w w w . L a w y e r S e r v i c e s . i n



In the Matter of: Inter Continental Travels & Tours Private Limited (First Transferor Company) & Others

    C.P. (CAA) No. 20 of 2019

    Decided On, 23 April 2020

    At, National Company Law Tribunal Bengaluru

    By, THE HONOURABLE MR. RAJESWARA RAO VITTANALA
    By, JUDICIAL MEMBER & THE HONOURABLE MR. ASHUTOSH CHANDRA
    By, TECHNICAL MEMBER

    For the Appearing Parties: Parameshwar Bhat, Prema Hatti, K. Nagaraj, Ganesh R. Ghale, Advocates.



Judgment Text


1. This Joint Company Petition was filed by the respective Petitioner Companies under Sections 230 to 232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 by inter alia seeking that the Science of Amalgamation be sanctioned by this Tribunal so as to be binding on all the Equity Shareholders and Unsecured Creditors of the Petitioner Companies and on the Petitioner Companies and the Transferor Companies be dissolved without winding up pursuant to the provisions of Section 232 of the Companies Act, 2013. It is further prayed that sanction may be accorded so that the Authorized Share Capital of the transferee Company in terms of its Memorandum of Association and Articles of Association shall automatically stand enhanced by the amount of authorized Capital of the Transferor Companies.

2. Brief facts of the case, as mentioned in the Company Petition, are as follows:

(1) M/s. Inter-Continental Travels and Tours Private Limited (hereinafter referred to as ‘First Transferor Company’) is a Private Limited Company incorporated on 25th, April, 1990, under the Companies Act, 1956 with CIN:U62200KA1990PTC010908 and having its registered office situated at 84/86, Safina Plaza, Infantry Road, bengaluru-560001. Its Authorized Share Capital was Rs.1,00,00,000/- divided into 1,00,000 Equity Shares of Rs.100/- each, and the Issued, Subscribed and Paid-up Share Capital is Rs.25,00,000/- divided into 25,000 Equity Shares of 100/- each. The main objects of the First Transferor Company inter alia are to ‘carry on business of booking and reserving accommodations, seats, compartments and berths on railways, steamships, motor-ships and boats, aero planes, to organize tours, religious, education sightseeing and business’ etc.

(2) The Board of Directors of the First Transferor Company at their meeting held on 14th January, 2019 for approval of the Scheme under Sections 230 to 232 of the Companies Act, 2013 have approved and adopted the Scheme of Amalgamation and had, inter alia, resolved the following (Page No.197 of the Petition):

‘CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE INTER CONTINENTAL TRAVELS AND TOURS PRIVATE LIMITED COMPANY AT ITS MEETING HELD ON JANUARY 14, 2019, MONDAY 10.00 A.M.

Approval of Scheme of Amalgamation and Granting Authorization:

RESOVED THAT pursuant to the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, the rules, circulars and notifications made there under (including any statutory modification(s) thereof for the time being in force), and as per the Memorandum of Association and the Articles of Association of the company, and subject to the approval of the Bengaluru Bench of the Hon’ble NCLT, and subject to other approvals, permissions and sanctions of regulatory and other authorities, as may be necessary and subject to such conditions and modification as may be prescribed or imposed by the Bengaluru of the NCLT, or by any Regulatory or other Authorities, while granting such consents, approval and permissions, which may be agreed to by the Board of Directors of the Company (hereinafter referred to as the “Board”, which term shall be deemed to mean and include one or more committee(s) constituted/to be constituted by the Board or any other person authorized by it to exercise its powers including the powers conferred by this Resolution), the Amalgamation embodied in the Scheme of Amalgamation between Safina Towers Private Limited (Transferee Company/Applicant Company and Inter Continental Travels and Tours Private Limited (First/Transferor Company) and Safina Hotels Private Limited (Second Transferor Company) and their respective Shareholders and Creditors (Scheme) placed before this Meeting and initiated by Chairman of the Meeting for the purpose of identification, be and is hereby approved”.

And the same has been brought before this Tribunal for approval under Sections 230 to 232 and other relevant provisions of Companies Act, 2013.

(3) M/s. Safina Hotels Private Limited (hereinafter referred to as ‘Second Transferor Company’) is a Private Limited Company, incorporated on 20, February, 1978, under the provisions of the Companies Act, 1956 in the name and style of ‘Safina Hotels Limited’. Subsequently the name of the Company was changed to ‘Safina Hotels Private Limited’ with fresh certificate of incorporation dated 31st March, 2010 with CIN: U55101KA1978PTC003283 having registered office at 84/85, Safina Plaza, Infantry Road, bengaluru-560001. Its Authorized Share Capital of the Company is Rs.2,20,00,000/- divided into 20,000 Cumulative Preference Shares of Rs.100/- each and 2,00,000 Equity Shares of Rs.100/- each. The issued, subscribed and paid up capital is Rs.1,90,13,300/- divided into 1.,90,133 fully paid up Equity Shares of Rs.100/- each. The main objects of Second Transferor Company inter alia are to ‘carry on the business of hoteliers, restaurants, caf, tavem, beer house, auto courts, casinos, refreshments rooms and lodge-house keepers, motels, to buy, maintain and sell horses and ponies for racing, breeding and training….’etc.

