Flipkart Logistics Pvt. Ltd. & Ors vs Regional Director & Ors

1. Flipkart Logistics Pvt. Ltd. No. 111, Brigade Manae Court, 1st Floor, Industrial Layout, Koramangala Bengaluru-560095. 2. Adiquity Technologies Pvt. Ltd. No. 111, Brigade Manae Court, 1st Floor, Industrial Layout, Koramangala Bengaluru-560095. 3. Instakart Services Pvt. Ltd. No. 111, Brigade Manae Court, 1st Floor, Industrial Layout, Koramangala Bengaluru-560095. ...Appellants Versus 1. Regional Director, South East Region 3rd floor, Corporate Bhavan, Bandlagunda Nagole, Tattiammaram, Hayat Nagar Nagole, Ranga Reddy District Hyderabad- 560068 2. Registrar Of Companies, Karnatka Kendriya Sadan, 2nd Floor, E Wing, Koramangala, 2

Bengaluru- 560034 3. Official Liquidator, 12th Floor, Raheja Towers, Mahatma Gandhi Road, Bengaluru- 560001. ...Respondents Present:

For Appellant: Mr. Krishnendu Dutta, Ms. Vishrutyi Sahni and Ms. Mehak Khuranna, Advocates. For Respondent: Mr. P.S. Singh, Advocate for Sr. Panel Counsel UOI for R-1 and R-2.

ORDER

13.12.2019 The present appeal has been filed by the Appellants challenging

the order date 16th January, 2019 passed by the National Company Law Tribunal

(NCLT), Bengaluru Bench in C.P. (CAA) No. 07/BB/2018.

2. The Appellants Jointly filed petition for amalgamation u/s 230 to 232 of the

Companies Act., 2013 of the present Appellant Nos. 1 and 2 as Transferor

Companies with Appellant No. 3 as the Transferee Company.

3. The Scheme for sanction proposed has one "M/s. DSYN Technologies Private

Limited" also as another Transferor Company which is in the jurisdiction of

'National Company Law Tribunal, Chandigarh Bench, for which separate petition

has been filed in Jurisdictional NCLT at Chandigarh and, it is stated by the learned

counsel for the appellant that, the same is pending awaiting result of the present

appeal.

Company Appeal (AT) No. 124 of 2019 3

4. Learned counsel for the Appellants states that the matter had come up before

the Bengaluru Bench within whose jurisdiction the present Appellants are situated.

The first motion the petition was filed and the same was allowed wherein meeting

of the Creditors of the Appellants were dispensed with.

5. It is stated that subsequently, second motion petition was filed in which the

present impugned order dated 16th January, 2019 came to be passed.

It is stated that the Ld. Tribunal solely because there was an enquiry

pending against group company "Flipkart Internet Private Limited" has rejected the

Petition and consequently the Scheme of Amalgamation of the Appellants was not

sanctioned.

It is stated that one of the group companies of the Appellants is

undergoing an inquiry although the Appellants are not party to any such inquiry.

It is stated that the said group company, relating to which inquiry is

going on is not party to Amalgamation and thus, according to the learned counsel

for the Appellants the objection was unfounded.

6. The learned counsel for the Appellants has referred to para 12 and 13 of the

impugned order which reads as under:-

"12. After hearing the Counsel for the Petitioner Companies and

considering the materials on record, it is observed that the

Transferor Company No. 2, M/s. DSYN Technologies Private

Limited is not registered with Registrar of Companies, Bengaluru

and is subject to the jurisdiction of NCLT, Chandigarh bench. It is

further noted that the Registrar of Companies has stated that the

Company Appeal (AT) No. 124 of 2019 4

report of the Ministry of Corporate Affairs regarding the enquiry of

the group company, Flipkart Internet Private Limited will take

some time. Hence, we are of the opinion that the above

scheme may be resubmitted after the report from the

Ministry of Corporate Affairs is given and once the issue

crystallises as it may be premature to allow the Scheme as

of now.

13. Generally, it has been observed that companies which

are undergoing restructuring, file the applications (whether joint

or individual) together. In case a petition relating to one of the

parties in another pending petition is filed, the said fact ought to

be disclosed in the latter Petition. It is observed that the Petitioner

Company No. 3/Transferee company has recently been involved

in another amalgamation [C.P.(CAA) No. 25/BB/2018] wherein

the present proceedings, which were pending at the time of filing

of that Petition, were not disclosed in that Petition. It is seen that

the lack of any mention of the pendency of other proceedings

relating to the Transferee Company, which was simultaneously

being heard before this Tribunal, is incongruent with the

submissions made in the Petition."

7. It is argued by the learned counsel for the Appellants that what is

observed in the above paragraphs that the Registrar of Companies has stated

that report of the Ministry of Corporate of Affairs regarding the enquiry of the

Company Appeal (AT) No. 124 of 2019 5

group company, Flipkart Internet Private Limited will take some time was no

reason for the Tribunal to dispose of the matter saying the above scheme may

be resubmitted after the report from the Ministry of Corporate Affairs take a

decision.

8. Learned counsel states that impugned order shows in para 9 the

observations of Regional Director and noted:-

"The group company M/s Flipkart Internet Private Limited is

under inquiry and all the petitioner companies are having

related party transactions with the said entity. Hence, the

Transferee Company be directed to give an undertaking that it

shall get the offences arising out of inquiry compounded by filing

necessary compounding applications or liable for prosecution for

all the violations of the Transferor as well as Transferee

Company."

