TaxTMI 
TaxTMI 
2017 (5) TMI 924
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....are detailed in their respective Memorandum and Articles of Association annexed with the petition at Annexures P-2 and P-4, respectively. The Board of Directors of the Transferor Company/Petitioner Company-I and Transferee Company/Petitioner Company-II have approved the said Scheme in their meetings held on 25.8.2015, Annexures P-6 & P-7, respectively. Earlier the petitioner/Transferor & Transferee Companies had approached this Court by way of CP No.198 of 2015 in which vide order dated 06.11.2015 meetings of the Equity Shareholders and Unsecured Creditors of the Transferor Company/Petitioner Company-I and Transferee Company/Petitioner Company-II were dispensed with and since there were no Secured Creditors of the Transferor Company/Petitioner Company-I and Transferee Company/Petitioner Company-II, therefore, it was ordered that there was nothing to convene their meetings. Hence, the Ist motion petition was disposed of on 06.11.2015 with liberty to move the Second Motion Petition. In the present Second motion petition, on 30.11.2015, notice was issued to the Regional Director, Ministry of Corporate Affairs, New Delhi and Official Liquidator. It was also ordered to be publi....
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....s business plans, no source of recoverability has been pointed out by the statutory auditors neither it is disclosed in the accounts of the company. (ii) The company has not provided and paid the provident fund on foreign component of salary paid to expatriate employees, as required in terms of the notification No.GSR 705 E and 706 E, dated 01.10.2008, issued by the Ministry of Labour and Employment, Govt. of India. In relation to the said qualification, the management responded that it is evaluating the implication of the aforementioned notification and awaiting the decision pending on similar matter at the Supreme Court level. It is stated that no evaluation as stated by the Company and status of pendency of case at Court level has been submitted by the company to the office of Deponent. 8.1 That the Deponent states that the Petitioner Companies vie para 20 of their reply have stated that there is no investigation/inspection pending against the petitioner companies under the provisions of various laws such as Companies Act, 1956, FEMA, IPC, SEBI Act, RBI Act etc. 9. That the Deponent states that the Registrar of Companies, Delhi & Haryana vide his above referred repor....
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....he demand of deposit of provident fund on foreign component of salary paid to expatriate employees is pending before Hon'ble Delhi High Court, in case titled Spice Jet Ltd. Versus Union of India and ANR, the Transferee Company, is evaluating the implications of the aforesaid notification of the Ministry of Labour and also the outcome of the said petition. A copy of order of Delhi High Court granting interim relief of in favour of the company, dated 11.09.2012 (ref. C.M. No.6321/2012 (stay)) is annexed hereto as Annexure A-1. 5. That it is undertaken that in the event of the Courts not agreeing with the contention, the Transferee Company undertakes to duly deposit the Provident Fund for the relevant period with the concerned authorities. 6. That without prejudice to the above, the said observations pertain to the Transferee Company only which is not being dissolved under the Scheme. 7. That further, as observed in para 10 of the Report of Regional Director, the Transferee Company shall continue all the employees of the Transferor Company on existing or similar terms and conditions as to remuneration and other benefits, and without any breach or interruption of service as pr....
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....,000/-. Out of this an amount of Rs. 3,519,873/- had been written back in FY 2013-14. It should also be noticed that such transactions have been undertaken with the group Companies itself. (d) That after carefully perusal of audit reports of the Company, we found that at some instance the audit report read with Companies (Auditor's report) Order, 2003 was qualified by auditors (shown in ITALICS as per guidelines of the ICAI), but not any explanation(s) was offered by Company in its BOD's report. The complete year wise elements can be discussed as under: - Financial year Qualification Company's Explanation 2012-13 Para (v)(b) of Companies (Auditor's report) Order, 2003: "In respect of transactions made in pursuance of such contracts or arrangements and exceeding the value of Rupees five lakhs entered into during the financial year, comparative quotes for those items are not available to us. Hence, we are unable to comment whether the transactions were made at prevailing market price at the relevant time." No explanation was offered by Company, in its BOD's report. Para (vi) of Companies (Auditor's report) Order, 2003: "During the year no inter....
