T N S Hotels and Resorts Pvt Ltd Vs

1. This is a first motion joint Application filed by the Applicant Companies namely-T N S Hotels and Resorts Pvt Ltd (Transferor Company/Applicant Company No. 1) and Mirza International Ltd (Transferee Company/Applicant Company No. 2) under Sections 230 & 232 of the Companies Act, 2013 (the Act), the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, the National Company Law Tribunal Rules, 2016, and other applicable provisions, if any, in relation to the Scheme of Amalgamation of T N S Hotels and Resorts Pvt Ltd with Mirza International Ltd. The said Scheme is attached as Annexure-A-3 of the Application.

2. The Applicant Companies have prayed for dispensation of the requirement of the convening meetings of the Equity Shareholders, Secured Creditors and Un-secured Creditors of both the Applicant Companies. The Applicant Companies have made an alternative prayer for convening of separate meetings of the Equity Shareholders, Secured Creditors and Un-secured Creditors of the Applicant Transferee Company through Video Conferencing with facility of remote e-voting under the supervision of this Tribunal; and to pass necessary directions for convening, holding and conducting of such meetings.

3. The Applicant Company No. 1 is developing a real estate office project on the piece of land owned by it in Sector-136, Noida, Uttar Pradesh jointly with the Applicant Company No.2

4. The Applicant Company No. 2 is engaged in design, development, manufacturing, marketing, trading, export and retailing of leather footwear, leather goods and accessories, and other related activities. Mirza International Ltd also owns and operates one of the most modern tanneries in India which is engaged in procuring and processing of leather. The Transferee Company is developing a real estate office project through its Wholly Owned Subsidiary/the Transferor Company in Sector-136, Noida, Uttar Pradesh.

5. The Applicant Companies have their respective registered offices in the State of Uttar Pradesh and hence are under the jurisdiction  of  the  Hon’ble  National  Company  Law  Tribunal, Allahabad Bench, Prayagraj. Accordingly, the Transferor Company and the Transferee Company are joint Applicants in the present Application

6. The rationale of the Scheme is given below:

a. The Transferor Company is a wholly owned subsidiary of the Transferee Company. The proposed amalgamation of the Transferor Company with the Transferee Company would result in consolidation of the Wholly Owned Subsidiary with its Parent Company and pooling of their resources into a single entity.

b. The Transferee Company is the Flagship Company of the Group, engaged in design, development, manufacturing, marketing, trading, export and retailing of leather footwear, leather goods and accessories, and other related activities. Mirza International Ltd also owns and operates one of the most modern tanneries in India which is engaged in procuring and processing of leather. Whereas the Transferor Company is a wholly owned subsidiary of the Transferee Company. The Transferor Company is developing a real estate office project on the piece of land owned by it in Sector-136, Noida, Uttar Pradesh jointly with the Transferee Company.

c. The proposed amalgamation will enable smooth completion of the on-going project. The Transferee Company is proposing to consolidate its various office operations at one place by utilizing the said office premises.

d. The proposed Amalgamation would result in pooling of physical, financial and human resource of these Companies for the optimal utilization of these factors in the combined entity. The proposed Scheme of Amalgamation will further strengthen the financial position of the Transferee Company.

e. The proposed Scheme of Amalgamation will result in usual economies of a centralized and a large company including elimination of redundancies, reduction of overheads, optimal utilization of financial, human and other resources and enhancement of overall business efficiency. The proposed Scheme of Amalgamation 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.

f. The amalgamation will result in significant reduction in multiplicity of legal and regulatory compliances which at present are required to be made separately by the Transferee Company as well as by the Transferor Company.

g. The proposed Amalgamation will streamline and simplify the shareholding structure.

h. The proposed amalgamation would enhance the shareholders’ value of the Transferor and the Transferee Companies.

i. 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.

7. It is stated that the Board of Directors of the Applicant Companies in their respective meetings held on 27th July, 2023, have considered and unanimously approved the proposed Scheme of Amalgamation subject to sanctioning of the same by this Tribunal. The copy of the board resolutions of both the Applicant Companies are annexed with the Application as Annexure: A-1/4 and Annexure: A-2/4, respectively, with the application.

8. The appointed date of the Scheme is 01.04.2023 as mentioned in Para 1.1.4 of Scheme of Amalgamation which is annexed as Annexure-A-3 with the application.

9. It is stated that both the Applicant Companies have prepared their Audited Financial Statements as on 31.03.2023 and the same are annexed as Annexure: A-1/2 and Annexure: A-2/2 respectively, with the Application.

