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TMI Blog2021 (1) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in sub-sections (1) and (2) of section 232 of the Companies Act, 2013 has been complied with, and hence the Scheme of Amalgamation, as approved by the Boards of both the Transferor Company and the Transferee Company, is hereby sanctioned - The Scheme of Amalgamation, as contained in the present Petition, is hereby sanctioned and the Appointed Date shall be 01st April, 2019. Application allowed. - CP (CAA) No. 20/BB/2020 - - - Dated:- 7-9-2020 - Rajeswara Rao Vittanala, Member (J) And Ashutosh Chandra, Member (T) For the Appellant : Saji P. John, Prema Hatti, Ganesh R. Ghale, Advocates For the Respondent : Manjunath ORDER Ashutosh Chandra, Member (T) 1. This Company Petition was jointly filed by M/s. Rangsons Schuster Technologies Private Limited (hereinafter referred to as 'Transferor Companies') and M/s. Rangsons Aerospace Private Limited (hereinafter referred to as 'Transferee Company') (collectively referred to as the 'Petitioner Companies') under Sections 230, 232 other applicable Provisions of the Companies Act, 2013, R/w Companies (Compromises, Arrangements Amalgamation) Rules, 2016, by inter alia seeking to the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Scheme of Amalgamation of Rangsons Schuster Technologies Private Limited ( Transferor Company ) and Rangsons Aerospace Private Limited ( Transferee Company ) and their respective shareholders (herein after referred to as 'Scheme' or 'the Scheme' or 'this Scheme'). (4) M/s. Rangsons Aerospace Private Limited (hereinafter referred to as 'Transferee Company') was incorporated on 03.06.2011 under the provisions of the Companies Act, 1956, under the name and style of Rangsons Defence Solutions Private Limited and the name of the Company has been changed to Rangsons Aerospace Private Limited on 16th October 2019 and bearing CIN: U36912KA2011PTC058960 and PAN No. AAFCR4176A. Its registered office is presently situated at Plot No. 9, Hebbal II Phase, KIADB Industrial Area Survey No.35, Part 36, 42, Pura Village Belagola Hobli Srirangapatna Taluk - 571401 Karnataka. The Company is carrying on the business of providing solutions to defense productions and applications, to manufacture, construct, sell, import, export and otherwise deal in all kinds of machinery, equipment, components, replacements parts, spares, consumables, gadgets, accessories and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and adequately. (9) The proposed Scheme is sought to be made under the provisions of Sections 230 to 232 of the Companies act, 2013 and other applicable provisions of the Companies Act, 2013 and the same if sanctioned by the Tribunal will take effect from April 1st, 2019, the Appointed Date. (10) It is also stated that the Petitioner Companies are unlisted Private Company. (11) The Transferee Company undertakes to pay any outstanding tax demands (including those tax demands that are outstanding on the Transferor Companies) once the matter reaches finality. (12) It is stated that the upon the Scheme becoming effective, the services of all transferred employees of the Transferor Company to the Transferee Company will be treated as having been continuous for the purpose of the employee benefits and liabilities. For the purpose of payment of any retrenchment compensation, gratuity and other terminal benefits and any other liability pertaining to the employees, the past services of such employees of the Transferor Company shall also be taken into account by the Transferee Company, who shall pay the same if and when payable. (13) Upon the Scheme coming into effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... affirmed that the Petitioners have served the notices as per the above Order. 5. The Registrar of Companies, Karnataka vide its report dated 09.06.2020 has inter alia pointed out the following observations: (1) It is observed that the Transferee Company 'Rangsons Aerospace Private Limited' was formerly known as 'Rangsons Defence Solutions Private Limited' before the Company changed its name with effect from 16.10.2019. (2) The Transferor Company and Transferee Company have related party transactions. Necessary proof of compliance under Section 188 of the Companies Act, 2013 may be directed to be submitted to the ROC before the approval of the Scheme. (3) It is also observed that the Transferor Company and the Transferee Company both have negative net-worth because of the excessive losses incurred by them. Further, these Companies are funded largely through debts, i.e. the borrowings from their Directors, and it is questionable if they have sufficient assets in their books to repay these debts. In light of this the Tribunal may direct the Companies to explain why it is appropriate for them to be considered as going concerns. (4) Both Transferor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government Authority before the approval of the Scheme. 