(4) The Board of Directors of the Second Transferor Company at their meeting held on 14th January, 2019 for approval of Scheme under Sections 230 to 232 of the Companies Act, 2013 have approved and adopted the Scheme of Amalgamation. The Transferee Company had, inter alia, resolved the following (Page No.199 of the Petition):

‘CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE SAFINA HOTELS PRIVATE LIMITED COMPANY IN ITS MEETING HELD ON MONDAY, JANUARY 14,2019 AT 10.00 AM”.

Approval of Scheme of Amalgamation and Granting Authorization:

RSOLVED THAT pursuant to the provisions of Sections 230 to 232 and other applicable provisions of the Companies Act, 2013, the rules, circulars and notifications made there under (including any statutory modifications(s) thereof for the time being in force), and as per the Memorandum of Association and the Articles of Associations of the company, and subject to the approval of the Bengaluru Bench of the Hon’ble NCLT and subject to other approvals, permissions and sanctions of regulatory and other authorities, as may be necessary and subject to such conditions and modification as may be prescribed or imposed by the Bengaluru Bench of the NCLT, or by any Regulatory or other Authorities while granting such consents approval and permissions which may be agreed to by the Board of Directors of the Company (hereinafter referred to as the Board, which term shall be deemed to mean and include one or more committee(s) constituted/to be constituted by the Board or any other person authorized by it to exercise its powers including the powers conferred by this Resolution, the Amalgamation embodied in the Scheme of Amalgamation between Safina Towers Private Limited (Transferee Company/Applicant Company and Inter Continental Travels and Tours Private Limited (First Transferor Company) and Safina Hotels Private Limited (Second Transferor Company) and their respective Shareholders and Creditors (Scheme) placed before this Meeting and initiated by Chairman of the Meeting for the purpose of identification, be and is hereby approved.

And the same has been brought before this Tribunal for approval under Sections 230 to 232 and other relevant provisions of Companies Act 2013.

(5) M/s. Safina Towers Private Limited (hereinafter referred to as Transferee Company) is a Private Limited Company incorporated on 18th, December, 1969 under the provisions of the Companies Act, 1956 in the name and style of ‘Palace Hotels Private Limited’ and subsequently the name of the Company was changed to ‘Safina Towers Private Limited’ with fresh certificate of incorporation dated 24th September, 2003 CIN:U55101KA1978PTC003283 having registered office at 3, All Asker Road, Bengaluru -560 001. The Authorized Share Capital of the Transferee Company is Rs.24,50,00,000/- divided into 24,50,000 Equity Shares of Rs.100/- each. The Issued, Subscribed and Paid up Share Capital is Rs.24,00,00,000/- divided into 24,00,000 fully paid up equity shares of Rs.100/- each. The main objects of Transferee Company inter alia are to ‘establish, develop and promote infrastructure facilities for information Technology Development in India in particulars in Karnataka by various means, including establishing Information Technology Parks with latest infrastructure facilities, designing, Developing, manufacturing, supporting computer software applications and hardware technology etc.

(6) The Board of Directors of the Transferee Company at their meeting held on 14th January, 2019 for approval of Scheme under Sections 230 to 232 of the Companies Act, 2013 have approved and adopted the Scheme of Amalgamation. The Transferee Company had, inter alia, resolved the following (Page No.201 of the petition):

‘CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BORAD OF DIRECTORS OF THE SAFINA TOWERS PRIVATE LIMITED AT ITS MEETING HELD ON MONDAY, JANUARY 14, 2019 AT 10.00 AM”.

Approval of Scheme of Amalgamation and Granting Authorization

RESOLVED THAT pursuant to the provisions of Sections 230 to 232 and other Applicable provisions of the Companies Act, 2013, the rules, circulars and notifications made there under (including any statutory modification(s) there of for the time being in force), and as per the Memorandum of Association and the Articles of Association of the Company, and subject to approval of the Bengaluru Bench of the Hon’ble NCLT, and subject to such other approvals, permissions and sanctions of regulatory and other authorities, as may be necessary and subject to such conditions and modifications as may be prescribed or imposed by the Bengaluru Bench of the NCLT or by any Regulatory or other Authorities, while granting such consents, approval and permissions, which may be agreed to, by the Board of Directors of the Company (hereinafter referred to as the “Board”, which term shall be deemed to mean and include one or more committees constituted/to be constituted by the Board or any other person authorized by it to exercise its powers including the powers conferred by this Resolution), the Amalgamation embodied in the Scheme of Amalgamation between Safina Towers Private Limited (Transferee Company/Applicant Company and Inter Continental Travels and Tours Private Limited (First Transferor Company) and Safina Hotels Private Limited (Second Transferor Company) and their respective Shareholders and Creditors (Scheme) placed before this Meeting and initiated by Chairman of the Meeting for the purpose of identification, be and is hereby approved.

