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TMI Blog2020 (12) TMI 1091X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue in question, are as follows: (1) M/s. Splash Fashions India Private Limited (hereinafter referred to as 'Transferor Company') was incorporated on 23.09.2005 under the Provisions of the Companies Act, 1956, bearing CIN: U52399KA2005PTC037310. Its registered office is presently situated at 4th Floor, 77 Town centre, Building No.3, West Wing, Off HAL Airport Road, Yamlur, P.O. Bangalore-560037, Karnataka. Its Authorized Share Capital is Rs. 100,00,00,000/-(Rupees One Hundred Crores only) divided into 10,00,00,000 (Ten Crores) equity shares of Rs. 10/- each and the Issued, subscribed and paid-up share capital is Rs. 88,82,83,330/-(Rupees Eighty Eight Crores Eighty Two lakhs Eighty Three Thousand Three Hundred and Thirty only) divided into 8,88,28,333 (Eight Crore Eighty Eight Lakh Twenty Eight Thousand Three Hundred and Thirty Three) equity shares of Rs. 10/- each fully paid up. The Company is carrying on the business of retail trading through establishment of retail sales outlets, stores, super markets, departmental stores, shopping malls and hypermarkets of consumer durables and merchandise of all description etc. (2) The Board of Directors of the Transferor Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Splash Fashion Clothing, Shoe Mart, Juniors, Lifestyle, Super Bowl etc. (4) The Board of Directors of the Resulting Company at its meeting held on 21.08.2019 have approved and adopted the Scheme of Arrangement and inter alia resolved as under: "RESOLVED THAT, pursuant to sections 230 to 232 of the Companies Act, 2013 (the Act) and rules, regulations and amendments thereto, and subject to the Articles of Association of the Company and subject to the approval of the National Company Law Tribunal at Bengaluru and subject to such terms and conditions and modification(s), as may be imposed, prescribed or suggested by the National Company Law Tribunal at Bengaluru or any other appropriate authorities and keeping in mind the larger interests of the Company, the consent of the Board be and is hereby accorded to the 'draft' Scheme of Arrangement of Splash Fashions India Private Limited and Lifestyle International Private Limited (hereinafter referred to as 'the Scheme'), whereby the apparel business of Splash Fashions India Private Limited, a company incorporated under the provisions of the Companies Act, 1956 and having its registered offices at Fourth Floor, 77 Town ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued and allotted pursuant to the Scheme, shall in all respects, be subject to the Memorandum of Association and Articles of Association of the Resulting Company and shall rank pari passu with the existing equity shares of the members of the Resulting Company under the Scheme. (9) The issue and allotment of the aforesaid Equity Shares in the Resulting Company to the Shareholders of the Transferor Company as provided in the Scheme, shall be deemed to have been carried out as per the procedure laid down under Section 42 and 62 of the Companies Act, 2013 and other applicable provisions of the Act or any amendments thereto. (10) The allotment of the equity shares as provided in this Scheme as an integral part thereof, shall be deemed to have been carried out in compliance with the provisions of the Act, as well as provisions under the Income Tax Act, 1961. (11) It is stated that no investigation or proceedings are pending under Sections 210 to 225 of the Companies Act, 2013 against the Resulting Company and the Transferor Company. 3. The Petitioners herein had filed CA (CAA) No.62/BB/2019 before this Tribunal by inter alia seeking to issue directions for convening a meeting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Capital of the Demerged Company as stated in the Scheme and in the Master Data is different. As per the Master data of the Demerged Company the Paid up Capital is Rs. 88,82,83,330/- whereas the paid up capital as the Scheme is Rs. 64,70,65,330/-. However the Company has stated in the scheme that there is a further allotment of shares on 24.05.2019, July 4, 2019, August 5, 2019 and 13.09.2019 consisting of 24121800 shares. (4) It is observed that both the Demerged and the Resulting Companies have related party transactions during the year 2017-18 and 2018-19. Necessary compliance under Section 188 of the Companies Act 2013 may be submitted to the satisfaction of the ROC. (5) As per the scheme entire apparel business of Demerged Company will be merged with Resulting Company. If that is the case, it is not known what business would be left under the demerged company to survive and to continue as going concern. (6) It is further observed that there are no prosecutions, complaints, technical scrutiny/inspections pending in this office against the Petitioner Companies. 