Maharaja Buildcon Pvt Ltd Vs N.P.S. Constructions Pvt Ltd (NCLT Allahabad)
Summary: The National Company Law Tribunal (NCLT), Allahabad Bench, sanctioned a Scheme of Amalgamation involving three transferor companies—Maharaja Buildcon Pvt Ltd, N.P.S. Constructions Pvt Ltd and Penguin Infrabuild Pvt Ltd—with Strategic Developers Pvt Ltd as the transferee company. The joint petition was filed underSections 230 and 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The proposed amalgamation sought to consolidate closely held group companies under common management, pool their resources, reduce duplication and regulatory compliance, improve operational efficiency and enhance shareholders’ value.
The respective boards had approved the Scheme on 9 June 2021. A valuation report dated 31 May 2021 supported the proposed share exchange ratios: 233 shares of the transferee company for every 100 shares of Maharaja Buildcon, and 140 shares for every 100 shares of each of N.P.S. Constructions and Penguin Infrabuild. The Tribunal had earlier dispensed with specified shareholder and creditor meetings on 26 August 2021. The companies subsequently filed their second motion petition and complied with directions concerning notices to statutory authorities and newspaper publication.
The Regional Director raised an objection that the Memoranda of Association of the second and third transferor companies lacked express merger clauses. In response, the petitioners contended that amalgamation was a statutory power under company law and did not require a specific enabling provision in a company’s objects clause. The Official Liquidator reported no objection to dissolution without winding up, while the Income-Tax Department did not submit any representation within the prescribed period.
After examining the regulatory reports, the Tribunal found no reservation against sanctioning the Scheme and concluded that it was neither contrary to public policy nor prejudicial to the public interest. It approved the Scheme with effect from the appointed date of 1 April 2021 and declared it binding on the companies and their shareholders and creditors. The three transferor companies would stand dissolved without winding up. The Tribunal expressly clarified that the sanction did not confer exemptions from stamp duty, income tax, GST or other statutory obligations. It also directed filing of a certified copy with the Registrar of Companies within 30 days and permitted filing of the schedule of assets within 60 days.
FULL TEXT OF THE NCLT JUDGMENT/ORDER
1. The court convened through videoconferencing.
2. The present Joint Company Petition is filed by Petitioner Companies above named under Sections 230 and 232 and other applicable provisions of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 for sanction of Scheme of Amalgamation of Maharaja Buildcon Pvt Ltd (Petitioner Transferor Company No. 1), N.P.S. Constructions Pvt Ltd (Petitioner Transferor Company No. 2) and Penguin Infrabuild Pvt Ltd (Petitioner Transferor Company No. 3) with Strategic Developers Pvt Ltd (Petitioner Transferee Company) and their respective Shareholders and Creditors (hereinafter referred to as “Scheme” or “Scheme of Amalgamation”).
3. The Petition has now come up for final hearing. The Ld. Counsel for the Petitioner Companies submits as follows: –
(i) The proposed ‘Scheme of Amalgamation’ has previously been approved by the Board of Directors of the Petitioner Transferor Companies and the Petitioner Transferee Company in their respective Board Meetings held on 9th June, 2021.
(ii) The factual position of the Authorized, Issued, Subscribed and Paid up Share Capital of the Petitioner Companies as on 31st March, 2020 is described in the present Company Petition.
(iii) The rationale of the proposed Scheme of Amalgamation is elaborately described in the present Company Petition which may be summarized as under:
(a) All the Transferor Companies and the Transferee Company are closely held private limited Group Companies under common management and control. The proposed amalgamation of the Transferor Companies with the Transferee Company would result in consolidation of various Group Companies and pooling of their resources into a single entity.
(b) The proposed Amalgamation would result in optimizing and leveraging existing resources of these Companies for the most beneficial utilization of these factors in the combined entity. It would be advantageous to combine the activities and operations of all these Companies in a single entity and building strong capability to effectively meet future challenges in competitive business environment.
(c) The proposed Scheme of Amalgamation will result in usual economies of a centralized and a large company including elimination of duplicate work, reduction in overheads, better and more productive utilization of financial, human and other resource and enhancement of overall business efficiency. The proposed Scheme will enable these Companies to combine their managerial and operating strength, to build a wider capital and financial base and to promote and secure overall growth.
