AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 1508
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....the Transferor Company") with Larsen & Toubro Limited ("the Transferee Company") ("Scheme"). This Scheme involves the amalgamation of a wholly owned subsidiary, the Transferor Company into the Transferee Company. 4. The Learned Counsel for the Petitioner Companies states that the Petitioner Company No. 1 is presently carrying on the business of designing, building, operating, maintaining engineering, procurement and construction projects & products on turnkey basis or otherwise for the oil & gas offshore & onshore exploration, transportation, production & processing, petroleum refining, chemicals & petrochemicals and fertilizer, onshore gas processing, pipelines and oil & gas storage sectors through engineering, procurement, fabrication, project management, construction, installation & commissioning. The Petitioner Company No. 2 is presently carrying on business of engineering and contracting business and capable of undertaking construction of whole or part of plants or industrial complexes on a turnkey or any other basis including but not limited to oil & gas, chemicals & petrochemicals and fertilizer sectors and to erect refineries, mills, machineries, laboratories, workshops ....
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....onal capability arising from the pooling of human capital that has diverse skills, talent and vast experience; • The management has decided to consolidate the various business lines of the Transferor Company and the Transferee Company to enable cost competitiveness; • The Scheme is commercially and economically viable and feasible and is in fact fair and reasonable; • The proposed amalgamation will result in administrative and operations rationalization, organizational efficiencies, reduction in overheads, personnel costs, costs of ERP, compliance cost and other administrative expenses. It will prevent cost duplication and will result in synergies in operations. The synergies created by the amalgamation would increase operational efficiency and integrate business functions. 8. This Company Petition is filed in consonance with Sections 230 to 232 of the Companies Act 2013 along with the Order passed in the connected CA (CAA) No. 198 of 2021 by this Tribunal. 9. Counsel for the Petitioner Companies states that the Petitioner Companies have complied with all requirements as per the directions of the Tribunal and have filed necessary Affidav....
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....ompanies have served notices to all the concerned authorities and the Petitioner Company No. 2 undertakes to address any issue arising after giving effect to this Scheme. (c) The Hon'ble NCLT may kindly direct the Petitioners to file an undertaking to the extent that the Scheme enclosed to the Company Application and the scheme enclosed to the Company Petition are one & same and there is no discrepancy or deviation. So far as the observation in paragraph IV (c) of the Representation of the Regional Director is concerned, the learned counsel for the Petitioner Companies undertakes and confirms that the Scheme enclosed to the Company Application and the Company Scheme Petition are one and the same and there is no discrepancy or deviation. (d) As per Definition of the Scheme, "Appointed Date" for the purposes of the Scheme means 1st April 2021 or such other date(s) as the National Company Law Tribunal at Mumbai, Maharashtra or such other competent authority may approve; "Effective Date" shall mean the latter of the dates on which certified copy of the order(s) sanctioning the Scheme passed by the National Company Law Tribunal at Mumbai, Mahara....
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...., the accounting policies followed by the Transferee Company shall prevail; The surplus/deficit, if any arising after taking the effect of above clauses shall be transferred to "Capital Reserve" in the financial statements of the Transferee Company and shall be presented separately from other capital reserves with disclosure of its nature and purpose in the notes. On the Scheme becoming effective, the financial statements of the Transferee Company (including comparative period presented in the financial statements of Transferee Company, if required) shall be restated for the accounting impact of Amalgamation, as stated above, as if amalgamation had occurred from the acquisition date (date when common control was established) or beginning of the said comparative period; whichever is later. Petitioner Companies have to undertake that the surplus shall be credited to Capital Reserve Account arising out of amalgamation and deficits shall be debited to Goodwill Account. Further Petitioner Companies have to undertake that reserves shall not be available for distribution of divided. So far as the observation in paragraph IV (f) of the Representat....
