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TMI Blog2018 (9) TMI 2041X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant Companies in support of the joint application for seeking appropriate orders/direction for calling and convening meetings and for dispensing with some of the meetings. The joint application is maintainable in terms of Rule 3(2) of the Rules. 2. The Board of Directors of the applicant companies unanimously approved the "Scheme" by passing their Board resolutions. The resolutions dated 01.08.2018 of A-1 and A-2 companies are Annexures A-11 and A-12, respectively and A-3 company approved the Scheme by resolution dated 02.08.2018 (Annexure A-13)subject to sanctioning of the same by this Tribunal. That A-1 Company has authorized Shri Rohit Gupta and Shri Mihir Gangadhar Kulkarni, Directors; A-2 company has authorized Shri Rohit Gupta and Shri Ramasubbu Sunder, Directors and A-3 company has authorized Shri Rohit Gupta, Chief Financial Officer and Executive Director and other directors and Mr. Abhishek Nagar, Company Secretary and Senior Manager (Legal) jointly and/or severally to sign, file, submit or present necessary applications, petitions, supplementary applications/ petitions, pleadings etc. and to do such acts and deeds as are necessary and incidental with regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Its CIN is U30009HR1992PTC056008. A-2 company is stated to be a wholly owned subsidiary of Transferee Company. 8. The authorized, issued, subscribed and paid-up capital of A-2 Company as on 31.07.2018 is as under:- Particulars Amount (in Rs.) Authorized Share Capital, 25,000 Equity Shares of Rs. 100/- each 25,00,000 Issued, Subscribed and Paid-up Share Capital 13,798 Equity Shares of Rs. 100/- each 13,79,800 9. It was represented further that as per Memorandum and Articles of Association, (Annexure A-8) the main objects of A-3 Company are as under:- "(i) To establish, own or acquire ferrous and non-ferrous metal melting furnaces and rolling mills and to carry on business as traders, manufacturers and fabricators of ferrous and nonferrous ingots, blocks, billets, slabs, sheets, hot rolled and cold rolled steel strips, strips with edges, rounded or otherwise shaped, coated strips, galvanized or Zinc finished or wax coated or painted. (ii) To carry on business as traders, manufacturers and fabricators of steel strappings of various ranges of tensile strength for different type of applications, including cold rolled steel, medium carbon, high manganes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity Shares of Rs. 20,000/- each 13,55,00,000 Add: Amount paid up on forfeited shares 5,125 12. The registered offices of all the Applicant-Companies are the same and situated within the State of Haryana and, therefore, the matter falls within the territorial jurisdiction of this Tribunal. All the ApplicantCompanies are unlisted private limited companies. 13. It is stated that there are no proceedings for inspection / investigation under the Companies Act, 1956 or Companies Act, 2013 or any proceedings under SEBI/FEMA/IPC, pending against the Applicant Companies or their directors. Even no proceedings are pending under Sections 241 and 242 of the Companies Act, 2013 against the companies or its Directors. 14. The Applicant Companies have made the following prayers;- "(a) Direct that the meetings of the equity shareholders and secured creditors of the Applicant Companies 1 and 2 be dispensed with; (b) Direct that meetings of unsecured creditors of Applicant Company 1 and 2 be convened; (c) Direct that meeting of secured creditors of Applicant Company 3 be convened; (d) Direct that the meetings of the equity shareholders and unsecured creditors of the Applicant Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A-1 company. It has been prayed that meeting of the unsecured creditors of A-1 company may be convened. 