TNT INDIA PRIVATE LIMITED VS, National Company Law Tribunal, Judgment, Law, casemine.com

Citation Codes

Equivalent Citations

citation codes

Case Number

C.P.(CAA) - 229/2022

Disposition

dismissed

Acts

COMPANIES ACT 2013
SECTION 232 COMPANIES ACT 2013
INCOME TAX ACT 1961
SECTION 230 COMPANIES ACT 2013
Sections 230 to 232 of the Companies Act, 2013
Section 2022 and that the 232 (6) of the Companies Act, 2013
provisions of Income Tax Act and Rules
provisions of Section 90 of the Companies Act, 2013, read with the Companies (Significant Beneficial Owners) Rules, 2018,
provisions of Section 2(1B) of the Income Tax Act, 1961.
Rule 2(h) of the Companies (Significant Beneficial Owners) Rules, 2018,
u/s. 90 of the Companies Act, 2013 r.w. companies (Significant Beneficial Owners) Rules, 2018.

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Smart Summary

Factual and Procedural Background

This opinion concerns the sanction of a Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013 between TNT India Private Limited (Transferor Company) and FedEx Express Transportation & Supply Chain Services (India) Private Limited (Transferee Company) along with their respective shareholders. The petitioner companies had approved the Scheme by board resolutions dated 19^th August 2022 and filed a joint Company Scheme Petition before the National Company Law Tribunal (NCLT), Mumbai Bench. The Scheme involves the merger by absorption of the Transferor Company into the Transferee Company, with the appointed date being 1^st April 2022, following the transfer of the entire business of the Transferor Company to the Transferee Company on a going concern basis. The Regional Director and Official Liquidator submitted reports and observations, and no objections were raised against the Scheme.

Legal Issues Presented

Whether the Scheme of Amalgamation complies with the provisions of Sections 230 to 232 of the Companies Act, 2013 and related rules.
Whether the appointed date of 1^st April 2022 is valid and effective for the Scheme.
Whether the interests of shareholders, creditors, and other stakeholders are protected under the Scheme.
Whether statutory compliances, including accounting standards, stamp duty, fees, and filings under the Companies Act, have been fulfilled.
Whether the Scheme is fair, reasonable, not violative of law, and not contrary to public policy.

Arguments of the Parties

Petitioner Companies' Arguments

The Scheme was approved by the boards of the petitioner companies and filed in accordance with prior NCLT orders.
All statutory and procedural requirements, including affidavits of compliance, have been fulfilled.
The transferor company ceased business operations from 1^st April 2022 by transferring its entire business to the transferee company as a going concern.
The Scheme is in the interest of stakeholders and will result in corporate simplification, cost reduction, and consolidation benefits.
The appointed date of 1^st April 2022 is consistent with Section 232(6) of the Companies Act, 2013, and the Scheme shall take effect from this date.
The petitioner companies will comply with all accounting standards, statutory filings including those under the Significant Beneficial Owners rules, Income Tax Act provisions, FEMA and RBI guidelines, and stamp duty requirements.
The petitioner companies have obtained consent affidavits from unsecured creditors constituting at least 90% in value and there are no secured creditors in the transferor company.

Regional Director's Observations and Requirements

Compliance with accounting standards AS-14 (IND AS-103), AS-5 (IND AS-8), and other applicable standards must be ensured.
The Scheme must clearly specify the appointed date from which it shall be effective, as required by Section 232(6) of the Companies Act, 2013.
Fee and stamp duty paid by the transferor company on its authorized capital shall be set off against that payable by the transferee company; any difference must be paid accordingly.
The Scheme must be approved by the requisite majority of members and creditors as per Section 230(6) of the Companies Act, 2013, with minutes placed before the Tribunal.
Compliance with provisions of Section 2(1B) of the Income Tax Act, 1961 and related rules must be ensured.
Compliance with Companies (Significant Beneficial Owners) Rules, 2018 is required; clarifications on BEN-2 filings were sought.
Provisions of FEMA and RBI guidelines must be complied with due to the presence of foreign shareholders.
The Registrar of Companies reported no complaints or investigations pending against the petitioner companies.
Protection of interests of creditors and stakeholders must be ensured.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Tribunal considered the joint Company Scheme Petition, the reports of the Regional Director and Official Liquidator, and the submissions made by the petitioner companies. It noted that no objections were raised against the Scheme. The Tribunal observed that the petitioner companies complied with all statutory requirements, including passing board resolutions, filing affidavits of compliance, and obtaining creditor consents. The Regional Director’s observations were addressed through undertakings and clarifications by the petitioner companies. The Tribunal found that the Scheme was fair, reasonable, not violative of any law, and not contrary to public policy. It further noted that the appointed date of 1^st April 2022 was consistent with statutory provisions. The Tribunal was satisfied that the interests of shareholders, creditors, and other stakeholders were protected. It also accepted the Official Liquidator’s report that the affairs of the transferor company were conducted properly and that dissolution without winding up was appropriate.

