Talace Private Limited Vs

Subrata Kumar Dash, Member (Technical)

1. This is a joint First Motion Application filed by the Applicant Companies namely; Talace Private Limited (Transferor Company No. 1), Tata SIA Airlines Limited (Transferor Company No. 2) and Air India Limited (Transferee Company) under Sections 230 to 232 of the Companies Act, 2013, read with Rules 3 and 5 of the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 (the Rules) in relation to the Composite Scheme of Arrangement between Talace Private Limited (Transferor Company No. 1), Tata SIA Airlines Limited (Transferor Company No. 2) and Air India Limited (Transferee Company) and their respective shareholders. The said Scheme is attached as Annexure-A1 of the Application.

2. The Applicant Companies have prayed for dispensing with the requirement of convening the meetings of the Equity Shareholders of each of the Applicant Companies; and Preference Shareholders of the Transferor Company No. 1 and the Transferee Company. It is further prayed to convene the separate meetings of Secured Creditors of the Transferor Company No. 2; and Unsecured Creditors of the Transferor Company No. 2 and the Transferee Company.

3. The Applicant Company No. 1/Transferor Company No. 1 is the holding company of the Transferee Company which holds, shareholding of: (i) 100% (one hundred percent) in Air India Express Limited; (ii) 100% (one hundred percent) in AIX Connect Limited (previously, AirAsia (India) Private Limited) and (iii) 50% (fifty percent) in Air India SATS Airport Services Private Limited.

4. The Applicant Company No. 2/Transferor Company No. 2 is a full-service airline and a joint venture between Tata Sons Private Limited and Singapore Airlines Limited, which operates under the brand of Vistara. The Transferor Company No. 2 is engaged in the business of providing full-service scheduled passenger airline services, cargo belly-hold services and certain other allied businesses.

5. The Applicant Company No. 3/Transferee Company is a subsidiary of the Transferor Company No. 1. The Transferee Company and its subsidiaries are engaged in the business of providing full-service and low-cost scheduled passenger airline services, cargo belly-hold services and certain other allied businesses.

6. It is submitted that the respective registered offices of each of the Applicant Companies are situated in the State of Haryana, and hence, the jurisdiction of each of the Applicant Companies falls within this Bench.

7. The rationale of the Scheme is given below:

i. All the above Applicant Companies are part of the Tata Group (Tata Sons Private Limited being the ultimate holding company for the Transferee Company, Transferor Company No. 1 and the Transferor Company No. 2) and, other than Transferor Company No. 1, all companies are engaged in the similar line of business, i.e., aviation.

ii. The Tata Group is now desirous of consolidating the operations of these companies as they are engaged in similar line of business to realise benefits of larger scale of operations, operational synergies and efficiencies. This would enhance the returns and benefits for all stakeholders of the Parties and their consumers. The benefits of the proposed consolidation include:

a. Streamlining of the corporate structure and consolidation of assets and liabilities of the group;

b. Strengthening of the combined entity in the industry in terms of network fleet and footprint, revenue, and business volume share for improved efficiencies;

c. Providing superior service and experience to customers both in domestic and international markets;

d. Enhanced organizational leadership, arising from the combination of people with diverse skills, talent and industry experience;

e. Cost saving through legal entity rationalisation and consolidation of support functions, and business processes; and

f. Efficient leverage of combined asset and capital base. The combined company shall have better borrowing capacity, to expand its business at a faster rate.

8. It is stated that the Board of Directors of each of the Applicant Companies in their meetings, all held on 07.02.2023, have considered and unanimously approved the proposed Composite Scheme of Arrangement subject to sanctioning of the same by this Tribunal. The copies of the respective Board Resolutions of Transferor Company No. 1, Transferor Company No. 2 and Transferee Company are attached with the application as Annexures A5, A16, and A29, respectively.

9. The appointed date of the Scheme shall be 29.11.2022 and the Effective Date has been defined in Clause 1.1.11 of Part-I of the Scheme to mean the 10th (tenth) business day from the completion of the last of the conditions set out in Clause 28 of the Scheme.

10. Each of the Applicant Companies have filed their respective standalone, Audited Financial Statements for the year ended 31.03.2023 which are attached as Annexures A43, A44 and A45, respectively of the CA No. 119 of 2023.

11. It is submitted that no corporate debt restructuring is envisaged in the proposed Scheme of Arrangement.

12. It is further submitted that in pursuance of the proviso to Section 230(7) and Section 232(3) of the Act, the Transferee Company has filed a certificate dated 13.05.2023 issued by its Statutory Auditor certifying that the Scheme is in compliance with the Accounting Standards under Section 133 of the Act and the same is attached with the application as Annexure A36.

