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TMI Blog2020 (11) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... lations by Applicant Company, since the issue here is only sanction of the Scheme, subject to compliance of extant provisions of Companies Act and to make them to comply all terms and conditions as mentioned in the proposed Scheme in question, and other consequential actions, after sanction of the Scheme. By perusal of instant Scheme of Amalgamation of the Companies involved here, the Scheme in question is comprehensive one complying with the provisions of Sections 230 to 232 of the Companies Act, 2013 and the Rules made thereunder and the Petition Application is filed in accordance with law - the scheme is sanctioned. - C.P. (CAA) No. 60/BB/2018 - - - Dated:- 21-5-2020 - Rajeswara Rao Vittanala, Member (J) And Ashutosh Chandra, Member (T) For the Appellant/Respondent : Shubhang Setlur, Prema Hatti and Ganesh R. Ghale, Advocates ORDER RAJESWARA RAO VITTANALA, MEMBER (J) 1. CP (CAA) No. 60/BB/2018 is filed by M/s. VMware Software India Private Limited (hereinafter referred to as 'Petitioner/Transferee Company') under Sections 230, 232 and other applicable provisions of the Companies Act, 2013 R/w Rule 3 of Companies (Compromises, Arrangements and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsferee Company in their meeting held on 21.03.2018 approved the said Scheme of Amalgamation and inter alia resolved as under: RESOLVED THAT subject to the consent of the shareholders and creditors in writing or at a general meeting (as the case may be) as well as applicable statutory and regulatory authorities, National Company Law Tribunal (Tribunal), approval of the Board of Directors of the Company be and is hereby accorded to the proposal for the amalgamation of Arkinnet Software Private Limited (the Transferor Company) into VMware Software India Private Limited (Transferee Company or the Company), pursuant to section 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (including any statutory modification(s) and re-enactment thereof for the time being in force), read with the Memorandum of Association of the Company (Amalgamation) as in the opinion of the Company's Board of Directors, the Scheme is advantageous and beneficial to the Shareholders of the Company and the terms thereof being fair and reasonable. (4) M/s. Arkinnet Software Private Limited (hereinafter referred to as Transferor Company& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transferee Company under Sections 210 to 220 and 223 to 229 of the Companies Act, 2013. Further, no Petition u/ss 241 and 242 of the Companies Act, 2013 (or corresponding provisions of erstwhile Companies Act, 1956) has been filed against the Transferee Company or Transferor Company and there has been no material change in the affairs of the affairs of the Transferee or Transferor Company, except what was done in the normal course of business. (9) It is also stated that the Scheme of Amalgamation is in the interest of the Transferee Company, the Transferor Company, their shareholders, creditors and all concerned. The Board of Directors of the Transferee Company or Transferor Company have declared that they have no material interest in the proposed Scheme of Amalgamation. (10) It is stated that the assets of the Transferee/Transferor Companies are sufficient to meet all their liabilities. The said Scheme does not involve any compromise with any creditors of the Transferee or Transferor Company and will not affect any of the creditors of the Transferee or Transferor Company in any manner whatsoever whether in terms of the value of their debt, or security for the debt. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clubbing, it has to comply the necessary provision of Section 233(11) of Companies Act, 2013 and pay the differential fee after setting off the fees already paid by the Transferor Companies on their respective Authorised Capital. (3) As per the Independent Auditors' Report of the Transferee Company and as per Note 35 of the Financial Statements, a portion of the fixed assets have been physically verified by the Management during the year aggregating to ₹ 169,24,09,735/- and net book value of ₹ 44,87,15,377, where certain discrepancies were noted aggregating to ₹ 11,84,13,118/- with net book value ₹ 1,54,26,671/-. (4) In view of the above, there is violation of Section 129 of Companies Act, 2013, and the Company and its Directors are required to file compounding application before the approval of the Scheme. (5) It is declared that are no prosecutions, complaints, technical scrutiny/ inspections pending in this office against the Petitioner Companies. The Petition may be decided on merits. 6. In pursuance to the observations made by the ROC and the Regional Director (SER), Hyderabad, the Petitioner has filed an affidavit dated 12.09.2019 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f reconciling computers physically found and not in the fixed asset register of the Transferee Company aggregating to ₹ 70,561,112/- (CIF Value). The management is of the view that the said unreconciled figures are not material to impact the true and fair spirit of the financial statement. However, with the intent to maintain transparency, a separate note on this has been included in the financial statements of the Company. Further, the management is of the opinion that the de-bonding charges if any on these assets is also not material enough to impact financial statements of the Company. So far, the Transferee Company has not made any adjustments in its books of the accounts as this is a reconciliation issue and efforts are being made to further reduce the difference by taking the following steps: a. Write off all the assets that the management believes do not definitely exist or are of not useful value to the organization. b. Use alternative methods of tracing assets, like laptops, that could be geographically displaced and could be missed during physical count; and c. Put appropriate systems which help trace assets physically and correlate them to the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholders and more than 92% of un-secured Creditors of the Company, have also consented for it. The Tribunal, by an order dated 28th September, 2018 passed in CA (CAA) No. 38 of 2018 has dispensed with conducting the meetings of Shareholders and Creditors. There are no investigations stated to be pending against the Company. The Auditor of Transferee Company has furnished a Certificate dated 23rd April, 2018 by inter alia certifying that necessary accounting treatment, as proposed in the scheme of Amalgamation, is in conformity with accounting standards as prescribed U/s 133 of Companies Act, 2013. 12. It is a settled position of law that any Scheme of Arrangement or Amalgamation, under the extant provisions of Companies Act, would not contemplate to waive any liability or legal action for any violation of provisions of Companies Act, so as to prevent Statutory Authorities from initiating any action against violation of provisions of Companies Act, in respect of the Companies involved, in accordance with law. In the instant case, the Transferee Company would hold all such responsibilities. With reference to various observations made by the Statutory Authorities, as briefly det ..... X X X X Extracts X X X X X X X X Extracts X X X X
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