19. In relation to A-2 company, it is stated that A-3 company is holding 13,797 equity shares of the value of Rs. 100/- each constituting 99.99% shareholding in this company and Avery India Limited is holding 1 share as a nominee shareholder of A-3 company. List of shareholders is at Annexure A-18. A-3 company, vide resolution of its Board of Directors dated 02.08.2018 (at page 354 of the paper book), while granting approval to the scheme, has jointly and/or severally authorized Shri Rohit Gupta and Shri Mihir Gangadhar Kulkarni to do various acts including executing any affidavits in relation to the scheme. The affidavit giving consent of Mr. Rohit Gupta, Director on behalf of A-3 company has been filed stating therein that the A-3 company has no objection to the dispensation of meeting of shareholders. The affidavit dated 07.08.2018 is Annexure A-19. With regard to the nominee shareholder, i.e. Avery India Limited, a similar affidavit by Rohit Gupta, its Director furnishing no objection for dispensation has been filed along with Board resolution of Avery India Limited. The aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntCompanies to the effect that the accounting treatment proposed in the Scheme is in conformity with the Accounting Standards prescribed under Section 133 of the Companies Act,2013 read with relevant Rules issued thereunder and other generally accepted accounting principles in India are attached as A-26 (colly.). 26. We have heard the learned counsel for the applicantcompanies and have perused the records and the supporting documents/papers filed along with the "Scheme" contemplated between the Applicant-Companies with the assistance of learned counsel for the applicants. 27. The rationale for the "Scheme" is stated as under:- "The Transferee Company, the Transferor Company 1 and the Transferor Company 2 (hereinafter referred as "Companies") are a part of the ITW Group which is headquartered in the United States of America. This Scheme of Arrangement, is being undertaken as part of the restructuring plan to simplify the holding structure through consolidation of the wholly owned subsidiaries and to reduce the paid up share capital of all shareholders holding less than 10 shares in the Transferee Company. The Scheme is expected to achieve various objectives, including: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss of winding up. 29. It is also averred that since all the Transferor Companies are wholly owned subsidiaries of the A-3 company, therefore, there would be no issue and allotment of shares by the A-3 company. 30. The learned counsel for the Applicant-companies further represented that in respect of the applicant-companies, the audited financial statements upto 31.3.2017 and unaudited supplementary accounting statements upto 31.3.2018 are at Annexures A-3, A-4, A-6, A-7, A-9 and A-10 respectively. 31. It was also represented by learned counsel for the applicant companies that as per clause 6 of the Scheme, on the "Scheme" coming into effect, all employees of the Transferor Companies in service on the date immediately preceding the Effective Date shall, on and from the Effective Date, be deemed to have become the employees of the Transferee Company on the same terms and conditions on which they are engaged by the Transferor Companies without treating it as a break, discontinuance or interruption in service. Care has also been taken in the Scheme regarding other benefits/facilities being granted to the employees of the transferor-companies. 32. It is also stated that upon the Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the petitioner-companies, however, referred to the following judgements to contend that the Scheme of Arrangement to give honorable exit to such minority shareholders who still remain the members after the delisting of the company: (i) R Systems International Limited MANU/NL/0151/2018 (ii) Sandvik Asia Ltd. V. Bharat Kumar Padamsi & Ors MANU/MH/0237/2009 (iii) Reckit Benckiser (India) Ltd. MANU/DE/1174/2005 (iv) Jubilant Clinsys Limited MANU/NC/0629/2017 (v) Gujarat Ambuja Exports Ltd. MANU/GJ/0170/2003 Hind Lever Chemicals Ltd. & Anr. MANU/PH/0040/2004 Such an arrangement, according to the learned counsel, is covered under Section 66 of the Act, which is permitted as per explanation below subsection (12) of Section 230 of the Act. We would not like to express any opinion on merits of this contention at this stage and leave this issue to be finally adjudicated up while disposing of the Second Motion petition for which the applicant-companies shall make a specific prayer in the relief clause at that stage seeking for adjudication on this aspect. However, we would observe that in the Companies Act, 2013, certain provisions/changes have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 20,000 each. 18.3 Upon the Scheme becoming effective and pursuant to clause 18.1 and clause 18.2 above, the Relevant Shareholders of the Transferee Company as on the Record Date, shall be paid, for the equity shares held by them and which are cancelled and extinguished, a sum of Rs. 21,60,088 per equity share of face value Rs. 20,000 each, so cancelled and extinguished, as per valuation carried out by independent valuers, SSPA & CO. (Chartered Accountants). Further, as per the provisions of section 115-O of the Income Tax Act, 1961, the Transferee Company shall additionally bear the dividend distribution tax @ 20.555% amounting to Rs. 4,44,006 per equity share so cancelled and extinguished or as may be applicable as per the tax laws then in force. 