13. It is further submitted that as per the Valuation Report/Share Entitlement Ratio Report dated 07.02.2023 submitted by PwC Business Consulting Services LLP, Registered Valuer, registered with the Insolvency and Bankruptcy Board of India (IBBI) vide Registration No. IBBI/RV-E/02/2022/158 is attached as Annexure A40 of the application. The Share Entitlement Ratio for the mergers as mentioned in the Scheme is given below:

“a. The Transferee Company will issue 6.2709 (six point two seven zero nine) fully paid-up equity shares of Transferee Company of INR 4 (Indian Rupees Four) each for every 1 (one) equity share of Transferor Company No. 1 of INR 10 (Indian Rupees Ten) each and for every 1 (one) preference share of Transferor Company No. 1 of INR 10 (Indian Rupees Ten) each.

b. The Transferee Company will issue 2.5487 (two point five four eight seven) fully paid-up equity shares of Transferee Company of INR 4 (Indian Rupees Four) each for every 1 (one) share of Transferor Company No. 2 of INR 10 (Indian Rupees Ten) each.”

14. It is submitted that the Scheme (Annexure-A1) also takes care of the interest of the staff/workers and employees of Transferor Company No. 1 and Transferor Company No. 2, by virtue of Clauses 6 and 16 of the Scheme.

15. It is submitted that all the Applicant Companies are closely held un-listed Group Companies.

16. It is deposed by the respective authorised representatives of the Applicant Companies that each of the Applicant Companies are regulated by the sectoral regulators and statutory authorities as mentioned in the Affidavits submitted by the authorised representatives as Annexures A10, A23, and A37 with the application.

17. It is deposed by the authorised representative of the Transferor Company No. 1 that there are no material investigations, legal proceedings/litigations pending against Transferor Company No. 1 under the Companies Act, 2013, or any other applicable law. Moreover, there are no proceedings or investigations pending against the Transferor Company No. 1 under Sections 206 to 227 of the Companies Act, 2013. The Affidavit executed by the authorised representative of Transferor Company No. 1 is submitted as Annexure-A11 with the application.

18. It is also deposed by the authorised representative of the Transferor Company No. 2 that there are certain material investigations and legal proceedings/litigations pending against the Transferor Company No. 2 which are limited to those mentioned in the Affidavit submitted by the authorised representative of Transferor Company No. 2 as Annexure-A24 with the application, and besides those mentioned therein, there are no material investigations or proceedings/litigations pending against the Transferor Company No. 2. Moreover, there are no proceedings or investigations pending against Transferor Company No. 2 under Sections 206 to 227 of the Companies Act, 2013.

19. It is deposed by the authorised representative of the Transferee Company that there are certain material investigations and legal proceedings/litigations pending against the Transferee Company which are limited to those mentioned in the Affidavit submitted by the authorised representative of the Transferee Company as Annexure-A38 with the application, and besides those mentioned therein, there are no material investigations or proceedings/litigations pending against the Transferee Company. Moreover, there are no proceedings or investigations pending against the Transferee Company under Sections 206 to 227 of the Companies Act, 2013.

20. The Applicant Companies have furnished the following documents:

i. Composite Scheme of Arrangement (Annexure-A1 of the application).

ii. Copies of Master Data, Certificate of Incorporation along with Memorandum and Articles of Association of the Applicant Companies (Annexures A2, A13, A26 respectively of the application).

iii. List of Equity and Preference Shareholders of the Transferor Company No. 1 as on 01.03.2023 along with consent affidavits (Annexures A7 of the application).

iv. List of Equity Shareholders of the Transferor Company No. 2 as on 01.03.2023 along with consent affidavits (Annexures A19 of the application).

v. List of Equity and Preference Shareholders of the Transferee Company as on 30.03.2023 along with consent affidavits (Annexures A32 of the application).

vi. Certificates issued by Dhanbhoora & Company, Chartered Accountants certifying that the Transferor Company No. 1 has no Secured Creditors and Unsecured Creditors as on 31.01.2023 (Annexures A8 and A9 respectively of the application).

vii. List of Secured Creditors, Unsecured Creditors and Unsecured Creditors (having outstanding balances of over Rs. 10 Lakh) of the Transferor Company No. 2 as on 31.01.2023 duly certified by AKN & Co., Chartered Accountants (Annexures A20, A21 and A22 respectively of the application).

viii. Certificate issued by Thakur, Vaidyanath Aiyar & Co., Chartered Accountants certifying that the Transferee Company has no Secured Creditors as on 31.01.2023 (Annexure-A33 of the application).

ix. List of Unsecured Creditors and Unsecured Creditors (having outstanding balances of over Rs. 10 Lakh) of the Transferee Company as on 31.01.2023 duly certified by Thakur, Vaidyanath Aiyar & Co., Chartered Accountants (Annexures A34 and A35 respectively of the application).

x. Certificate of the Statutory Auditor of the Transferee Company to the effect that the Accounting treatment proposed in the Scheme is in conformity with Section 133 of the Companies Act, 2013 (Annexure-A36 of the application).

xi. Audited Financial Statements as on 31.03.2023 of each of the Applicant Companies (Annexures A43, A44 and A45 respectively of the application).

xii. Report on Valuation of Shares & Share Entitlement Ratio (Annexure A40 of the application).

xiii. Corrigendum dated 02.06.2023 to the Report on Valuation of Shares & Share Entitlement Ratio which is attached as Annexure A46 of the CA No. 119 of 2023,

xiv. Copy of the acknowledgement of the e-filing made with the Competition Commission of India (Annexure-A42 of the application).