And the same has been brought before this Tribunal for approval under Sections 230 to 232 and other relevant provisions of Companies Act, 2013.

(7) It is stated that M/s. Y V S VINOD & ASSOCIATES, Chartered Accountants, the Statutory Auditors of the First Transferor Company and Second Transferor Company and Transferee Company have issued respective Certificate dated 9th January, 2019, confirming that the Accounting Treatment contained in the Proposed Scheme is in compliance with the applicable Accounting Standards notified by the Central Government under the Companies Act, 2013.

(8) Circumstances and reasons which justify and necessitate the proposed Scheme of Amalgamation, as well as the major benefits that will accrue further to such Amalgamation of the First Transferor Company and Second Transferor Company with the Transferee Company are as stated below:

(a) The First Transferor Company, Second Transferor Company and the Transferee Companies carry on business related to multiple services including accommodation, housing the officers, infrastructure facilities and the travel and movements to the public. A combined entity will prove to generate immense benefits on a larger scale of economies and combined entity will have powers to negotiate with vendors, customer and other stakeholders.

(b) Greater financial strength and flexibility for the amalgamated entity, which would result in optimizing the leverage with respect to debt and Equity and maximize overall shareholders value.

(c) Larger integrated entity will improve the competitive position of the combined entity.

(d) Better customer management and higher business opportunity etc.

(9) By an Order dated 03rd May, 2019 in the C.A. (CAA) No.23/BB/2019, the Tribunal dispensed with holding of the meeting of the Equity Shareholders and Creditors of the Petitioner Companies with respect to the Scheme of Amalgamation considering the consent by way of affidavit obtained from the 100% Shareholders and 100% Creditors of the Petitioner Companies.

(10) It is stated that there are no prosecution proceedings initiated against the Petitioner Companies and its Directors for violation of various laws such as the Companies Act, 1956/2013, FEMA, IPC, SEBI Act, RBI Act, etc., and there are no prosecution proceedings pending before any Court as on this date.

(11) The Petitioners issued notice to the Regional Director, ROC, Official Liquidator, Income Tax Department . Further, the Petitioners Companies are not regulated by any Sectorial Regulator including RBI/IRDA or any other Government Department other than the above mentioned Departments.

3. This Tribunal vide its Order dated 12.06.2019 directed the respective Petitioner Companies to issue Notice to the Regional Director (SER), Registrar of Companies, Income tax Department, Competition Commission of India, Official Liquidator, SEBI-Corporate Finance Department and also directed it to carry out paper publication in the newspapers in ‘The Financial Express’ English daily and ‘Samyukta Karnataka’, Kannada daily, and to file proof of the same.

4. Pursuant to the above directions, the Petitioners have filed respective Affidavits dated 24.06.2019, affirming compliance of the Order passed by the Tribunal dated 12.0-6.2019. Further, they have also furnished copies of the newspaper publication for having taken advertisement in ‘The Financial Express’, English Daily on 20.06.2019 as well as ‘Samyukta Karnataka’, Kannada daily on 20.06.2019.

5. Pursuant to the above and letter dated 5th July, 2019 of the Competition Commission of India (CCI), the Petitioner Companies have filed a letter of undertaking dated 24th July, 2019 stated that the provisions on Competition Act, 2002 are not applicable to the Petitioner Companies as the Combined Assets/Turnover are not beyond the limits as prescribed in Section 5 of the Competition Act 2002.

6. Intimation of the proposed Scheme of Amalgamation was also sent to all relevant Statutory Authorities/Regulators. No response has, however, been received and hence it is deemed that these statutory authorities/regulators have not objection to the proposed Scheme of Amalgamation.

