Anuroop Builders & Development Pvt. Ltd vs Regional Director, Northern Region

1. Anuroop Builders & Development Pvt. Ltd. ....Appellants 1E, Jhandewalan Extension, (1 to 6 Transferor Naaz Cinema Complex, Companies) New Delhi-110055

2. Havard Builders & Developers Pvt. Ltd. 1E, Jhandewalan Extension, Naaz Cinema Complex, New Delhi-110055

3. Kambod Real Estates Pvt. Ltd. 15, Shivaji Marg New Delhi-110015

4. Niabi Builders & Developers Pvt. Ltd. 15, Shivaji Marg New Delhi-110015

5. Tatharaj Estates Pvt. Ltd. 15, Shivaji Marg New Delhi-110015

6. Vismay Builders & Developers Pvt. Ltd. 1E, Jhandewalan Extension, Naaz Cinema Complex, New Delhi-110055 With 7. Dome Builders & Developers Pvt. Ltd. ..... Appellant no. 7 1E, Jhandewalan Extension, (Transferee Naaz Cinema Complex, Company) New Delhi-110055

Vs 1. Regional Director, Northern Region ....Respondents Government of India, Paryava Bhawan CGO Complex, Lodhi Road New Delhi -2-

2. Registrar of Companies NCT of Delhi & Haryana 4th , IFCI Tower, 61, Nehru Place New Delhi-110019

Present: For Appellants: Mr. Ravi Bassi and Mr. Sheel Kumar, Advocates.

For Respondents: C. Balooni, Company Prosecutor for R.D (NR)

ORDER

01.12.2017: 1) The Company Appeal 384 of 2017 is arising out of impugned

order dated 21.08.2017 passed in CAA 86 (PB) 2017 connected with CA (CAA)

26(PB)/2017 by the National Company Law Tribunal, Special Bench, New Delhi

( NCLT in Short).

2) The appellant had filed the said petition before the learned NCLT for

amalgamation of 6 companies as mentioned in the memo of parties with Dome

Builders & Developers Pvt. Ltd. The counsel for appellant is submitting that

these 6 companies which are to be amalgamated with Dome Builders &

Developers Pvt. Ltd. are closely held companies having common promoters. It is

stated that the respondent no. 1 and 2 Regional Director, Northern Region and

Registrar of Companies are formal parties. It is stated that Regional Director,

Northern Region has already given no objection to the amalgamation in the

NCLT.

3) The learned NCLT while considering the scheme of amalgamation

referred to rule 6 of the Companies (Compromises, Arrangements and

Company Appeal (AT). No. 383 & 384 -3-

Amalgamations) Rules, 2016 and also referred to provisions of Section 232(2) of

the Companies Act 2013 (Act-in brief) and observed in Para 11 to 13 as under:

"11. The above provisions of section 232(2) of the Act read with sub

rule (3) of the Rule 6 clearly places an onus on the company to make

a disclosure of all material particulars to enable the shareholders to

make their decision in relation to the scheme proposed by the

company. If that were so for the shareholders concerned, obviously

to this Tribunal the duty cast on the companies should be equal, if

not more when they are seeking sanction and thereby, seek the seal

of approval of this Tribunal by the companies involved in the

scheme.

12. More pertinently under section 232 (3) of the Act, the Tribunal is

required to pass an order making provision for the matters specified

therein including:

(a) XXX

(b) "the allotment or appropriation by the transferee company

of any shares, debentures, policies or other like instruments in the

company which, under the compromise or arrangement, are to be

allotted or appropriated by that company to or for any person."

(c) XXX

(d)XXX

13. From the above, it is evident that the Tribunal is required to pass

an order while sanctioning the scheme inter-alia relating to the

Company Appeal (AT). No. 383 & 384 -4-

allotment of shares in the Transferee Company in lieu of transfer by

the Transferor Companies or in other words consideration and Share

Exchange Ratio. Since the same has not been disclosed in the

scheme or in the annexures or in the petition, we are forced to

dismiss the petition for non-disclosure of material particulars."

4) The appellants on finding that the valuation report was not on record

has been held by the learned NCLT moved application for review/ recall of the

judgment dated 21.08.2017 filing C.A. No. 295 (PB)/2017 in CA (CAA)

26(PB)/2017. The application for review/ recall has been rejected on

03.11.2017 & this order is impugned in Competition Appeal (AT) 383/2017. In

this order dated 03.11.2017 the learned NCLT after hearing the Appellants

observed in para 2:-

"The primary reason for the dismissal was on the basis that detailed

disclosures as required to be made under the provisions of

Companies Act, 2013 as well as the Companies (Compromises,

Arrangements and Amalgamations) Rules, 2016 (for brevity the

Rules) have not been compiled with in as much as the share

exchange ratio has not been disclosed in the Scheme of

Amalgamation anywhere and if there is any, the same has not been

indicated, as brought about in the order dated 21.08.2017. The

Valuation Report on which reliance was placed had also been not

produced before this Tribunal. In view of the elaborate order passed

on merits in the Petition due to lack of material disclosures, the

Company Appeal (AT). No. 383 & 384 -5-

Petition came to be dismissed after due consideration of provisions

of law and the records which were available before this Tribunal at

the time of disposal of the Petition."

