Crown Beers India Private Limited vs The Regional Director South Eastern ...

In the matter of: Crown Beers India Private Limited CIN: U15531TG2007PTC052435 A Company incorporated under the Companies Act, 1956. Having its Registered Office at: 510/511, Minerva House, Sarojini Devi Road, Secunderabad - 500 003, Telangana Represented by its Director, Madavaraj, DIN09496054; Email: B.Madavaraj@in.ab-inbev.com ..... Appellant v.

1. The Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad Address: The Central Government, Regional Director Office, Third Floor, Corporate Bhavan, Ministry of Corporate Affairs, Government of India, Bandlaguda, Nagole, Hyderabad, 500 068, Telangana. Email: rd.ser@mca.gov.in ..... Respondent No. 1

2. Registrar of Companies, Hyderabad Address: Office of the Registrar of Companies, Hyderabad for Telangana, Second Floor, Corporate Bhavan, GSI Post, Near Indu Aranya, Thatte Annaram, Hyderabad, Telangana - 500 068 Email: roc.hyderabad@mca.gov.in .... Respondent No. 2

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 1 of 12 3. Official Liquidator, Minstry of Corporate Affairs, Address: The Official Liquidator, First Floor, Corporate Bhavan, Ministry of Corporate Affairs, Government of India, Bandlaguda, Via - Nagole, Tattiannaram, Bandlaguda P.O, Rangareddy District, Hyderabad - 500 068, Telangana Email: ol-hyderabad-mca@nic.in .... Respondent No. 3 Present: For Appellant : Mr. P.H. Arvind Pandian, Senior Advocate M/s. Pawan Jhabakh, Abishek Raman, Ashwin Raman, Jerin Asher Sojan, Advocates. For Respondents : Mr. S.Janarthanam, Advocate for R1 to R3.

For the Liquidator : Mr. Mahendar, Company Prosecutor.

WITH Company Appeal (AT) (CH) No. 96 of 2022 & IA No.800/2022 Under Section 421 of the Companies Act, 2013) (Arising out of the `Order' dated 31.05.2022 in I.A. No.2/2021 in CP(CAA)No.576/230/HDB/2019 connected with CA(CAA)No.986/230/HDB/2018, passed by the National Company Law Tribunal, Hyderabad Bench - II)

In the matter of: Crown Beers India Private Limited CIN: U15531TG2007PTC052435 A Company incorporated under the Companies Act, 1956. Having its Registered Office at: 510/511, Minerva House, Sarojini Devi Road, Secunderabad - 500 003, Telangana Represented by its Director, Madavaraj, DIN09496054; Email: B.Madavaraj@in.ab-inbev.com ..... Appellant v.

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 2 of 12 1. The Regional Director, South Eastern Region, Ministry of Corporate Affairs, Hyderabad Address: The Central Government, Regional Director Office, Third Floor, Corporate Bhavan, Ministry of Corporate Affairs, Government of India, Bandlaguda, Nagole, Hyderabad, 500 068, Telangana. Email: rd.ser@mca.gov.in ..... Respondent No. 1

2. Registrar of Companies, Hyderabad Address: Office of the Registrar of Companies, Hyderabad for Telangana, Second Floor, Corporate Bhavan, GSI Post, Near Indu Aranya, Thatte Annaram, Hyderabad, Telangana - 500 068 Email: roc.hyderabad@mca.gov.in .... Respondent No. 2

3. Official Liquidator, Minstry of Corporate Affairs, Address: The Official Liquidator, First Floor, Corporate Bhavan, Ministry of Corporate Affairs, Government of India, Bandlaguda, Via - Nagole, Tattiannaram, Bandlaguda P.O, Rangareddy District, Hyderabad - 500 068, Telangana Email: ol-hyderabad-mca@nic.in .... Respondent No. 3 Present: For Appellant : Mr. P.H. Arvind Pandian, Senior Advocate M/s. Pawan Jhabakh, Abishek Raman, Ashwin Raman, Jerin Asher Sojan, Advocates. For Respondents : Mr. S.Janarthanam, Advocate for R1 to R3.

