9911796707
TMI Blog2020 (9) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Accountants of India (ICAI) have the effect of law under section 133 of the Companies Act, 2013. We are also acutely conscious of the fact that ultimately, upon the scheme being sanctioned, it is the transferee-company alone that will be concerned with the accounting entries to be made, which is not within our jurisdiction. The transferee-company being within the jurisdiction of the National Company Law Tribunal, Bengaluru Bench, we do not wish to express any opinion in the matter. Change of name of the transferee company and change of registered office of the transferee company consequent upon sanction of the scheme of amalgamation - compliance with section 13 of the Companies Act, 2013 - HELD THAT:- It is now settled law that the provisions to schemes of arrangement area complete code in themselves, and the separate procedures prescribed for change of name, change of registered office, reduction of capital, etc., under other provisions of the Companies Act are not required to be followed if they are effected as part of the scheme itself. It is also settled law that approval by the members to the scheme should be treated as approval also under other provisions of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel submits that the petitioner/transferor company No. 2 and the transferee company are engaged in the business of conducting chit funds or kuries and similar kinds of schemes which encourage the habit of savings, inter alia, by opening chit savings, thrift savings, and other deposit schemes in relation to trade or public, commercial and regular needs whether in the form of time, demand or call deposits and to allow interests in all such deposits. 6. Learned counsel submits that the board of directors of the petitioner/ transferor company No. 2 has approved the said scheme of amalgamation by passing a board resolution at their meeting held on August 16, 2017. 7. Learned counsel for the petitioner/transferor company No. 2 further submits that the rationale for the scheme is that the amalgamation of transferor company No. 2 would have the benefits as all the transferor companies involved herein and the transferee company are incorporated with the same/similar objects, and carry on the same line of business, viz., conduct of the business of chit funds, kuries, and similar kinds of chits. 8. The three transferor companies and the transferee company are all part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the scheme. The decision of such authorities is binding on the petitioner-company(s). (b) It is observed that the petitioner-companies have not submitted the chairman's report, admitted copy of the petition, and the minutes of order for admission of the petition. In this regard, the petitioner has to submit the same for the record of the Regional Director. (c) The National Company Law Tribunal may kindly direct to the petitioners to file an undertaking to the extent that the scheme enclosed to the company application and the scheme enclosed to the company petition are one and the same and there is no discrepancy or deviation. (d) In compliance of AS-14 (Ind AS-103), the petitioner-companies shall pass such accounting entries which are necessary in connection with the scheme to comply with other applicable accounting standards such as AS-5 (Ind AS-8), etc. (e) As per description of companies mentioned in the scheme, it is noticed that the registered office of the first transferor company is situated in Hyderabad, third transferor company is situated in Chennai, transferee company is situated in Bengaluru, i. e., outside the jurisdiction of this Bench and falls wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larified that notices have been served to all concerned regulatory authorities as required under section 230(5) of the Companies Act, 2013 such as the Regional Director, Registrar of Companies, concerned Income-tax Department, and official liquidator. Further, without prejudice to the petitioner's position that participation of the Registrar of Chits in the captioned proceeding under sections 230-232 of the Companies Act, 2013 is neither required nor man dated by law, the petitioner has strictly on a without prejudice basis and out of abundant caution served a notice of hearing upon the Registrar of Chits, Mumbai, Maharashtra and also provided a copy of the petition along with the chairman report and scrutiniser report filed before this Tribunal on September 13, 2019 and further states that an affidavit of service of company petition and notice of hearing on the Registrar of Chits dated September 26, 2019 has been filed with this Tribunal. Vide an order dated September 27, 2019 this Tribunal had directed the Registrar of Chits, Mumbai to remain present with the records of the petitioner-company on the next date of hearing, i. e., November 25, 2019. The Joint Registrar of Chits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el for the petitioner confirms and undertakes to comply with the said observation and seek approval from the concerned National Company Law Tribunals. (f) A propos the observation of the Regional Director in paragraph V(f) of his report, learned counsel for the petitioner-company submits that the accounting treatment proposed in clause 3 of the scheme is in consonance with Ind AS-14. In any event, the accounting treatment has to be given effect by the transferee company which is within the jurisdiction of the National Company Law Tribunal, Bengaluru Bench, and the Regional Director (South Eastern Region), Ministry of Corporate Affairs, Hyderabad. Learned counsel for the petitioner further submits that there is no bar or embargo in law in adjusting the difference in accounting policy to general reserve. Learned counsel for the petitioner further submits that the independent auditor of the petitioner-company by his report dated May 31, 2017 which is annexed at page 106, annexure A2 to the petition, had certified that the financial statements comply with the accounting standards specified under section 133 of the Companies Act, 2013. Learned counsel for the petitioner further submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncerned Registrar of Companies. 