21. The Applicant Companies have furnished the details of the Shareholders, Secured Creditors and Unsecured Creditors which are as follows:

22. Accordingly, the directions of this Bench in the present case are as under:

I.   In relation to Applicant Company No. 1/Transferor Company No. 1:

a. The meeting of the Equity Shareholders of Applicant Company No. 1 /Transferor Company No. 1 is dispensed herewith, keeping in view that all the Equity Shareholders have given their consents by way of affidavits;

b. The meeting of the Preference Shareholders of Applicant Company No. 1 /Transferor Company No. 1 is dispensed herewith, keeping in view that all the Preference Shareholders have given their consents by way of affidavits;

c. Since there are no Secured and Unsecured Creditors in Applicant Company No. 1/Transferor Company No. 1. Therefore, the requirement of convening the meeting of Secured Creditors does not arise; and

II. In relation to Applicant Company No. 2/Transferor Company No. 2:

a. The meeting of the Equity Shareholders of Applicant Company No. 2/Transferor Company No. 2 is dispensed herewith, keeping in view that all the Equity Shareholders have given their consents by way of affidavits;

b. Since there are no Preference Shareholders of Applicant Company No. 2/Transferor Company No. 2, the requirement of convening the meeting of Preference Shareholders does not arise;

c. The meeting of the Secured Creditors of the Applicant Company No. 2/Transferor Company No. 2 be convened as prayed for on 23.09.2023 at 10:30 AM through video conferencing with the facility of remote e-voting, subject to notice of the meeting being issued. The quorum of the meeting of the Secured Creditors shall be 3 in number or 40% in value; and

d. The meeting of the Unsecured Creditors of the Applicant Company No. 2/Transferor Company No. 2 be convened as prayed for on 23.09.2023 at 12:30 PM through video conferencing with the facility of remote e-voting, subject to notice of the meeting being issued. The quorum of the meeting of the Unsecured Creditors shall be 132 in number or 40% in value.

III. In relation to Applicant Company No. 3/Transferee Company:

a. The meeting of the Equity Shareholders of Applicant Company No. 3/Transferee Company is dispensed herewith, keeping in view that all the Equity Shareholders have given their consents by way of affidavits;

b. The meeting of the Preference Shareholders of Applicant Company No. 3/Transferee Company is dispensed herewith, keeping in view that all the Preference Shareholders have given their consents by way of affidavits;

c. Since there are no Secured Creditors in Applicant Company No. 3/Transferee Company, the requirement of convening the meeting of Secured Creditors does not arise; and

d. The meeting of the Unsecured Creditors of the Applicant Company No. 3/Transferee Company be convened as prayed for on 23.09.2023 at 02:30 PM through video conferencing with the facility of remote e-voting, subject to notice of the meeting being issued. The quorum of the meeting of the Unsecured Creditors shall be 650 in number or 40% in value;

IV. In case the required quorum as noted above for the meetings is not present at the commencement of the meeting, the meeting shall be adjourned by 30 minutes and thereafter the persons shall be deemed to constitute the quorum.

V. Justice Mr. M.M. Singh Bedi (Rtd), Advocate, address: #164, Sector 11, Chandigarh, Mobile No. 9780008126, Email id: bedimms@gmail.com, is appointed as the common Chairperson for the meeting to be called under this order. An amount of ₹ 2,00,000/- (Two Lakh Rupees only) be paid for his services as the Chairperson.

VI. Mr. Dhananjay Singh, Advocate, Address: Chamber No. 36, Punjab and Haryana High Court, Chandigarh, Mobile No. 8901523999, Email id: advdhananjays@gmail.com, is appointed as the common Alternate Chairperson for the meeting to be called under this order. An amount of ₹1,25,000/- (One Lakh Twenty Five Thousand Rupees only) be paid for his services as the Alternate Chairperson.

VII. Mr Ajay K Arora, Practicing Company Secretary, address: SCO 64-65, 1st Floor, Sector 17-A, Chandigarh, Mobile No. +91 9814006492, e-mail id: ajaykcs@gmail.com, is appointed as the Scrutinizer for the above meeting to be called under this order. An amount of ₹1,00,000/-(One Lakh Rupees only) be paid for his services as the Scrutinizer.

