TMI Blog2020 (9) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the concerned persons, directors and officials of the petitioners. While approving the Scheme as above, it is clarified that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, payment is due or required in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law. It is further clarified that this approval shall not be construed as an approval for any regulatory compliance required to be done or obtained under the appropriate statutes. Petition allowed. - CP/1396, 1397/CAA/2019 in CA/804 and 805/CAA/2019 - - - Dated:- 31-7-2020 - R. Varadharajan , Member ( J ) And Anil Kumar B. , Member ( T ) For the Appellant : Lakshmmi Subramanian , PCS ORDER Anil Kumar B. , Member ( T ) 1. The hearing of this Petition has been conducted through video conferencing platform. 2. M/s. Apollo Hospitals Enterprise Limited (hereinafter referred to as Transferor Company ), a listed public limited Company and M/s. Apollo Pharmacies Limited (hereinafter referred to as Transferee Company ) an unlisted p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res, colloidal products, injectable and all pharmaceuticals and medical preparations. 5. 1st Motion Application - In Brief 5.1. The Transferor Transferee Companies have filed the First Motion Application vide CA/804/CAA/2019 CA/805/CAA/2019 respectively seeking for directions for convening the meeting of the Shareholders and dispensing with the requirement of convening the meeting of the Creditors of the Transferor Company and in relation to the Transferee Company, it was prayed to dispense with the meeting of the Shareholders and based on such application moved under Sections 230-232 of the Companies Act, 2013; directions were issued by this Tribunal, vide order dated 28.08.2019 and also on 09.09.2019. Subsequent to the said order, the meeting of the Shareholders of the Transferor Company was held on 21.10.2019 and the Chairman to the said meeting has filed his report before this Tribunal on 01.11.2019 and the second motion petition was filed before this Tribunal by the petitioner companies on 07.11.2019 for sanction of the Scheme of Arrangement before this Tribunal. 6. Rationale of the Scheme 6.1. The Rationale and benefits of the Scheme as submitted by the Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cknowledgements/receipts have been enclosed. 9. Statutory Authorities 9.1. The Regional Director, (hereinafter referred to as 'RD') Chennai to whom the notice was issued in the first motion itself, has filed his Report on 20.01.2020 before this Tribunal and has stated that Para 9 of Part B of the Scheme provides for the protection of the interest of the employees of the Demerged Undertaking of the Transferor Company. It was further observed that as per the report of RoC, Chennai, the Transferor and Transferee Companies are regular in filing their statutory returns and has reported that there is no prosecution/Inspection or Investigation pending against the Companies. Thus, the Regional Director, after examining the Scheme has decided not to make any objection to the Scheme. 9.2. In relation to the Department of Income Tax, despite notice being served in the first motion and also during the second motion stage, there was no representation. However, this Tribunal after examining the Scheme has decided to give one more notice to the Income Tax Department vide order dated 03.06.2020. Upon notice being served, the Department of Income Tax has filed a memo before thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 2(19AA) of the Income Tax Act, 1961 more particularly sub-clause (v) states that the shareholders holding not less than three - fourth in value of shares in the demerged company (other than shares already held therein immediately before the demerger, or by a nominee for the resulting company or, its subsidiaries) become shareholders of the resulting company or companies by virtue of demerger. 11.2. Apropos to the said query, the Learned AR for the Petitioner Companies referred to Clause 13.1 of the Scheme and stated that the Capital gains tax, if any, that may arise on account of payment of the consideration shall be the sole responsibility of the Transferor Company and as such they have not sought for any exemption and therefore the necessity of shareholders holding not less than three - fourth in value of shares in the demerged company to become shareholders of the resulting company does not arise. 