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2016 (6) TMI 60 - PUNJAB AND HARYANA HIGH COURT

2016 (6) TMI 60 - PUNJAB AND HARYANA HIGH COURT - TMI - Sanction of the Scheme of Arrangement of demerger - Held that:- The procedural requirements contemplated under Sections 391 & 394 of the Act, the relevant Rules and on due consideration of the report of the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi, the Scheme of Arrangement is hereby sanctioned and as a result thereof, the assets and liabilities of the “KPO Business” of Quatrro Global Services Private Lim .....

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d with the Registrar of Companies within 30 days from the date of receipt of the same.

A notice of the order be published in the newspapers, namely, “Financial Express” (English), “Jansatta” (Hindi) both Delhi/NCR Edition and in the Official Gazette of Government of Haryana. - CP No.31 of 2016 (O&M) - Dated:- 9-5-2016 - MR.JUSTICE RAKESH KUMAR JAIN, J. For The Petitoner : Ms.Munisha Gandhi, Sr. Advocate, with Mr.Deepak Suri, Advocate, For The Respondent : Mr.Deepak Aggarwal, Advocate, .....

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II). The main objects of the Quatrro Global Services Private Limited (Petitioner Company No.1) and Scope e-Knowledge Solutions Private Limited (Petitioner Company No.II) are detailed in their respective Memorandum and Articles of Association, which are annexed with the petition as Annexures P-3 and P-6, respectively. The registered office of the Quatrro Global Services Private Limited (Petitioner Company No.1) and Scope e-Knowledge Solutions Private Limited (Petitioner Company No.II) is at Gurga .....

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uatrro Global Services Private Limited (Petitioner Company No.1) and Equity Shareholders of the Scope e-Knowledge Solutions Private Limited (Petitioner Company No.II) were dispensed with. However, meeting of Equity Shareholder of the Quatrro Global Services Private Limited (Petitioner Company No.1) was directed to be held on 23.1.2016 for which, the Chairman and Co-chairman were appointed. The Chairman of the said meeting has submitted his report on the basis of which CP No.220 of 2015 was dispo .....

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ial Liquidator has filed the representation/affidavit dated 13/18.4.2016 of A.K. Chaturvedi, Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi in which following parawise observations have been made:- 8.1 That the Deponent states that the Petitioner-Companies vide para No.18 of the reply have stated that 5 foreign shareholders holds 140,04,12,259 shares representing 77.009% stake of paid up share capital of QGS India. Upon Scheme becoming effective foreign/non-resident .....

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t states that the Petitioner Companies vide para No.21 of their reply have stated that the Petitioner Companies and their respective directors represent and confirm that no prosecution proceedings against the company and its directors have either been instituted or pending before any Court on account of any violation of laws such as the Companies Act, 1956, FEMA, IPC, SEBI Act, RBI Act, etc. 8.3 That the Deponent states that the Petitioner Companies vide para no.22 of the reply have furnished th .....

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from the statutory auditors of Transferee Company that the Accounting Treatment proposed is not in violation of AS issued by the Central Government. 9. That the deponent states that the Registrar of Companies vide para 25 of the report has stated that it has been mentioned in para 12 of the proposed Scheme inter alia that upon sanction of the Scheme, the name of the Resulting Company shall automatically stand changed without any further act or deed from Scope e-knowledge Solutions Private Limite .....

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ivate Limited. It is to be noted that there is no Valuation Report along with the Scheme assessing the value of the said Business, states the corresponding Liabilities which shall stand transferred and enumerates the account of the same. In view of the above, unless the Valuation report is available, the Scheme is incomplete and the manner and scope of Demerger is not available for examination. (ii) Explanation to Paragraph 1.5 of the Scheme states that whether any particular asset or liability .....

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ilities being transferred in accordance with a valuation done by an Independent Valuer in this regard. (iii) Paragraph 4.12 of the Scheme states that statutory benefits including in respect of Income-tax (including and not limited to advance income tax and tax deducted at source), excise (including Modvat/Cenvat). Customs, sales tax etc. relating to the QGS KPO Business to which QGS India is entitled to shall be available to and be vested in QGS India. In the scheme the extent of such statutory .....

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. That it is submitted that Para 1 to Para 8.3, Para 9, Para 11.1 to Para 12 are only observations as given in the Affidavit submitted by the Regional Director and therefore, does not require any comment. 2. That as far as the observations raised in Para 8.4 of the Affidavit of the Regional Director is concerned, it is submitted that: The Petitioner Company has obtained certificate from the Statutory Auditors which states that the accounting treatment provided in the Clause 10 of the Scheme is o .....

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he Registrar of Companies is concerned, it is submitted that : 3.1 The observation of Regional Director is as under: The Scheme Scheme of arrangement envisages the demerger of QGS KPO Business of Quatrro Global Services P. Ltd into Scope e- Knowledge Solutions P. Ltd. It is to be noted that there is no Valuation Report along with the Scheme which has assessed the value of the said Business, states the corresponding Assets and Liabilities which shall stand transferred and enumerates the accountin .....

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taking of QGS India into Scope Solutions India. b) The Shareholding pattern of the Scope Solution India is as under: Sr.No. Name of Shareholder Number of Shares held % of shares held 1 Scope e-Knowledge Center Private Limited (Scope India - wholly owned subsidiary of QGS India 99,999 99.99 2 Vikas Talwar (Nominee of 1 0.001 Scope India) 1 00.01 Total 100,000 100 c) The entire share capital of Scope Solution India is indirectly held by QGS India. The shareholders of QGS India hold business of Sco .....