13. In response to the reply filed by the petitioner, the Regional Director has filed a supplementary report dated January 30, 2020 wherein the objections raised by the Regional Director in the previous affidavit dated May 8, 2019 were replied to by the petitioner in respect of the objections of the Regional Director with regard to : (a) Serving of notices on other statutory authorities. (b) Submission of a copy of the chairman's report to the Regional Director. (c) The scheme attached to the company application and the company petition are one and the same. (d) Accounting entries to be in compliance to AS 14. (e) Approval of the respective National Company Law Tribunal in whose jurisdiction the other transferor companies and the transferee company is situated. (f) To comply with the provisions of the Companies Act, 2013 for increase of the authorised capital of the transferee company subsequent to the approval of the scheme. 14. In the aforesaid supplementary/additional affidavit ( additional affidavit ), the Regional Director submitted that the petitioner may be directed to seek a NOC from the Registrar of Chits, Maharas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions of the amalgamation. However, it made a demand for ₹ 2.81 crores, which according to the authority is pending from the petitioner and should be paid to the credit of the Revenue. 20. Learned counsel for the petitioner submits that the petitioner has filed an affidavit in response to the said letter ( reply to the letter ) with this Tribunal on September 5, 2019 and also served the same with the office of the concerned Income-tax authority vide their advocate's letter dated September 5, 2019. In the said reply, the petitioner has dealt with the aforesaid observations of the concerned Income-tax authority. 21. A propos the observation with respect to the said demand for ₹ 2.81 crores made by the Income-tax authority, learned counsel for the petitioner submits that the petitioner had filed an appeal dated January 9, 2017 with the Commissioner of Income-tax (Appeals) against the aforesaid assessment, impugning the demand notice of the Income-tax Department and the demand of ₹ 2.81 crores therein. Learned counsel for the petitioner further submits that the said appeal is pending. Once the scheme is sanctioned, the transferee company shall be prosec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany No. 2 is ₹ 10, 00, 00, 000 comprising of 1, 00, 00, 000 equity shares of ₹ 10 each. The issued, subscribed and paid-up share capital of the petitioner/transferor company No. 2 is ₹ 8, 33, 00, 700 which comprises of 83, 30, 070 equity shares of ₹ 10 each fully paid. Learned counsel for the petitioner undertakes to do compliances of various provisions of Companies Act, 2013 for increasing the authorised share capital by filing requisite forms and to the extent applicable. 27. The petitioner/transferor company No. 2 has complied with the requirements as per directions of the Tribunal and they have filed necessary affidavits of compliance. Moreover, the petitioner/transferor company No. 2 undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 2013 and the Rules made thereunder whichever is applicable. This undertaking is accepted. 28. However, we are of the opinion that it would be better to clarify certain issues arising out of the Regional Director's report, and the response of the petitioner/transferor company No. 2 thereto. These issues are- (a) Adherence to Accounting Standards ; (b) Complianc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's judgment dated May 12, 2006 in Sutlej Industries Ltd., In re [2007] 135 Comp Cas 394 (Raj)-paragraph 10 read along with paragraph 9-Surplus can be adjusted to general reserve with the approval of shareholders. (c) The hon'ble Gujarat High Court's judgment in Gallops Reality P. Ltd., In re [2009] 150 Comp Cas 596 (Guj), paragraph 13-Surplus can be adjusted to general reserve. 31. The Ministry of Corporate Affairs, vide notification dated March 30, 2016 to paragraph 23 of AS-14, inserted a footnote to the said para to the effect that paragraph 23 shall not apply to any scheme of amalgamation approved under the Companies Act, 2013 . With this, the exemption that could be carved out in a scheme of amalgamation in respect of treatment of reserves, has now been removed. The end result is that paragraph 23 of AS-14 dealing with treatment of reserves in a scheme of amalgamation is now mandatorily to be followed, and the accounting treatment prescribed in a scheme cannot override the provisions of paragraph 23 of AS-14. 32. The judgments relied upon by learned counsel for the petitioner/transferee company were all delivered prior to the amendment dated March 30, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e procedures required to be followed consistent with the requirements of the MCA-21 programme, so as to ensure that the changes are effected in the registry maintained by the Registrar of Companies. The petitioner/transferor company No. 2 has undertaken to abide by all procedural compliances required in this regard. This undertaking is recorded. 37. The official liquidator had filed its report dated April 12, 2019 with this Tribunal stating therein that, the affairs of the petitioner/transferor company No. 2 have been conducted in a proper manner. 38. From the materials on record, the scheme of amalgamation appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. 39. Since all the requisite statutory compliances have been fulfilled, C. P. (CAA) No. 846/MB/2019 is made absolute in terms of prayer of the petition mentioned therein. The petitioner/transferor company No. 2 shall be dissolved without winding up, upon the scheme being finally sanctioned by the jurisdictional benches of the National Company Law Tribunal. 40. The scheme is hereby sanctioned, and the appointed date of the scheme is fixed as April 1, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