(d) The amalgamation will result in significant reduction in multiplicity of legal and regulatory compliances which at present is required to be made separately by the Transferor Companies and the Transferee Company.
(e) The proposed amalgamation will provide greater efficiency in fund management and unfettered access to fund flow generated by the combined business which can be deployed more efficiently to fund organic and inorganic growth opportunities. The proposed amalgamation would enhance the shareholders’ value of the Transferor and the Transferee Companies.
(f) The proposed Scheme of Amalgamation will have beneficial impact on the Transferor and the Transferee Companies, their shareholders, employees and other stakeholders and all concerned.
4. The Petitioners have stated that the accounting treatment proposed in the Scheme of Amalgamation is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013 as certified by the Auditors of the Petitioner Companies.
5. It has also been stated in the Petition that no proceedings under Sections 235 to 251 of the Companies Act, 1956 or under Sections 210 to 226 of the Companies Act, 2013 are pending against any of the Petitioner Companies.
6. It has also been stated in the Petition that the Scheme is not prejudicial to the interest of the Shareholders and Creditors of the Petitioner Companies and the Petition is made bona fide and is in the interest of all the Petitioner Companies and their respective Shareholders and Creditors as a whole and is just and equitable.
7. It has been stated that all the Petitioner Transferor Companies and the Petitioner Transferee Company are private limited closely held Group Companies under the common management and control, and as such, the Petitioner Transferee Company shall issue and allot without any further application, act or deed and without any further payment, the Equity Shares to the Equity Shareholders of the Petitioner Transferor Companies No. 1 to 3 in the manner provided under Para No. 9 of the Scheme.
8. It is also submitted that the Board of Directors of the Petitioner Transferor Companies and the Transferee Company have determined the share exchange ratio as under:
a. The Transferee Company will issue 233 (two hundred thirty three) Equity Shares of Rs. 10 each, credited as fully paid up, for every 100 (one hundred) Equity Shares of Rs. 10 each held in the Transferor Company No. 1- Maharaja Buildcon Pvt Ltd.
b. The Transferee Company will issue 140 (one hundred forty) Equity Shares of Rs. 10 each, credited as fully paid up, for every 100 (one hundred) Equity Shares of Rs. 10 each held in the Transferor Company No. 2-N.P.S. Constructions Pvt Ltd.
c. The Transferee Company will issue 140 (one hundred forty) Equity Shares of Rs. 10 each, credited as fully paid up, for every 100 (one hundred) Equity Shares of Rs. 10 each held in the Transferor Company No. 3-Penguin Infrabuild Pvt Ltd.
9. The Petitioner Companies have also annexed the valuation report dated 31st May, 2021 given by Mr Devinder Arora, a Company Secretary and the Registered Valuer in respect of Securities or Financial Assets, registered with the Insolvency and Bankruptcy Board of India (IBBI) in relation to the share exchange ratio.
10. This Tribunal vide its Order dated 26th August, 2021, dispensed with the requirement of convening meetings of Equity Shareholders of the Transferor Companies No. 1 to 3 and of the Transferee Company; and Unsecured Creditors of the Transferee Company considering the Scheme of Amalgamation.
11. The Petitioner Companies filed the Second Motion Petition being Company Petition No. CP (CAA) No.15 /ALD /2021 on 27th August, 2021. This Tribunal vide its Order dated 31st August, 2021 directed the Petitioner Companies to serve notices of the Petition upon the Regional Director (Northern Region), Registrar of Companies, Uttar Pradesh, Kanpur, Official Liquidator, Allahabad, Uttar Pradesh Real Estate Regulatory Authority (UP RERA), Income-Tax Authority and other Sectoral Regulatory Authorities for filing their representation and also directed to effect the paper publication in in “Business Standard” (English, Delhi NCR Edition) and “Business Standard” (English, Delhi NCR Edition) having circulation in Noida, Uttar Pradesh.
