SPAN INDIA PVT LTD VS

address of all the Applicant Companies is situated in New Delhi and therefore the subject matter of the said application falls within the jurisdiction of this Tribunal. The brief description of the Applicant Companies, as per the Master data is are as follows:

a) Applicant Company No. 1 namely M/s. ADVANTAGE FASHIONS PRIVATE LIMITED bearing CIN: U51311DL2004PTC128998 was incorporated on 13/09/2004 under the provisions of the Companies Act, 1956 as a Company limited by Shares (Non-govt. company) with the Registrar of Companies, NCT of Delhi & Haryana. The registered office of Applicant Company No. 1 is situated at 220 Okhla Industrial Estate, Phase III, New Delhi- 110020. The Authorized Share Capital of the Company is Rs.5,00,000/- divided into 50,000 equity shares of Rs. 10/- each and the issued, subscribed and paid-up share capital of the Company is Rs.1,00,000/- divided into 10,000 equity shares of Rs. 10/- each.

b) Applicant Company No. 2 namely M/s. SPAN INDIA PRIVATE LIMITED bearing CIN: U74899DL1977PTC008672 was incorporated on 14/07/1997 under the provisions of the Companies Act, 1956 as a Company limited by Shares (Non-govt. company) with the Registrar of Companies, NCT of Delhi & Haryana. The registered office of Applicant Company No. 2 is situated at 220 Okhla Industrial Estate, Phase III, New Delhi- 110020. The Authorized Share Capital of the Company is Rs.30,00,000/- divided into 3,000 equity shares of Rs. 1000/- each and issued, subscribed and paid- up share capital of the Company is Rs. 10,20,000 /- divided into 1,000 equity shares of Rupees 1000/- each and 2,000 equity shares of Rupees 1000/- each.

2. The Affidavits in support of the present application have been sworn by Mr. Naresh Gujral, who is Director of both the Companies i.e. Applicant Company No. 1, and Applicant Company No. 2. The said Affidavit is filed along with the Application.

3. The Board of Directors of the Applicant No. 1/Transferor Company as well as

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the Board of Directors of the Applicant No.2/ Transferee Company in their separate meetings held on 03.03.2025 respectively have approved and adopted the Resolution to transfer and vest the Amalgamated Undertaking of the Applicant No. 1 Company/ Transferor Company into the Applicant No. 2/Transferee Company in accordance with the terms of the Scheme of Amalgamation.

4. The Applicant Companies have filed its Memorandum and Articles of Association inter alia delineating their object clauses as well as the latest audited annual financial report for the financial year 2023-2024 and the copy of the unaudited/provisional financial statements of the Applicant companies as on 31.12.2024 as required under section 232(2)(e) of the Companies Act,

2013.

5. The Applicant Companies have filed the true copy of the proposed Scheme of Amalgamation and have outlined the rationale and purpose of the scheme, which are as follows:

"Both the transferor company and. the transferee company are managed and operated by the same management personnel. The Transferor Company does not have any significant assets. The Transferee Company has an agricultural as well as industrial lands as briefly mentioned in the financial statements of the Company. The Transferee Company continues to utilize these property in future for business purpose. The Management of the transferee company is of the view that the proposed amalgamation by absorption will enhance work efficiency of directors, stakeholder's wealth and streamline the group structure, leading to improved administrative and operational efficiency. The amalgamation of Transferor Company with Transferee Company would provide the following set of benefits:

(i) Economies of Scale:

 Cost savings are expected to flow from more focused operational efforts, rationalization, standardization and simplification of business processes, productivity improvements, improved procurement and the elimination of duplication and rationalization of administrative expenses by climinating multiple record keeping

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and other administrative functions.

(ii) Synergies The transferor and transferee company are engaged in similar business activities, and the proposed amalgamation would lead to integration of business functions and manpower, which will generate synergies amongst the business that would significantly enhance overall value. These synergies can be in the following form thereby creating a more robust and sustainable business platform:

 Operational Synergies: The combination allows for sharing expertise, technology, and talent, leading to better operational efficiency and productivity.

 Financial Synergies: The Transferor Company may have access to better financing options, lower capital costs, and increased borrowing power.

 Revenue Synergies: By combining marketing efforts, sales channels, and customer relationships, the new entity can boost its revenue generation capabilities.

(iii) Cost Reduction  The amalgamation allows for the consolidation of functions such as marketing, administration, research and development, and customer support, leading to a reduction in redundant costs and improved: cost efficiency.

 Duplicative roles or departments will be eliminated, leading to further cost savings.