11.3. Further, it is also significant to refer to the decision of the Hon'ble High Court of Delhi in the matter of Bilt Power Limited in Company Petition No. 67/2006, dated 25.05.2006, wherein the Hon'ble High Court of Delhi, while dealing with the similar issue, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gement/demerger in the case of the transferee company No. 2; and there being no investigation proceedings pending in relation to the petitioner company u/s 235 to 251 of the Companies Act, 1956. The scheme of Arrangement/Demerger in respect of Transferor Company and Transferee Company No. 2 has already been sanctioned by High Court of Judicature at Bombay, Nagpur vide order dt. 25/4/06. 11. 4. The Hon'ble High Court of Bombay, in the matter of Thomas Cook Insurance Services (India) Limited, in Company Scheme Petition No. 99 of 2016 dated 02.07.2015, while sanctioning the Scheme as contemplated between the petitioner company, has held as follows; ...It is not that in every case the consideration for transfer of an undertaking as part of a scheme of arrangement must come in the form of an allotment of shares of a transferee company or for that matter allotment of any shares. The consideration for such transfer can he any legitimate consideration, which the transferor is entitled to accept for contract of transfer. The scheme may, thus, not provide for any allotment of shares at all or provide any other appropriate consideration including allotment of shares of a holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee of the Transferee Company, without any interruption of service. 13.4. Clause 10 deals with Continuation of the Legal proceedings and Clause 11 deals about the Treatment of Taxes. Clause 12 deals with Conduct of Divestment Business. 13.5. Clause 13 deals with Consideration, wherein it has been stated as follows; Upon this Scheme coming into effect, the Transferee Company shall discharge the lump sum consideration of ₹ 5,27,80,00,000/- (Rupees Five Hundred Twenty Seven Crore Eighty Lakhs Only) to the Transferor Company in the form of cash through normal banking channels. It is clarified that capital gains tax, if any, that may arise on account of payment of consideration shall be the sole responsibility of the Transferor Company. Upon the Scheme becoming effective, the Transferee Company shall discharge the consideration as under. (i) Raising equity share capital AMPL (Apollo Medicals Private Limited) the holding Company of the Transferee Company, shall raise ₹ 1,43,45,00,000/- (Rupees One Hundred Forty Three Crores Forty Five Lakhs Only) towards equity share capital from the Transferor Company and other identified investors. AMPL shall thereafte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on CAA-284/ND/2018 vide Order dated 12.11.2018, has made the following observations with regard to the right of the IT Department in the Scheme of Amalgamation, taking into consideration the clauses contained in the Scheme in relation to liability to tax and also as insisted upon by the Income Tax and in terms of the decision in RE: Vodafone Essar Gujarat Limited v. Department of Income Tax (2013) 353 ITR 222 (Guj) and the same being also affirmed by the Hon'ble Supreme Court and as reported in (2016) 66 taxmann.com.374(SC) from which it is seen that at the time of declining the SLPs filed by the revenue, however stating to the following effect vide its order dated April 15,2015 that the Department is entitled to take out appropriate proceedings for recovery of any statutory dues from the transferor or transferee or any other person who is liable for payment of such tax dues, the said protection be afforded is granted. With the above observations, the petition stands allowed and the scheme of amalgamation is sanctioned. 13.10. After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated between the petitioner companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaking shall stand transferred to the Transferee Company on the same terms and conditions at which these employees are engaged by the Demerged Company without any interruption of service as a result of the transfer; and (v) That upon the Scheme coming into effect, the Transferee Company shall, without any further application or deed, discharge the lump sum consideration of ₹ 527,80,00,000/- (Rupees Five Hundred Twenty Seven Crores Eighty Lakhs Only) to the shareholders of the Transferor Company or to their respective heirs, executors, administrators or other legal representatives or the successors - in - title, as the case may be. (vi) That the Appointed date for the Scheme is 1st April 2019; and (vii) That the Petitioner Companies, shall within thirty days of the date of the receipt of this order cause a certified copy of this order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered, the Demerged undertaking shall be deemed to be transferred; and (viii) That any person interested in the Scheme, shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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