9. The learned counsel for the Appellants states they had submitted before the

Tribunal that the scheme takes care to ensure that liability of the Petitioner

Companies to remain liable if the inquiry against Flipkart Internet Private Limited

has findings proved against them but NCLT did not say any thing about it.

10. It is stated that the other reason, to reject the Petition was also not

sustainable. The Tribunal found fault with the Appellants for not disclosing

regarding proceeding relating to Flipkart Digital Media Private limited merging

with the Appellant No. 3 Transferee Company.

Company Appeal (AT) No. 124 of 2019 6

11. Learned counsel states that at page 290 of the Appeal at Annexure- A 16 is

the order, whereby merger of Flipkart Digital Media Private limited with the

present Appellant No. 3 was approved.

12. Learned counsel for the Appellants further submits that the Appellants

have already filed an undertaking before this Tribunal on behalf of the Transferee

Company which would be the resultant company vide Dairy No. 13289 and

relevant portion is as under:-

"4. In response to the aforesaid observation of the Regional

Director, the Appellants by way of an Affidavit dated 05-09-

2018 have stated that the undertaking as required by the

Regional Director is already present under clause 4(a) of the

Scheme of Amalgamation between the Appellants. The response

affidavit of the Appellants has been placed on record at

Annexure A-15 and the Scheme of Amalgamation between the

Appellants is placed on record at Annexure A-3.

5. Without prejudice to the aforesaid, I state that the Appellant

No. 3 being the Transferee Company herein specifically

undertakes to file necessary applications for compounding or be

liable for prosecution of violations, if any made out against

Appellant herein, based on the outcome of the enquiry as

against one of the group companies of the Appellants."

13. The learned counsel for the Respondent Nos. 1 and 2 submits that the

Respondents did not have any objection for the Amalgamation, as the stand of the

Company Appeal (AT) No. 124 of 2019 7

Respondents is that the Transferee Company should give undertaking to remain

liable for offences to the compounded or prosecution for any violations by the

Transferor and Transferee Companies.

14. The learned counsel referred to portion of the counter affidavit filed by the

Respondents, portion of which reads as follows :-

"The enquiry report of M/s Flipkart Logistics Private Limited

had been sent to the regional Director on 04/01/2019 for

further direction and to take action against the Company based

on the report and violation committed. Hence, a direction was

sought to the petitioner company to give an undertaking that it

shall get the offences compounded or face prosecution for the

violation pointed out against the transferor and transferee

companies."

15. Having heard learned counsel for both the sides, it appears to us that the

reason recorded in paragraph Nos. 12 and 13 of the impugned order by the Ld.

'National Company Law Tribunal' cannot be maintained.

16. The enquiry was not against any of the Transferor of Transferee Companies.

It was against Flipkart Internet Private Limited. The said Company is not subject

matter of the scheme. Apart from this, the Appellants have given undertaking as

mentioned above.

17. The other objection of the Ld. NCLT that information regarding one more

Company Flipkart Digital Private Limited merging with the Transferee Company

was not disclosed, is not such a big issue to non-suit the Appellants.

Company Appeal (AT) No. 124 of 2019 8

18. Learned counsel for both the sides agree that other than above two reasons

recorded by the Ld. NCLT in decline the second motion, there was no other reason.

19. The learned counsel for the appellant has pointed out the application by

way of second motion which was filed before the NCLT at Annexure- A 12 in which

the relevant prayer was in para 29 of D & E which reads as under:-

"D. That Scheme as annexed herewith and marked as

Annexure-1, may kindly be sanctioned by this Hon'ble Tribunal,

with or without modification(s), so as to be binding on said

Petitioner Companies and their respective shareholders and

creditors of Petitioner Companies and all concerned;

E. That Petitioner Company No. 1 and Petitioner Company

No. 2 shall stand dissolved without following the process of

winding up / liquidation on filing a certified copy of the order of

this Hon'ble Tribunal with the ROC; AND/OR......"

20. In the present appeal the prayer is to set aside part of the impugned

Judgment dated 16th January, 2019 rejecting the Scheme of

Amalgamation of the Appellants and allow the scheme of amalgamation

of the Appellants.

21(A) Going through the records and the considering the submissions made, we

set aside the impugned order and allow the prayer of the Company Appeal. We

sanction the Scheme proposed, as far as it relates to the Appellants with

modification that the Appellants Nos. 1 to 3 shall be bound by the undertaking as

given vide Diary No. 13289 relevant part of which is reproduced in para 15 Supra.

Company Appeal (AT) No. 124 of 2019 9

(B) We make it clear that the Appellant Nos. 1, 2 and 3, their Promoters and

Directors and Shareholders shall remain responsible for any liability, if any,

getting attracted against them due to the enquiry against "Flipkart Internet Pvt.

Ltd.".

(C) The Scheme as regards the Appellants will be treated as approved to the

extent of the Amalgamation of the Appellant Nos. 1, 2 and 3. We remit the matter

back to the Ld. NCLT and request to issue further formal order(s) required to be

issued, within a month of receipt of copy of this Judgment and order.

The appeal is disposed of accordingly. No costs.

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

[V. P. Singh] Member (Technical) R N/ m d /

Company Appeal (AT) No. 124 of 2019