Substantial changes to merger schemes require compliance with procedural mandates outlined in the Companies Act, with negligence in identifying errors not excusing adherence to such processes.

Per: Sh. Charanjeet Singh Gulati, Member (Technical

1. M/s. PIRAMAL CORPORATE SERVICES PRIVATE LIMITED (formerly known as Nicholas Piramal Pharma Private Limited), (Applicant Company) has filed the present Application to modify Clause 5.1 of the Scheme of Merger by Absorption of Piramal Texturising Private Limited (Transferor Company 1) and Vulcan Investments Private Limited (Transferor Company 2) and Piramal Corporate Services Limited (Transferor Company 3) with Nicolas Piramal Private Limited (Transferee Company) and their respective Shareholders (Scheme) inter alia seeking the following reliefs:

a) That the consideration clause 5 in Scheme of Merger be amended in pursuance of the Valuation Report (Annexure G) and as per the Schedule annexed to this Application;

b) That the corresponding changes in the Order dated 30th August 2018 be allowed by issuing corrigendum;

Facts of the Case and Submission of the Applicant, in Brief:

2. Board of Directors of the Applicant Company passed Board Resolution for sanctioning of the Scheme of Merger by Absorption (Scheme) on 16.03.2018. Clause (h) of Board Resolution dated 16.03.2018 authorises the Applicant Company “to make any alterations/ changes to the Scheme as may be expedient necessary which does not materially change the substance of the Scheme particularly for satisfying the requirements or conditions imposed by the Central Government or the NCLT of competent jurisdiction or any other authority.

3. The Scheme was sanctioned by this Tribunal in C.P.(CAA) 2012/ MB/C- III/2018 vide order dated 30.08.2018.

4. Thereafter, the Applicant Company applied for adjudication before the Office of the Collector of Stamps (Enforcement I), Mumbai (Collector Office). During the adjudication process, the Collector Office issued a Demand Notice cum Show- Cause Notice dated 16.03.2022 to the Applicant Company.

5. In the said notice the Applicant Company was called upon to show cause why stamp duty for a sum of Rs. 37,27,65,460/- (Rupees Thirty-Seven Crore Twenty-Seven Lakhs Sixty-Five Thousand Four Hundred and Sixty only) computed along with a penalty for sum of Rs. 3,72,76,540/- (Rupees Three Crore Seventy-Two Lakhs Seventy-Six Thousand Five Hundred and Forty only) should not be levied upon the Applicant Company on the order dated 30.08.2018.

6. The Applicant Company replied to the Show-cause Notice dated 16.03.2022 vide letter dated 21.03.2022, clarifying the consideration clause of the Scheme. Subsequently, the Applicant Company filed reply dated 24.03.2022 raising the contention that due to typographical error, the exchange ratio mentioned for Preference Shares of Transferor Company No.3 is wrongly interpreted. The incorrect exchange ratio for preference shareholders is stated in the Scheme as 1: 95721

7. In its reply letter dated 24.03.2022, the Applicant Company relied upon the valuation report issued by Price Waterhouse & Co LLP dated 16.03.2018. The relevant paragraph from the said report is as under:

“…

95,721 NCRPS (of face value of INR 10 each) of NPPPL shall be issued and allotted as fully paid up to the NCRPS of PCSL, on existing terms, in the proportion of their respective holding of NCRPS in PCSL”

8. The Issued Share Capital of the Transferor Company 3 in respect of the Preference Share Capital as on the date of sanctioning the Scheme was held by the following Shareholders: