9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 500 - Tri - Companies LawApproval of Scheme of Arrangement - Sections 230 to 232 of the Companies Act, 2013, and other applicable Provisions of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - HELD THAT - From a perusal of the material brought on record, it appears that the Scheme of Arrangement is fair, reasonable and is not detrimental to the Members or Creditors. The Scheme has not been opposed by the RD. As per the ROC, there are no prosecutions, complaints, technical scrutiny/ inspections pending against the Petitioner Companies. Further, as per the Petition, the Scheme in question will enable a focussed and concentrated approach; maximize opportunities for strategic partnership; help in fundraising and future growth; help in expansion and take advantage of market opportunities; induct new investors and reorganise its capital structure etc. Hence, the Scheme appears to have been framed for commercial expediency and in the interest of the Petitioner Companies and all stakeholders. A Scheme of Arrangement proposed by a Company for commercial expediency and in its commercial wisdom cannot ordinarily be interfered with and has to be sanctioned if the relevant provisions of the Companies Act, 2013 are met and no prejudice is caused to any of the stakeholders. The Board of Directors of the both Demerged as well as the Transferee Company have in their respective meeting held on 16.09.2020 approved and adopted the Scheme of Arrangement. The other requisite stakeholders have given their consent. However, it is a settled position of law that any sanction to a Scheme of Arrangement under the extant provisions of Companies Act, does not imply waiver of any liability or legal action for violation of the provisions of any Statute or the Rules made thereunder, or to prevent any statutory authority from initiating action for any such violation. The procedure specified in sub-sections (1) and (2) of Section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Arrangement, as approved by the Boards of the Petitioner Companies, can be sanctioned - Application allowed.
Issues Involved:
1. Approval and adoption of the Scheme of Arrangement. 2. Compliance with statutory requirements and provisions of the Companies Act, 2013. 3. Observations and objections raised by the Registrar of Companies (ROC) and the Regional Director (RD). 4. Clarifications and responses provided by the Petitioner Companies. 5. Final judgment and directions by the Tribunal. Detailed Analysis: 1. Approval and Adoption of the Scheme of Arrangement: The Petitioners, M/s. Embassy Real Estate Developments and Services Pvt. Ltd. (Demerged Company) and M/s. Embassy Office Ventures Pvt. Ltd. (Transferee Company), sought the Tribunal's sanction for a Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013. The Scheme involves demerging the Services Undertaking of the Demerged Company into the Transferee Company. The Board of Directors of both companies approved the Scheme on 16.09.2020, highlighting benefits such as focused management, strategic partnerships, fundraising, and operational efficiency. 2. Compliance with Statutory Requirements and Provisions of the Companies Act, 2013: The Petitioner Companies complied with the procedural requirements, including filing necessary applications and obtaining approvals from shareholders and creditors. No investigations or proceedings were pending against the companies under relevant sections of the Companies Act, 1956 or 2013. The statutory auditors certified that the proposed accounting treatment complies with Indian Accounting Standards. 3. Observations and Objections Raised by the Registrar of Companies (ROC) and the Regional Director (RD): The ROC and RD raised several observations: - The Scheme did not specify the nature of service activities to be merged. - The Appointed Date was ambiguously defined as the Effective Date. - Clarifications were needed regarding the shareholding pattern and related party transactions. - The need for transferring the Service Undertaking was questioned. - Compliance with Section 188 of the Companies Act, 2013, was required. 4. Clarifications and Responses Provided by the Petitioner Companies: In response, the Petitioners clarified: - The Demerged Company acquired equity shares and CCDs of the Transferee Company on 09.11.2020. - The Services Undertaking includes maintenance, engineering, property services, and administration. - The Appointed Date is defined as the Effective Date, tied to the occurrence of specific events. - The shareholding pattern was updated and certified by an independent Chartered Accountant. - The Transferee Company filed an adjudication application for compounding the delay in appointing a Company Secretary. - The Scheme aims to consolidate business operations and enhance financial strength for potential investments. - Related party transactions were conducted in compliance with Section 188. 5. Final Judgment and Directions by the Tribunal: The Tribunal found the Scheme of Arrangement fair, reasonable, and not detrimental to members or creditors. It sanctioned the Scheme with the following directions: - The Appointed Date shall be the Effective Date. - Sanctioning the Scheme does not exempt payment of Stamp Duty, taxes, or other charges. - The Services Undertaking of the Demerged Company shall be transferred to the Transferee Company. - All liabilities, including taxes and duties, shall be transferred to the Transferee Company. - Tax implications under the Income Tax Act, 1961, are subject to the final decision of concerned authorities. - Pending proceedings by or against the Services Undertaking shall continue with the Transferee Company. - Compliance with FEMA/RBI regulations is required. - Non-compliance liabilities under Section 135 shall transfer to the Transferee Company. - Full compliance with affidavits/undertakings and Section 188 is necessary. - Statutory returns must be filed immediately. - Certified copies of the Order and Scheme must be delivered to the Registrar of Companies within thirty days. - Books of Accounts and relevant documents must be handed over to the Transferee Company. - The Order does not prevent statutory authorities from taking action for any violations. - Any contravention of Section 232 shall result in fines. - Liberty to apply for further directions or objections. The Tribunal disposed of CP (CAA) No.43/BB/2020 along with pending IAS, if any.
|
