2019 (12) TMI 1370 - Tri - Companies Law

Approval of the Composite Scheme of Arrangement - Section 230 to 232 and other applicable provisions of the Companies Act 2013 read with Companies (Compromises Arrangements and Amalgamations) Rules 2016 - HELD THAT - Despite notice being served there is no representation from the Department of Income Tax or from SEBI. The Ld. Counsel for the Petitioner Companies referred to Clause 16.2. of the Scheme and stated that all tax assessment proceedings/appeals of whatsoever nature by or against the Residual Transferor Company shall be continued and/or enforced by the Transferee Company - The Tribunal is of the view that since the Transferee Company is not being dissolved and Clause 8 and 16 of the Scheme provides the savings in relation to taxes as well all the Tax authorities are entitled to proceed against the Transferee Company in accordance with law if any amount is found due and payable. The Independent Statutory Auditors of the Transferor Company and the Transferee Company have filed the Certificate in relation to compliance with the Accounting Standards and certified that the proposed scheme is in conformity with the accounting standards specified under Section 133 of the Act read with relevant rules as applicable. Thus the Petitioner Company has complied with proviso to Section 230 (7)/Section 232 (3) of the Companies Act 2013. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled this Tribunal sanctions the Composite Scheme of Arrangement annexed as Annexure 13 with the Company Petition as well as the prayer made therein - the scheme is approved.

Issues Involved:
1. Approval of the Composite Scheme of Arrangement.
2. Jurisdiction of the Tribunal.
3. Compliance with statutory requirements.
4. Protection of employees' interests.
5. Tax liabilities and pending disputes.
6. Compliance with Accounting Standards.
7. Investigation proceedings status.
8. Final sanction and conditions of the scheme.

Issue-wise Detailed Analysis:

1. Approval of the Composite Scheme of Arrangement:
The Joint Company Petitions were filed by M/s. India Land and Properties Limited (Demerged Company) and M/s. Indiabulls Infrastructure Limited (Resulting Company) for the approval of the Composite Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013. The Scheme involves two steps: (a) Demerger of the Demerged Undertaking into the Resulting Company, and (b) Amalgamation of the Residual Transferor Company with the Transferee Company.

2. Jurisdiction of the Tribunal:
The Transferee Company is a public listed company with its registered office in New Delhi, falling outside the jurisdiction of the NCLT, Chennai, and within the jurisdiction of NCLT, New Delhi. However, the petitions were filed before the Chennai Bench for sanctioning the Scheme.

3. Compliance with statutory requirements:
The Tribunal issued directions for notices to Statutory/Regulatory Authorities and for paper publication. Notices were served to various authorities including the Regional Director, RoC, SEBI, Stock Exchanges, and the Income Tax Department. The Petitioner Companies filed an affidavit confirming compliance with these directions.

4. Protection of employees' interests:
The Regional Director's report highlighted that the Scheme includes provisions for protecting the interests of employees/staff of the demerged undertaking and the Transferor Company. Clause 5 of Part B and Clause 12 of Part C of the Scheme specifically address these protections.

5. Tax liabilities and pending disputes:
The Official Liquidator's report noted that the Transferor Company had received a demand notice under Section 156 of the Income Tax Act, 1961, for the Assessment year 2016-2017, amounting to Rs. 1,56,14,590/-. The Tribunal observed that all tax assessment proceedings/appeals against the Residual Transferor Company shall be continued and enforced by the Transferee Company. The Tribunal referenced the NCLAT decision in Ad2Pro Creative Solutions Private Limited, which held that tax liabilities would be satisfied by the Transferee as determined by the competent forum.

6. Compliance with Accounting Standards:
The Independent Statutory Auditors of the Transferor and Transferee Companies certified that the proposed Scheme is in conformity with the accounting standards specified under Section 133 of the Companies Act, 2013. The Petitioner Companies complied with the relevant provisions of Sections 230(7) and 232(3) of the Act.

7. Investigation proceedings status:
The Petitioner Companies confirmed that no investigation proceedings were pending against them under the Companies Act, 1956 or the Companies Act, 2013, and no proceedings were pending under Sections 235 to 251 of the Companies Act, 2013.

8. Final sanction and conditions of the scheme:
The Tribunal sanctioned the Composite Scheme of Arrangement, subject to several conditions, including:
- Transfer of all properties, rights, powers, liabilities, and duties of the Demerged Undertaking to the Resulting Company.
- Continuation of all proceedings by or against the Demerged Undertaking against the Demerged Company or the Resulting Company.
- Transfer of all employees of the Demerged Company to the Resulting Company without interruption of service.
- Filing of necessary applications for the conversion of the Resulting Company to a private limited company.
- No issuance of shares by the Transferee Company in exchange for shares held by the Resulting Company in the Residual Transferor Company.
- Filing of revised Memorandum and Articles of Association with the RoC, Chennai, and payment of differential fees for the enhancement of authorized capital.
- Delivery of a certified copy of the order to the RoC for registration, leading to the dissolution of the Residual Transferor Company.

The Tribunal clarified that the order does not grant exemption from payment of stamp duty, taxes, or any other charges, and any deficiencies or violations found will not prevent action against the concerned persons in accordance with the law. The Company Petitions were allowed on the aforementioned terms.

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