12. In compliance thereof, the Petitioner Companies on 12th October, 2021, filed Affidavits of service and publication, confirming that notices have been duly published in “Business Standard” (English, Delhi NCR Edition) and “Business Standard” (English, Delhi NCR Edition) having circulation in Noida, Uttar Pradesh. The Petitioner Companies have duly served notices to (a) the Central Government through the office of the Regional Director (Northern Region), Ministry of Corporate Affairs, New Delhi; (b) the Registrar of Companies, Uttar Pradesh, Kanpur; (c) the Official Liquidator, Allahabad; (d) Uttar Pradesh Real Estate Regulatory Authority (UP RERA) (e) the Income-Tax Departments having jurisdiction over the Petitioner Companies c/w CA (CAA) No.19/ALD/2021
13. In response to the above stated notice the Regional Director the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi has filed his reply affidavit dated 16th February, 2022 in which the observation has been made that in the Memorandum of Association(MOA) of the Transferor Companies No. 2 and 3 merger clause is not mentioned.
14. The Petitioner Companies in their Reply Affidavit filed on 18th February, 2022 stated that the Transferor Companies No. 2 & 3 do not have enabling clause for merger in their Memorandum of Association and further submitted that the aforesaid issue is irrelevant as to implement a scheme of amalgamation, no specific object to this effect is required in the Memorandum of Association of a company. The Objects Clause defines and regulates various business and other commercial activities which a company may legally carry on and further stated that in terms of the provisions of the Companies Act, 1956, or the Companies Act, 2013, power to amalgamate or de-merge is a statutory power and has nothing to do with the objects or activities of a company. TheCompanies Act, 2013, does not provides that a company can propose a scheme of arrangement or amalgamation only if it has an enabling clause in its Memorandum of Association It is pertinent to mention that apart from a company, even a member or other stakeholder of a company can also propose a scheme of arrangement or amalgamation.
15. In response to the above stated notice, the Official Liquidator, Ministry of Corporate Affairs, Allahabad, Uttar Pradesh has also submitted its report wherein it has stated that the Official Liquidator has no objection to the dissolution of the Petitioner Transferor Companies without winding uppursuant to provisions oSections 230 and 232 of the Companies Act, 2013 and other applicable sections and rules thereunder.
16. The Income-Tax Department has not filed any representation within 30 days of service of the notice of the Petition. Hence, pursuant to Section 230(5) of the Companies Act, 2013read with Rule 8(3) of the Companies it is presumed that c/w CA (CAA) No.19/ALD/2021 he Income-Tax Department has no objection on the Scheme of Amalgamation filed by the Petitioner Companies.
17. We have gone through the reports of the Ld. Regional Director (Northern Region), Ministry of Corporate Affairs, New Delhi, Ld. Registrar of Companies, Uttar Pradesh, Kanpur and Ld. Official Liquidator, Ministry of Corporate Affairs, Allahabad and the Reply Affidavit filed by the Petitioner Companies and after perusing the same, we find that there appears to be no reservation to grant sanction to the Scheme and we are of the view that the sanction of the present Scheme is not against public policy, nor it would be prejudicial to the public interest at large.
18. In addition to above, all the statutory compliance seems to have been complied with by the Petitioner Companies, therefore, the present Company Petition deserves to be allowed in terms of its Prayer clause.
19. In the result, the proposed Scheme of Amalgamation, which is annexed to the Company Petition stands approved and sanctioned. The Petitioner Companies are required to act upon as per terms and conditions of the sanctioned Scheme and the same shall be binding on all the Shareholders, Secured Creditors and Unsecured Creditors of the above named Petitioner Companies and also on the Petitioner Companies with effect from the Appointed Date i.e. 1st day of April, 2021.
20. While approving the Scheme as above, it is clarified that this order should not be construed as, in any way, granting exemption from payment of stamp duty (if any, is applicable), taxes (including Income Tax, GST or any other charges, if any, are applicable) and payment in accordance with law or in respect to any permission / compliance with any other requirement which may be specifically required under any law. Also, the Petitioner Transferor Companies No. 1 to 3 shall stand dissolved without undergoing the process of winding up.
21. The Petitioner Companies shall within thirty days of the date of the receipt of this order cause a certified copy of this order to be delivered to the Registrar of Companies Kanpur for registration.
22. All the concerned Regulatory Authorities to act on a copy of this order annexed with the Scheme duly authenticated by the Registrar of this Bench.
23. Leave is granted to the Petitioners to file the Schedule of Assets within a period of sixty days.
24. Any person interested shall be at liberty to apply before this Tribunal in the above matter for such directions as may be necessary.
25. Accordingly, the present Company Petition bearing CP (CAA) No. 15/ALD/2021 is allowed and stands disposed of.
26. Urgent certified copies of this order, if applied for, be supplied subject to usual formalities.