Holding and Implications

The Tribunal sanctioned the Scheme of Amalgamation and made the Company Scheme Petition No. 229 of 2022 absolute.

The Transferor Company (Petitioner Company 1) is ordered to be dissolved without winding up. The petitioner companies are directed to file copies of the Scheme and the Order with the Registrar of Companies and the Superintendent of Stamps within specified timelines. All concerned authorities are directed to act upon the Order and Scheme as authenticated by the Tribunal. The appointed date for the Scheme is declared as 1^st April 2022.

The decision directly affects the parties by approving the merger and dissolution of the transferor company, but the opinion does not establish any new legal precedent.

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TNT INDIA PRIVATE LIMITED VS

IN THE NATIONAL COMPANY LAW TRIBUNAL

COURT - V, MUMBAI BENCH

C.P.(CAA)/229/MB-V/2022

C.A.(CAA)/215/MB-V/2022 In the matter of Companies Act, 2013

AND

In the matter of Section 230-232 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises,

Arrangements and Amalgamations) Rules, 2016;

In the matter of

Scheme of Amalgamation amongst TNT India Private Limited and FedEx Express Transportation & Supply Chain Services (India) Private Limited and their respective shareholders

TNT India Private Limited, CIN: ) U64120MH1993PTC361351, a )

company incorporated under the ) Companies Act, 1956 and having its ) registered office at Boomerang, Unit ) No. 801, Wings A and B1, Chandivali )…Petitioner Company 1/

Farm Road, Andheri East, Mumbai ) Transferor Company 400072, Maharashtra, India.

FedEx Express Transportation & )

Supply Chain Services (India) Private ) Limited, CIN: )

U60231MH2010FTC211583, a )

company, incorporated under the )

Companies Act, 1956 and having its ) registered office at Boomerang, Unit ) No. 801, Wings A & B1, 8th Floor, ) … Petitioner Company 2 / Chandivali Farm Road, Andheri East ) Transferee Company Mumbai 400072, Maharashtra, India.

Order delivered on: 17^thFebruary, 2023

Coram:

Sh. Kuldip Kumar Kareer : Member (Judicial) Smt. Anuradha Sanjay Bhatia : Member (Technical) Appearances (via videoconferencing):

For the Applicants : Mr. Ahmed M Chunawala, i/b Rajesh Shah & Co, Advocates

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For the Regional Director : Rupa Sutar, Authorized Representative of Regional

Director MCA (Western

Regional), Mumbai

Per: Anuradha Sanjay Bhatia, Member (T)

ORDER

1. Heard the Learned Counsel for the Petitioner Companies. No objector has come before this Hon'ble National Company Law Tribunal ("Tribunal") to oppose the Scheme and nor has any party controverted any averments made in the joint Company Scheme Petition.

2. The sanction of the Tribunal is sought under Sections 230 to 232 of the Companies Act, 2013 and other relevant provisions of the Companies Act, 2013 and the rules framed there under for the Scheme of Amalgamation amongst TNT India Private Limited and FedEx Express Transportation & Supply Chain Services (India) Private Limited and their respective shareholders (hereinafter referred to as "Scheme").

3. The Petitioner Companies have approved the said Scheme of Amalgamation by passing board resolutions dated 19^thAugust, 2022 which are annexed to the joint Company Scheme Petition.

4. The Learned Counsel appearing on behalf of the Petitioners states that the said joint Company Scheme Petition has been filed in consonance with the Order passed in the Company Scheme Application No. 215 of 2022 of the Hon'ble Tribunal.

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5. The Learned Counsel appearing on behalf of the Petitioners further states that the Petitioner Companies have complied with all requirements as per directions of the Hon'ble Tribunal and they have filed necessary affidavits of compliance with the Hon'ble Tribunal.

