Tribunal Approves Company Restructuring for Fairness, Transfers Services and Liabilities to New Entity.

The Tribunal sanctioned the Scheme of Arrangement between the Demerged Company and the Transferee Company, finding it fair and reasonable. The Scheme involves transferring the Services Undertaking from the Demerged Company to the Transferee Company, with the Appointed Date set as the Effective Date. All liabilities, including taxes and duties, will transfer to the Transferee Company, subject to compliance with statutory requirements, including FEMA/RBI regulations and Section 188 of the Companies Act, 2013. The Tribunal directed the delivery of certified copies of the Order and Scheme to the Registrar of Companies within thirty days and allowed for further directions or objections.

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Issues Involved:
1. Approval and adoption of the Scheme of Arrangement.
2. Compliance with statutory requirements and provisions of the Companies Act, 2013.
3. Observations and objections raised by the Registrar of Companies (ROC) and the Regional Director (RD).
4. Clarifications and responses provided by the Petitioner Companies.
5. Final judgment and directions by the Tribunal.

Detailed Analysis:

1. Approval and Adoption of the Scheme of Arrangement:
The Petitioners, M/s. Embassy Real Estate Developments and Services Pvt. Ltd. (Demerged Company) and M/s. Embassy Office Ventures Pvt. Ltd. (Transferee Company), sought the Tribunal's sanction for a Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013. The Scheme involves demerging the Services Undertaking of the Demerged Company into the Transferee Company. The Board of Directors of both companies approved the Scheme on 16.09.2020, highlighting benefits such as focused management, strategic partnerships, fundraising, and operational efficiency.

2. Compliance with Statutory Requirements and Provisions of the Companies Act, 2013:
The Petitioner Companies complied with the procedural requirements, including filing necessary applications and obtaining approvals from shareholders and creditors. No investigations or proceedings were pending against the companies under relevant sections of the Companies Act, 1956 or 2013. The statutory auditors certified that the proposed accounting treatment complies with Indian Accounting Standards.

3. Observations and Objections Raised by the Registrar of Companies (ROC) and the Regional Director (RD):
The ROC and RD raised several observations:
- The Scheme did not specify the nature of service activities to be merged.
- The Appointed Date was ambiguously defined as the Effective Date.
- Clarifications were needed regarding the shareholding pattern and related party transactions.
- The need for transferring the Service Undertaking was questioned.
- Compliance with Section 188 of the Companies Act, 2013, was required.

4. Clarifications and Responses Provided by the Petitioner Companies:
In response, the Petitioners clarified:
- The Demerged Company acquired equity shares and CCDs of the Transferee Company on 09.11.2020.
- The Services Undertaking includes maintenance, engineering, property services, and administration.
- The Appointed Date is defined as the Effective Date, tied to the occurrence of specific events.
- The shareholding pattern was updated and certified by an independent Chartered Accountant.
- The Transferee Company filed an adjudication application for compounding the delay in appointing a Company Secretary.
- The Scheme aims to consolidate business operations and enhance financial strength for potential investments.
- Related party transactions were conducted in compliance with Section 188.

5. Final Judgment and Directions by the Tribunal:
The Tribunal found the Scheme of Arrangement fair, reasonable, and not detrimental to members or creditors. It sanctioned the Scheme with the following directions:
- The Appointed Date shall be the Effective Date.
- Sanctioning the Scheme does not exempt payment of Stamp Duty, taxes, or other charges.
- The Services Undertaking of the Demerged Company shall be transferred to the Transferee Company.
- All liabilities, including taxes and duties, shall be transferred to the Transferee Company.
- Tax implications under the Income Tax Act, 1961, are subject to the final decision of concerned authorities.
- Pending proceedings by or against the Services Undertaking shall continue with the Transferee Company.
- Compliance with FEMA/RBI regulations is required.
- Non-compliance liabilities under Section 135 shall transfer to the Transferee Company.
- Full compliance with affidavits/undertakings and Section 188 is necessary.
- Statutory returns must be filed immediately.
- Certified copies of the Order and Scheme must be delivered to the Registrar of Companies within thirty days.
- Books of Accounts and relevant documents must be handed over to the Transferee Company.
- The Order does not prevent statutory authorities from taking action for any violations.
- Any contravention of Section 232 shall result in fines.
- Liberty to apply for further directions or objections.

The Tribunal disposed of CP (CAA) No.43/BB/2020 along with pending IAS, if any.

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