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TMI Blog2018 (3) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... never a part of the Scheme. 5. All consequential amendments as required. 2. Clause 2(e) and 2(f) of the Scheme read as under : e. "Demerged Undertaking" means and includes: i. All the investments of the Demerged Company. ii. Windmill business means "windmill business" comprising of all assets (whether movables or immovables, tangible or intangible, real or personal, corporeal or incorporeal or present, future or contingent) and liabilities which relate thereto or are necessary therefore including specifying the following: (a) Wind energy generator facility presently operating at Gut No.64/4P, Village; Akhatwade, Taluka, Nandurbar, Dist; Nandurbar, Maharashtra together with all that piece or parcel of freehold/leasehold lands, hereditaments and premises situate, lying and being thereat together with all civil structures standing thereon. (b) All wind energy generators, movable and fixed plants and machinery equipments, installations, plants, pipes, tools, accessories, computers, furniture, fixtures, office equipments, power lines, water lines, relating to windmill business. (c) All current assets including sundry debtors, receivables, cash, bank balances, loans and adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny company or other person, investments of all kinds, rights to use telephones, telexes, facsimile connections, email, internet, leased line connections and installations, utilities and other services, reserves, provisions, funds, and all other interests, easements and privileges of all kinds, if any of whatsoever nature and wherever situated belonging to or in the ownership, power or possession and in the control of or vested in or granted in favour of or enjoyed by the Demerged Company which pertains to the Windmill business as on the Appointed Date. ii. All the debts, liabilities (including contingent liabilities), advances, duties, loans taken, deposits accepted, facility availed, any guarantees relating to the business executed by the Demerged Company in favour of third party, undertakings or any other obligations (whether in Indian Rupees or foreign currency, whether in present or future and whether secured or unsecured) of the Demerged Company which relates to the windmill business as on the Appointed Date: iii. All statutory licenses, Government approvals or otherwise, authorities, registrations, authorizations, engagements, permissions, noobjection certificates, statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Associates Aluminium Industries (P) Ltd. (Transferor) and applicant in company application no.581 of 2016 - Associated Aluminium Products (P) Ltd. (Transferee) was sanctioned by this Court by an order dated 13th September, 2013. The Scheme has been made effective by Transferee filing copy of the order and Scheme alongwith Form 21 with the Registrar of Companies on 15th October, 2013. 4. In terms of clause 2(e) of the Scheme, Transferor was to demerge all its investment business, windmill business, office premises at 122B, Mittal Court, Nariman Point, Mumbai - 400 021 and land and building at Plot No.10, MIDC Industrial Area, Taloja - 410 208, District Raigad to Transferee. The Windmill Business Undertaking has been defined in detail under clause 2(f) of the Scheme as quoted above. 5. Transferor was enjoying various tax benefits while it was carrying on the Windmill Business and was involved in generation and distribution of power and setting up of various infrastructural facilities for distribution and transmission of power so generated. Transferee, though it was incorporated on 6th January, 2012, was not carrying on any business prior to the business that was transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible undertaking/enterprise is clarified in the provisions of section itself. In this regard provisions of Section 80IA (12A) clarifies that no deduction shall be available to the amalgamated company when the enterprise or undertaking of an Indian company entitled to the deduction under the said section is transferred on or after 01-04-2007 in the scheme of amalgamation or demerger. This position has further been clarified by Board's circular as cited above. In the present case under consideration M/s. Associated Aluminium Industries (P) Ltd. being an Indian company who was entitled to the deduction u/s80IA, transferred its Windmill running business to M/s. Associated Aluminium Products (P) Ltd. Here M/s. Associated Aluminium Industries (P) Ltd. being the Transferor company was claiming deduction from A.Y.2010-11 which was the initial Assessment Year as per Form No.10CCB. In assessee's case Demerger has been happened from 01-04-2012, i.e., after the date specified in sub section (12A) of Section 80IA (i.e. 01-04-2007) and hence the assessee company being resulting company is not entitled to claim deduction u/s80IA. 5.10 In view of the above facts, the legal position an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall have power to supervise the carrying out of the compromise or arrangement; and (b) may, at the time of making such order or at any time thereafter, give such directions in regard to any matter or make such modifications in the compromise or arrangement as it may consider necessary for the proper working of the compromise or arrangement. (2) If the Court aforesaid is satisfied that a compromise or arrangement sanctioned under section 391 cannot be worked satisfactorily with or without modifications, it may, either on its own motion or on the application of any person interested in the affairs of the company, make an order winding up the company, and such an order shall be deemed to be an order made under section 433 of this Act. (3) The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this Act under section 153 of the Indian Companies Act, 1913, (7 of 1913) sanctioning a compromise or an arrangement. 