7. Pursuant to the notice issued the Registrar of Companies, Karnataka vide letter bearing No.ROCB/Legal/C.P.(CAA)NO.20/BB/2019 dated 20.08.2019 has submitted a report, wherein it is inter alia observed that, (i) As per Section 232(6) of Companies Act, 2013, though in the Scheme appointed date is mentioned as 01/04/2018, no effective date as such is mentioned. (ii) The Transferee Company has not appointed a Company Secretary despite having a total capital of more than 5 Crores. Hence the Petitioner Company may be advised to comply with the Provisions of Section 203 read with Rule 8A of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and be directed to file adjudication Application with the ROC and adjudicate the offence. (iii) Clubbing of Authorized capital is mentioned at Clause 11.3 of the Scheme wherein it is stated that the filing fees and stamp duty paid by the Transferor Companies on the authorized share capital shall be deemed to have been paid by the Transferee Company and accordingly the transferee Company shall not be required to pay any fee/stamp duty for the increased authorized capital./ In this regard, the transferee Company shall comply with Section 232(3)(i) of Companies Act, 2013 and pay the difference of filing fees and stamp duty after setting off the fees already paid by he Transferor Companies. (iv) a) Transferor Company No.1 has related Party transactions with – M/s. Safina Towers Pvt. Ltd. towards interest received for Rs.2,81,524/- each for 2016-17 and 2017-18 respectively. B) The Transferor Company NO.2 has Related Party transactions with Mr. Feroz Sattar Sait for Rs.54,93,206/- and Rs.54,96,206/- for 2016-17 and 2017-18 respectively. C) The Transferee Company has Related Party transactions during the year 2016-17 and 2017-18 as under: a. Lease Rent paid to M/s. Safina Foundation for Rs.1,44,00,000/- for 2016-17 and 2017-18 respectively. b. Interest paid/accrued to M/s. Inter-continental Tours and Travels Pvt. Ltd; for Rs.2,81,524/- for 2016-17 and 2017-18 respectively. C. Security deposit to M/s Safina Foundation of Rs.1,12,00,000/- for 2016-17 and 2017-18 respectively. (v) There is a Technical Scrutiny in respect of M/s. Safina Hotels Pvt. Ltd. of the Balance Sheet as at 31.03.2010 is pending and also the follow up action pursuant to scrutiny of Balance Sheet as at 31.03.2007 is under way. (vi) The Transferee Company has to spend 2% of the average net profit of three years on CSR. As per the financial statement, the Company has not spent 2% of the net profit. The compliance of Section 135 read with 134 and Rules made thereon are to be explained by the Petitioner Company. The petition may be decided on merits.

The Regional Director (SER) has filed an Affidavit dated 18.09.2019, in which the same issues of non-appointment of Company Secretary, Payment of Stamp Duty etc. on account of clubbing of share capital, related party transactions, pending technical scrutiny, and expenditure u/s 135 have been mentioned. In addition it is mentioned that the Share exchange ratio as per the valuation report dated 31.01.2019 of the Chartered Account M/s. YVS & Associates is as below:

“56 (Fifty Six) Equity Shares of Rs.100/- each credited as fully paid of the Transferee Company for every 100 (One Hundred Equity Shares of Rs.100/- each in transferor Company No.1.

300 (Three Hundred) Equity Shares of Rs.100/- each credited as fully paid of the Transferee Company for every 100 (One Hundred) Equity Shares of Rs.100/- each in the Transferor Company No.2”.

9. Further, the Registrar of Companies has filed an Additional Affidavit dated 11.11.2019 by inter-alia stating as follows:

(1) With regard to RD, SER, Hyderabad’s Observation at Para (a), it is replied that considering adjudication Application will be filed U/s. 454 of the Companies Act, 2013 with the RoC.

(2) With regard to RD, SER, Hyderabad’s observation at para (c), the Transferee Company has agreed to pay the differential amount of Stamp duty for the increased amount of Authorized Share Capital.

(3) With regard to RS, SER, Hyderabad’s observation at para (d)(i), it is replied that the related party transactions as mentioned in the Balance Sheet i.e. interest received for Rs.2,81,524/- each for 2016-17 and 2017-18 respectively is not coming within the purview of Section 188 of the Companies Act, 2013. The same is against the Inter Corporate Deposits which are coming within the purview of Section 186 of the Companies Act, 2013. Further, the said inter Corporate deposits were made during the previous Companies Act i.e. Companies Act, 1956 i.e. Section 372A of the Companies Act, 1956 and the same was exempt for the Private Limited Companies which are not subsidiary of Public Company as per sub-section B9A)(iii) of Section 372A of the Companies Act, 1956.

(4) Since the Transaction i.e. the loan was given during he applicability of the suitable provisions and the interest on loans are not covered under Section 188 of the Companies Act, 2013, there were no compliance to be made under the Companies Act under the Related party transactions.

(5) ii) Consequent to the transfer of the business of shopping complex and hotels to Mr. Feroz Sattar Sait as ongoing business concern at book value, Rs.54,93,205.57 was determined as the consideration payable by Mr. Feroz Sattar Sait to Safina Hotels Pvt. Ltd. on 31.03.2013. Accordingly, the asset (loan) was created in the books of Safina Hotels Pvt. Ltd. It was the understanding between Safina Hotels Pvt. Ltd. & Mr. Feroz Sattar Sait that the consideration amount shall be paid by Mr. Feroz Sattar Sait within a span of 8 years and this shall not bear any interest. Out of Rs.54,93,205.57, Rs.45,00,000/- has been repaid by Mr. Feroz Sattar Sait during the year 2019-20. So it is cleared that this transactions took place when Companies Act, 1956 was in force and Section 295 of Companies Act was not applicable for the Pvt. Ltd. Company which is not subsidiary of a Public Ltd. Company. Hence, here is no non-compliance in the mater. The outstanding shown in the Balance Sheets FY:2016-17 & 2017-18 is a carried forward balance and not the actual transaction is made during these years.