For the Liquidator : Mr. Mahendar, Company Prosecutor.

JUDGMENT

(Virtual Mode) [Per; Ms. Shreesha Merla, Member (Technical)]:

1. Aggrieved by the Order dated 31.05.2022 passed by the Ld. NCLT

(National Company Law Tribunal), in I.A. No.2/2021 in CP (CAA) No.

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 3 of 12 576/230/HDB/2019 connected with CA (CAA) No.986/230/HDB/2018

the Transferor Company, M/s. Crown Beers India Private Limited

preferred these Appeals, under Section 421 of the Companies Act, 2013

(hereinafter referred to as 'The Act'). Since both these Appeals deals with

common facts, they are being disposed of by this common Order.

2. Company Petition No. 576/230/HDB/2019 connected with CA

(CAA) No. 986/230/HDB/2018 was preferred by the Appellant herein,

which is the Transferor Company, under Sections 230-232 of the Act,

seeking a direction to dispense a Meeting of the Secured Creditors of the

Appellant and for directions to convene the Meetings of the Equity

Shareholders, Preference Shareholders and Unsecured Creditors of the

Appellant, for the purpose of consideration of the Scheme. Vide Order

dated 06.02.2019, NCLT allowed the prayers of the Appellant in CA

(CAA) No. 986/230/HDB/2018 and directed the Appellant to convene the

Meetings of the Equity Shareholders and preference Shareholders. It is

submitted that the Appellant filed I.A. No.258/2019 seeking direction for

extension of the dates of the Meeting by a period of two months for the

various Meetings which were scheduled for 01.04.2019. NCLT, vide

Order dated 29.03.2019, allowed this extension by a period of two months

and directed the Appellant to hold the Meeting on 01.06.2019. Thereafter,

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 4 of 12 the Appellant filed I.A.343/2019 seeking directions to change the venue

and also the extension of the date of the Meeting to 18.06.2019. Vide

Order dated 06.05.2019, NCLT allowed the change of venue for the

Meetings as prayed for.

3. It is submitted that the Appellant had duly complied with the

directions and convened the Meetings of the Shareholders and Unsecured

Creditors wherein each class of the Stakeholders unanimously voted in

favour of the Scheme, subsequent to which the Appellant filed CP (CAA)

576/230/HDB/2019 before the NCLT seeking sanctioning of the Scheme.

It is submitted that vide Order dated 11.08.2019 NCLT had admitted a

Company Petition and directed the Appellant to publish the date of final

hearing by advertising and directed the Appellant to Issue Notices and

serve the relevant Statutory Authorities, namely the Regional Director,

Ministry of Corporate Affairs ('MCA'), Registrar of Companies ('RoC'),

the Official Liquidator and the Income Tax Department. It is stated that

the second Respondent namely, the RoC Hyderabad had issued a notice

dated 01.08.2019, seeking various clarifications and documentary proof to

which a detailed Reply along with the requisite documents were filed on

31.12.2019. The first Respondent/the Regional Director South Eastern

Region ('SER'), MCA, Hyderabad had also issued a notice dated

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 5 of 12 18.11.2019, for which the Appellant had given a very detailed Reply on

24.01.2020. The first Respondent filed a Report by way of an Affidavit

before the NCLT on 29.10.2019, and its second Report on 24.01.2020 and

third Report on 11.03.2020. Likewise, the second and third Respondents

have also filed their Reports before the NCLT and correspondence was

exchanged between the Appellants and Respondents on a continuous

basis. While so, the NCLT vide Order dated 26.02.2021 in CP (CAA)

1027/2020/MB filed by the Transferee Company, had directed that the

appointed date of the Scheme be changed from, 01.04.2018 to

01.04.2020. As there ought to be a common appointed date for the

implementation of the Scheme, the Appellant herein had filed I.A. 2/2021

seeking for modification for the appointed date from 01.04.2018 to

01.04.2020 in consonance with the direction of the NCLT Mumbai

Bench.