5) Before the learned NCLT the appellants claimed in application for

review that the First Motion Application which was moved seeking directions of

the Tribunal whether to convene or dispense with meetings, the necessary

valuation report had been annexed. Against this, the learned NCLT observed as

under:

"However, careful perusal of the First Motion Application discloses

that no such valuation report has been annexed as contended by the

Petitioner/ Applicant. It is also evident that a specific request letter

has been moved on 22.08.2017/23.08.2017 to obtain certified copy

of valuation report alleged to have been annexed by the Petitioners.

It is pertinent to note the observations made by the Bench Officer to

the following effect:

"As per record, page No. 180 to 186 are not placed in

the Paper Book. CA (CAA) 26(PB)/2017 (First Motion)

and CA (CAA) 86(PB)/2017, both the Paper Books have

been checked."

The above endorsement made by the Bench Officer dated

30.08.2017 is in response to Counsel for Applicant's application for

certified copy of valuation certificate dated 06.03.2017 which clearly

affirms that no such valuation report as sought to be projected to

Company Appeal (AT). No. 383 & 384 -6-

have been enclosed had indeed been enclosed for the consideration

of this Tribunal. We are not standing on the technicalities of the

matter. However, non-compliance with the provisions of Companies

Act, 2013 along with Attendant Rules framed by the Central

Government in relation to scheme of amalgamation has not been

complied with by disclosing material facts and particulars before

this Tribunal while seeking sanction of the scheme of amalgamation,

as contemplated between the Applicant Companies, which is quite

serious. Evaluation and fixing the exchange ratio based on the share

valuation are material aspects and the entire scheme hinges on it

and when the petitioners are seeking to evade from giving such

material particulars it was incumbent on this Tribunal to come down

heavily on such laxity or willful non-disclosure as the case may be."

6) It was then observed by the NCLT that it was of the view that

evaluation and fixing the exchange ratio based on the share valuation are

material aspects and the entire scheme hinges on it and when the petitioners

are seeking to evade from giving such material particulars it was incumbent on

the Tribunal to come down heavily on such laxity or willful non-disclosure as

the case may be. The Tribunal was of the view that considering the position of

law & facts in relation to review or recall they were dismissing the application.

7) Aggrieved by both these orders, the present appeals have been filed.

8) We do not find that there is any error as such in both the impugned

orders. At this stage, the learned counsel for the appellants is submitting that

Company Appeal (AT). No. 383 & 384 -7-

in the matter already necessary steps have been taken to get the no objection

of the Regional Director and Official Liquidator. The counsel is submitting that

the appellants are willing to again go back to the shareholders as well as board

of directors of all the companies which are to be amalgamated with Dome

Builders & Developers Pvt. Ltd. and the appellants are willing to do the exercise

again to the extent of getting no objection of the board of directors as well as

consent of the shareholders circulating the valuation report, copy of which has

been filed at Annexure A-2 in Company Appeal 383 of 2017. The counsel

submits for the appellants are ready to do whatever compliances the learned

NCLT may ask and makes the request for remand of the matter.

9) It appears to us that the appellants still have an option of initiating

the whole exercise again even if the present petition has been disposed in the

manner as done by NCLT. Still it would be more appropriate, in order to save

time and avoidable difficulties to the parties by setting aside both the

impugned order and remanding back the matter, with certain directions. We

are considering remand also looking to the fact that although Bench Officer

reported that pages 180 to 186 were not placed in the Paper Book (while

appellants claimed they had filed Valuation Report), there is scope to say that

claims of appellants were not baseless. After all, there is nothing to show

Registry objecting earlier, that pages as mentioned are/ were not filed.

10) For such reasons the impugned orders in both these appeals are

quashed and set aside. CA(CAA)86(PB)/2017 connected with

CA(CAA)26(PB)/2017 is restored to the file of the National Company Law

Company Appeal (AT). No. 383 & 384 -8-

Tribunal Special Bench, New Delhi. The Tribunal will give opportunity to the

appellants to revert back to the board of directors and the shareholders as well

as directors of companies which are to be amalgamated with Dome Builders &

Developers Pvt. Ltd., as well as to Directors & shareholders of Dome Builders &

Developers Pvt. Ltd. alongwith the valuation report and such other information

as the learned NCLT may like to prescribe for the appellants to share with the

board of directors, shareholders and creditors for amalgamation. It will be open

for the learned NCLT to specify further and other compliances which it would

like to insist upon the appellants to do for the purpose of amalgamation as

sought by them.

11) These company appeals are disposed accordingly.

(Justice A.I.S. Cheema) Member (Judicial)

(Balvinder Singh) Member (Technical) sh/nn

Company Appeal (AT). No. 383 & 384