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.... Ministry letter no. 3/51/2014 CL-II WR dated 03.04.2014 ordered inquiry against the Transferee Company and report was sent to the Directorate/Ministry and present before the oversight committee were in the committee directed to carry out the inspection of two companies i.e. L&T Employee Welfare Foundation Private Limited and L&T Welfare Company Private Limited and the inspection is being carried out by this Directorate. So far as the observation in paragraph IV (h) (2) of the Representation of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that L&T Employee Welfare Foundation Pvt. Ltd. and L&T Welfare Company Ltd. are separate companies and not subsidiaries of the Petitioner Company No. 2 and thus are not the subject of the present proceedings before the Hon'ble Tribunal. (3) As per MCA Master Data the authorized and paid up share capital of the Transferee Company does not match with the scheme. So far as the observation in paragraph IV (h) (3) of the Representation of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that the Authorised Share Capital of the Petitioner Compa....
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....ereafter it has not received any further communication from the regulatory authorities. In any event, the Petitioner Company No. 2 undertakes to respond to any communication/clarification, as and when received by it, post sanction of the present Scheme, i.e., the Scheme of Amalgamation of L&T Hydrocarbon Engineering Limited with Larsen & Toubro Limited. Also, the proceedings against the Transferee Company do not have any bearing as the Transferee Company will continue to exist even after the Scheme is approved/sanctioned by the Hon'ble Tribunal and thus will not affect or prejudice the proceedings pending against the Transferee Company in any manner or form whatsoever. (4) (d) Various complaints filed by Shri. Bharat Jhunjhunwala regarding possible overvaluation of assets of subsidiaries of L&T (in particulars of L&T Uttaranchal Limited), Purchase of Preference Shares of its subsidiary at a premium by L&T, allotment of lucrative contracts by subsidiary to holding company. So far as the observation in paragraph IV (h) (4) (d) of the Representation of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that a Complaint addr....
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....Company No. 2 do not have any bearing on the present Scheme as the Petitioner Company No. 2 will continue to exist even after the Scheme is approved and thus will not affect the proceedings pending against the Petitioner Company No. 2 in any manner whatsoever. (5) The office has issued letter dated 6th January 2021 to Larsen & Toubro Limited for furnishing all the information/communication in respect of search and survey operation by Income Tax Authorities. So far as the observation in paragraph IV (h) (5) of the Representation of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that the officials from the Income Tax Department conducted a survey at the Mumbai and Chennai office of the Petitioner Company No. 2 on the basis of the information received from GST authorities enquiring into certain parties who undertook project work for the Petitioner Company No. 2. The Petitioner Company No. 2 extended full co-operation to the Income Tax Department and provided the required information. In any event, the Petitioner Company No. 2 undertakes to respond to any communication/clarification, as and when received by it, post sanction o....
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.... a wholly owned subsidiary of Petitioner Company No. 2. IV (k) The observation of Income Tax Department is awaited. The Hon'ble NCLT may direct the Petitioner Companies to obtain NOC from Income Tax Department. So far as the observation in paragraph IV (k) of the Representation of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that the Petitioner Companies have in terms of Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 sent a notice under Section 230(5) of the Companies Act 2013 to the Income Tax Department vide its letter dated October 26, 2021. Further, as per the said Rules, if the Income Tax Department desires to make a representation under Section 230(5) of the Act, the same is to be sent to the Hon'ble National Company Law Tribunal within a period of 30 days from the date of receipt of such notice. In the event no representation is received within 30 days by the National Company Law Tribunal, it shall be presumed that the Income Tax Department has no representation to make on the proposed Scheme. Till date no representation has been received from the Income Tax Department. IV ....
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....s. IV (o) Petitioner Companies shall disclose full facts about Income Tax raid/survey and present status and tax evasion, if any found by Income Tax Department and full facts thereto. So far as the observation in paragraph IV (o) and (q) of the Representation of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that the Income Tax Department ("IT department") conducted a survey at its premises at Mumbai and Chennai from January 4, 2021 to January 7, 2021. IV (q) It is submitted that, letter received from o/o Convener REIC & Director General of Income Tax (Investigation) Mumbai dated 21.10.21 interalia enclose letter from Ministry of Finance, o/o Principal Director of Income Tax (Inv.)-1 dated 14.10.21,23.09.21,22.09. 21 interalia mentioned that as follows: - ........... Further the Petitioner Company be directed to disclose full facts in this regard. The Survey was undertaken based on information received from the GST authorities who investigated certain companies / parties for non-compliances under the GST law. As part of the survey exercise, the IT department furnished a list of 69 parties to the Petitione....