 Greater efficiency in cash management of the transferee entity and unfettered access to cash flow generated by the combined business which can be deployed more efficiently to fund other growth opportunities.

(iv) Integration of share capital and financial strength  The acquisition of businesses of the Transferor Company will further lead to the integration of share capital of the Transferor Company and the Transferee Company which provides wide

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opportunity for shareholders' participation and compliance with the applicable law.

 Greater integration and greater financial strength and flexibility for the transferee entity, which would result in maximising overall shareholder value, improving profitability or accessing new funding sources and will improve the competitive position of the combined entity.

(v) Enhanced management focus  With a simplified group structure, the management of the transferee company can focus more effectively on core business activities, further the absorption through amalgamation shall also reduce the group's overall exposure to operational risks and regulatory complexities, ensuring better risk management, transparency and compliance.

 Streamlining of legal, compliance and statutory functions to allow a more coordinated approach towards governance for the businesses."

6. The Shares of the Transferor Companies and the Transferee Company have been evaluated for the purpose of determining the exchange ratio as per which The fair share exchange ratio for the proposed amalgamation should be for every 1000 equity shares of Rs. 10 each of M/s ADVANTAGE FASHIONS PRIVATE LIMITED, 3 equity shares of Rs. 1000 each of M/s SPAN INDIA PRIVATE LIMITED should be issued. The relevant portion of valuation report is reproduced below:

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7. ANALYSIS

i. As far as the present application is concerned, it is apparent from the record that the Board of Directors of all the Applicant Companies vide their meetings held on 03.03.2025, have approved the proposed amalgamation scheme. Copies of Resolution of the Board of Directors of Applicant Companies are found on record at Annexure 4 and Annexure 14 to the application.

ii. The Appointed Date of the Scheme is 31.12.2024, as mentioned in the scheme.

iii. The Applicant Companies have filed their Memorandum and Articles of Association inter alia delineating their object clauses as well as the latest audited annual financial report for the financial year 2023-2024 and the copy of the unaudited/provisional financial statements of the Applicant companies as on 31.12.2024, so the requirement under section 232(2)(e)

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of the Companies Act, 2013 is complied with.

iv. In the present application separate disclosure affidavits as are also filed deposing that no investigation or proceeding under the Companies Act, 2013 or under the erstwhile Companies Act, 1956 is pending neither against the Transferor Companies nor Transferee Company involved in the present Scheme of Amalgamation, so required under section 230(2)(a) of the Companies Act 2013 has also been satisfied.

v. On perusal of the prayers to the present application it is clear that, primarily the Applicant Companies have sought the relief of dispensing with the meetings of various stakeholders of the Applicant Companies.

vi. Sub-section (9) of Section 230 of the Companies Act 2013 provides that this Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety percent value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement. Sub-section (9) of Section 230 of the Companies Act 2013 is reproduced below:

"(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety percent value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement."

vii. An examination of the Companies Act, 2013 reveals that, unlike Section 230(9), which allows this Tribunal to dispense with the meeting of creditors if more than 90% of the creditors or class of creditors in value have consented to the proposed scheme. However there is no analogous provision for dispensing with the meeting of shareholders. In this context it will be pertinent to refer to sub-section (6) to Section 230 of the Companies Act 2013 which reads as :

"(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing three-fourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the

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Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator appointed under this act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be, and the contributories of the company."

At this juncture it would also be apt to reproduce sub-sections (1) and

(2) of Section 391 of the Companies Act 1956, which read as hereunder:

"Section 391. Power to compromise or make arrangements with creditors and members.

(1) Where a compromise or arrangement is proposed-

(a) between a company and its creditors or any class of them; or

(b) between a company and its members or any class of them; the Court may, on the application of the company or of any creditor or member of the company, or, in the case of a company, which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs.

(2) If a majority in number representing three- fourths in value of the creditors, or class of creditors, or members, or class of members as the case may be, present and voting either in person or, where proxies are allowed under the rules made under section 643, by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company, or, in the case of a company which is being wound up, on the liquidator and contributories of the company: Provided that no order sanctioning any compromise or arrangement shall be made by the Court unless the Court is satisfied that the company or any other person by whom an application has been made under sub-section (1) has disclosed to the Court, by affidavit or otherwise, all material facts relating to the company, such as the latest financial

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position of the company, the latest auditor's report on the accounts of the company, the pendency of any investigation proceedings in relation to the company under sections 235 to 251, and the like……"