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.... regard till date. (e) During the Financial Year 2014-15 the Company had estimated the different useful life of the assets rather than that suggested in Schedule-II of Indian Company Act, 2013. Further the residual value was also estimated to NIL. This fact was confronted to the Company and asked to support the estimated life with technical advice as mentioned in Application Guide on the provisions of Schedule II of the Companies Act, 2013 issued by ICAI read with Accounting Standard-6 and Schedule II of Indian Company Act, 2013. But vide reply dated February, 16th 2016 the Company had submitted management paper based on internal technical expert's review. But no such advice was submitted with us. In the absence of such technical advice, it appears that the Company is not following the Schedule-II of the Indian Company Act, 2013. (f) During the Financial year 2011-12, the Company had taken a Working Capital Loan of Rs. 80 million from Bank of Tokyo- Mitsubishi UFJ Ltd., Parliament Street, New Delhi for 102 days towards the working capital requirements. On perusal of the financial statements of the Company it was found that the total working capita....
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....he Transferor Company would like to submit that it has a closing cash balance of Rs. 9,06,20,048.71/- in FY 2011-12 as highlighted in the auditor's report itself. This would clearly justify the fact that such working capital loan has not been used for long term investments purposes. The Transferor Company has used equity funding of Rs. 20,00,00,000/- in that financial year primarily for acquisition of long term and non-current assets and short term borrowings have been primarily used for working capital purposes. Further, no qualification is raised by statutory auditors in its report for that financial year. 4. That it is submitted, that none of the observations per se have any impact on the amalgamation being proposed by the Petitioners and are balance sheet related observations. 5. That further para 11 of the Scheme provides as under: - "11 Legal proceedings All legal proceedings of whatsoever nature by or against the Transferor Company pending and/or arising at the Appointing Date and relating to Transferor Company or its properties, assets, debts, liabilities, duties and obligations, shall be continued and/or enforced until be Effective as desired by the Transferor ....
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....ponse to the observation made at para 4(c) by the Official Liquidator in his report that the Transferor Company has a provision for doubtful debts during 2012-13 and 2013-14, learned counsel for the petitioner-Companies has submitted that there are no doubtful debts as all debts have been recovered as per the balance sheet of 2014-15 attached at page 107 of the petition. In response to the observation made at para 4(d) by the Official Liquidator in his report that for the Financial Year 2012-13 and 2013-14, the auditor has observed comparative quotes for contracts above Rs. 5 lacs are not available and no explanation was offered by the petitioner-Transferor Company in auditors report, learned counsel for the petitioner-Companies has submitted that it is not a ground to deny the merger/amalgamation and it is further submitted that as per para 8 of reply to the report of the Official Liquidator, the Transferee Company has undertaken that it shall be liable for any action/liability that could have been or may be brought against Transferor Company In response to the further observation made at para 4(d) by the Official Liquidator in his report that for the Financial Year 2012-13 ....
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....averments made in para 4 to 6 of the additional affidavit dated 17.11.2016, the company is trading automobile components and it imports the trade goods for which foreign exchange is required for sale in domestic market where sales are in Indian rupees. 2. Salary paid to Directors is Rs. 1,79,08,880/- The directors are expatriates and salary is in account with Companies Act. Even the statutory auditor has not made any adverse observation on this. 3. The carry forward losses of the Transferor Company will be set off against the profits of Transferee Company There are no carry forward losses of Transferor Company. Even the report of the OL also states that the losses carry forward are 'Nil'. 4. Latest Audited Accounts of the petitioner-Companies not produced. Audited Balance Sheets for the Financial Year 2015-16 were filed along with CA No.525 of 2016 which was taken on record by this Court on 04.11.2016. I have heard both the learned counsel for the parties and after considering all the relevant facts, the procedural requirements contemplated under Sections 391 to 394 of the Act, the relevant Rules and on due consideration of the reports of the....