TaxTMI 
TaxTMI 
2019 (5) TMI 1891
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....mpanies filed First Motion Application bearing 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 f....
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....hed as Annexure P-16 of the petition. The share exchange ratio 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 ....
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....cified in the notices that the objections, if any, to the Scheme contemplated by the authorities to whom notice has been given 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 Res....
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....njab, Haryana and Chandigarh; (v) Director General, The Council of Scientific and Industrial Research and (vi) Reserve Bank of India. 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 Secti....
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....there is no outstanding demand and unpaid taxes against the Transferor Company 2. The assessment year wise response in respect of the DCIT report has also 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 a....
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....ls Filmnagar, Hyderabad Andhra Pradesh, 500033 2 20,000 40,000 21,60,088 43,20,176 8. Sonal D Shah Preeti N Shah 3 Amba Bhuvan 2nd Floor, 29 Sion Circle Sion (West), Mumbai, 400022 2 20,000 40,000 21,60,088 43,20,176 9. R Sunitha Reddy V V Subba Reddy Plot No 123 Balamrai Society, Mahendra 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. Kailashb....
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....ar Hyderabad Andhra Pradesh 500033 2 equity shares of Rs. 20,000 each 40,000 6. Nagasiromani Dandamudi Plot No 98 Huda Enclave Road No 70 Jubilee Hills Film Nagar Hyderabad Andhra Pradesh 500033 2 equity shares of Rs. 20,000 each 40,000 7. Rama Krupa Mulpury Plot No 98, Huda Enclave Road No 70 Jubilee Hills Filmnagar, Hyderabad Andhra Pradesh, 500033 2 equity shares of Rs. 20,000 each 40,000 8. Sonal D Shah Preeti N Shah 3 Amba Bhuvan 2nd Floor, 29 Sion Circle Sion (West), Mumbai, 400022 2 equity shares of Rs. 20,000 each 40,000 9. R Sunitha Reddy V V 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 equi....
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....was further contended that capital reduction under the proposed 'Scheme' is in no manner a buy-back of shares under Section 68 of the Act. Further, the learned counsel for the petitioner-companies also referred to SEBI vs. Sterlite Industries (India) Ltd, wherein the High Court of Bombay brought out the distinction between buy-back and capital reduction and held that the conditions provided in Section 77A are applicable only to buyback of shares under section 77A and the conditions applicable to Sections 100 to 104 and Section 391 cannot be imported into or made applicable to a buyback under Section 77A. Learned counsel further submitted that the Transferee Company is undertaking the capital reduction under section 230-232 read with Section 66 of the Act and 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 ....
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....yment in accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law. With the sanction of the Scheme, the Transferor Companies shall stand dissolved without undergoing the process of winding up. The Issued, Subscribed and Paid-up Share Capital of the Transferor Companies shall stand cancelled and extinguished. Further, no shares would be issued and allotted by the Transferee Company upon the amalgamation of the Transferor Companies with the Transferee Company. THIS TRIBUNAL DO FURTHER ORDER: i) That all the property, rights and powers 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 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 Secti....