Approval of Merger Scheme involving 14 subsidiaries with Patel Engineering Ltd. - Compliance and Notification Directions

The Tribunal approved the Scheme of Merger by Absorption involving 14 wholly-owned subsidiaries with Patel Engineering Limited. Meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors were dispensed based on written consents obtained. The Applicant Companies were directed to comply with statutory requirements and notify regulatory authorities. Addressing pending Insolvency and Bankruptcy Code proceedings, the companies were directed to issue notices of the Scheme to the Petitioners. The Transferee Company was instructed to submit Consent Affidavits from Equity Shareholders and Unsecured Creditors by specified dates and comply with notification procedures.

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Issues Involved:
1. Approval of the Scheme of Merger by Absorption.
2. Dispensation of meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors.
3. Compliance with statutory requirements and notifications to regulatory authorities.
4. Addressing pending Insolvency and Bankruptcy Code (IBC) proceedings.

Detailed Analysis:

1. Approval of the Scheme of Merger by Absorption:

The Scheme involves the merger of 14 wholly-owned subsidiaries with Patel Engineering Limited (Transferee Company) under Sections 230 to 232 of the Companies Act, 2013. The subsidiaries include Patel Energy Resources Limited, PEL Power Limited, PEL Port Private Limited, Patel Energy Projects Limited, Patel Energy Assignment Private Limited, Patel Energy Operations Private Limited, Jayshe Gas Power Private Limited, Patel Thermal Energy Private Limited, Patel Hydro Power Private Limited, Zeus Minerals Trading Private Limited, Patel Concrete & Quarries Private Limited, Patel Lands Limited, Patel Engineers Private Limited, and Phedra Projects Private Limited.

The Board of Directors of the Transferee Company approved the merger on November 13, 2020, and the Transferor Companies on January 21, 2021, with an appointed date of April 1, 2021. The Transferor Companies are wholly-owned subsidiaries, and their share capital is owned and controlled by the Transferee Company.

2. Dispensation of Meetings for Equity Shareholders, Secured Creditors, and Unsecured Creditors:

The Tribunal dispensed with the meetings of Equity Shareholders for the First to Sixth Applicant Companies as they procured written consent affidavits from all Equity Shareholders. Similarly, there are no Secured Creditors in these companies, and they procured written consents from Unsecured Creditors constituting more than 90% in value. Therefore, meetings for Unsecured Creditors were also dispensed.

For the Sixth Applicant Company, the meeting of the sole Debenture Holder was dispensed as written consent was obtained.

For the Transferee Company, the Tribunal considered previous judgments and dispensed with the meetings of shareholders, creditors, or debenture holders, as no new shares were issued, and the creditors' claims were unaffected. The Transferee Company procured written consents from all 22 Secured Creditors, amounting to INR 1881.81 crores.

3. Compliance with Statutory Requirements and Notifications to Regulatory Authorities:

The Applicant Companies were directed to serve notices along with the Scheme to:
- Concerned Income Tax Authorities
- Central Government through the Regional Director, Western Region, Mumbai
- Registrar of Companies, Mumbai
- Securities and Exchange Board of India (SEBI) (for the Transferee Company)
- BSE Limited (for the Transferee Company)
- National Stock Exchange of India Limited (NSE) (for the Transferee Company)
- Concerned Goods and Service Tax Authorities

These authorities were given 30 days to submit representations, failing which it would be presumed they had no objections.

The First to Sixth Applicant Companies were also directed to serve notice to the Official Liquidator, with a Chartered Accountant appointed to scrutinize their books of accounts for the last five years.

4. Addressing Pending Insolvency and Bankruptcy Code (IBC) Proceedings:

The Tribunal noted seven pending IBC proceedings against the Applicant Companies. The Applicant Companies were directed to issue notices of the Scheme to the Petitioners of these IBC proceedings and obtain specific consents to be submitted at the time of filing the Company Petition.

Order:

The Transferee Company must submit Consent Affidavits from Equity Shareholders or hold a meeting on December 22, 2021. Notices for this meeting must be sent 30 days in advance by Registered Post-AD/Speed Post and email. An advertisement of the notice must be published in 'Business Standard' and 'Navshakti'.

The Transferee Company must also issue notices to all Unsecured Creditors and file Consent Affidavits of at least 90% in value at the time of filing the Company Petition.

The Applicant Companies must file an affidavit of service and compliance within 10 working days after serving the notices to all regulatory authorities.

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