10. It is submitted that in terms of the provisions of Section 230(7) and Section 232(3) of the Act, the Applicant Companies have filed Certificates dated 12.08.2023 issued by their respective Statutory Auditors, certifying that the Scheme is in compliance with the Accounting Standards prescribed under Section 133 of the Act and the same are annexed as Annexure: A-4 with Application.

11. It is further submitted that Applicant Transferor Company is a wholly owned subsidiary of the Applicant Transferee Company. Since, it is an amalgamation of a Wholly Owned Subsidiary with its Holding Company, no new share will be issued pursuant to the Scheme of Amalgamation. Hence, no Report on Valuation of Shares or Share Exchange Ratio is required for the proposed Scheme of Amalgamation.

12. It is submitted that the Scheme [Annexure: A-3 of the Application] also takes care of the interests of the workmen and staff (employees) of the Companies, by virtue of Clause 7 of the Scheme.

13. It is deposed by the Applicants that there is no legal proceeding, inquiry, inspection, investigation, prosecution, litigation pending before any court of law or Tribunal against any of the Applicant Companies which may have any impact on the Scheme of Amalgamation or vice versa.

14. It is further deposed by the Applicants there is no sectoral regulator in any of the Applicant Companies whose approval may be required for the sanction of the Scheme of Amalgamation except the statutory authorities, i.e., (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; and (c) the Official Liquidator, Uttar Pradesh, Prayagraj; and (d) the Income Tax Department.

15. It is also deposed that the proposed Scheme of Amalgamation will not attract the provisions of the Competition Act, 2002. Hence, no intimation to or approval from the Competition Commission of India (CCI) is required for the present Scheme of Amalgamation. There is no legal proceeding, inquiry, inspection, investigation, prosecution, litigation pending before any court of law or Tribunal against any of the Applicant Companies which may have any impact on the Scheme of Amalgamation or vice versa.

16. The Transferor Company/Applicant Company No. 1, i.e., T N S Hotels and Resorts Pvt Ltd [Corporate Identification No. (CIN): U55101UP2007PTC185484; Income Tax Permanent Account No. (PAN): AADCT6850B] is a private limited company incorporated under the Companies Act, 1956 on 13.05.2007. Whereas the Transferee Company /Applicant Company No. 2, i.e., Mirza International Ltd, CIN: L19129UP1979PLC004821; Income Tax Permanent Account No. (PAN): AAECM3626M] is a public limited company incorporated under the Companies Act, 1956 on 05.09.1979.

17. The Transferor Company is a Wholly Owned Subsidiary of the Transferee Company. Whereas the Transferee Company is a public limited listed company. Both the Companies are Group Companies under the common management and control. The Transferor  Company  has  already  obtained  Consent  Affidavits from all its Shareholders and Creditors for the proposed Scheme of Amalgamation. Detail of the same is given below:

*In addition to the Un-secured Creditors, the Transferor Company had some ‘Statutory and Other Dues’ which have either been paid in full or being provisional in nature, are not due for payment as on the date of this Application. Certificate from the Chartered Accountants confirming the same is enclosed.

18. With regard to the Transferee Company, the Applicants have submitted that the Transferee Company is not required to obtain Consent Affidavits from its Shareholders, Secured Creditors and Un-secured Creditors for the proposed Scheme of Amalgamation in view of the following:

i. The present Scheme solely provides for amalgamation of the Wholly Owned Subsidiary/Transferor Company with its Parent Transferee Company.

ii. Since entire share capital of the Transferor Company is held by the Transferee Company itself, no new share will be issued by the Transferee Company to anyone pursuant to the present Scheme of Amalgamation.

iii. Accordingly, the proposed Scheme embodies an arrangement between the Transferor Company and its Shareholders. It is clarified and confirmed that the Transferor Company is not proposing any compromise or arrangement with any of its Creditors.

iv. There will not be any change in the share capital of the Transferee Company pursuant to the proposed amalgamation. The proposed Scheme of Amalgamation does not envisage any compromise or arrangement between the Transferee Company and its Shareholders or Creditors or any other class of persons whatsoever within the meaning of Sections 230 and 232 of the Companies Act, 2013, and other applicable provisions, if any.

v. The Transferee Company is a profit-making company with strong financials. Assets of the Transferee Company are more than sufficient to meet all the liabilities of the Transferor and Transferee Companies. It is, accordingly, clarified and confirmed that rights of the Shareholders, Secured Creditors and Un-secured Creditors of the Transferee Company will not be adversely affected by the present Scheme of Amalgamation.