4. When this Application was pending before the NCLT, the Petition

praying for the sanction of the Scheme was decided vide the Impugned

Order. It is also submitted that the Report filed by the first Respondent in

I.A. 2/2021 was never served on the Appellant.

5. It is submitted by the Learned Counsel, on a query from the Bench

regarding the liberty given to the Petitioner Company to approach a fresh

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 6 of 12 after making proper rectification to the proposed Scheme, that it would

take considerable amount of time and the purpose of the Scheme of

Amalgamation, would be lost.

6. We observe from the record that the NCLT has gone into great

detail into the Reports received from the Statutory Authorities i.e., the

Regional Director, SER, MCA, Hyderabad, who filed the Reports on

30.10.2019, 27.01.2020, 12.03.2020 and 16.12.2021 together with the

Reports filed by the Official Liquidator dated 11.03.2020, 07.09.2021 and

09.11.2021 and also the reports received from the MCA and has observed

that there are multiple objections raised by the Regional Director and the

Official Liquidator, which have not been satisfied to the complete

satisfaction of the respective Statutory Authority. An Application to

amend the Scheme had also been moved, which is pending therefore, the

NCLT, while rejecting the instant Scheme, gave a liberty to the Petitioner

Companies/Appellants herein to approach afresh after making proper

rectifications to the proposed Scheme.

7. Some of the observations made by the Regional Director, SER in

their Additional Affidavit dated 16.12.2021 (fourth Report) are detailed as

hereunder:

"1. The contents/observations were pointed out by this Directorate vide Affidavits dated 29.10.2019

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 7 of 12 24.01.2020 & 11.03.2020 and have already requested the Hon'ble Tribunal to reject the petition and the Petitioner Company be directed to file a fresh scheme before this Tribunal.

2. On 23.08.2021, the counsel for the Petitioner Company had filed an IA No.2/2021 before this Hon'ble tribunal wherein (para 4) it has been stated that Hon'ble NCLT, Mumbai Bench vide its Interim Order dated 26:02.2021 in CP (CAA)/1027/2020/MB in CA(CAA)1554/2018/MB has directed the Transferee Company to change the appointed date of the Scheme of Amalgamation from 01.04.2018 (old appointed date) to 01.04.2020 (modified appointed date). As per the attendance cum order sheet dated 09.12.2021, the Hon'ble Tribunal has directed to file a memo confirming no objection. Directorate is of the view that the Petitioner Company may not merely, change the appointed date from 01.04.2018 to 01.04.2020, as there are certain observations of the Directorate as stated below:

i. As per the provisions of Section 230 of the Companies Act, 2013 r/w Rule 6 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 clearly states that where an application is made to the Tribunal under Section 230 for sanctioning of a scheme involving merger or amalgamation requiring valuation report shall be made by a Registered Valuer as per the provisions laid down under Section 247 of the Companies Act, 2013 with regard to latest audited financial statements of the Company including consolidated financial statements.

ii. As per the provisions of Section 230 of the Companies Act,2013 r/w Rule of Companies

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 8 of 12 (Compromises, Arrangements and Amalgamations) Rules, 2016 clearly states that where an application is made to the Tribunal under Section 230 for sanctioning of a scheme involving merger or amalgamation, the report requiring a certificate issued by Auditor of the Company, with regard to latest audited financial statements of the Company including consolidated financial statements, to the effect that the Accounting Treatment, if any, proposed in the Scheme of compromise or arrangement is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013.

3. As the Petitioner, Company proposes to change the appointed date from 01.04.2018 to 01.04.2020, the Petitioner Company is required to file its due latest financial statements and then has to comply with the conditions stated at as stated at para 2 (i) & (ii) above and the same has to be approved by the Shareholders and Creditors in their respective meetings. Whereas, as per Company Master Data the latest Balance. Sheet filed by the Petitioner Company, is for the period ended 31.12.2019 and Transferee Company for the year ending 31.03.2019 only and not filed its die, balance sheet for the year 2019-2020 & 2020-2021 and valuation report as required to be made on the latest financial statement and the same is not done by the Petitioner Company. It appears that the proposed change in the appointed date from 01.04.2018 to 01.04.2020 was not approved by the members and creditors.

