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TMI Blog2018 (8) TMI 1030X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme of Arrangement between the Respondent Companies. Respondent No. 1 Emaar MGF Land Limited had proposed itself as Petitioner Company No. 1/ Demerged Company and the present Respondent No.2 MGF Developments Limited had approached as Petitioner Company No. 2/Resulting Company. The final order passed by the NCLT in the Impugned Order is as under: "9. THIS TRIBUNAL DO FURTHER ORDER: That in the terms of the Scheme: a. That all the property, rights and powers of the Demerged Undertaking of the Demerged Company be transferred without further act or deed, to the Resulting Company and accordingly the same shall pursuant to Section 232 of 2013 Act, be transferred to and vest in the Resulting Company for all the intents, purposes 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 Demerged Undertaking of Demerged Company be transferred without further act or deed, to the Resulting Company and accordingly the same shall pursuant to section 232 of the Act, be transferred to and become the liabilities and duties of the Resulting Company; and c. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etition 689/16 before the Hon'ble Delhi High Court. The Hon'ble High Court vide orders dated 09.08.2016 directed the Respondents under Section 230 to 232 of the Companies Act, 2013 (new Act in brief) read with relevant Rules, to issue notice in the Second Motion Petition to Regional Director, Registrar of Companies, Income Tax Department, Official Liquidator, etc. 5. It is the case of the Appellant that the Managing Director and Chief Editor of Appellant wrote emails to the Respondents that they have not fulfilled their commitments under the Arbitral Award dated 12.05.2016 and Respondents were requested to pay balance sum of Rs. 5,92,81,459/-. According to the Appellant this amount has been wrongly deducted by the Respondents as TDS. The Appellant had also taken up with the Respondents that in lieu of an additional cash payment of Rs. 24,90,87,095/-, the Appellant had accepted the property allotted by the Respondents in terms of the Award on the express commitment by the Respondents that the property was ready and marketable and Appellant will be able to sell the same for not less than Rs. 25 crores within 4 to 5 months. According to the Appellant it was found that the project was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts suppressed in the affidavit filed in support of Judges' Summons that there was no substantial change in the financial position of the demerged company. Even the correct list of secured creditor filed in second Motion (paper book 2.3, page No. 578) did not include name of the Appellant. The counsel for Appellant then made submissions to show that while making payments in view of the Award, the Respondents wrongly deducted amounts towards TDS. The Appellant has further argued to show that Respondents defaulted while executing Buyers Agreement finding fault with the same on the basis that the same was not signed/executed by land owners and thus it was no agreement in the eyes of law. The effort is to show that the Award is yet not satisfied. The Appellant has further made submissions to claim that the matter has again been taken up before the Arbitral Tribunal. Appellant has argued that the lis is pending before the Arbitral Tribunal of the 3 retired Hon'ble Judges of the Supreme Court. The Respondents have been jointly referred in the Arbitral Award as "EMGF". In the argument the Appellant claims that the following issues are pending before the Arbitral Tribunal:- "a. Whether E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st practicable earlier date for the purpose of convening their meetings, was filed. The High Court acted on such lists and on 30.05.2016 passed order to convene separate meetings of the equity shareholders, secured creditors and unsecured creditors of the Respondent Companies under the supervision of the High Court. The First Motion Application was accordingly disposed. In compliance of the orders separate meetings of the shareholders, secured creditors and unsecured creditors of the two companies were convened and the Scheme of Arrangement was approved unanimously or with overwhelming majority in the meetings. It is claimed that on 29.02.2016 which was the base for the lists, the Appellant was neither a secured creditor nor the unsecured creditor. The Arbitral Award was signed and delivered in the late evening hours on 12.05.2016 and thus according to the Respondents they cannot be said to have suppressed material facts when the First Motion Application was moved. Along with the First Motion Application lists of secured and unsecured creditors are required to be filed as on a latest practicable date. The Respondent Companies were not expected to file list updated till presentation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o state that they have actually complied with the Award which was passed and have tried to show that the disputes being raised by the Appellants with regard to the deduction of TDS and the Property allotted has no substance. Alternatively, it has been argued by the Respondents that total value of the unsecured creditors of the Respondent No.1 Company as per the list filed before the Hon'ble High Court was Rs. 1792,81,70,282 out of which unsecured creditors for the value of Rs. 1159,68,28,452 were present. The total claim of the Appellant is around Rs. 60 crores. The Argument is that even if the Appellant had attended and voted against the Scheme, it would not have any impact on the outcome of the meeting. 