Since the transaction was given during the applicability of the provisions and was not covered under Section 188 of the Companies Act, 2013, there were no compliances to be made under the Companies Act, under the Related Party Transactions.

iii) The Transferee Company has some related party transactions with M/s Safina Foundation as mentioned in the Balance Sheet. The same was in compliance with Section 188 of the Companies Act, 2013. As per Section 188 of the Companies Act, 2016 read with rule 15 of the Companies (Meeting of the Board and its Power) Rules, 2014.

Since the transaction with M/s. Safina Foundation is not amounting to 10% of the net worth of the turnover of the Company, there was not approval required to be obtained from the shareholders. The approval of the Board was obtained as the requirements of Section 188 of the Companies Act, and form AOC 2 as required under Section 134 of the Companies Act, 2013 was attached to the Directors Report.

With regard to point related to interest paid/accrued to Inter Continental Tours and Travels Private Limited for Rs.2,81,524/- as explained, the same is not coming within the purview of Section 188 of Companies Act, 2013 under Related Party Transactions. Hence there is no non-compliance of Section 188 of the Companies Act, 2013 i.e., Related Party Transactions from any of the Applicant Companies i.e. both Transferor Companies and Transferee Company.

e) It is replied that there were no such notices received from the Registrar of Companies for the scrutiny in respect of Safina Hotels Pvt. Ltd. of the Balance Sheet as at 31.03.2010 and 31.03.2007. However, the Transferee Company undertakes to provide all necessary information and documents as may be required to complete the Scrutiny in respect of Safina Hotels Pvt. Ltd., of the Balance Sheet as at 31.03.2010 and 31.03.2007.

f) It is replied that the Company has initiated steps to spend the 2% of the average net profit of three years as XCSR and to comply with Section 135 of the Companies Act, 2013 read with Rules made there under. However, on perusal of the copy of the Annual reports submitted along with the Scheme, it was noticed that Transferee Company has not complied with Section 134 read with 135 read with Rules made there on. Hence, the Company may kindly be asked to show the compliance of CSR provisions for the last three years to the satisfaction of ROC.

10. In response to the RD and ROC’s observations, the Authorized Signatory of the Petitioner Companies has filed a reply Affidavit dated 06.09.2019, by inter alia stating as follows:

a. As regards to observation No.1 by ROC, it is stated that the ‘Appointed Date’ as well as the effective date is defined in clause 1.2 and 1.4 respectively in the Scheme of Amalgamation. The same is reproduced as below:

1.2 “Appointed Date” means the date from which this Scheme shall become operative viz., the commencement of business on 1st April 2018 or if the Board of Directors of the Transferee Company requires any other date prior or subsequent to 1st April, 2018 and/or the National Company Law Tribunal (NCLT) modifies the Appointed date to such other date, then the same shall be the Appointed date;

1.4 “Effective Date” means the date on which certified copies of the Orders of the National Company Law Tribunal (NCLT) under Sections 230 to 232 of the Companies Act, 2013 are filed with the Registrar of Companies.

b. As regards to observation No.1 by ROC and Point a) of RD, it is stated that the Company was trying to appoint the Company Secretary in whole time employment to comply with Section 203 read with Rule 8A of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014. However, considering the small size of business operations and the high scale of remuneration which the Company could not pay, the suitable candidates were not available in the market. Finally, the Company was able to get a candidate for the post of Company Secretary and the appointment was done with effect from 1st August, 2019. Now, they have a qualified Company Secretary as per the requirement of Section 203 read with Rule 8A of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014.

Further, as a Director and authorized representative of the Transferee Company, hereby undertake to file adjudication application with the Registrar of Companies and adjudicate the offence committed in the said matter.

c. As regards to Observation No.3 by ROC and Point c) of RD, Clause 11.3 of the Scheme of Amalgamation is reproduced here below:

11.3 the Filling fees and stamp duty, if any, paid by the Transferor Companies on its authorized share capital, shall be deemed to have been so paid by the Transferee Company on the combined authorized Share Capital and accordingly, the Transferee Company shall not be required to pay any fee/stamp duty for its increased authorized share copied to the extent of which was already paid by the Transferor Companies. The Transferee Company shall pay the differential amount of stamp duty for the increased amount of Authorized Share Capital after adjusting the stamp duty already paid by the Transferor Companies.

As per the above clause, they have clearly mentioned that the Transferee Company shall pay the differential amount of stamp duty for the increased amount of Authorized Share Capital after adjusting the stamp duty already paid by the Transferor Companies. Hence, the Transferee Company is complying with Section 232 (3)(i) of Companies Act, 2013.

d. As regards to Observation No.4 a) by ROXC and Point d (i) of RD, it is stated that the Related Party Transactions as mentioned in the Balance Sheet i.e., interest received for Rs.2,81,524/- each for 2016-17 and 2017-18 respectively is not coming within the purview of Section 188 of the Companies Act, 2013. The same is against the Inter Corporate Deposits which are coming within the purview of Section 186 of the Companies Act, 2013. Further, the said inter corporate deposits were made during the previous Companies Act i.e., Companies Act, 1956 i.e.. Section 372A of the Companies Act, 1956 and the same was exempt for the Private Limited Companies which are not subsidiary of Public Company as per sub-Section 8(a)(iii) of Section 372A of the Companies Act, 1956.