11. Section 392, therefore, makes it clear that after the Court sanctions a compromise or an arrangement under Section 391 of the Act, it has power to supervise the carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to ensue the proper working of the Scheme and further, that such powers may not be exercised in a manner that would alter the "basic fabric" of the scheme. The removal of obstacles, impediments or hitches cannot be held to mean wholesale changes in the scheme itself and go beyond the confines of what the shareholders, the stakeholders and the courts that sanctioned the scheme would have understood the provisions of the scheme to mean. It is true that in paragraph 26 of the said decision in S.K. Gupta case it was stated that "if something can be omitted or something can be added to a scheme of compromise by the Court, on its own motion or on the application of a person interested in the affairs of the company" then there ought not to be any justification for restricting the meaning of the word of modification and whittle down the powers of the court. However, the next paragraph holds the key to the judgment that the "basic fabric" of the scheme ought not to be changed. The limit on the powers of the Court to modify by way of even additions or omissions as contemplated is that the "basic fabric" of the Scheme cannot be changed; and according to the said decision, even before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strued as comprehending not only such things which they signify according to their natural import, but also those things which the interpretation clause declares that they shall include (see Dilworth v. Commissioner of Stamps). Where in a definition section of a statute a word is defined to mean a certain thing, wherever that word is used in that statute, it shall mean what is stated in the definition unless the context otherwise requires. But where the definition is an inclusive definition, the word not only bears its ordinary, popular and natural sense whenever that would be applicable but it also bears its extended statutory meaning. At any rate, such expansive definition should be so construed as not cutting down the enacting provisions of an Act unless the phrase is absolutely clear in having opposite effect (see Jobbins v. Middlesex County Council). Where the definition of an expression in a definition clause is preceded by the words 'unless the context otherwise requires', normally the definition given in the section should be applied and given effect to but this normal rule may, however, be departed from if there be something in the context to show that the definiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. The scheme in this case is one by which a compromise is offered to the unsecured creditors of the company and whoever comes in as sponsor would be bound by it. Undoubtedly a sponsor of the scheme enjoys an important place in the scheme of compromise and/or arrangement but basically the scheme is between the company and its creditors or any class of them, or the company and its members or any class of them, and not between the sponsor of the scheme and the creditor or member. The scheme represents a contract sanctified by Court's approval between the company and the creditors and/or members of the company. The company may as well be in charge of directors and the implementation of the scheme may come through the agency of directors but that would not lead to the conclusion that during the working of the scheme the directors cannot be changed. If the scheme has to be ultimately implemented by the company as part of its contract and yet its directors can be changed according to its Articles of Association, we see no difference in the situation where a sponsor is required to be changed in the facts and circumstances of a case. Therefore, it is not possible to accept the submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were copies of licences or the Merger Guidelines 2008, or the correspondence exchanged between the appellant and the Department of Telecommunications placed on record. The High Court sanctioned the scheme of amalgamation which provided that overlapping licences would be transferred in accordance with the scheme of demerger. Upon the merger scheme being sanctioned by the Court, overlapping licences stood vested in the appellant and that the Department of Telecommunications had no other option but to grant its formal approval for transfer of licences. The Department of Telecommunications, however, refused permission and on the ground that the amalgamation of Spice with the appellant was resorted to without the knowledge or taking consent of or notice of the proceedings to it, moved an application for recall of the orders of sanction and demerger of the two companies. The Learned Single Judge held, by notifying that a communication from the Department of Telecommunications to appellant that merger and demerger as proposed was impermissible as some of the overlapping licences were less than 3 years old was suppressed from the Court when the matter was argued and judgment reserved, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts have allowed even shifting of the transfer date which, according to Shri Sethi, is much more a serious issue than what applicants are seeking in the present two applications. I am afraid, it is like comparing apples with oranges. Each application has to be considered in its own merits and conclusion arrived at. It should be noted that when an order sanctioning a scheme under Section 391 of the Act is passed, it operates in rem. It affects the rights of several persons including creditors, investors, etc. and also creates liabilities in favour of persons like the Income Tax Authorities. These rights and liabilities became vested once the scheme becomes effective. The windmill business was transferred to Transferee and the Scheme was made effective by Transferee by filing Form 21 with the Registrar of Companies, Transferee having started earning revenue and having filed income tax returns, undoubtedly created rights and liabilities in favour of the Income Tax Authorities. 18. It should be noted that Transferee has filed returns for 3 years before this applications were filed. Therefore, these applications are not just for a simple or minor modification of the scheme. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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