vi. As on 31st March, 2023, the Transferee Company has a Net Worth of more than ₹455 Crore as per the detail given below:

Certificate from the Statutory Auditors of the Transferee Company certifying the aforesaid Net Worth is enclosed herewith and marked as Annexure: A-5.

vii. That it is pertinent to mention that this Tribunal in a similar case in Company Application CA (CAA) No. 01/ALD/2022 [Re: Jaykaycem (Central) Limited and J.K. Cement Limited] held that the Transferee Company is not even required to file any petition for sanction of the Scheme as there is no compromise or arrangement whatsoever between the Transferee Company and any classes of persons within the meaning of Sections 230 or 232 of the Companies Act, 2013. It may be pointed out that the aforesaid Scheme of Amalgamation has since been approved by this Tribunal.

viii. It may be pointed out that various Benches of the Tribunal, in several cases, have held that when the Transferor Company is a wholly owned subsidiary of the Transferee Company, requirement of obtaining consents from Shareholders, Secured Creditors and Un-secured Creditors of the Transferee Company are not mandatory; and meetings of Shareholders, Secured Creditors and Un-secured Creditors of the Transferee Company were dispensed with in such cases.

ix. Copies of some of the Orders passed by various Coordinate Benches of the NCLT in the following cases have been enclosed with the petition:

a. Berkeley Design Automation India Pvt Ltd with Mentor Graphics (India) Pvt Ltd [CA No. 29 (PB)/2017, passed by the Special Bench, New Delhi]

b. Ragnor Buildtech India Pvt Ltd & Ors. with Experion Developers Pvt Ltd [CA (CAA) No. 153 (ND)/2019, passed by New Delhi Bench]

c. Blue Point Leasings Ltd & Ors. with Gold Rock Investments Ltd [CA (CAA) No. 3376/MB/2019, passed by Mumbai Bench]

19. Based upon judicial precedents as referred to above, the Applicants have prayed for dispensation of the requirement of convening meetings of the Shareholders, Secured Creditors and Un-secured Creditors of the Transferor Company and the Transferee Company for the purpose of considering and approving the Scheme of Amalgamation. The Learned Counsel of the Applicant Companies, however, fairly submitted that the Transferee Company is open to serve individual notice of the proposed Scheme of Amalgamation to all its Secured Creditors and Un-secured Creditors inviting their objections/comments to the Scheme.

20. We have carefully perused the documents filed by the Applicants and considered the averments made in support of the dispensation of meetings.

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

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

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

b. Since, there is no Secured Creditor in the Applicant Company No. 1/Transferor Company, the requirement of convening the meeting of Secured Creditors does not arise.

c. The meeting of the Un-secured Creditors of Applicant Company No. 1/Transferor Company is dispensed herewith, keeping in view that both the Un-secured Creditors have given their consents by way of affidavits.

II. In relation to the Transferee Company/Applicant Company No. 2

a. The meeting of the Equity Shareholders of Transferee Company/Applicant Company No. 2 is dispensed herewith, keeping in view of the averments made by the Applicant Transferee Company.

b. The meeting of the Secured Creditors of Transferee Company/Applicant Company No. 2 is dispensed herewith, keeping in view of the averments made by the Applicant Transferee Company.

c. The meeting of the Un-secured Creditors of Transferee Company/Applicant Company No. 2 is dispensed herewith, keeping in view of the averments made by the Applicant Transferee Company.

d. As submitted by the Learned Counsel of the Applicant Companies, the Transferee Company will serve individual notices of the proposed Scheme of Amalgamation to all the Secured Creditors and Un-secured Creditors by Speed Post or Registered Post or Courier or by hand or through e-mail, inviting their objections/comments to the proposed Scheme of Amalgamation which may be filed with this Tribunal within a period of 30 days from the date of such notice.

22. In view of the above, the First Motion Application stands allowed by giving liberty to the Applicant Companies to file Second Motion Petition with a direction that the Applicant Companies shall make specific prayer for sending notices to the (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, Uttar Pradesh, Prayagraj; and (d) the Income Tax Department by disclosing the PAN numbers of both the Applicant Companies in the title of the Second Motion Petition.

23. The Company Petition for confirmation of the Scheme is to be filed within the time period prescribed under the provisions of the Act and corresponding rules made thereunder.

24. That appropriate prayer would also be made in the second motion petition for publication in newspapers.

25. With the aforesaid directions, the First Motion Application bearing CA (CAA)No.21/ALD/2023 is disposed of accordingly.