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TMI Blog2017 (5) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... ditors and all concerned. Let formal order of sanction of the Scheme be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date of receipt of the same. A notice of the order be published in the newspapers, namely, “Indian Express” (English), “Jansatta” (Hindi) both Delhi/NCR Edition and in the Official Gazette of Government of Haryana. - Company Petition No. 209 of 2015 (O&M), And Company Petition No.198 of 2015 - - - Dated:- 16-5-2017 - MR. RAKESH KUMAR JAIN For The Petitioner : Mr.Atul V. Sood, Advocate RAKESH KUMAR JAIN, J. This petition is filed under Section 391 to 394 of the Companies Act, 1956 [for short the Act ], duly supported by affidavits of the petitioner- Companies, seeking sanctioning of the Scheme of Amalgamation (Annexure P-1) [for short the Scheme ]. As per the Scheme, Keihin Automotive Systems India Private Limited (Transferor Company/Petitioner Company-I) shall amalgamate into Keihin India Manufacturing Private Limited (Transferee Company/Petitioner Company-II). The registered office of the Transferor Company/Petitioner Company-I and Transferee Company/Petitioner Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee regularly filed the return of income for the A.Y. 2015-16. The said letter from the Income Tax Department is marked as Exhibit-C for kind perusal of the Hon ble Court. 8. That the deponent states that the Petitioner Companies vide para 19 of their reply have furnished following replies to the Auditor Qualifications made in respect of the Transferee Company for the Financial Year 2013-14 and Financial year 2014-15:- ( i) Given the uncertainty of the business plan, the auditors were unable to comment on the recoverability of Cenvat Credit. In relation to the said qualification, the management responded that the company has business plans which would reduce the incidence of input credit and considered that the balance available is good and recoverable. It is seen from the qualification of Auditors on the accounts of the Transferee Company for the financial year ending on 31.03.2014 that the Company has huge amount of ₹ 2316.15 lakhs Cenvat Credits on account of manufactured goods and capital purchases. Further, the statutory auditors have again qualified recoverability of Cenvat Credits amounting to ₹ 2473.49 lacks on account of manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner Companies has filed reply by way of affidavit. The relevant averments made in the reply are reproduced as under: - 2. That the Regional Director in his Report in para 8(i) has referred to the qualification in Auditors Report of the financial years 2013-14 and 2014-15 regarding the recoverability of Cenvat Credit of the Transferee Company. 3. That the Transferee Company has business plans which would reduce the incidence of input credit and therefore it considers that the balance available is good and recoverable. Since past few years, domestic as well as export sales of Transferee Company have been growing gradually. In 2013-14, Export Sales were ₹ 65,343,196/- in 2014-15 it rose to ₹ 89,522,119/-. Given the same, Transferee Company would be able to utilize the available Cenvat Credit and therefore the available balance is considered recoverable by the management. 4. That further, with regard to the Regional Director s observation in para 8(ii) of the Report, the Regional Director has mentioned that the transferee Company has not provided and paid the provident fund on foreign component of salary paid to expatriate employees, as required i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Public Interest except than the qualifications mentioned in the report of M/s K.D. Associates, Chartered Accountant and has further submitted that the matter may kindly be decided on merits keeping in view the submissions made in para No.4 of his report, which read as under: - 4. That M/s K.D. Associates, Chartered Accountant, has verified the Accounts of Transferor Company and submitted his report to this office on 16.3.2016. The copy of report is enclosed and annexed as Annexure R-2. The learned Chartered Accountant has made following observations: - ( a) That the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets. ( b) That there are some accumulated losses in the Company for past 4 years, can be briefed as under: - Sr.No. Company Loss brought forward FY 2010-11 FY 2011-12 FY 2012-13 FY 2013-14 FY 2014-15 Loss Carry Forward 1 Keihin Automotive Systems India Private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts) Rules 2014. But vide reply dated February 16, 2016 the Company states that: We hereby submit that Company has internal audit system commensurate with the size and nature of business. Further please note that statutory auditor has also confirmed the above in its report. Our earlier reply in this matter was inadvertently mentioned as not applicable However, no documentary proof is submitted in this regard till date. Para (xvii) of Companies (Auditor s report) Order, 2003: According to information and explanation given to us and on an overall examination of the balance sheet of the Company, we report that funds amounting to ₹ 5,27,87,751/- have been used for long term investment representing acquisition of fixed assets and funding of losses. No explanation was offered by Company, in its BOD s Report. 