1. Heard the Learned Counsel for the Petitioner Companies. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petitions to the said Scheme, except as otherwise stated hereinafter.
2. The sanction of the Tribunal is sought under Sections 232 r/w Section 230 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 of Canopy Finance Limited (Transferor Company), with Purple Finance Limited (Transferee Company).
3. The Petitioner Companies have approved the said Scheme of Amalgamation by passing the Board Resolutions dated 15th November, 2022.
4. The Company Petition has been filed in consonance with the Order passed in the C.A. (CAA) No. 202 of 2023 of the Tribunal on 04.10.2023 and the Petitioner Companies have complied with all requirements as per directions of the National Company Law Tribunal, Mumbai Bench and they have filed necessary affidavits of compliance in the National Company Law Tribunal, Mumbai Bench.
5. The Petitioner Company No. 1 is a Non-Banking Financial Company registered with Reserve Bank of India having Registration Number N-13.02430 and is inter-alia engaged in the business of lending money or financing Industrial Enterprises by way of making loans and advances or by subscribing to their Capital Structure. They carry out all the objectives of a NBFC Company and is mainly dealing in lending loans and advances. The Company is a Non-Deposit Taking Company and that the Petitioner Company No. 2 intends to become a new age NBFC inter-alia currently engaged in the business of offering small secured business loans across India predominantly in tier III & tier IV cities. Purple Finance Limited with its superior technology platform aspires to simplify the existing processes in the mortgages segment and is confident of making a difference to the MSME borrowers with simplified funding options and timely loan disbursements.
6. The rationale for the Scheme of Amalgamation of the Petitioner Companies is in the interest of the stakeholders of these companies and shall result in the following benefits:
(a) CFL and PFL are largely engaged in the same line of business activities. The proposed merger will enable the integration of the business activities of the Transferor Company (“CFL) with the Transferee Company (“PFL”).
(b) Economies of scale will play a bigger role as the consolidated entity’s operational efficiency will increase, which will in turn allow the merged entity to compete on a larger scale in the industry, thus benefiting the merged entity and the shareholders.
(c) The combined Networth of both the entities will enable the merged entity with more negotiation power for debt finance considering its size and financial strength further the merged entity will have option of equity raising.
(d) This merger will provide an opportunity to leverage assets and build a stronger sustainable business. It will provide an opportunity to fully leverage stronger networth capabilities, experience, expertise and infrastructure of both the companies thus increased ability for promotion of business activities as well as for fund raising as may be required for business development.
(e) This merger will result in business synergy, pooling of physical, financial and human resource of these Companies for the most beneficial utilization of these resources in the combined entity.
(f) The merger will result to synergic benefits, efficiency of operations and management, rapid growth of the entity, optimum utilization of its resources and optimization of the administrative and operative costs, in a value creation for the shareholders and stakeholders of both CFL and PFL as the combined amalgamated company will have improved efficiency, market share, financial structure, larger cash flows and stronger consolidated revenue and profitability.
(g) The Merger will result in significant reduction in multiplicity of legal and regulatory compliances which at present are required to be done separately by the Transferee Company as well as by the Transferor Company.
(h) The merger of CFL with PFL would result in consolidation of business activities of both the companies and will facilitate effective management of investments and synergies in operation.
(i) The Promoter of CFL and PFL will jointly control PFL.
(j) There is no likelihood that any shareholder or creditor or employee of CFL and PFL would be prejudiced as a result of the Scheme. Thus, the merger is in the interest of the shareholders, creditors and all other stakeholders of the companies and is not prejudicial to the interests of the concerned shareholders, creditors or the public at large.
7. The Regional Director has filed his Report dated 01.02.2024 making certain observations. The Petitioner Companies have submitted/undertaken that :-
a. The Transferee Company shall pass such accounting entries as may be necessary in connection with the Scheme to comply with other applicable accounting standards such as AS-5 as applicable;
b. The Petitioner will 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;
c. The setting off of fees paid by the Transferor Company on its Authorized Share Capital shall be in accordance with provisions of section 232(3)(i) of the Companies Act, 2013;
d. The Petitioner Company shall ensure compliance of all the provisions of Income Tax Act and Rules thereunder;
e. The Petitioner Companies submits that the Reserve bank of India has given the No Objection certificate;
f. The Petitioner Company further submits that based on the shareholding pattern of Saguna Mercantile Private Limited, it does not have any major shareholder (holding more than 50% stake) and for so reason the provisions of significant beneficial owner are not applicable. Hence, the Company has not filed Form BEN-2. The Company viz., Purple Finance Limited has filed the BEN-2 vide SRN No. F91552059 dated 1st day of February, 2024. 1st day of February, 2024. The Company sincerely apologizes and admits that this was an oversight on our part and we hereby admit to rectify it and submit to your good office all the required details. The Company believes in good corporate governance practices and ensures transparency in its business matters. It seeks to protect the interests of all stakeholders and acknowledges its duty to disclose all relevant facts to the regulatory authorities and other stakeholders. We further wish to inform you that we make disclosures to all the regulators within prescribed timelines and this is a one-time oversight from our end. We have filed the e-form BEN-2 on 1st February, 2024 and complied with all the necessary formalities of the Companies Act, 2013 in this regard.
g. The Transferee Company will comply with Income Tax Provisions in relation to proceedings/claims under Income Tax Act against the Transferor Company;
8. Mr. Tushar Wagh, Deputy Director, Office of Regional Director (WR), Mumbai appeared on the date of hearing and submits that above explanations and clarifications given by the Petitioner Companies in rejoinder are satisfactory and they have no further objection to the Scheme.
9. The Official Liquidator has filed his Report dated 30th January, 2024 inter-alia making observations. The Petitioner Companies have submitted/undertaken that :-
a. The Petitioner Company submits that there is discrepancy in the reply letter provided by the Transferor Company and its Financial Statements in relation to any bad debts / advances written off by the Company during the last 3 years. The Company submits that they have provided the reply in respect of the financial year 31.03.2023 and not for last 3 financial years. The Petitioner Company further submits that sincerely apologizes and admits that the reply given by them for the said point in the response to the requirements raised by was unintentionally incorrect. The Petitioner Company further submits that the details of bad debts / advances written off by the Company during the last 3 years as mentioned herewith in relation to the said point No. 43. Kindly take note that considering the declining economic conditions of the clients and the economic feasibility of the recovery proceedings, no recovery proceedings were initiated by the Company against its borrower/(s) as amount involved was very small.
10. 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. Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No. 311 of 2023 is made absolute in terms of clauses 29 (a) to (c) of the said Company Scheme Petition.
11. The Income Tax Department will be at liberty to examine the aspect of any tax payable as a result of this scheme, it shall be open to the income tax authorities to take necessary action as possible under the Income Tax Law.
12. The First Petitioner Company be dissolved without winding up.
13. Petitioners are directed to file a copy of this Order along with a copy of the Scheme of Amalgamation 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 Order from the Registry.
14. The Petitioner Companies to lodge a copy of this Order and the Scheme duly authenticated by the Deputy Registrar or Assistant Registrar, National Company Law Tribunal, Mumbai Bench, with the concerned Superintendent of Stamps, for the purpose of adjudication of stamp duty payable within 60 days from the date of receipt of the Order, if any.
15. 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.
16. The Appointed Date is 1st October, 2022.
17. Ordered Accordingly. Pronounced in open court today.
