TaxTMI 
TaxTMI 
2020 (11) TMI 60
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....d (Demerged Company) and Bajaj Electricals Limited (Resulting Company) and their respective shareholders creditors whereby and where under the Manufacturing Business of the Demerged Company will be demerged into the Resulting Company. 4. The Petitioner Company and the Demerged Company have approved the Scheme of Arrangement between Hind Lamps Limited (Demerged Company) and Bajaj Electricals Limited (Resulting Company) by passing the necessary board resolutions which are annexed to the Company Scheme Petition. 5. Learned Counsel appearing on behalf of the Petitioner Company stated that the Petition has been filed in consonance with the order passed in their CA (CAA) No. 1027/2018 filed before this Bench. Learned Counsel appearing for the Petitioner Company submitted that the National Stock Exchange of India Limited and BSE Limited have through their respective observation letters dated 21 March 2018 (annexed to the Company Scheme Petition), granted their 'No objection' to the Scheme and have stated in their respective letters that the Petitioner Company is not required to send notice for representation as mandated under section 230(5) of Companies Act, 2013 to the Secu....
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....ger of the Manufacturing Business of the Demerged Company into the Resulting Company would have the following benefits: (a) The Scheme of Arrangement between the Petitioner Company and the Demerged Company will result in various benefits including synergies in administration, marketing and business operations. (b) The transfer and vesting of the manufacturing business of the Demerged Company into the Petitioner Company will enable both the Demerged Company and the Petitioner Company to achieve and fulfil their objectives more efficiently and economically and the same is also in the interest of all stakeholders. The Petitioner Company's existing management expertise and quality systems & controls will enhance the performance of the business of the Demerged Company. (c) It shall facilitate the revival of the Manufacturing Business of the Demerged Company upon its consolidation with the Petitioner Company. (d) It shall lead to greater administrative efficiency and shall enable the Demerged Company to focus on and enhance its remaining business operations by streamlining operations and cutting costs. (e) It will increase the ability to l....
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....me to "upon the Scheme becoming effective" of "effectiveness of the Scheme" shall be a reference to the "Effective Date". In this regard, it is submitted that section 232(6) of the Companies Act, 2013 states that the scheme under this section shall clearly indicate an appointed date from which it shall be effective and the scheme shall be deemed to be effective from such date and not at a date subsequent to the appointed date. However, this aspect may be decided by the Tribunal taking into account its inherent powers. Further, the Petitioners may be asked to comply with the requirements as clarified vide circular No. 7/12/2019/CL-1 dated 21.08.2019 issued by the Ministry of Corporate Affairs. (c) That appointed date for the Scheme is 31st day of March, 2014 and the Petitioner Company has filed Company application in the year 2018. Therefore, the Petitioner may be asked reason for the same. (d) ROC, Mumbai Report dated 10.02.2020 has inter alia mentioned that as per MCA Master Data the paid-up Share Capital of the Resulting Company is Rs. 20,49,59,502/- and as per para No. 3 of the scheme the paid-up share capital of the Resulting Company is Rs. 20,25,80,3....
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....her with paragraph 3 of The Companies (Indian Accounting Standard) Rules, 2015 is applicable to the Resulting Company from the year ended March 31, 2017 with transition date of 1st April, 2015. In the statutory books of account of the Resulting Company, the scheme will be accounted from effective date in accordance with the Indian Accounting Standard (IND AS) 103 - Business Combination. Hence, on the Scheme becoming effective, the Resulting Company shall account for the Scheme and its effects in its books of account as under: (a) The Resulting Company shall, upon the Scheme coming into effect, record all the identifiable assets acquired and liabilities assumed pertaining to the Demerged Undertaking vested in it pursuant to this Scheme, at their acquisition date fair values. Accordingly, if the fair values of identifiable assets acquired, separately from goodwill, are less than the fair values of liabilities assumed and the consideration issued as per Clause 11 on account of demerger of Demerged Undertaking, then as per Ind AS 103, the Resulting Company shall on the acquisition date recognise the identifiable assets acquired and the liabilities as....
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....sulting Company will record all assets, liabilities and reserves pertaining to the Demerged Undertaking vested in it pursuant to this Scheme, at the respective book values thereof (ignoring revaluation) and in the same form as appearing in the books of the Demerged Company at the Appointed Date. b. The Resulting Company shall credit its share capital account with the aggregate face value of shares issued by it to the shareholders of HLL pursuant to Clause 11 of the Scheme. c. The difference between the net assets of the Demerged Undertaking under sub-clause (a) above and the consideration issued as per Clause 11 on account of demerger shall be adjusted to the reserves in the books of the Resulting Company. d. The assets and liabilities of the Demerged Company being transferred to the Resulting Company shall be transferred at values appearing in the books of account (ignoring revaluation) of the Demerged Company at the Appointed Date; e. The net difference between the assets and liabilities as transferred under sub-clause (d) above shall be adjusted to capital reserve in the books of the Demerged Company. 14. In so far as the observation made i....