11. Counsel stated that even at the time of Second Motion reference was not made to Appellant as comparing the financial standing and debts of Respondents the dues of Appellant did not constitute "substantial change in financial position". It has been further argued for Respondents that the notice of meetings of unsecured creditors of both the Respondents were published in Newspapers-Business Standard (English) on 09.06.2016 and 15.06.2016 and Business Standard (Hindi) dated 09.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 under the heading "Objector-Statesman". Before the NCLT also the Appellant raised similar arguments to show that the Respondents misrepresented and concealed material facts from the Court and thus the petition should have been dismissed and Scheme of Demerger should have been declined. There also the Appellant claimed that the TDS of 5.9 crores was illegally deducted. NCLT noted the argument that the Appellant was claiming that the Arbitration Proceedings were still pending and the property as per the Award had not been transferred to the objector-applicant (Appellant). NCLT also noted the arguments of the counsel for Respondents that the Respondents claimed that as per the Award dated 12.05.2016 the Respondents had paid on 29.09.2016 the amounts due to the Appellant and they were no longer creditors. Reference was made to form 16A and certificate issued under Section 203 of Income Tax Act to show that the amount due has been fully paid. The other arguments were also noted by NCLT regarding Board of Directors had met out on 11.05.2016 and the newspaper publication and holding of meetings. Considering these and other arguments NCLT recorded:- " Having heard the learned counsels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing gone through the material on record, we do not find substance in the arguments being made for the Appellant. There is no substance in the submission of the learned counsel of the Appellant that on 12.05.2016 when the Respondents moved the Hon'ble High Court in the first Motion, they had suppressed material fact by not referring to the Award. Looking to the First Motion Application, the copies and documents of which have been filed before us, it is not something which is prepared in an hour or so. Apparently, the First Motion Application was prepared before filing the same in High Court in the course of the day on 12.05.2016. Before filing the petition etc. the same are deliberated and prepared and signed and affidavits are sworn. All this naturally happens before filing or in the course of the day and working hours. The same cannot be said for arbitral proceedings which were already pending before the Arbitral Tribunal of Hon'ble retired Judges of the Hon'ble Supreme Court on 12.05.2016. It is the argument for the Respondents that these proceedings before the Arbitral Tribunal took place in the evening of 12.05.2016. These arguments have not been denied by the learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication by more than six months." 17. Once having moved the High Court in the first Motion on the basis of lists of creditors as on 29.02.2016 so as to call for meeting of the secured and unsecured creditors, and once the Hon'ble High Court having accepted it and passed orders to call the meeting, subsequently, how adding or deducting the names of creditors would be permissible is not shown by Appellant. Appellant has not shown that the company is bound to go on updating the list of creditors till the date of filing of the First Motion Application or after orders, till the meetings of creditors takes place. 18. The learned NCLT appears to have observed regarding whole Awarded amount standing paid as it accepted the submission of the counsel for the Respondents. According to us even if the Appellant continues to raise disputes regarding the question whether or not TDS was rightly deducted or to find fault with the commercial property given by Respondents and the buyers Agreement, we are not entering into those aspects as it appears that the Appellant has again claimed issues as mentioned in Para 8 supra, to be pending before the Hon'ble Arbitral Tribunal. They are not issues f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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