7. In response to the aforesaid RD/ROC observations the Petitioners herein vide Affidavit dated 03.07.2020, by inter alia stated as follows: (1) Regarding Para No.3a) of RD Report: It is stated that the Transferee Company undertakes to pay the differential stamp duty arising out of clubbing of the Authorized Capitals after setting of the stamp duty already paid by the Transferor Company on its Authorized Capital. (2) Regarding Para No. 3c) of the RD Report Para No. 2 of the ROC Report: It is stated that such related party transactions are undertaken at arm's length and is in compliance with the applicable provisions of Companies Act, 2013. The same is disclosed in Form AOC-2 of the Board's Report and is reflected in the Notes forming part of Audited Financial Statements and the same has been placed on record as Ann. 1 (3) Regarding Para No.3 of the ROC Report: It is stated that both the Transferor and Transferee Companies are product technology Companies crafting innovative products for aerospace, and defense solutions by integrating technology, engineering and manufacturing expertise. Both the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each. Since the Preference and Equity Share Capital of both Companies are clubbed as per Clause 11 of the Scheme the Transferee Company has enough Preference Share Capital to allot Preference Shares to the Preference Shareholders of the Transferor Company. The Transferee Company undertakes to allot the Preference Shares post-merger upon sanction of the Scheme of Amalgamation by this Tribunal. (6) Regarding Para No.3f) of the RD Report: It is stated that the above fund was received as a soft loan from the Government for implementation of the Project and the Transferor Company has already implemented the Project and the Project will be continued by the Transferee Company. Karnataka State Council for Science and Technology (KSCST) has already inspected the project and they are satisfied with the implementation and are willing to release balance 15% of the Sanctioned Loan. A copy of the Letter from KSCST intimating the Transferor Company to submit Project Report to enable them to release the remaining balance of the Loan has been place on record as Ann.4. 8. The Official Liquidator vide OLR No.50 of 2020 dated 07.07.2020 in CP (CAA) No.20/BB/2020 has inter alia stated that f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Applicant Companies for approving the Scheme of Amalgamation and that any party aggrieved by this order is entitled to file Miscellaneous Application in the instant Company Application. 10. Intimation of the Scheme of Amalgamation was sent to all relevant Statutory Authorities/Regulators. Wherever no response has been received from the said Authorities/Regulators, it is deemed that they have no objection to the proposed Scheme. 11. Heard Mr. Saji P. John, learned Counsel for the Petitioner Companies, Mr. Manjunath, Official from Office of the Official Liquidator 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. 12. We have considered the facts of the case as mentioned in the Petition, the reports of the Regional Director, MCA, the ROC as well as the comments offered by the Official Liquidator, the reply filed by the Petitioners and the relevant provisions contained in the Companies Act, 2013 and other related Acts and Rules. In his report, the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961, arising out of the Scheme are subject to final decision of Concerned Tax Authorities and the decision of the Concerned Tax Authorities shall be binding on the Transferee Company; and (6) All the proceedings now pending by or against the Transferor Company be continued by or against the Transferee Company, if any; and (7) The Karnataka State Council for Science and Technology (KSCST) project is stated to have been completed by the Transferor Company, however any prior dues owed to or demands raised by the KSCST after amalgamation shall be binding upon and payable by the Transferee Company; and (8) Any liability, if any, arising from non-compliance to the provisions contained in section 135, shall stand transferred to and be the liability of the Transferee Company; 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 Amalgamation 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 Amalgamation is subject to the directions that the Petitioner Co ..... 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