18.4 Upon the Scheme becoming effective, and without any further act or deed by the Relevant Shareholders or their nominees (including but not limited to surrendering of share certificates and/or sending appropriate instructions to the Depository Participants), the shares held by the Relevant Shareholders shall stand cancelled, extinguished and rendered invalid 18.5 Upon the Scheme becoming effective, the payment for the Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny shall continue to undertake the Research and Development activities in the same manner and to the same extent, as the Transferor Company 2. Further, with effect from the Appointed Date, the approval of DSIR pertaining to the Transferor Company 2 shall stand transferred to the Transferee Company and The Transferee Company shall be entitled to claim applicable tax deduction, specified under the relevant provisions of the Income Tax Act, 1961 including Section 35(2AB) of the Income Tax Act, 1961. 39. The learned counsel for the applicant-companies submits that apart from the statutory authorities, the Reserve Bank of India is also to be issued notice as the holding company is a foreign based company. However, we find from clause 5.2(h) of the Scheme as referred to above that the Department of Scientific and Industrial Research (DSIR) should also be served notice as according to the Scheme, with the approval of DSIR, the transferor company No. 2 shall stand transferred to the transferee company and the transferee-company shall be able to claim applicable tax deductions. Further in case the reduction of share capital in this case is considered as buy-back, then the transferee compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sector-14, Gurugram, Haryana 122001 on 18.11.2018 at 10.30 AM subject to the notice of meeting being issued. The quorum of the meeting shall be 60 in number and 50% of the value of the unsecured credit. The meeting of unsecured creditors having debt of less than Rs. 50,000/- is dispensed with. D. In case the required quorum as noted above for the meetings of the Applicant-Companies is not present at the commencement of the meetings, the meetings shall be adjourned by 30 minutes, and thereafter the persons present and voting shall be deemed to constitute the quorum. For the purpose of computing the quorum the valid proxies shall also be considered, if the proxy in the prescribed form, duly signed by the person entitled to attend and vote at the meeting, is filed with the registered office of the applicant companies at least 48 hours before the meeting. The Chairperson and Alternate Chairperson appointed herein along with Scrutinizer shall ensure that the proxy register is properly maintained. E. Ms. Anu Chatrath, Senior Advocate, House No. 2055, Sector 15- C, Chandigarh (Mobile No. 9872511222), e-mail id: [email protected] is appointed as the Chairperson for the meeting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be also circulated for the aforesaid meetings apart from other requirements of sub-section 2 of Section 230 of the Act. L. That the Applicant Companies shall jointly publish the advertisement with a gap of at least 30 clear days before the aforesaid meeting, indicating the day, date and the place and time of meetings as aforesaid, to be published in the Indian Express (English), Delhi NCR Edition and Business Standard (Hindi), Delhi NCR Edition. It be stated in the advertisement that the copies of "Scheme", the Explanatory Statement required to be published pursuant to Section 230 to 232 of the "Act" and the form of proxy shall be provided free of charge at the registered office of the Applicant Companies. The Applicant Companies shall also publish the notice on their respective website, if any. M. It shall be the responsibility of the Applicant Companies to ensure that the notices are sent under the signature and supervision of the authorized representative of the companies on the basis of Board resolutions and that they shall file their affidavits in the Tribunal at least ten days before the date fixed for the meeting. N. Voting shall be allowed on the "Scheme" in person or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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