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....p companies were on the basis of invoices issued by vendors under a bona fide belief that such vendors were tax compliant and that the Petitioner Company No. 2 incurred cash outflow to pay all the invoices before the credits were availed. Petitioner Company No. 2 learned ex post facto of the allegation that fake invoices were obtained by its vendors from their sub vendors in order to avail untenable input tax credit under GST law. e. That the projects undertaken by the Petitioner Company No. 2 were mostly at remote sites, where the choice of vendors to work with is rather limited. f. That the project schedules and other exigencies necessitated certain departures from the SOPs followed by the Company and these were neither material nor unusual in a project business. The Petitioner Company No. 2 states that the Income-tax proceedings would survive even after the present Scheme is sanctioned and the Petitioner Company No. 2 will discharge all tax liabilities as are determined to be due. Clause 7.4 of the present Scheme secures all such tax payments by providing that all debts, liabilities and pending proceedings against the Petitioner Company No. 1 will stand assumed....
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.... are summarized in the table below: Sr. No. RD Supplementary Report dated 17th January 2022 Response of Petitioner Companies 2. That the company in its Affidavit in Rejoinder dated 12.01.2022 has submitted replies on the observations made by the Regional Director in its Report/Representation dated 31.12.2021, in para IV (a) to (p). The company has not submitted reply on the observations made by the Directorate in Para No. IV (6) (q) regarding the letter received from REIC & Director General of Income Tax (Investigation). So far as the observation in paragraph 2 of the Supplementary Report of the Regional Director is concerned, Learned Counsel for the Petitioner Companies submits that Paragraph IV (q) has been responded to in detail by the Petitioner Company No. 2 in paragraph 23 of its Affidavit in Reply dated 12th January 2022. Learned Counsel for the Petitioner Companies further submits that the letters received from REIC & Director General of Income Tax (Investigation) (attached to the Representation of the Regional Director dated 31st December 2021) are internal communications not addressed to the Petitioner Companies. Learned Counsel fu....
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....(a), (b), (c), (d), (e), (f) in respect of the various serious complaints are pending against the L&T and its group companies. The reply of the company is not satisfactory as to how these complaints have been addressed. So far as the observation in paragraph 4 of the Supplementary Report of the Regional Director is concerned, Learned Counsel for the Petitioner Companies reiterates what is stated by it in paragraph 10 above with respect to the observations of the Regional Director in paragraphs IV (4) (a), (b), (c) and (f). As regards the observation of the Regional Director in paragraphs IV (4) (d), Learned Counsel for the Petitioner Companies reiterates what is stated by it in paragraph 10 above. As regards the observation of the Regional Director in paragraphs IV (4) (e), Learned Counsel for the Petitioner Companies reiterates what is stated by it in paragraph 10 above. Learned Counsel for the Petitioner Companies further submits that although the Complaints referred to by the Regional Director in paragraphs IV (4) (a), (b), (c), (d), (e) and (f) of its Representation dated 31st December 2021 have been responded to by the Petitioner Company No. 2, in case of any futur....
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....., the Transferee Company undertakes to provide clarifications, if any to the Regional Director with regard to any future correspondence/communication on the observations of the Regional Director pertaining to and in connection with the Transferee Company in his Representation dated 31st December 2021 and Supplementary Report dated 17th January 2022. The observations made by the Regional Director and clarifications & undertakings given by the Petitioner Companies have been verified and accepted. 13. The Official Liquidator, High Court, Bombay has filed his report on 23rd November 2021 stating therein that the affairs of the Petitioner Company No. 1 have not been conducted in a manner prejudicial to the interest of its members or to the public interest and that the affairs of the Petitioner Company No. 1 have been conducted in a proper manner. 14. No objections were received from the Income Tax Department of the Petitioner Companies. 15. The Petitioner Companies through their Counsel submit that the right of the Income Tax Department is kept intact to take out appropriate proceedings regarding recovery of any tax from the Transferor or Transferee Company as the case may be.....