TMI Blog2013 (12) TMI 1643X X X X Extracts X X X X X X X X Extracts X X X X ..... estate projects which are classified under two divisions, namely Residential projects and Commercial projects. It is a profit making company. 3. On the other hand, Nemi Landmarks Private Limited, the Resulting Company is a private limited company of the same group which was originally incorporated with the object of carrying on the business of printers and publishers etc. However, being empowered to carry on the business as developer and consultants of Real Estate commercial projects; has proposed to undertake the activities as a real estate developer of the commercial projects upon the present scheme being sanctioned. Although the size of operations is small, it is a profit making company. 4. It has been realized by the management of these companies that the two operating divisions of the Demerged Company are quite different involving distinct business dynamics. Both of them have distinct market segments and customers. The strategies for the development and growth of these businesses require different focus. It is therefore proposed to segregate the two activities by demerger and transfer of its Commercial Division to another group company viz. Nemi Landmarks private Limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been filed by Mr. Kashmir Lal Kamboj, the Regional Director, North Western Region, Ministry of Corporate Affairs, whereby several observations are made. The same pertain to (a) the terms of employment of the employees of demerged undertaking; (b) the accounting treatment; (c) approval to the scheme by creditors of Resulting Company; (d) disputed tax liability of the Demerged Company; (e) transfer of Authorised Capital of the Demerged Company to the Resulting Company; (f) Reduction of Equity Share Capital of the Demerged Company; (g) Issue of Bonus Shares from Share Premium Account in the previous financial years; (h) applicability of RBI guidelines and status of NBFC; and (i) use of suffix and reduced in case of Demerged company. 10. The attention of this court is drawn to the Additional Affidavit dated 3rd December 2013, whereby all the above issues have been dealt with. I have further heard submissions made by the learned counsel appearing for the Central Govt. and Mrs. Swati Soparkar, learned advocate appearing for the petitioners and conclude as follows: (a) With regard to the observation relating to the terms of employment of the employees of the demerged und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company at this stage. (d) With regard to the disputed tax liability of the Demerged Company, it has been submitted that primarily, the pendency of any litigation with regard to such disputed tax liabilities is not relevant consideration for the sanction of the scheme. The scheme does not envisage absolution of the demerged company, if such liability is crystalised at a later date. It is also pointed out that in the given case, the CIT (A) has already ruled in favour of the petitioner company and as on today, no demand exists. In view of the facts and circumstances, the said observation is overruled. (e) With regard to the issue of transfer of part of the Authorised Capital, it has been submitted that said issue is now settled vide series of decisions of various High Courts and there being no legal prohibition for the transfer of the Authorised Capital of the Demerged Company to the Resulting Company, the said observation is redundant. (f) With regard to the proposed Reduction of Capital, it has been submitted that the contention of the Regional Director that under Sec. 100 of the Companies Act, the company can reduce its capital only if there are accumulated losses is ill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than 90 % of these shareholders belong to the same family and the proposed reduction does not have any impact on public interest. The proposed reduction does not have any impact on public interest. Further, the Regional Director has not given any specific ground for such directions. The concerned stakeholders of the Company viz. the shareholders and the unsecured creditors have not raised any objection on such ground. It is further pointed out that the Reduction of Capital proposed under the present scheme does not involve diminution of any liability towards unpaid share capital or payment to the shareholder of any paid up share capital. The reduction is proposed merely to make consequential accounting adjustments so as to make its financial statements realistic. Considering the facts and circumstances of the present case, there is no justification or special reason for issuing such direction to add And Reduced as a suffix to its name. 11. Considering all the facts and circumstances and taking into account all the contentions raised by the affidavits and reply affidavits, the reliance placed on the judgments of this High Court and the submissions during the course of hearing, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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