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TMI Blog2018 (7) TMI 395X X X X Extracts X X X X X X X X Extracts X X X X ..... albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners. While approving the scheme as above, we further clarify that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes including VAT/GST or other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. - Company Petition No. 26 of 2016 with Company Application No. 126 of 2016 - - - Dated:- 24-11-2017 - MR. M. M. KUMAR AND MS. DEEPA KRISHAN, JJ. For The Applicant : Arun Kathpalia, Senior Adv., V.P. Singh, Abhinav Ashwin, Bharat Apte and Rushil Oberoi For The Respondent : Kamal Kant Jha, Sr. Counsel JUDGMENT M.M. KUMAR, HOB BLE PRESIDENT 1. This joint Petition filed by a group of four Companies has been placed before us for final disposal for approval of the Scheme of Arrangement, as finalized between the Companies and its shareholders. The scheme proposes the demerger of the Real Estate Undertaking and the IT Support Services Undertaking of the Transferor Company and vest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) the consolidation of the group companies which are either core investment companies such as the Transferee Company or which may, over a period to time, become core investment companies due to holding shares in group companies. (vi) dedicated and specialized management focus on the specific needs of the respective businesses; and (vii) maximizing the value and return to the shareholders and achieving operational efficiencies. In order to achieve the objective, the Scheme seeks to undertake the following arrangements in the sequence as specified below: (i) the demerger of the Real Estate Undertaking of the Transferor Company which shall be transferred and vest with the Resulting Subsidiary No. 1, on a going concern basis; (ii) the demerger of the IT Support Services Undertaking of the Transferor Company which shall be transferred and vested with the Resulting Subsidiary No. 2, on a going concern basis; and (iii) post the demerger of the above mentioned undertakings, the amalgamation of the residual Transferor Company into the Transferee Company, on a going concern basis. Further, the Transferee Company was to assume the name of the Transferor Company post the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptember 16, 2016. The High Court directed the Petitioner Companies under Sections 230 to 232 of the Companies Act, 2013 read with relevant Rules to issue Notice in the Second Motion petition to the Regional Director, Northern Region, Ministry of Corporate Affairs, Registrar of Companies, Official Liquidator and the Income Tax Department. The Petitioner Companies were also directed vide said order to carry out publication in English Daily 'Times of India (Jaipur Edition)' and Hindi Daily 'Rajasthan Patrika (Jaipur Edition)'. 6. The Regional Director has filed his report on 10.11.2016, In his report RD has raised certain observations on some clauses of the Scheme. The same were also responded to by the Petitioner Companies by way of a rejoinder affidavit. Similarly, the Official Liquidator has also filed its report on 14.12.2016. 7. While the matter was listed for final hearing before High Court, the Central Government notified (a) the provisions of Sections 230-233 of the Companies Act, 2013; (b) the Companies (Transfer of Pending Proceedings) Rules, 2016; and (c) the Companies (Removal of Difficulties) Fourth Order, 2016. All the above rules, orders and provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dgment rendered by Delhi High Court in the case of Ashim Investment Co. Ltd., In re [2007] 76 SCL 358 and the Punjab and Haryana High Court in the case of Max India Ltd., Taurus Ventures Ltd. and Capricorn Ventures Ltd. (C.P. No. 134 of 2015, dated 5-2-2016) wherein by similar clauses relating to combination of ASC of demerged company into the Transferee Company were permitted. 9. Secondly, Para 2(e) of the RD's Report states that Clause 14 of Part D of the Scheme provides for Change of Name of the Transferee Company . It is revealed from the said clause that the Scheme has proposed that the name of Transferee Company shall be changed to InterGlobe Enterprises Private Limited subject to the approval of the concerned Registrar of Companies. RD states that the Scheme has not clearly disclosed about the payment of necessary fees (including fees and charges payable to the Registrar of Companies) in compliance of Section 13 of the Companies Act, 2013 by the Transferee Company in this regard. It is therefore submitted by the RD that the Transferee Company should pay the necessary fees including other fees and charges for alteration of its name to InterGlobe Enterprises Priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ule 8(8) of the Companies (Incorporation) Rules, 2014 states as follows: The names released on change of name by any company shall remain in data base and shall not be allowed to be taken by any other company including the group company of the company who has changed the name for a period of three years from the date of change subject to specific direction from the competent authority in the course of compromise, arrangement and amalgamation . Accordingly, the said provision provides for and gives discretion to this Tribunal to direct that the name of the Transferee Company be changed to the name of the Transferor Company. 