VIII. It is further directed that individual notices of the said meetings shall be sent by the Transferor Company No. 2 to its respective Secured Creditors and Unsecured Creditors and by Transferee Company to its Unsecured Creditor through registered post or speed post or through courier or e-mail, 30 days in advance before the scheduled date of the meetings, indicating the day, date, the place and time as aforesaid, together with a copy of the Scheme, copy of the explanatory statement with Share Entitlement Ratio as discussed in para 13 of this order required to be sent under the Companies Act, 2013 and the applicable Rules and any other documents as may be prescribed under the Act shall also be duly sent with the notice.

IX. It is further directed that along with the notices, the Applicant Companies shall also send, statements explaining the effect of the scheme on the creditors, key managerial personnel, promoters and non-promoter members, etc. along with the effect of the Scheme of Arrangement on any material interests of the Directors of the Company, if any, as provided under sub-section (3) of Section 230 of the Act.

X. It is also directed that the Financial Statements of the Applicant Companies not older than 6 months from the date of the meetings be also circulated for the aforesaid meetings in terms of Section 232 (2) (e) of the Act.

XI. The Transferor Company No. 2 and the Transferee Company shall publish an advertisement with a gap of at least 30 clear days before the aforesaid meetings, indicating the day, date and place and time of the meetings as aforesaid, to be published in “Business Standard” (English, All India Edition) and “Business Standard” (Hindi, All India Edition); The publication shall indicate the time within which copies of the Scheme of Arrangement shall be made available to the concerned persons, free of charge from the registered offices of the Transferor Company No. 2 and the Transferee Company. The publication shall also indicate that the explanatory statement required to be furnished pursuant to Sections 230 & 232 read with Section 102 of the Companies Act, 2013 can be obtained free of charge at the registered office of the Transferee Company in accordance with the second proviso to sub-section (3) of Section 230 and Rule 7 of the Companies (CAA) Rules, 2016. The Transferor Company No. 2 and the Transferee Company shall also publish the notice of the meeting on their websites, if any.

XII. It shall be the responsibility of the Transferor Company No. 2 and the Transferee Company to ensure that the notices are sent under the signature and supervision of the Director/Authorized Representative of the company on the basis of Board resolutions and that they shall file their affidavits in the Tribunal at 7 days before the date fixed for the meetings.

XIII. Voting is allowed on the proposed Scheme through a remote e-voting process in compliance with the guidelines issued by the Ministry of Corporate Affairs in this regard.

XIV. The Scrutinizer’s report will contain his/her findings on compliance to the directions given in Para VIII to XIII above.

XV. The Chairperson shall be responsible to report the result of the meetings to the Tribunal in Form No. CAA-4, as per Rule 14 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within 7 (seven) working days of the conclusion of the meetings. The Chairperson would be fully assisted by the authorized representative/Company Secretary of the respective Applicant Companies and the Scrutinizer, who will assist the Chairperson and Alternate Chairperson in preparing and finalizing the report.

XVI. The Applicant Companies shall individually and in compliance of sub-section (5) of Section 230 of the Act and Rule 8 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 send notices in Form No. CAA-3 along with copy of the Scheme, Explanatory Statement and the disclosures mentioned in Rule 6 of the “Rules” 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, N.C.T. of Delhi and Haryana; (c) the Official Liquidator, attached to the High Court of Punjab & Haryana; (d) the Income Tax Department through its nodal office and the jurisdictional assessment office of each of the Applicant Companies by mentioning the PAN number of the Applicant Companies; (e) Competition Commission of India; (f) the Reserve Bank of India; (g) Ministry of Civil Aviation; and (h) the Directorate General of Civil Aviation, stating that report on the same, if any, shall be sent to this Tribunal within a period of 30 days from the date of receipt of such notice and copy of such report shall be simultaneously sent to the Applicant Companies, failing which it shall be presumed that they have no objection to the proposed Scheme.

XVII. The Applicant Companies shall furnish a copy of the Scheme free of charge within one day of any requisition for the Scheme made by any Creditor entitled to attend the meeting as aforesaid.

XVIII. The authorized representatives of the Applicant Companies shall each furnish an affidavit of service of notice of meetings and publication of advertisement and compliance of all directions contained herein at least a week before the proposed meeting.

XIX. All the aforesaid directions are to be complied with strictly in accordance with the applicable laws including forms and formats contained in the Rules as well as the provisions of the Companies Act, 2013 by the Applicant Companies.

23. With the aforesaid directions, this First Motion Application stands disposed of. A copy of this order be supplied to the learned counsel for the Applicant Companies who in turn shall supply a copy of the same to the Chairperson, Alternate Chairperson and the Scrutinizer immediately.