6. The Learned Counsel for the Petitioner Companies states that the Petitioner Company No. 1 was engaged in carrying on business of importing and exporting from India, light documents, express documents, parcels, commercial papers, business documents, printed matter, freight and delivering the same throughout the world and that the Petitioner Company No. 2 is presently carrying on the business of courier, logistics, ground and air transportation, and custom clearance. The Learned Counsel for the Petitioner Companies further states that the Petitioner Company 1 has ceased to operate its business with effect from April 1, 2022, pursuant to a transfer of its entire business to the Petitioner Company 2 on a going concern basis.

7. The rationale for the Scheme of the Petitioner Companies is in the interest of the stakeholders of these companies and shall result in the following benefits:

a. the Petitioner Companies are engaged in related businesses. The Petitioner Company 1 had transferred its entire business to the Petitioner Company 2 on April 1, 2022. The shareholders of both the Petitioner Companies are the same. The proposed Amalgamation is being undertaken as a part of an integration process on a global

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level pursuant to the acquisition of TNT Express B.V. (formerly TNT Express N.V. and merged out of existence with and into FedEx Express International B.V. effective as of October 2, 2020) by FedEx Corporation in the year 2016; b. the Amalgamation will result in simplification of corporate governance procedures and regulatory compliance, simplification and rationalization of accounting procedures, structural efficiency, and reduction in overall cost; c. the Amalgamation will result in consolidation of the companies and thereby provide value for shareholders and all other stakeholders;

d. the amalgamation by way of merger by absorption of the Petitioner Company 1 with and into the Petitioner Company 2 and consequent issue of Transferee Company Shares (as defined in the Scheme) by the Petitioner Company 2 to the shareholders of the Petitioner Company 1 in accordance with Clause 18 of the Scheme; and

e. various other matters consequential or otherwise integrally connected therewith.

8. The Regional Director has filed his Report dated 13^thJanuary, 2023 inter-alia making the following observations in paragraphs 2 (a) to (h) which are reproduced hereunder:

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
2(a)	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(ND AS-8) etc.	So far as the observation in paragraph 2 (a) of the Report is concerned, the Transferee Company undertakes that in addition to compliance of AS- 14 (IND AS-103) for accounting treatment, the Transferee Company shall pass such accounting entries as may be necessary in connection with the Scheme to comply with other applicable

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		accounting standards such as AS-5 (IND AS-8) as applicable.
2(b)	As per Definition of the Scheme, "Appointed Date" shall mean April 1, 2022 or such other date as may be directed or approved by the NCLT or any other Governmental Authority; And “Effective Date" means the last of the dates on which all the conditions and matters referred to in Clause 26 hereof have been fulfilled; 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.	So far as the observation in paragraph 2 (b) of the Report is concerned, it is submitted and confirmed that the Appointed Date as mentioned in the Scheme is 1st April, 2022 and that the Scheme shall take effect from the Appointed Date, i.e. April 1, 2022. It is further submitted that the Petitioner Companies shall

Company/Rejoin der

accounting standards such as AS-5 (IND AS-8) as applicable.

2(b) As per Definition of the Scheme, So far as the

"Appointed Date" shall mean April 1, 2022 observation in or such other date as may be directed or paragraph 2 (b) of approved by the NCLT or any other the Report is Governmental Authority; And concerned, it is submitted and

"Effective Date" means the last of the confirmed that the

dates on which all the conditions and Appointed Date as

matters referred to in Clause 26 hereof mentioned in the

have been fulfilled;

Scheme is 1^stApril,

In this regard, it is submitted that Section 2022 and that the 232 (6) of the Companies Act, 2013 Scheme shall take states that the scheme under this section effect from the shall clearly indicate an appointed date Appointed Date, i.e. from which it shall be effective and the April 1, 2022. It is scheme shall be deemed to be effective further submitted from such date and not at a date that the Petitioner subsequent to the appointed date. Companies shall

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	However, this aspect may be decided by the Hon’ble Tribunal taking into account its inherent powers. The Petitioners may be asked to comply with the requirements as clarified vide circular no. F. No, 7/12/2019/CL-I dated 27.08.2019 issued by the Ministry of / Corporate Affairs.	comply with the requirements as to Appointed Date and clarified vide circular no. F. No.7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs.
2(c)	Petitioner Company have to undertake to comply with section 232(3)(i) of Companies Act, 2013, where the transferor company is dissolved, the fee and stamp duty paid by the transferor company on its authorised capital shall be set-off against fees and stamp duty payable by the transferee company on its authorised capital subsequent to the amalgamation and therefore, petitioners to undertake that the transferee company	So far as the observation in paragraph 2 (c) of the Report is concerned, it is submitted that the setting off of fees and stamp duty paid by the Transferor Company on its authorised share

