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TMI Blog2020 (12) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... here to avoid duplication and repetition, we are satisfied that the procedure specified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Arrangement, as approved by the Boards of both the Transferor Company and the Resulting Company, is hereby sanctioned. The scheme is sanctioned - application allowed. - CP (CAA) No. 11/BB/2020 - - - Dated:- 4-9-2020 - Rajeswara Rao Vittanala, Member (J) And Ashutosh Chandra, Member (T) For the Appellant : A. Murali, Prema Hatti For the Respondents: Ganesh R. Ghale, Advocates ORDER Ashutosh Chandra, Member (T) 1. This Company Petition was jointly filed by M/s. Splash Fashions India Private Limited (hereinafter referred to as Transferor Company') and M/s. Lifestyle International Private Limited (hereinafter referred to as 'Resulting Company') (collectively referred to as the 'Petitioner Companies') under Sections 230 to 232 of Companies Act, 2013, R/w Companies (Compromises, Arrangements and Amalgamation) Rules, 2016, by inter alia seeking to the Scheme of Arrangement be sanctioned by this Tribunal, so as to be binding on the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Companies Act, 1956 and having its registered offices at Fourth Floor, 77 Town Centre, Building No.3, West Wing, Off HAL Airport Road, Yamlur, P.O. Bangalore, Karnataka-560037, in terms of the Scheme, as placed before the meeting and initialed by the Chairman for the purposes of identification. (3) M/s. Lifestyle International Private Limited (hereinafter referred to as 'Resulting Company') and Petitioner No. 2 was incorporated on 24.11.1997 under the provisions of the Companies Act, 1956, bearing CIN: U52190KA1997PTC046775. Its registered office is presently situated at 77 Town Centre, Building No.3, West Wing, Off HAL Airport Road, Yamlur P.O. Bangalore - 560037 Karnataka. Its authorised share capital is ₹ 140,00,00,000/-(Rupees One Hundred and Forty Crores only) divided into 14,00,00,000 (Fourteen Crores) equity shares of ₹ 10/-(Rupees Ten Only) each and the Issued, Subscribed and paid-up share capital is ₹ 1,22,46,37,890/- (Rupees One Hundred and Twenty Two Crores Forty Six Lakhs Thirty Seven Thousand Eight Hundred and Ninety Only) divided into 12,24,63,789 (Twelve Crore Twenty Four Lakh Sixty Three Thousand Seven Hundred and Eighty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further act, instrument, deed or order to be transferred to and be vested with the Resulting Company as a going concern. The Scheme if approved will be effective from the Appointed Date viz. April 1st, 2019. b. On and from the Appointed Date, all debts, secured and unsecured liabilities, if any and obligations of every kind including tax liabilities in relation to Apparel Division of the Transferor Company to become the debts, liabilities and obligations of the Resulting Company from that date. c. All legal proceeding of whatsoever in nature by or against the Transferor Company in relation to Apparel Division shall be continued by or against the Resulting Company. d. All the employees working for the Apparel Division of the Transferor Company shall become employees of the Resulting Company without any break or interruption in service and on terms of service not less favourable than those enjoyed by them. (7) As consideration for the merger, the Petitioner Company No.2 shall issue and allot to the equity Shareholders of the Petitioner Company No.1 in following ratio: 1 (One) fully paid Equity Share of face value of ₹ 10 (Rupees Ten Only) each of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ublish paper publication in 'The Hindu' in English daily as well as in 'Kannada Prabha' in Kannada daily and to file proof of the same. Vide Compliance Affidavit dated 02.03.2020 it is affirmed that the Petitioners have served the notices as per the above Orders and also caused paper publication in The Hindu' and in 'Kannada Prabha' on 25.02.2020 with regard to the notice of hearing of the Petition and they have not received any objection from any party about the acceptance of Scheme. 5. The Registrar of Companies, Karnataka vide its report dated 14.05.2020 has inter alia pointed out the following observations: (1) It is observed that the proposed Scheme of Demerger is combining the businesses and operations of the Apparel Division of the Demerged Company into the Resulting Company. (2) The Gross amount required to be spent by the Resulting Company towards CSR for the financial years 2017-18 and 2018-19 were ₹ 6 Crores and ₹ 9 Crores respectively. Though, the Company had spent the full amount of ₹ 9 Crores in the financial year 2018-19 only ₹ 5 Crores was spent during the financial year 2017-18 and the amount yet to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petitioner Company may be directed to ensure compliance of the same. 7. In response to the aforesaid RD/ROC observations the Petitioners herein vide Affidavits dated 28.07.2020, by inter alia stated as follows: In Respect of M/s.Splash Fashions India Pvt. Ltd. (1) Regarding Observation No. 1 of the RD Report: It is stated the Transferor Company is providing manpower services and will continue with the same. As per the MoA of the Transferor Company, it can carry out manpower services and manpower resources for various areas of business including for