4. The Petitioner Company in its IA has not stated whether, the said IA have been served to all the Regulatory Authorities i.e. Official Liquidator, RBI/FEMA etc. as there might be changes in the

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 9 of 12 shareholding pattern, financial statements, profit & loss account, exchange ratio, valuations, increase/ decrease of Income Tax Demands, if any. As on 31.03.2018, there are seven shareholders. i.e. Anheuser-Busch Netherlands Holdings II B.V., Anheuser-Busch Netherlands Holdings I.B.V., Anheuser-Busch Worldwide Investments Inc. Budwiser Hong Kong Holding Company Limited and Harbin Brewery Group Holding holding 58,45,67,979 equity shares and all the seven shareholders are foreigners.

5. The Hon'ble Tribunal may be pleased to dispose of the petition, directing the Petitioner Company to file a fresh Scheme after filing their due Statutory Return and also to issue directions for the observations as made in the affidavit dated 11.03.2020 filed before the Hon'ble Tribunal on 12.03.2020."

8. It is also relevant to detail the observations made by the `Official

Liquidator', vide their Additional Affidavit dated 09.11.2021:

i."As per the Financial Statements as at 31.12.2019 and 31.03.2020, the Transferor Company is a loss-making company.

ii.The Transferor Company filed IA along with modified Scheme for change of Appointed date from 01.04.2018 to 01.04.2020. However, the share capital is not updated as on revised appointed date (i.e., 01.04.2020) and remained the same as on old appointed date (i.e., 01.04.2018).

........................"

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 10 of 12

9. Keeping in view the aforenoted observations, whereby the

`Statutory Authorities', had sought clarifications from the `Appellant

Company' herein, this `Tribunal', do not find any `irregularity' or

`infirmity', in the directions passed by the `Tribunal' (`National Company

Law Tribunal'). The `Regional Director', is a `Public Authority', looking

after the interest of the `Public/Shareholders/Investor' at large, and if

there are any observations, made by the `Regional Director' that there

were `irregularities' and `non-compliances' that were present, it is

imperative that the `Company' must comply with the provisions of Law,

and not to `violate', any `Public Policy', failing which, the `National

Company Law Tribunal', is empowered to reject the `Petition', seeking

approval of the `Scheme'. Before the Scheme gets approved, under

Section 230 of the Companies Act, 2013, the `Company', must, be in

compliance with all the provisions required by the `Statutory' and `Public

Authorities'.

10. Before the sanctioning of the `Scheme', under Section 230 of the

Companies Act, no action ought to be pending against the `Company', by

any `Public Authority'. The contention of the Learned Counsel for the

Appellant that I.A. 2 / 2021, seeking change of date was kept pending, has

also been addressed to by the `Tribunal', in the `impugned order' and the

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 11 of 12 same has not been approved or dealt with on account of the `multiple

objections', raised by the `Regional Director' and the `Official

Liquidator', which were not been complied with, to the `subjective

satisfaction' of the respective `Statutory Authorities'.

11. In the light of the foregoing(s), this `Tribunal', does not find any

ground(s), to interfere with the well-reasoned `Order' of the `Tribunal'

(`NCLT'), especially, keeping in view that a `Liberty' was indeed granted

to the `Appellants' herein, to file a `Petition' afresh `rectifying the

irregularities', pointed by the concerned `Authorities'.

12. Hence, these `Appeals' fail and accordingly they are dismissed in

Limine at the `Admission Stage' itself. No Order as to costs. The

connected pending `Interlocutory Applications', if any, are closed.

[Justice M. Venugopal] Member (Judicial)

[Ms. Shreesha Merla] Member (Technical) 18/01/2023 HIMANSHU / TM

Comp. App. (AT) (CH) No. 95/2022 & I.A. Nos. 797 & 798/2022 & Comp. App. (AT) (CH) No. 96 of 2022 & I.A. No. 800/2022 Page 12 of 12