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	shall pay the difference of fees and stamp duty.	capital against any fees and stamp duty payable by the Transferee Company on its authorised capital subsequent to the amalgamation shall be accordance with provisions of section 232(3)(i) of the Companies Act, 2013.
2(d)	The Hon’ble Tribunal may kindly seek the undertaking that this Scheme is approval by the requisite majority of members and creditors as per Section 230(6) of the Act in meetings duly held in terms of section 230(1) read with 7 subsection (3) to (5) of Section 230 of the Act and the Minutes thereof are duly placed before the Tribunal.	So far as the observation in paragraph 2 (d) of the Report is concerned, it is submitted that that as directed by this Hon’ble Tribunal by way of its order

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		dated September 9, 2022 passed in the captioned Company Scheme Application, notices were not required to be sent to the unsecured creditors of the Transferee Company under section 230(3) of the Companies Act, 2013, in view of the dispensation granted by the Hon’ble NCLT. As directed by Hon’ble NCLT, the Transferee Company has filed consent affidavits from unsecured creditors

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		constituting at least 90% in value, granting their consent to the Scheme. Further, there are no secured creditors in either of the Petitioner Companies and no unsecured creditors in the Transferor Company. The meetings of the shareholders of the Petitioner Companies were dispensed on account of consent affidavits from all their respective shareholders filed

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		with the Hon’ble NCLT.
2(e)	The Petitioner Company states that the Transferee Company shall be in compliance with provisions of Section 2(1B) of the Income Tax Act, 1961. In this regards, the petitioner company shall ensure compliance of all the provisions of Income Tax Act and Rules thereunder.	So far as the observation in paragraph 2 (e) of the Report is concerned, it is submitted that the Transferee Company shall ensure compliance with the provisions of section 2(1B) and all other provisions of the Income-tax Act, 1961 and the rules thereunder.
2(f)	It is observed from latest financial statements 31/03/2022 that the Transferor Company & Transferee Company following shareholder who have	So far as the observation in paragraph 2 (f) of the Report is

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	holding more than 10% and Ben-2 has not filed: - Sr Petitioner Name of Remar . Company Shareholde ks N r o Percentage of Holding 1. M/s. TNT FedEx Ben-2 India Private Express not Limited Internation Filed al B.V. 99.99% 2. M/s. FedEx FedEx Ben-2 Express Express not Transportati Internation Filed on & Supply al B.V. Chain 99.9998% Services (India)	concerned, it is submitted that in the present case, FedEx Express International B.V. ("FEIBV") which holds 99.99% of the share capital of each of the Transferor Company and the Transferee Company is a body corporate. As per paragraph (i) of explanation III to Rule 2(h) of the Companies (Significant Beneficial Owners) Rules, 2018, where a shareholder/memb

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	Therefore, petitioner company may be directed to clarify and comply with the same as required u/s. 90 of the Companies Act, 2013 r.w. companies (Significant Beneficial Owners) Rules, 2018.		Private Limited			er of a company is a body corporate (in the case of the Petitioner Companies, FEIBV being such member), an individual shall be considered to hold a right or entitlement indirectly in the company, if he satisfies any of the following criteria, in respect of a member of the company: (a) holds majority stake in that member (i.e. in FEIBV); or (b) holds majority stake in the

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		ultimate holding company of that member. For this purpose, ‘majority stake’ means (i) holding more than one-half of the equity share capital in the body corporate; or (ii) holding more than one-half of the voting rights in the body corporate; or (iii) having the right to receive or participate in more than one-half of the distributable dividend or any other distribution by the body corporate. In the

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		present case, (a) no individual holds majority stake in FEIBV and (b) the ultimate holding company of FEIBV is FedEx Corporation, a listed company having its headquarters in the United States of America, and no individual holds majority stake in FedEx Corporation. Therefore, it is submitted that the Transferor Company and the Transferee Company are not required to file

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
		Form BEN-2 under the Companies Act, 2013 with respect to the shareholding of FEIBV in the Transferor Company and the Transferee Company. The Registrar of Companies, Mumbai has a liberty to take appropriate action against the Petitioner Company if BEN-2 is applicable.
2(g)	It is observed that the Transferor Company is having foreign shareholder therefore, petitioner company may be	So far as the observation in paragraph 2 (g) of the Report is