staffing, recruiting, consultancy, advisory, training, manpower supply and skill development and various activities such as packing, re-packing, logistics and transport, quality control, warehousing and other areas of retail business and the same has been placed on record as Ann. A (2) Regarding Observation No.3 of the RD Report: It is stated that the Transferor Company will undertake to cause the Resulting Company to provide the necessary clarifications, if any to the ROC. (3) Regarding Observation No.4 of the RD Report: It is stated that the Petitioner Companies have been complying with Section 188 of the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34,288,000 September 13, 2019: 15,400,000 Equity Shares of ₹ 10/- each 154,000,000 Issued, Subscribed and Paid-up Capital (as on date) 8,88,28,333 Equity Shares of ₹ 10/- each 88,82,83,330 The Transferor Company undertakes to make the necessary clarifications, if any, to the ROC. (6) Regarding Observation No.4 of the ROC Report: Same as the response given to the RD with regard to the query on compliance to section 188 of the Companies Act, 2013 and related rules, as mentioned above. In respect of M/s. Lifestyle International Private Limited (1) Regarding Observation No. 1 of the RD Report: It is stated the Transferor Company is providing manpower services and will continue with the same. As per the MoA of the Transferor Company, it can carry out manpower services and manpower resources for various areas of business including for staffing, recruiting, consultancy, advisory, training, manpower supply and skill development and various activities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above. 8. The Competition Commission of India vide letter No.N-20(11)/NF-492/2020/CD/2140 dated 28.02.2020 has inter alia informed that under the provisions of the Competition Act, 2002, a notice for combination is to be mandatorily given to CCI subject to meeting of thresholds, in terms of combined assets or combined turnover. Further, there are certain exemptions available for which notice may not normally be given to the Commission and also informed that the said Scheme has not been filed with the Commission under the provisions of the Act, and that the NCLT may seek an undertaking from the Companies involved that CCI approval is not required for the said Scheme. 9. In regard to the CCI letter, the Petitioner Companies in Affidavits dated 28.07.2020 have submitted that notice of the Petition was served to the Competition Commission of India on 24th February 2020 and the same was received on 26th February. It is stated that the Petitioner Companies have not received any objections/observations/reports in relation to the proposed Scheme of Arrangement form the CCI from the date of service up to the date of filing these Affidavits. It is submitted that the Demerged undertak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the Petitioner Companies, Smt. Prema Hatti, learned Standing Counsel for the ROC and Mr. Ganesh R. Ghale, learned Standing Counsel for the Income Tax Department through Video Conference. We have carefully perused the pleadings of the Parties and the extant Provisions of the Companies Act, 2013 and various Rules made thereunder and the Law on the issue. 15. We have considered the facts of the case as mentioned in the Petition, the reports of the Regional Director, MCA, and that of the ROC. In his report, the Regional Director, MCA has concluded that the Scheme appears to be fair, reasonable and not detrimental against the Members or Creditors or contrary to public policy and the same can be approved. The issue of CIN has been satisfactorily explained. The minor discrepancy has occurred due to the year of incorporation and year of transfer only, and would not come in the way of sanction of the Scheme of Arrangement. It appears that the Scheme will enable better control and visibility over the resources of the dormant entities, since pursuant to the merger they shall be consolidated into the Resulting Company and will help in reducing the costs and efforts involved in perform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against the Transferor Company relating to Apparel Division be continued by or against the Resulting Company, if any; and (7) Liability, if any, arising from non-compliance to the provisions contained in section 135, shall stand transferred to and be the liability of the Resulting Company; and (8) The Registrar of Companies, Karnataka, shall rectify the CIN, if not already done, and if required, issue a fresh Certificate of Incorporation, so as to ensure that in all records the correct CIN of the Resulting Company is reflected; and (9) The Petitioner Companies shall within thirty days of the date of the receipt of this Order cause a certified copy of this Order along with a copy of Scheme of Arrangement to be delivered to the Registrar of Companies for registration in accordance with applicable rules and regulations; and (10) The acceptance of the Scheme of Arrangement is subject to the directions that the Petitioner Companies shall file all the due Statutory Returns immediately, if any. (11) The Petitioner Companies will ensure compliance to all provisions of the Companies Act 2013, as may be applicable, and their Affidavits and will submit Quarterly/Annua ..... X X X X Extracts X X X X X X X X Extracts X X X X
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