2013-14 Para (vii) of Companies (Auditor s report) Order, 2003: During the year no internal audit was carried out and accordingly, we are unable to comment on the internal audit system. No explanation was offered by Company, in its BOD s Report. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt that this issue was confronted to the Company by our questionnaire dated 8th February 2016 to which the Company submitted its reply on 18/02/2016 in which it has been stated that the Company is relying upon the audit report of their statutory auditors and hence, no proper justification had been provided. The Official Liquidator in para 4(g) of his report has also made the following observations: - ( g) Further in spite of these finding while verification of financial documents, accounts, books and records of the transferor Company, certain discrepancies irregularities, are found which are as follows: - Not complying to certain Accounting Standards issued by Institute of Chartered Accounts of India : While verification of financial statements of the Company, we found that Company is not adherence to certain applicable accounting standards under provisions of the Indian Company Act (1956 and 2013) read with Companies (Accounting Standards) Rules, 2006. The year wise detail can be summarized as below: - 1. F.Y. 2011-12 : Accounting standard - 15: Employee Benefits Accounting Standard 26: Intangible assets. 2. F.Y. 2014-2015: Accounting Standar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame in relation to the Transferor Company in the same manner and to the same extent as would or might have been initiated by the Transferor Company. 6. That the Scheme, therefore, sufficiently takes care of the observations of the Official Liquidator, if the observations are taken at their face value. 7. That further, given that the Scheme of Amalgamation provides for transfer of all the liabilities /proceedings of the Transferor Company to the Transferee Company (i.e. the surviving entity post approval of the Scheme of Amalgamation), the Transferee Company shall remain liable and responsible with the relevant authority with respect to the observations highlighted in the auditor s report by the Official Liquidator. 8. That the Transferee Company further undertakes that upon sanction of the Scheme of Amalgamation, the Transferee Company shall be liable for any action/liability that could have been for may be brought against the Transferor Company towards the observations in the Official Liquidator s Report. 9. That consequently, it is submitted that the observations made by the Official Liquidator are not detrimental to creditors, shareholders or public inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory requirement for the same in terms of Section 138 of the Act read with Rule 13 of the Companies (Account) Rules, 2014 [for short the Rules ] and it is further submitted without prejudice to the above, as per para 8 of the reply to the report of the Official Liquidator, the petitioner-Companies have undertaken that the Transferee Company shall be liable for any action/liability that could have been or may be brought against Transferor Company. In response to the observation made at para 4(e) by the Official Liquidator in his report, learned counsel for the petitioner-Companies has submitted that in the audit report at page 100 of the petition, it has been averred that the company has made necessary changes in compliance with Schedule 11 of the Companies Act, 2013. The impact of the same on the financial statements is not material. The reasons for considering different life and rates and value with regard to items under Schedule II of Companies Act, 2013 are on the basis of technical evaluation done by technical people estimating the life and the realizable value. In response to the observation made at para 4(g) by the Official Liquidator in his report, learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the separate reply(s) thereto by way of affidavits of the Authorised Signatory of the Petitioner-Companies, the Scheme of Amalgamation is hereby sanctioned and as a result thereof, the assets and liabilities relating to the Transferor Company/Petitioner Company-I shall stand vested in the Transferee Company/Petitioner Company-II and the Transferor Company/Petitioner Company-I shall be dissolved without being wound up. The Petitioner-Companies shall comply with all the applicable Accounting Standards upon sanctioning of the Scheme or any other undertaking made by the Petitioner-Companies. The Scheme shall be binding on the Petitioner-Transferor and Transferee Companies, their respective shareholders, creditors and all concerned. Let formal order of sanction of the Scheme be drawn in accordance with law and its certified copy be filed with the Registrar of Companies within 30 days from the date of receipt of the same. A notice of the order be published in the newspapers, namely, Indian Express (English), Jansatta (Hindi) both Delhi/NCR Edition and in the Official Gazette of Government of Haryana. Any person interested shall be at liberty to apply to the Court for any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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