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TMI Blog2020 (10) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... persons ; to order for dissolution of transferor company without winding up, etc. 2. Brief facts of the case, as mentioned in the company petition, which are relevant to the issue in question, are as follows : (1) M/s. HHV Center for Advanced Photovoltaic Technologies P. Ltd. (hereinafter referred to as "transferor company/petitioner No. 1") is a private limited company incorporated on December 26, 2012 under the Companies Act, 1956 with CIN : U29190KA2012PTC067387 and having its registered office at Site No. 17, Phase 1, Peenya Industrial Area, Bangalore- 560 058. Its authorised capital is Rs. 10,00,000 divided into 1,00,000 equity shares of Rs. 10 each and its paid-up capital is Rs. 1,00,000 divided into 10,000 equity shares of Rs. 10 each. Its main objects, inter alia, are to undertake technology development and incubation and commercialization of thin film and micromorph technologies, manufacture, assembly and marketing and supply of solar modules, other new generation solar mod ules and cells, etc. (2) The board of directors of the transferor company at its meeting held on December 28, 2018 have approved and adopted the scheme of amalgamation and inter alia resolved as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cale, reduction in overheads, administrative, managerial and other expenditure and increase in operational rationalization, organizational efficiency, and optimal utilization of various resources; duplication of administrative functions will be eliminated together with the multiple records-keeping resulting in reduced expenditure ; there shall be impetus and increase in the area of sales, network of the transferee company apart from reduction in costs, etc. (6) M/s. Brahmayya and Co., chartered accountants, the statutory auditors of the transferee company, vide certificate dated March 11, 2019 have, inter alia, certified that the accounting treatment contained in the aforesaid scheme of amalgamation is in compliance with the applicable accounting standards specified under section 133 of the Companies Act, 2013. (7) As regards consideration, it is stated that since the transferor company is the wholly owned subsidiary of the transferee company, i. e., the entire paid-up capital of the transferor company is held by the transferee company (including through nominee), therefore no new equity shares of the transferee company shall be issued and allotted in respect of shares held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registry. Pursuant to the above directions, the petitioners vide memo have affirmed compliance with the order passed by the Tribunal dated August 19, 2019 and also caused paper publication in The Hindu English daily as well as in Udayavani Kannada daily on September 13, 2019, with regard to the notice of hearing of the petition. 5. The Registrar of Companies, Karnataka vide its report dated October 4, 2019, has raised certain observations : that the transferor company is the wholly owned subsidiary of the transferee company which is the subsidiary of M/s. HHV Ltd., UK and that 100 per cent. shares of transferor company were transferred to the transferee company ; that no effective date is mentioned ; that the transferee company shall give an undertaking with regard to section 232(3)(i) of the Companies Act, 2013 ; that the statutory auditors report dated August 16, 2018 for the year 2017-18 has made some qualifications in respect of provisions and inter corporate deposit ; that the transferee company has not complied with sections 185 and 186 of the Companies Act, 2013 with respect to the loan made thereunder ; that it has related party transactions during the years 2016-17 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the regime of the 1956 Act and accordingly the agreements were entered and transactions took place subsequently as per the agreement and section 185 of the 2013 Act came into force on April 1, 2014 and the corresponding section 372A of the 1956 Act ceased to be effective as on that date and that the agreement entered earlier continued to be in force as on date of commencement of the 2013 Act it is valid and the transactions carried on in line with it are also valid. It is submitted that the loan was extended as part of above agreement only and hence there was no violation of sections 185 and 186 of the 2013 Act and thus the applicants deny that there has been any non-compliance with provisions of the 2013 Act. It is stated that the loans were extended to fund highly advanced profitable projects and thus the company was of the opinion that it would not have adverse impact on the financial statements of the transferee company and if directed by the Tribunal it undertakes to apply for compounding. It is also stated that the related party transactions during the year 2016-17 and 2017-18 are outside the scope of section 188 of the 2013 Act. The transferee company being the entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of assets of transferor company against loans and advances made by transferee company will be dealt as per accounting treatment for amalgamation as stated in Part IV of the scheme of amalgamation. The proposed accounting treatment inter alia includes the transferee company shall abide by the Accounting Standard AS-14 issued by the Institute of Chartered Accountants of India, and on approval of the scheme by the National Company Law Tribunal, will be accounted for under the Pooling of Interest Method, and as per the AS, all the assets and liabilities recorded in the books of transferor company shall be transferred and vested in the transferee company. As per the accounting entry No. 1 for transfer of assets and liabilities from transferor company to transferee company, the aggregate written off in the books of transferee company on account of merger will be Rs. 486,56,894. (2) Further, as regards compliance with sections 185 and 186 of the 2013 Act it is reiterated that there has been no violation of sections 185 and 186 of the 2013 Act and accordingly, the need to go for compounding does not arise. Thus, it is requested that the instant petition for the scheme be sanctione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sent to all relevant statutory authorities/regulators. Wherever no response has been received from the said authorities/regulators, it is deemed that they have no objection to the proposed scheme. 14. Heard Mr. Thirupai Gorige, learned practising company secretary for the petitioner-companies, Smt. Prema Hatti, learned standing counsel for the Registrar of Companies and Mr. J. Elangovan for office of official liquidator. We have carefully perused the pleadings of the parties and the extant provisions of the Companies Act, 2013/1956 and various Rules made there- under and the law on the issue. 15. We have considered the facts of the case as mentioned in the petition, the reports of the Regional Director, the Registrar of Companies, in which the para wise replies of the petitioner companies to his observations have been duly examined, along with the comments offered by the official liquidator and the relevant provisions contained in the Companies Act, 2013 and other related Acts and Rules. In his report, the Regional Director, MCA has concluded that the scheme appears to be fair, reasonable and not detrimental against the members or creditors or contrary to public policy and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es arising from transactions with related parties ; (6) The Registrar of Companies shall examine the default, if any, with regard to the investments covered by sections 185 and 186 of the Act of 2013, after giving due opportunity to the applicant-companies, and penal consequences, if any, shall be the liability of the transferee company ; (7) The transferee company shall approach the Regional Director, within 30 days of receipt of this order, for adjudication of default/s, if any, committed by the applicant/s in respect of investments covered by section 185 and section 186, as also transactions covered by section 188 of the Companies Act, 2013. Penal consequences, if any, following from the same, shall be dealt with by the Regional Director, in accordance with law ; (8) All the proceedings now pending by or against the transferor company be continued by or against the transferee company, if any ; (9) The petitioner-companies shall within thirty days of the date of the receipt of this order cause a certified copy of this order along with a copy of scheme of amalgamation to be delivered to the Registrar of Companies for registration in accordance with the applicable Rules and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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