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on in which they were holding shares in QGS India. e) The object of the Scheme is to allow the shareholders of QGS India to own the shares of Scope Solutions India directly rather than indirectly through QGS India. Thus, the purchase consideration is being issued directly to the shareholders of QGS India pursuant to the Scheme which has been approved by the Board of Directors vide the Board Resolution dated December 1, 2015. Further, the creditors and members of both the Petitioner Companies inv .....

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valuation report following share exchange ratio is fair and reasonable: 1 (One) fully paid up equity share of face value of Re 1 (Rupee One Only) each in Scope Solutions India shall be issued and allotted for every 100 (One Hundred) equity shares held in QGS India g) The Petitioner Company further submits that pursuant to the Scheme of demerger, QGS India shall transfer all the assets and liabilities relating to the QGS KPO Business to Scope Solutions India at their respective book values. The .....

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quirement for the petitioner companies to obtain valuation report for the transfer of assets and liabilities relating to the QGS KPO Business Undertaking to Scope Solutions India. Further, there will be no loss of economic interest in the hands of shareholders of QGS India and the share exchange ratio as per valuation report is determined on relative values rather than the absolute values. i) Further the clause 7.2 of the fairness opinion/ valuation report mentions that: • Upon the draft Sc .....

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is of no relevance since there will be no loss of economic interest in the hands of shareholders of QGS India. Accordingly, for the purpose of recommending a swap ratio, we are not attempting to arrive at the absolute values of shares of each company. Our exercise is to work out relative values of shares. • Thus, in determining the share swap ratio, we have chosen the methodology, which would fairly state the relative values of the shares rather than the absolute values . This does not in .....

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to be allotted to the shareholders has been worked out by a recognised firm of Chartered Accountants who are experts in the field of valuation and the same has been accepted by the Board of Directors and the shareholders of both the companies, the court is not required to substitute its exchange ratio, especially when the same has been accepted by the overwhelming majority of the shareholders of the all companies. The various courts judgments which have held are Miheer H. Mafatlal vs Mafatlal I .....

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ns of the Demerged Undertaking shall be decided by mutual agreement between the Board of Directors of QGS India (Demerged Company) and Scope Solutions India (Resulting Company). As this does not specify Assets and Liabilities of the Demerged Company which shall be transferred upon sanction of the Scheme the Petitioner may be directed to delete the same from the Scheme and clearly state the Assets and liabilities being transferred in accordance with a valuation done by an Independent Valuer in th .....

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shall mean the Knowledge Process Outsourcing business division (i.e. intellectual and patents analytics business and related business) of Quatrro Global Services Private Limited along with all the assets, interests, liabilities, employees, approvals, licenses, contracts, business, track record, activities and operations and rights and powers pertaining or related to such QGS KPO Business, in particular including the following: a) all assets (along with related investments) wherever situated, ta .....

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ertaining to the QGS KPO Business; d) liabilities, other than those referred to in sub- clauses (b) and (c) above, being the amounts of general or multipurpose borrowings of QGS India, allocated to the QGS KPO Business in the same proportion in which the value of the assets (ignoring the revalued amount) transferred in the demerger under this Scheme bear to the total value of the assets of QGS India immediately before giving effect to this Scheme; (the liabilities in (b), (c) and (d) above are c .....

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enewals or extensions of, and rights to claim priority from, such rights and all similar or equivalent rights or forms of protection which subsist or will subsist now or in the future in any part of the world; f) any and all permits, rights, entitlements, allotments, approvals, consents, concessions, exemptions, liberties, advantages, noobjection certificates, certifications, registrations, trade names, trademarks, service marks, copyrights, domain names, easements, goodwill, licences, tenancies .....

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Undertaking as on the Effective Date; i) any and all debts, borrowings, guarantees, assurances, commitments, obligations and liabilities, whether fixed, contingent or absolute, asserted or unasserted, present or future, whether secured or unsecured, pertaining to the said Demerged Undertaking; j) all books, records, files, papers, directly or indirectly relating to the Demerged Undertaking; k) any other asset / liability which is deemed to be pertaining to the Demerged Undertaking by the Board .....

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ansferred to QGS India pursuant to Scheme. The explanation to clause 1.5 of the Scheme enables the Board of Directors of the demerged company (QGS India) and resulting company (Scope Solutions India) to decide on whether a particular asset or liability needs to be transferred or retained. For eg: There could be intra group transactions between the demerged undertaking and resulting company which are required to be cancelled pursuant to demerger. The indicative list of assets and liabilities rela .....

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s that statutory benefits including in respect of income-tax (including and not limited to advance income tax and tax deducted at source), excise (including Modvat/ Cenvat). Customs, VAT, sales tax etc. relating to the QGS KPO Business to which QGS India is entitled to shall be available to and be vested in QGS India. In the scheme the extent of such statutory liabilities relating to the QGS KPO Business is not specified. Comments regarding the same may be called for from the respective Regulato .....

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y benefits but also the liabilities of the QGS KPO Business. b) The clause 4.12 of the Scheme read as under: Upon the coming into effect of this Scheme and with effect from the Demerger Appointed Date, all existing and future incentives, unavailed credits and exemptions, benefit of carried forward losses and other statutory benefits, including in respect of income tax (including and not limited to advance income tax and taxes deducted at source), excise (including Modvat / Cenvat), customs, VAT, .....

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y based on the General Circular No.1/2014,F.No.2/2014 dated 15th January, 2014 issued by Ministry of Corporate Affairs, Government of India, the Regional Director is required to send notices only to the Income tax Department. There is currently no provision under the law to send notices to other authorities such as Customs, Service Tax Authorities, etc. d) Further, the office of the Regional Director till date has not received any observation/ comments from the Income Tax Authorities. e) Further .....

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