e. Since the transaction i.e. the loan was given during the applicability of the above provisions and the interest on loans are not covered under Section 188 of the Companies Act; 2013, there were no compliances to be made under the Companies Act, 2013 under the Related Party Transactions. The Related party Transactions as mentioned in the Balance Sheet i.e., outstanding balance of Rs.54,93,206/- Mr. Ferox Sattar Sait was not the transaction which taken place during the year and also not taken place after the commencement of Companies Act, 2013. The said transaction was taken during the previous Companies Act, i.e. Companies Act, 1956 was in force. The Company has given some loan to Mr. Feroz Sattar Sait who was Director of the Company at that point of time. Since the applicable Section i.e. Section 296 of the Companies At, 1956 was not applicable for the Private Limited Company which was not subsidiary of Public Company, there were no non compliance in the matter. The balance which was shown in the Balance Sheet is only the outstanding balance and which is not the transition made during the year.

Since the transaction i.e. the loan was given during the applicability of the above provisions and it was not covered under Section 188 of the Companies Act, 2013, there were no compliance s to be made under the Companies Act, 2013 under the Related Party Transactions.

f. The Transferee Company has some Related Party Transactions with Messrs Safina Foundation as mentioned in the Balance Sheet. The same was in compliance with Section 188 of the Companies Act, 2013. As per Section 188 of the Companies Act, 2013 read with Rule 15 of the Companies (Meeting of the Board and its Power) Rules, 2014 as produced below:

(3) For the purposes of first proviso to sub-section (1) of Section 188, except with the prior approval of the Company by a resolution, a Company shall not enter into a transaction or transactions, where by transaction or transactions, to be entered into:-

(a) as contracts or arrangements with respect to clauses 9a) to (e) of sub-section 91) of Section 188, with criteria as mentioned below:-

(iii) leasing of property any kind (amounting to ten percent or more) of the net worth of Company or ten percent or more of turnover) of the Company or Rupees One Hundred Crore, whichever is lower, as mentioned in clause (c) of sub-section (1) of Section 188;

Since the transaction with Messrs Safina Foundation is not amounting to ten percent of the net worth or turnover of the Company, there was not approval required to be obtained from the Shareholders. The approval of the Board was obtained for the said transactions as per the requirements of Section 188 of the Companies Act, 2013 and form AOC 2 as required under Section 134 of the Companies Act, 2013.

Further, with regard to point number (ii) i.e. relating to interest paid/accrued to inter-continental Tours and Travels Private Limited for Rs.2,81,524/-, as explained in point number (a) above, the same is not coming within the purview of Section 188 of the Companies Act, 2013 under Related Party Transactions.

Hence, there is no non-compliance of Section 188 of the Companies Act, 2013 i.e. Related Party Transactions from any of the Applicant Companies i.e. both Transferor Companies and Transferee Company.

g. As regards to observation No.5 by ROC and Point e) of RD, it is stated that there were no such notices received from the Registrar of Companies for the Scrutiny in respect of Safina Hotels Private Limited of the Balance Sheet at 31.03.2010 and 31.03.2007.

However, the Transferee Company undertakes to provide all necessary information and documents as may be required to complete the Scrutiny in respect of Safina Hotels Private Limited of the Balance Sheet as at 31.03.2010 and 31.03.2007 and in case of any issues find out by the Registrar of Companies, the Transferee Company undertakes to take all such actions which the Safina Hotels Private Limited i.e., Transferor Company 2 is required to be taken in the mater. The same was already undertaken at clause 6 of the Scheme of Amalgamation. The same is reproduced as below:

6.1 All legal proceedings of whatsoever nature by or against the Transferor Companies pending and/or arising at the Appointed Date and relating to the Transferor Companies or its properties, assets, debits, liability, duties and obligations referred to above, shall be continued and/or enforced until the Effective Date as desired by the Transferee Company and as and from the Effective Date shall be continued and enforced by or against the Transferee Company in the same manner and to the same extent as would or might have been continued and enforced by or against the Transferor Companies. On and from the Effective Date, the Transferee Company shall and may, if required, initiate any legal proceedings in its name in relation to the Transferor Companies in the same manner and to the same extent as would and to the same extent as would or might have been initiated by the Transferor Companies.

h. As regards to Observation No.6 by the ROC and Point f) of RD, As per requirements of Section 136 of the Companies Act, 2013, the CSR Committee has been formed and the Company has initiated steps to spend the 2% of the average net profit of three years as CSR. However, the Company has not spent the entire amount to be spent in CSR during the previous years.