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	directed to comply with the provisions of FEMA and RBI guidelines;	concerned, it is submitted that the Petitioner Companies will comply with the provisions of FEMA and RBI guidelines.
2(h)	That on examination of the report of the Registrar of Companies, Mumbai dated 02.12.2022 (Annexed as Annexure A-1)) that all the Petitioner Companies fall within the jurisdiction of ROC, Mumbai. It is submitted that no complaint and /or representation regarding the proposed scheme of Amalgamation has been received against the Petitioner Companies. Further, the petitioner companies have filed Financial Statements up to 31.03.2021 further observations in ROC report are as under:- i. That the ROC Mumbai in his report dated 08.09.2022 has stated that	So far as the observation in paragraph 2 (h)(i) of the Report is concerned, it is submitted that the contents of paragraph 2(h)(i) of the Report are matter of record and we do not offer any comments. So far as the observation in paragraph 2 (h)(ii)

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	no Inquiry, inspection, investigation & prosecution is pending against the subject applicant companies. ii. It is submitted that as per the provisions of Section 230(3)(i) of the Companies Act, 2013, where the transferor company is dissolved, the fee, if any, paid by the transferor company on its authorized capital shalt be set-off against any fees payable by the Transferee company on its authorized capital subsequent to the amalgamation. Therefore, remaining fee, it any after setting- off the fees already paid by the transferor company on its authorized capital, must be paid by the transferee company on the increased authorized capital subsequent to the amalgamation.	of the Report is concerned, it is submitted that the setting off of fees paid by the Transferor Company on its authorised share capital against any fees and stamp duty payable by the Transferee Company on its authorised capital subsequent to the amalgamation shall be accordance with provisions of section 232(3)(i) of the Companies Act, 2013. So far as the observation in paragraph 2 (h)(iii)

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Par a	Observation by the Regional Director	Undertaking of the Petitioner Company/Rejoin der
	iii. Interest of Creditors and other stakeholders should be protected. iv. May be decided on its merits.	of the Report is concerned, it is submitted that the interest of creditors will be protected.

9. The Petitioner Companies shall comply with the provisions of Section 90 of the Companies Act, 2013, read with the Companies (Significant Beneficial Owners) Rules, 2018, amended from time to time, and make necessary filing with the Registrar of Companies. In case of the Company, which has not complied with aforesaid provisions, liberty is given to Registrar of Companies, to take appropriate action in respect of the Petitioner Companies with respect to the issue of BEN form filing. Further, the Transferee Company shall undertake to comply with the show cause notice, if issued, with respect to Transferor Company. All issue arising thereunder shall be decided in accordance with law.

10. Ms. Rupa Sutar, Authorised representative of the Regional Director, MCA (WR), Mumbai who is present at the time of Final hearing has submitted that the clarifications, submissions and undertakings

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given by the Petitioner Companies are hereby accepted and that they have no objection for approving the scheme by the Tribunal.

11. The Official Liquidator has filed his report dated 8^thFebruary, 2023, in the Company Scheme Petition No. 229 of 2022, inter alia, stating therein that the affairs of the Transferor Company have been conducted in a proper manner not prejudicial to the interest of the shareholders of the Transferor Company or the public, and that the Transferor Company may be ordered to be dissolved by this Hon'ble Tribunal.

12. 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.

13. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 229 of 2022 is made absolute in terms of prayer clauses (a) to (c) of the said Company Scheme Petition.

14. The Petitioner Company 1 be dissolved without winding up.

15. Petitioners are 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 copy within 30 days from the date of receipt of the certified copy of the Order from the Registry.

16. The Petitioner Companies to lodge a copy of this Order and the Scheme duly authenticated by the Deputy Registrar or Assistant

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Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable, if any, within 60 days from the date of receipt of the certified copy of the Order from the Registry.

17. All authorities concerned to act on a copy of this Order along with Scheme duly authenticated by the Deputy Director or Assistant Registrar, National Company Law Tribunal, Mumbai.

18. The Appointed Date is 1^stApril, 2022.

19. Ordered accordingly. SD/- SD/-

ANURADHA SANJAY BHATIA KULDIP KUMAR KAREER

Member(Technical) Member(Judicial)

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TNT INDIA PRIVATE LIMITED VS

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner Companies' Arguments

Regional Director's Observations and Requirements

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

TNT INDIA PRIVATE LIMITED VS

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