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TMI Blog2019 (5) TMI 1891X X X X Extracts X X X X X X X X Extracts X X X X ..... ng CA (CAA) No.24/Chd/Hry/2018 before this Tribunal for seeking directions to convene the meetings of unsecured creditors of the Petitioner Company No.1 and 2, equity shareholders, secured and unsecured creditors of Petitioner Company No. 3 and for seeking dispensation of the meetings of equity shareholders and secured creditors of the Petitioner Company No.1 and 2 and unsecured creditors (having debt of less than Rs. 50,000/-) of Petitioner Company No.3. 3. The First Motion Application was disposed of vide order dated 27.09.2018 with a direction to hold the meetings of unsecured creditors of the Petitioner Companies No.1 and 2; equity shareholders, secured creditors of Transferee Company and unsecured creditors of Transferee Company. Further, meetings of the equity shareholders and secured creditors in Petitioner Companies No.1 and 2 were dispensed with as mentioned in the order dated 27.04.2018 attached at Annexure P-14 of the petition. 4. The affidavits dated 02.11.2018 of Mr. Rohit Gupta, Authorised signatory of all the Petitioner Companies with regard to compliance of all the directions given in the order dated 27.09.2018 was filed vide Diary No.4307 dated 05.11.2018 along w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... io under the 'Scheme' has been determined in accordance with the report on share entitlement dated 31.07.2018 of SSPA & Co., Chartered Accountants. According to the share valuation report, the share exchange ratio as per Discount Cash Flow Method is as follows:- "the fair value per equity share of ITW works out to INR 21,60,088 as on the Valuation Date" 11. It is also represented that the present 'Scheme' involves reduction of share capital of Transferee Company and the relevant paragraph is reproduced as under:- "18. REDUCTION OF SHARE CAPITAL OF THE TRANSFEREE COMPANY 18.1 The subscribed and paid up share capital of the Transferee Company is Rs. 13,55,00,000 consisting of 6,775 equity shares of face value Rs. 20,000 each, fully paid up. The subscribed and paid up share capital of the Transferee Company shall stand reduced with regard to the shares held by the Relevant Shareholders by paying back the capital at a price as mentioned hereinafter. 18.2 Upon the Scheme becoming effective, the subscribed and paid up share capital of the Transferee Company will be reduced from Rs. 13,55,00,000 (Rupees Thirteen Crore Fifty Five Lakhs) consisting of 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven on or before the date of hearing fixed herein may be filed within thirty days from the date of the receipt of the notice, failing which it will be considered that there is no objection to the approval of the Scheme on the part of the authorities by this Tribunal and subject to other conditions being satisfied as may be applicable under the Companies Act, 2013 and relevant rules framed thereunder. In addition to the above public notice, each of the petitioner-companies shall serve the notice of the petition on the following Authorities namely, (a) Central Government through Regional Director (Northern Region), Ministry of Corporate Affairs (b) Registrar of Companies, NCT of Delhi and Haryana (c) Income Tax Department through the Nodal Officer - Principal Chief Commissioner of Income Tax, NWR, Aaykar Bhawan, Sector 17-E, Chandigarh by mentioning the PAN of the companies (d) Official Liquidator, Punjab, Haryana and Chandigarh (e) Director General, Council of Scientific and Industrial Research (CSIR)-cum-Secretary, Department of Scientific and Industrial Research (DSIR), Room No.14-B, Technology Bhawan, S&T Block I, New Mehrauli Road, Block-C, Adchini, New Delhi-110016; (f) Reser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The postal receipts of the notices sent to the statutory authorities are part of the said affidavit. 15. The learned counsel for the petitioner companies further submitted that as per separate affidavits of Mr. Rohit Gupta, authorized signatory of the petitioner companies, it is stated that the companies do not have any sectoral regulator and Reserve Bank of India may be treated as the sectoral regulator as there is foreign control and investments involved in the petitioner-companies. 16. We have heard the Learned Counsel for the petitioners, Mr. Afsar Ali, Assistant Registrar of Companies, Chandigarh and Punjab and Learned Counsel for the Income Tax Department and perused the records carefully. 17. The Regional Director, Northern Region, Ministry of Corporate Affairs filed its report by way of affidavit of Dr. Raj Singh, Regional Director dated 08.03.2019. Following are the observations:- (i) In para 8(a) of the report, it is stated that the Transferee Company need to comply with the provisions of the Section 232(3)(8)(i) read with Section 233(11), 233(12) of the Companies Act, 2013.; (ii) In para 8(b) of the report, it was further observed that consequent to sanctioning of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so been prepared in tabular form in the reply to the report of Income Tax Department. In relation to the pendency of the Assessment Proceedings under Section 143(3) of the Income Tax Act, it is submitted that the last date for completion of assessment as per the provisions of the Income Tax Act, 1961 for AY 2017-18 is 31.12.2019. Further, it is deposed that the Transferee Company undertakes to pay any tax liability upon final order of the relevant adjudicating authority for the years for which the Transferor Company 2 is under scrutiny. 