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TMI Blog2017 (3) TMI 1750X X X X Extracts X X X X X X X X Extracts X X X X ..... l Officer and Constituted Attorney, for Alpha Corp. Development Private Limited, in person Mr. D.K. Singh, Official Liquidator S.J. VAZIFDAR, CHIEF JUSTICE (Oral): This is an appeal against the order of the learned single Judge declining to consider the appellants petition for sanctioning a Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956, on the ground that the proceedings are liable to be transferred to the National Company Law Tribunal, Chandigarh Bench, Chandigarh, (NCLT) in view of Notification No.GSR 1119(E) dated 07.12.2016 issued by the Ministry of Corporate Affairs. 2. We permitted the constituted attorney of the appellant to address us, although there is an Advocate on record, as the Advocates have abstained from appearing in Court today and in view of the appellant s contention that there is extreme urgency in the matter. The urgency is this. If the Scheme of Arrangement is liable to be sanctioned but is sanctioned only after today i.e. 31.03.2017, the appellant would lose the benefit of the Double Taxation Avoidance Agreements with Singapore and Mauritius. In view of this contention, we circulated the matter yesterd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Company. The learned Judge issued notices to the Regional Director and the Official Liquidator returnable on 03.03.2017 and issued directions for the publication of the notices in newspapers and in the Government gazette. (C) On 03.03.2017, the Regional Director filed an affidavit. We will refer to the affidavit while dealing with the application on merits. As an advance copy may have been furnished, the appellant filed a rejoinder on the same day. (D) On 03.03.2017, the learned Judge passed the following order: For consideration regarding transfer of the case to NCLT, Chandigarh Bench, Chandigarh, now to come up on 17.03.2017. On 17.03.2017, the petition was adjourned to 24.03.2017 at the appellants requests. The learned Judge passed the following order on 24.03.2017:- As per the notification dated 07.12.2016 issued by the Ministry of Corporate Affairs under section 434(1)(c) of the Companies Act, 2013, the company matters mentioned therein, are required to be transferred to the National Company Law Tribunal. The present joint petition under Section 391-394 read with Section 100-103 of the Companies Act, 1956 for demerger of the mall undertaking, could have al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs relating to cases other than Winding up .- All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force of these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction: Provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred. 9. On 07.12.2016, the Central Government made The Companies (Removal of Difficulties) Fourth Order, 2016. Under section 1(2), the order was to come into force with effect from 15.12.2016. The recitals which precede the Order and are relevant for the present purpose read as under:- And, whereas, difficulties have arisen regarding continuation of provisions of the 1956 Act for (i) those proceedings relating to cases other than winding-up that are reserved for orders for allowing or otherwise and (ii) those winding up cases which would not be transferred to Tribunal and be proceeded with by High Courts on account of commencement of the corresponding provisions under the 2013 Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the Benches of the Tribunal. The proviso to this rule, however, stipulates that the proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred. Thus, where a petition seeks only one relief, the situation would be clear. It is only if the final order is reserved that the proceedings stay with the High Court and shall not be transferred to the Tribunal. The case before us, however, is one of a composite petition. The Central Government which made the order i.e. The Companies (Removal of Difficulties) Fourth Order, 2016, was aware that such composite petitions are filed in some courts and at least in this Court. It was not suggested otherwise by the Regional Director. Despite the same, the order does not state in absolute terms that pending proceedings shall stand transferred. Nor does it state that the proceedings shall be transferred though orders regarding a part of the proceedings are reserved but orders regarding a part of the proceedings are not reserved. If the intention was to transfer all proceedings including composite petitions where orders as to a part are reserved, the language of the order would have been entire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be any substantial controversy so far as the third parties rights are concerned. The controversies indicated from the papers and proceedings are not substantial and we intend safeguarding the rights of the parties concerned fully. Both the appellants are closely held companies and all the share holders have approved the scheme. All the secured creditors of the first appellant have approved the scheme. There are no secured creditors of the second appellant. 15 out of the 16 unsecured creditors of demerged company have approved the scheme. Only one of the unsecured creditors of the demerged company of the value of about ₹ 15 lacs has neither consented to nor opposed to the scheme. The appellants contend that the creditors have now no claim as the entire claims have been satisfied. In any event the rights, if any, of the solitary unsecured creditor are safeguarded by the undertaking on behalf of the appellants that both the appellants shall be responsible for and liable in respect of the claims of that unsecured creditor jointly and/or severally. The undertaking is accepted and it is so ordered by us as well. The failure to make good the undertaking would, apart from anythi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there are no accounting standards issued by the ICAI in respect of the demerger although they are stipulated in respect of the merger. In any event, it is ordered and directed that the appellants shall comply with the accounting standards, if any, issued by the ICAI even in respect of the demerger. The Regional Director has also referred to the objections raised by the said caveator. We have already dealt with the same. 22. In the circumstances, the appeal is disposed of by the following order:- i) The scheme of arrangement (Annexure P-1) is sanctioned. ii) The appellants are directed to file a copy of this order along with a copy of the Scheme with the concerned Registrar of Companies, electronically, along with E-Form INC 28 in addition to physical copy as per the relevant provisions of the Companies Act, 1956. iii) Each of the appellants to pay costs of ₹ 50000/- each to the Regional Director, Northern Region, Noida by 30th April, 2017. iv) The sanction of the scheme and copies of this order be published in the Financial Express (English) and Jagbani (Punjabi) newspapers, both Punjab Editions and in the Official Gazette of the Government of Punjab. v) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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