TaxTMI 
TaxTMI 
2021 (1) TMI 725
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....rvations, the relevant paras of the impugned order are enumerated as follows: "34. In the matter of de-merger of East West Pipelines (demerged Company) and Pipeline Infrastructure Pvt. Ltd. (the resultant Company), Court-I, NCLT, Mumbai had ordered the Petitioner Company to amend the Scheme of amalgamation by deciding the appointed date as on the date on which the demerged Undertaking has been valued. As decided in the case discussed supra, the Bench is of the considered view that the appointed date can be the date on which the Valuation Report was prepared and the Fairness Opinion was given by the Merchant Banker i.e. 31.07.2018. Since the Transferee Company will be allotting the shares which are listed and being regularly traded on the Stock Exchanges, on consideration, the share exchange ratio would undergo change significantly in view of the market price on which the cut-off date i.e. appointed date is considered. In the instant case, if we consider 31.07.2018 as the appointed date, the average of two weeks market price per share was Rs. 182.58 as stated above. However, if we consider the market price per share as on the appointed date proposed in the Scheme i.e. 01.01....
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....products. 4. The Appellant no. 1 & 2 herein are the transferor companies and 3rd Appellant is the transferee company. Appellants herein are a part of RHI Magnesita group of companies. The 3rd appellant is a subsidiary of Dutch US Holding, BV which is ultimately owned by RHI Magnesita N.V., Netherlands (RHIM). Two group companies of RHIM being Dutch Brasil Holdings, BV, the Netherlands and VRD Americas BV, the Netherlands, hold 100% of 1st appellant and 2nd appellant is a subsidiary of VRD Amercas BV, the Netherlands, which is ultimately owned by RHIM. 5. Appellants presented a scheme of amalgamation for approval of the Tribunal for merging 1st and 2nd appellant in 3rd appellant. The rationale for the scheme to simplification of the corporate structure and consolidation of the India business of the RHIM group, establishing a comprehensive refractory product portfolio; realizing business efficiencies inter alia through optimum utilization of resources due to pooling of management, expertise, technologies and other resources of the Companies, improved allocation of capital and optimization of cash flows contributing to the overall growth prospects of the combined companies, crea....
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....iew to gain undue advantage over the general public by committing certain acts of deceit/ fraud. 12. The learned counsel for the Appellant also submitted that the legislature while enacting Chapter XV namely "Compromises, Arrangements and Amalgamations" (under section 230-232 of the Companies Act) has made it a pre-condition for an entity applying for a Compromises/ Arrangement/ Amalgamation to inform the entire public at large including the public/ institutional shareholder, about the entire contours of the scheme as well as its impact on each and every shareholder. Basis such information, a minimum percentage of consent from various shareholders (be it public or institutional)/ stakeholders is mandatory for a scheme to be sanctioned under the Companies Act. Further, NCLT has not come to any finding that the Appellants while applying for the mandatory consent of the Public Shareholders have committed a fraud upon the Public Shareholders/ or have withheld any information/ or have manipulated any information or have committed any deceit, whereby, it can be stated or inferred that the consent for the scheme which has been received by the Appellants is based on any of the above men....
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....g the rejection of the scheme of merger by NCLT has been on the grounds, which were not required to be delved into for the determination of a merger in terms of scheme of Section 230-232 of the Companies Act. 16. The Leaned Counsel for the Appellants further contended that the NCLT has wrongly held that the scheme is to the advantage of some shareholders as opposed to all the shareholders and as such is against public policy. NCLT has overlooked the informed/ unprejudiced consent and commercial wisdom exercised by the shareholders of the Appellants, who have made an informed decision to approve the said scheme and is doing so has attempted to superimpose/ sub-plant its own commercial wisdom on all the stakeholders. 17. Appellant also stated that after post-merger a minor increase of 4% of the promoter group as before the scheme was promulgated, 66.49% of the 3rd appellant was controlled by the promoter group and post scheme it will become 70.19%. 18. It is further contended on behalf of the Appellants that the valuation, basis which the exchange ratio has been determined reflects the inherent value of the shares of each of the Appellant Company and therefore to arrive at a....
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....n rejected by the NCLT is completely alien to the observations which were raised by the Respondent. 22. The Learned Counsels for the Appellants further argued that the NCLT, while rejecting the scheme has further gone on a technical ground stating the Valuation Report, the Board Resolution and the Fairness Opinion are of same date i.e. 31.7.2018 within a gap of few hours, therefore, the same raises concerns. NCLT while rejecting the said scheme has failed to cite any provisions of law and record any reasonable grounds in support of its concern. The learned counsels further put its reliance on the Judgment of this Appellate Tribunal in the matter of Arvind Aggarwal vs. Trinetra Cement Ltd., Company Appeal (AT) No. 171 of 2017, whereby it was specifically held that "We do not agree with the submission made on behalf of the Appellants that the multiple steps for the 'Scheme' taken on a single day (26th February, 2014 herein) will render the reports invalid. Validity of one or other report can be looked into if specific illegality is brought to the notice of the Hon'ble High Court/Tribunal." 23. The Learned Counsels for the Appellants further contended that Company un....
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....pellants have made the following clarifications and undertakings which are hereby accepted by the NCLT. I. The Appellant companies have served notices to all the regulatory authorities concerned as required under Section 230(5) of the Companies Act, 2013; II. The Appellants have also submitted a copy of the Chairman's report together with an admitted copy of the petition and order for admission of the petition; III. 3rd Appellant undertakes that in addition to compliance of AS-14, 3rd appellant shall pass such accounting entries which are necessary in connection with the Scheme to comply with other applicable accounting standard. IV. The Appellant Companies undertake to comply with provisions of Section 232(3)(i) of the Companies Act, 2013. V. The Appellant Companies confirm and undertake that the Appointed Date has been fixed as the 1st day of January, 2019 which is in compliance with section 232(6) of the Companies Act, 2013 and the Scheme shall be effective from such Appointed Date but shall be operative from the Effective Date 29. We also note that the Official Liquidator has filed his report stating therein that the affairs of th....
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....Scheme is 01.01.2019 whereas the Valuation Date is 31.07.2018. NCLT by putting its reliance on the case of East West Pipelines (demerged Company) and Pipeline Infrastructure Pvt. Ltd. (the resultant Company), Court-I, NCLT, Mumbai ordered that the appointed date can be the date on which the Valuation Report was prepared and the Fairness Opinion was given by the Merchant Banker i.e. 31.07.2018. Since the Transferee Company will be allotting the shares which are listed and being regularly traded on the Stock Exchanges, on consideration, the share exchange ratio would undergo change significantly in view of the market price on which the cut-off date i.e. appointed date is considered. 34. The Ministry of Corporate affairs in its General Circular bearing No. 09/2019 dated 21.08.2019 made the clarification under section 232(6) of Companies Act, 2013. According to such circular, section 232(6) of the Companies Act enables the companies in question to choose and state in the scheme an 'appointed date'. This date may be a specific calendar date or may be tied to the occunence of an event such as grant of license by a competent authority or fulfilment of any preconditions agreed upon ....