21. The Official Liquidator in its report directed that all the petitioner companies to comply with the provisions of FEMA. It was also submitted that there are no investigations/inspection/proceedings pending against the petitioner companies 22. There is no representation from Reserve Bank of India and Department of Scientific and Industrial Research so far in respect of the notices sent to them. 23. Learned counsel for the petitioner companies submits that both the Transferor Companies 1 and 2 are wholly owned subsidiaries of Transferee Company. 24. Further, It can be seen that the Petitioner Company No.3 (Transferee Company) avails the option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dra Hills Secunderabad, AP 500026 2 20,000 40,000 21,60,088 43,20,176 10. Manoj J Bagadia 1 Ratnadeep Bldg 2nd Floor Hingwala Lane, Ghatkopar East Mumbai, 400077 2 20,000 40,000 21,60,088 43,20,176 11. Bharat Bhushan Sahny Veena Sahny IV-B/22 Dayanand Colony Lajpat Nagar New Delhi 110024 1 20,000 20,000 21,60,088 21,60,088 12. Geera Finance Limited Anand Bunglow Opp Devdeep Duplex Motinagar Society, Dhumketu Marg Paldi, Ahmedabad, 380007 1 20,000 20,000 21,60,088 21,60,088 13. Hobart LLC 155 Harlem Avenue Glenview Illinois 60025 USA 1 20,000 20,000 21,60,088 21,60,088 14. Podile Gita Vani 5-91-2nd Floor 4TH Lane, Lakshmipuram Guntur, 522007 1 20,000 20,000 21,60,088 21,60,088 15. Kailashben Kiritbhai Shah Aarohi Complex 4th Floor Nr Rasranjan Vijay Cross Road Navrangpura, Ahmedabad, 380009 1 20,000 20,000 21,60,088 21,60,088 16. Amita Nitesh Thakkar Nitesh Arjun Thakkar 1101-1102 Kailash Palace, Upashraya lane Ghatkoper (E), Mumbai Maharashtra, 400077 1 20,000 20,000 21,60,088 21,60,088 17. Priya Dhawal Thakkar Dhawal Arjun Thakkar Nand Ashish, 2nd Floor R B Mehta Marg Pant Nagar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Subba Reddy Plot No 123 Balamrai Society, Mahendra Hills Secunderabad, AP 500026 2 equity shares of Rs. 20,000 each 40,000 10. Manoj J Bagadia 1 Ratnadeep Bldg 2nd Floor Hingwala Lane, Ghatkopar East Mumbai, 400077 2 equity shares of Rs. 20,000 each 40,000 11. Bharat Bhushan Sahny Veena Sahny IV-B/22 Dayanand Colony Lajpat Nagar New Delhi 110024 1 equity shares of Rs. 20,000 each 20,000 12. Geera Finance Limited Anand Bunglow Opp Devdeep Duplex Motinagar Society, Dhumketu Marg Paldi, Ahmedabad, 380007 1 equity shares of Rs. 20,000 each 20,000 13. Hobart LLC 155 Harlem Avenue Glenview Illinois 60025 USA 1 equity shares of Rs. 20,000 each 20,000 14. Podile Gita Vani 5-91-2nd Floor 4TH Lane, Lakshmipuram Guntur, 522007 1 equity shares of Rs. 20,000 each 20,000 15. Kailashben Kiritbhai Shah Aarohi Complex 4th Floor Nr Rasranjan Vijay Cross Road Navrangpura, Ahmedabad, 380009 1 equity shares of Rs. 20,000 each 20,000 16. Amita Nitesh Thakkar Nitesh Arjun Thakkar 1101-1102 Kailash Palace, Upashraya lane Ghatkoper (E), Mumbai Maharashtra, 400077 1 equity shares of Rs. 20,000 each 20,000 17. Priya Dhawal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as per the provisions of Section 68 of the Act and The Companies (Share Capital and Debentures) Rules, 2014 (Buy-back Rules). 29. Learned counsel for the Petitioner Companies stated that the proposed reduction of capital is done to rationalize the capital structure of the Company and it is a commercial decision of the company to do so. It is further contended that in case any shareholder is not interested in the reduction at the price offered, such aggrieved shareholder be at liberty not to offer his shares for reduction. 30. The present position of law, while dealing with the provisions of Sections 230-232 and 66 of the Act is that if none of the shareholders are objecting for the proposed reduction, then after considering the merits of the case as also connected facts and circumstances such petition generally deserves to be admitted. 31. It is also observed that while reducing the share capital, company can decide to extinguish some of its shares without dealing in the same manner as with all other shares of the same class. The company limited by shares is permitted to reduce the share capital in any manner, thereby a selective reduction is permissible within the framework ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 232 of the Companies Act, 2013 be transferred to and vested in the Transferee Company for all estate and interest of the Transferor Companies therein but subject nevertheless to all charges now affecting the same; and ii) That all the liabilities and duties of the Transferor Companies be transferred without further act or deed, to the Transferee Company and accordingly, the same shall, pursuant to Section 230 to 232 of the Act, be transferred to and become the liabilities of the Transferee Company; and iii) That all the proceedings now pending by or against the Transferor Companies be continued by or against the Transferee Company; and iv) That all the employees of the Transferor Companies shall be transferred to the Transferee Company in terms of the 'Scheme'; and v) The authorized share capital of the Transferee Company shall stand increased and that of Transferor Companies shall stand cancelled and extinguished as provided in the Scheme; and vi) That the fee, if any, paid by the Transferor Companies on its authorized capital shall be set off against any fees payable by the Transferee Company on its authorized capital subsequent to the sanction of the 'Scheme' ..... 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