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....esulting Company (Petitioner Company) and there will be no change in the statutory accounts already filed by the Resulting Company (which is a listed company) with the Registrar of Companies, Mumbai for previous years. For tax and other regulatory purposes, the Scheme shall be accounted from the Appointed Date as defined in the Scheme. Accordingly, the Demerged Company and Resulting Company shall prepare financial statements for previous years for tax purposes and file revised tax audit reports and return of income with the respective tax authorities. 15. In so far as the observation made in paragraph IV(c) of the Report submitted by the Regional Director is concerned, the Petitioner Company submitted the following: (a) The Demerged Company was declared as a Sick Industrial Company in terms of Section 3(1)(o) of Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "SICA") by the Board for Industrial & Financial Reconstruction (hereinafter after referred to as BIFR") vide its order dated 29 May 2003 in Case No. 9 of 2002. On declaration of the Demerged Company as a Sick Industrial Company, the Demerged Company filed a revival scheme with t....
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....Independent Valuer by the Petitioner Company and Demerged Company. (d) Since the Demerged Company was declared as a sick industrial company within the meaning of Section 3(1)(o) of the SICA by the BIFR, the said Scheme of Arrangement was required to be filed only with the BIFR for its approval and accordingly, on 22 April 2016, the Demerged Company had filed the said Scheme of Arrangement with the BIFR under the BIFR Case No. 09/2002 (hereinafter referred to as "BIFR Case"). (e) As the Scheme of Arrangement was not required to be filed with the High Court or Tribunal for its approval when it was approved by the Board of Directors of the Demerged Company and Petitioner Company, and was required to be filed only with the BIFR, the provisions of erstwhile Clause 24(f) of the Listing Agreement and/or Regulation 37 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as the "SEBI LODR") and SEBI circulars No. CIR/CFD/DIL/5/2013 dated 4 February 2013 and CIR/CFD/CMD/16/2015 dated 30 November 2015 (hereinafter referred to as "SEBI Circulars"), in respect of filing of draft scheme of arr....
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.... SEBI Circular vide their letter dated 6 October 2017 and 26 October 2017. (j) Accordingly, the Board of Directors of the Petitioner and Demerged Company, in their respective meeting held on 9 November 2017, considered and approved the revised valuation/share entitlement ratio, as per the valuation report dated 31 October 2017 (hereinafter referred to as the "Revised Valuation Report"), issued by M/s. Katre Barwe & Associates, Chartered Accountants, Mumbai, the independent valuation firm, for demerger of the manufacturing business of the Demerged Company into the Petitioner Company and made consequential amendment to the Scheme of Arrangement (which hereinabove referred to as "Scheme"). As per the Revised Valuation Report, the revised share entitlement ratio of equity shares for the proposed demerger of the Manufacturing Business of the Demerged Company into the Petitioner Company, as at the relevant date, shall be 97 equity shares of the Petitioner Company of Rs. 2 each fully paid-up for every 1,000 equity shares of the Demerged Company of Rs. 25 each fully paid-up. Accordingly, the shareholders of the Demerged Company, except the Petitioner Company, shall now be issued 4....
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....tions by the NCLT Allahabad vide order dated 18 December 2019 (Form CAA-7 dated 7 January 2020). 18. In so far as the observation made in paragraph IV(f) and paragraph IV(j) of the Report submitted by the Regional Director is concerned, the Petitioner Company undertakes through its Counsel that the Scheme has been approved by the requisite majority of equity shareholders, secured creditors and unsecured creditors as per Section 230(6) of the Act in the meeting duly held in terms of Section 230(1) read with subsection (3) to (5) of the said Act and the Petitioner Company has filed the Chairman's report in Form CAA-4 dated 20 March 2019 (copy annexed to the Company Scheme Petition) to report the outcome of the meeting of the equity shareholders, secured creditors and unsecured creditors of the Petitioner/Resulting Company. 19. In so far as the observation made in paragraph IV(g) of the Report submitted by the Regional Director is concerned, the Petitioner Company submitted that the details of the observation letters mentioned in the said report pertains to Godrej Industries Limited and not in respect of the Petitioner Company. The Petitioner Company submitted that the BSE L....