The Transferee Company will undertake to spend all the monies unspent during the previous years in the current year and will take necessary action to comply with Section 135 of the Companies Act, 2013 read with the Rules made thereunder.

i. As regards to Observation in para (f) by RD, SER Hyderabad, it is stated that as per the requirements of 134(o) of the Companies Act, 2013 the details about the policy developed and implemented by the Company on corporate social responsibility initiatives taken during the year is mentioned in the Board’s Report.

The Company considers social responsibility as an integral part of its business activities and endeavors to utilize allocable CSR budget for the benefit of society. However, during the year under review, the Company’s spend on the CSR activities has been less than the limits prescribed under the Companies Act, 2013 due to unavoidable circumstances.

The company will undertake to spend unspent amount which was required to be spent in previous three years and will undertake to file compounding application for the non-compliance made in this behalf.

11. Official Liquidator has filed OLR No.100/2019 dated 06.09.2019 in C.P. (CAA) No.20/BB/2019 by inter alia stating that the Official Liquidator for scrutiny of the books of accounts and records of the First Transferor Company and Second Transferor Company has engaged M/s. N. Tatia & Associates, Chartered Accountants, which after examining the affairs of the Transferor Companies, has inter alia reported the following:

(i) In Para No.18.08: Loans and Advances paid are subject to confirmation. They are unable to confirm Rental Deposit in absence of supporting documents. Loans and Advances (Long Term) to Cutchi Memon Jamath amounting to Rs.1 crore and to Safina Hotels_Mr. Feroz Sattar Said amounting to Rs.54,93,205.57 reflecting as per books of accounts. No interest received by the company on these advances. Party confirmation is not available.

(ii) In Para No.18.09: The Amount written off in FY 2017-18 amounted to Rs.3,71,043/- with related parties to Mr. Feroz Sattar Sait – Rs 2,81,097/- and Mr. Muzrat Sattar Sait – Rs.89,946/-.

(iii) In Para No.18.10: Balance with IT department amounting to Rs.17,06,464 (IT refund is pending since Ay 11-12 and AY 13-14), pending to check/adjust in profit and loss account (if not recoverable).

(iv) In Para No.18.12: As per our scrutiny, the Transferor Company had defaulted in deduction of TDS, short payment, interest and late fee of TDS by Rs.4,08,262.97/-.

“On the examination of the Books of Accounts and papers of the Transferor Company and as per the explanations and information provide by the Transferor Company, report as follows:

a. We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purpose of scrutiny of books and papers of Transferor Company.

b. In our opinion proper books of accounts, papers, statutory registers and other related records as required by Law have been kept by the Transferor Company as for as it appears from our examinations.

c. On scrutiny of books of accounts, papers, statutory registers and other elated records of the Company, we are of the opinion that the affairs of the Company have not been conducted in a manner prejudicial to the interests of the members of the Company or public interest as per Section 232 of the Companies Act, 2013.”

12. Pursuant to the aforesaid OL report, the Authorized Signatory of the Petitioners Companies has filed an Affidavit dated 23rd September 2019, by inter – alia stating as follows:

a. With regard to the observation of the OL in para 18.08: It is submitted by the first Transferor Company, the rental agreement was executed for the said transaction. However, since the agreement was executed around 15 years back, they unable to trace the same. As Director of the Company, hereby confirm that the Rental Deposits are in Compliance with the terms of agreement and there were no noncompliance observed by the statutory Auditors from the date of execution.

b. With regard to the observation of the OL in Para 18.09: It is submitted the said amounts i.e. Mr. Feroz Sattar Sait – 2,81,097/-, Mr. Muzrat Sattar Sait – 89,946/-, are the amount which the Company has expended for booking of tickets to Mr. Feroz Sattar Sait and Mr. Muzrat Sattar Sait as the Company’s business was travelling and booking agents. This was in the ordinary course of business. However, he said amounts were not repaid by Mr. Feroz Sattar Sait and Mr. Muzrat Sattar Sait. Since the said amount was due from long period, the Company decided to write off the dues in FY 2017-2018 after complying with the accounting standards. The same was observed by the statutory Auditor and no noncompliance has been reported.

c. With regard to the observation of the OL in Para 18.08: It is submitted by the Second Transferor Company that Cutchi Memon Jamath is a social and charitable organization. The Jamath requested for an interest free loan of Rs. 1 crore for the construction of their Cutchi Memon Jamath Khana (Community Hall), at Kamraj Road, Bangalore, Accordingly, Rs.1 Crore was given as interest free loan. Their request letter & deposit receipt is held on our files. The same was repaid to the Company during the financial year 2019-20. Consequent to the transfer of the business of shopping complex and hotels to Mr. Feroz Sattar Sait as ongoing business concern at book value, Rs.54,93,205,57 was determined as the consideration payable by Mr. Feroz Sattar Sait to Safina Hotels Pvt. Ltd. Accordingly, this asset (loan) was created in the books of Safina Hotels Pvt Ltd. It was the understainding between Safina Hotels Pvt Ltd and Mr. Feroz Sattar Sait that the consideration amount shall be paid by Mr. Feroz Sattar Sait within a span of 8 years and this shall not bear any interest. Out of Rs.54,93,205.57, Rs. 45,00,000/- has been repaid by Mr. Feroz Sattar Sait during the year 2019-20.

d. With regard to the observation of the OL In para 18.10: It is submitted by the Second Transferor Company that the discussion with the IT department are in process and the same will be adjusted towards the dues from Company as per the below point. The Transferee Company undertakes to ensure the compliance of the same.

e. With regard to the observation of the OL in Para 18.12: It is submitted by the record Transferor Company that the discussion with the IT department are in process and the same will be adjusted from the refund due to the Company as per the above point. The Transferee Company undertakes to ensure the compliance of the same.