10. Thirdly, the Regional Director has observed that the Ministry of Corporate Affairs vide its General Circular No. 1/2014 dated January 15, 2014 and bearing reference no. F.No. 2/1/2014 has directed that the Regional Director concerned shall invite specific comments from the Income Tax Department giving 15 days time to the Income Tax Department to inform objections, for the proposed scheme under Section 391 or 394 of the Companies Act, 1956, as the case may be and to file the report on behalf of the Central Government accordingly. In this regard, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s extracted did not relate to the Petitioner Companies' contingent liability. Therefore, the Petitioner Companies not only brought this to the attention of the Regional Director but also, only for the sake of completeness of record resubmitted, the details of the actual contingent liabilities as stated in the notes forming part of the accounts , contained in the audited financial statements of the Transferor Company and the Transferee Company for the period ending March 31, 2016. This was done in the prescribed format and was enclosed as an annexure to the Response to the RD's Report. In this regard it may be noted that as per the above-referred audited financial statements of the Transferor Company, the total contingent liability towards statutory authorities, including direct tax and indirect tax authorities amount to ₹ 6,50,92,158/-, out of which contingent liability of around ₹ 4,59,05,000/- stands discharged on account of the entire demand having been quashed vide a favourable order of the UP. VAT Appellate Authority dated march 18, 2017. Therefore, as on date, the total contingent liabilities relating to direct and indirect tax demands is around ₹ 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpromise, arrangements and amalgamation. Accordingly we are of the view that since there is no misuse the transferee company would qualify to use the name of the transferor company. Accordingly we issue direction to the authorities to do the needful subject to compliance with the procedural part. 14. The Petitioner Companies have also undertaken to comply with the provisions of Income Tax Act and the Rules framed thereunder in so far as applicable to the instant Scheme. An undertaking has also been filed by the transferee Company in that regard vide affidavit dated 16.05.2017. Therefore, aforesaid objection also stands satisfied. 15. The last objection of the Regional Director is with respect to contingent liabilities. It has been highlighted that the total contingent liabilities concerning Direct Tax Indirect Tax demands is around ₹ 191,87,158/-only whereas the Transferee Company as per its audited financial statement has pre-merger net worth of ₹ 4132018000/-. After the merger, net assets of Transferor Company having book value of around ₹ 740.90 cr would stand transferred to and vested with the Transferee Company. Therefore, the transferee company would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mployees Union v. Hindustan Lever Ltd., 1995 Supp (1) SCC 449: and (iii) Hon'ble High Court of Delhi in In Re : Seil Limited, 2004 72 DRJ 329. It is further submitted that generally there is no diminution in value of works of art/paintings, and the same are generally valued at cost since there is no ready market available. Therefore, the apprehension of the Official Liquidator that any diminution in the value of works of art over a period time may impact the share exchange ratio seems misplaced. Further, given the fact that the net asset value (NAV) of the residual Transferor Company is fairly significant, even if there were to be any appreciation in the value of the work of art/painting over and above its book value, it is submitted that the same would not have any impact on the share exchange ratio. Without prejudice to the above submissions, it is submitted that the value of the concerned Works of Art (Paintings) (i.e. the three paintings owned by the Transferor Company), as per the valuation undertaken by B Y Associates, Chartered Accountants, is ₹ 42.95 Crore, whereas, the aggregate value of such works of art as per valuation reports issued by Dr. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile approving the scheme as above, we further clarify that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes including VAT/GST or other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. 20. THIS TRIBUNAL DO FURTHER ORDER [with respect to Demerger of Real Estate Undertaking of the Transferor Company into Resulting Subsidiary No. 11: (a) That all the property, rights and powers of the Real Estate Undertaking of the Transferor Company be transferred without further act or deed, to the Resulting Subsidiary No. land accordingly the same shall pursuant to Section 232 of 2013 Act, be transferred to and vest in the Resulting Company for all the intents and interests of the Demerged Undertaking of Demerged Company therein but subject nevertheless to all charges now affecting the same; and (b) That all the liabilities and duties of Real Estate Undertaking of the Transferor Company be transferred without further act or deed, to the Resulting Subsidiary No. 1 and accordingly the same shall pursuant to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act or deed to the Transferee Company and accordingly the same shall pursuant to section 232 of Act, be transferred to and vested in the Transferee Company for all intents and interest of the residual Transferor Company therein but subject nevertheless to all charges now affecting the same; and (b) That all the liabilities of the residual Transferor Company be transferred without further act or deed to the Transferee Company and accordingly the same shall pursuant to section 232 of the Act, be transferred to and become the liabilities and duties of the Transferee Company; and (c) That all proceedings now pending by or against the residual Transferor Company be continued by or against the Transferee Company; and (d) That Petitioner Companies shall within thirty days of the date of the receipt of this order cause a certified copy of this order to be delivered to the Registrar of Companies for registration and the residual Transferor Company on such certified copy being so delivered shall deemed to be dissolved. The Registrar of Companies shall place all documents relating to the Transferor Company and registered with him on file kept by him in relation to the Transferee Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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