In the case of Adobe Properties Private Limited with AMP Motors Private Limited [CO. APPL.(M) No. 150/2016] Hon'ble Delhi High Court dealt with the issue of power to dispense with the requirement of convening meetings, under section 391 of the Companies Act 1956. In the above mentioned judgement Hon'ble Delhi High at para 32 observed that:

"Thus, the discretion so conferred upon the Court under the provision of section 391(1) can be summarized as follows:

i. Upon taking a prima facie view, the Court may dismiss the application, proposing a scheme of compromise or arrangement between a company and its creditors or any class thereof; or between a company and its members or any class thereof, on various grounds; OR

ii. Direct convening of meetings of the members and/or creditors or any class thereof, of the company, to whom a scheme of compromise or arrangement is proposed, in order to enable such members and creditors to consider and if thought fit, approve, with or without modification, such scheme; OR

iii. Dispense with the requirement of convening meetings of members and creditors or any class thereof, of the company proposing a scheme of compromise or arrangement."

viii. In the present application the Applicant companies have given the following details regarding the consent given by their respective stakeholders, the same is extracted hereunder : -

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ix. The Applicant Company No. 1 has nil unsecured creditors as on the date of closure of the preceding financial year, ie., 31.03.2024 and even as on 31.12.2024. From perusal of the material on record it is noticeable that there are no unsecured creditor in the Applicant Company No.1, therefore, the need to convene their meeting does not arise in the present application.

x. The Applicant Company No. 1 has nil secured creditors as on the date of closure of the preceding financial year, ie., 31.03.2024 and even as on 31.12.2024. From perusal of the material on record it is noticeable that there are no secured creditor in any of the Applicant Company No.1, therefore, the need to convene their meeting does not arise in the present application.

xi. The Applicant Company No. 1 has three (3) equity shareholders as 31.03.2024. The consent letters of all the Equity Shareholders of Applicant Company No. 1 along with affidavit(s) are filed along with the application.

On perusal of the records it is clear that all the Equity shareholders of the Applicant Company No.1 have given the consent/ NOC to the Scheme on their respective affidavit. Therefore, the requirement of

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convening the Meetings of Equity Shareholders in respect of the Applicant Company No.1 is dispensed with.

xii. The Applicant Company No. 2 on 31.12.2024 has unsecured creditors amounting to Rs. 58,63,362.13/- 92.79 % of Unsecured Creditors (in value) have given consent to the scheme of amalgamation which are filed along with the Application. Since more than 90% in value of the Unsecured Creditors of the Applicant Company No. 2 have given their consent to the scheme therefore, the requirement of convening the meeting of unsecured creditors of Applicant Company No. 2 is dispensed with.

xiii. The Applicant Company No. 2 has nil secured creditors. From perusal of the material on record it is noticeable that there are no secured creditor in any of the Applicant Company No.2, therefore, the need to convene their meeting does not arise in the present application.

xiv. The Applicant Company No. 2 has Two (2) equity shareholders as on 31.03.2024. The consent letters of all the Equity Shareholders of Applicant Company No. 2 along with affidavit(s) are filed along with the application. On perusal of the records it is clear that all the Equity shareholders of the Applicant Company No.2 have given the consent/ NOC to the Scheme on their respective affidavit. Therefore, the requirement of convening the Meetings of Equity Shareholders in respect of the Applicant Company No.2 is dispensed with.

8. In the light of above analysis, submissions made by Ld. Counsel and perusal of the material on record, we allow the following prayers:

a) "To allow this Application;

b) To pass directions for the dispensation of the meeting of the Equity Shareholders of the Applicant Company No.1 in view of consent vide affidavit received;

c) To pass directions for the dispensation of the meeting of the Shareholders and creditors of the Applicant Company No. 2

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in view of consent vide affidavit received;

d) To dispense with the publication of notices in the newspapers for convening the said meetings, in view of the dispensation of meetings of shareholders of both the Applicant Companies;"

9. The prayer sought in the present application bearing CA.CAA-45(ND)/2025 stands allowed on the aforesaid term and is accordingly disposed of.

10. All the aforesaid directions are to be complied with strictly in accordance with the applicable law including forms and formats contained in the Companies (Compromises, Arrangements, Amalgamations) Rules, 2016 as well as the provisions of the Companies Act, 2013 by the Applicant Companies.

11. Let copy of the order be served to all the parties. Sd/- Sd/-

(SANJEEV RANJAN) (BACHU VENKAT BALARAM DAS)

MEMBER (TECHNICAL) MEMBER (JUDICIAL)

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