Official Liquidator, High Court, Bombay, stating therein that it may submit its representation in relation to the Scheme, if any, to this Tribunal within 30 (thirty) days from the date of receipt of the notice, with a copy thereof to the Applicant Companies. If no response is received by the Tribunal from the Official Liquidator, within 30 (thirty) days from the date of receipt of the said notice, it will be presumed that the Official Liquidator has no objection to the proposed Scheme.M/s BN Kedia & Co, Chartered Accountants having their office at No. 507, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivli (East), Mumbai 400101, are appointed to assist the Official Liquidatorto scrutinise the books of accounts of the Applicant Companies. The Transferor Companies shall pay an aggregate fee of Rs. 2,00,000/- (Rupees two lakh only) as remuneration to the Chartered Accountants for this purpose, within a period of two weeks from the date of receipt of certified copy of this order.

    24. Additionally, the Applicant Company-1 to serve notice along with copy of the Company Application and a copy of this order, upon the National Housing Bank, New Delhi, stating therein that it may submit its representation in relation to the Scheme, if any, to this Tribunal within 30 (thirty) days from the date of receipt of the notice, with a copy thereof to the Applicant Company-1 and if no response is received by the Tribunal from the National Housing Bank within 30 (thirty) days of the date of receipt of the said notice, it will be presumed that they have no objection to the Scheme.

    25. The Applicant Companies to serve notice along with copy of the Company Application and a copy of this order, upon the National Stock Exchange of India Limited (NSE), stating therein that it may submit its representation in relation to the Scheme, if any, to this Tribunal within 30 (thirty) days from the date of receipt of the notice, with a copy thereof to the Applicant Companies andif no response is received by the Tribunal from the NSE, within 30 days of the date of receipt of the said notice, it will be presumed that the NSE has no objection to the Scheme.

    26. The Applicant Company-2 to serve notice along with copy of the Company Application and a copy of this order, upon BSE Limited, stating therein that it may submit its representation in relation to the Scheme, if any, to this Tribunal within 30 (thirty) days from the date of receipt of the notice, with a copy thereof to the Applicant Company-2 andif no response is received by the Tribunal from BSE Limited within 30 days of the date of receipt of the said notice, it will be presumed that they have no objection to the Scheme.

    27. In view of the averments made in paragraph 33 of the Company Scheme Application, the notice of filing of the present Company Application and passing of this order, is not required to be given to the Competition Commission of Indiaby the Applicant Companies.

    28. The Applicant Companies are directed to issue notice along with a copy of the amended Scheme to other applicable regulators including sectoral regulators, if any.

    29. The Applicant Companies are directed to publish the notice of filing of the Company Application in Free Press Journal(Mumbai edition) in English and Marathi translation thereof in Loksatta (Mumbai edition), stating therein that the present Company Application has been filed in this Tribunal, and that any person concerned with the Applicant Companies, may file its representations, if any, to the Scheme in this Tribunal within thirty days from the date of publication of the said notice in the newspapers with a copy thereof to the concerned Applicant Company.

    30. The Applicant Companies are further directed to publish the notice of filing of the Company Application on their respective websites, if any.

    31. The Applicant Companies shall file compliance report with the registry in regard to the directions given in this Order in lieu of customary affidavit of service, due to lockdown situation prevailing now proving service of notices to the regulatory authorities as stated above and do report to this Tribunal that the directions regarding the issue of notices have been duly complied with.

    Use AI to get other relevant cases.
    Try AI Pro free for 7 days Upgrade to AI Pro

    Comments

    Companies Act, 2013, In Re
    (Jul 24, 2020)