13. In conclusion, it has been stated by the Regional Director that, on a consideration of the materials on record, the Scheme appears to be fair, reasonable and is not detrimental against the Members or Creditors or contrary to public policy and the same can be approved.

14. We have considered the facts of the case as mentioned in the Petition, the reports of the Regional Director, MCA, in which the para wise replies of the Petitioner Company to his observations have been duly examined, and the relevant provisions contained in the Companies Act, 2013 and other related Acts and Rules. In his report the Regional Director, MCA has concluded that the Scheme appears to be fair, reasonable and not detrimental against the Members or Creditors or contrary to public policy and the same can be approved. It also appears to us that the Scheme has been proposed for commercial expedience, as it seeks benefits from economies of scale; greater financial strength and flexibility for the amalgamated entity, optimizing the leverage with respect to debt and Equity, improve the competitive position of the combined entity, and better customer management and higher business opportunity etc.

15. On a consideration of the fact

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s of the case as mentioned in the preceding paragraphs, which are not elaborated here again to avoid duplication and repetition, we are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved by the Boards of both First petitioner and Second Petitioner No.2 of Transferor and Transferee Company, is hereby sanctioned as prayed, and in view whereof, this Tribunal passes the following further Order: (1) Sanctioning the Scheme of Amalgamation should not be construed as an order in any way granting exemption from payment of Stamp Duty, taxes or other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specially required under any law, and the same shall be dealt with by the respective Authority in accordance with the extant Laws and Rules governing such Duty, taxes or other charges, as applicable; and (2) The Transferor Company be transferred without further act or deed to the Transferee Company and accordingly, the same shall, pursuant to section 232 of the Companies Act, 2013, be transferred to and vest in the Transferee Company for all the stage and interest of the Transferor therein, but subject nevertheless, to all the charges now affecting the same; and (3) All the liabilities including taxes and charges, if any, and duties of the Transferor Company be transferred without further act or deed to the Transferee Company and accordingly, the same shall, pursuant to Section 232 of the Companies Act; 2013, be transferred to and become the liabilities and duties of the Transferee Company; and (4) The tax implications, if any, arising out of the Scheme, as also various transactions with related parties, and cessation of liabilities of loan repayments etc. are subject to final decision of Concerned Tax Authorities and the decision of the Concerned Tax Authorities shall be binding on the Transferee Company; and (5) All the proceedings, legal or otherwise, now pending by or against the Transferor Company be continued by or against the Transferee Company, if any; and (6) Any liability/remaining expenditure arising from non-compliance to the provisions contained in section 135, shall stand transferred to and be the liability of the Transferee Company and the Undertaking given in this regard shall be fulfilled; and (7) The Petitioner Companies shall provide all necessary information and documents to complete the Technical Scrutiny in respect of Safina Hotels Pvt. Ltd. for the relevant Financial Years, as undertaken and make all disclosures with regard to the same before the ROC; and (8) The Petitioners shall approach the ROC for the adjudication of non-compliance to the provisions of section 203 of the Companies Act 2013, on account of non-appointment of Company Secretary as required therein; and (9) The petitioner Companies shall within thirty days of the date of the receipt of this Order cause a certified copy of this Order along with a copy of Scheme of Amalgamation to be delivered to the Registrar of Companies for registration in accordance with applicable rules and regulations; and (10) The Petitioner Companies shall file all the due Statutory Returns immediately, if any. (11) The Appointed Date shall be 01st April, 2018; and (12) Transferor Company or its Authorized Signatories are directed that after the completion of the process of amalgamation to handover the possession of the Books of Accounts and other relevant documents of the Transferor Company to the Transferee Company for the purpose of section 239 of the Companies Act, 2013; (13) This Order is limited to the Scheme of Amalgamation, and it will not come in the way of Registrar of Companies or any other authority to take appropriate action(s) in accordance with law, for any other violations/offences, if any, committed by the Company or any of its personnel prior or during the approval of the Scheme; (14) If any of the Companies party to this Scheme contravene any of the provisions of section 232, hey shall be liable to be punished with fine as contemplated in section 232(B) of the Act; (15) Any person shall be at the liberty to apply to the Tribunal in the above matter for any directions that may be necessary: (16) C.P. (CAA) No.20/BB/2019 is disposed of accordingly. Pending IA’s if any, also stand disposed of.
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