6. The Regional Director (SER), Hyderabad vide Affidavit dated 09.06.2020 has inter alia pointed out the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alysis, be otherwise exempt from approval requirements under section 188 of the Companies Act, 2013, and the transaction have been undertaken on arm's length basis. The AGM notice seeking approval of members for Financial Year 2018-19 and the Financial Year 2017-18 and the same has been placed on record as Ann. B. Further, particular of contracts or arrangements with related parties referred to in Section 188(1) in Form AOC-2, as required U/s134(3)(h) of the Companies Act, 2013 and Companies Accounts (Rule) 2014 for Financial Year 2018-19 and Financial Year 2017-18 and the same has been placed on record as Ann. C. The Petitioner Companies have complied with all obligations U/s 188 of the Companies Act, 2013 of the financial years 2017-18 and 2018-19. (4) Regarding Observation No. 2 of the ROC Report: It is stated that the Transferor Company will undertake to cause the Resulting Company to provide the necessary clarifications, if any to the ROC. (5) Regarding Observation No. 3 of the ROC Report: It is stated that the Share capital structure mentioned in the Scheme is as on March 31st, 2019. After March 31st, 2019, there was an increase in Issued, Subscribed and Paid-up Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gular intervals, approvals of the Board of Directors and its members from time to time for all related party transactions, existing or new, even though they may, on a case to case basis analysis, be otherwise exempt from approval requirements under section 188 of the Companies Act, 2013, and the transaction have taken place on arm's length basis. The AGM notice seeking approval of members for Financial Year 2018-19 and the Financial Year 2017-18 and the same has been placed on record as Ann. C Further, particular of contracts or arrangements with related parties referred to in Section 188(1) in Form AOC-2, as required U/s134(3)(h) of the Companies Act, 2013 and Companies Accounts (Rule) 2014 for Financial Year 2018-19 and Financial Year 2017-18 and the same has been placed on record as Ann. D. The Petitioner Companies have complied with all obligations U/s 188 of the Companies Act, 2013 of the financial years 2017-18 and 2018-19. (4) Regarding Observation No. 2 of the ROC Report: It is stated that the Resulting Company has met its CSR obligation fully and the Annual Report on CSR Activities forming part of the Director's Report of Financial year 2017-18 and the same has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unable to submit any scrutiny report in the absence of the Petitioner Company No.1/Transferor Company. 11. Intimation of the Scheme of Arrangement was sent to the Principal Commissioner of Income Tax and assessing Officer on 20th February 2020. No objections/observations/reports have been received up to the date of filing of this Affidavit. Necessary evidences of service have been filed. 12. Paper publication was carried out on 25th February 2020 in "The Hindu" and the "Kannada Prabha" and no objections/observations/reports have been received up to the date of filing of this Affidavit. Necessary evidences of service have been filed. 13. It was noticed that in respect of the Petitioner No. 2, i.e. the Resulting Company, there was a mismatch between the CIN number appearing in the Certificate of Registration of the CLB, being U52190KA2001PTC046775, and that reflected in the Company Master Data, being U52190KA1997PTC046775. It was clarified that the Company was incorporated in 1997 at Bangalore with reference no. 08/23058 of 1997, when CIN was not mandatory. In March 2001 it shifted its Regd. Office to Chennai and was allotted CIN: U52190TN2001PTC46843, whereas the same should have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent Petition, is hereby sanctioned and the Appointed Date shall be 01st April, 2019; (2) Sanctioning the Scheme of Arrangement should not be construed as an order in any way granting exemption from payment of Stamp Duty, taxes or other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specially required under any law, and the same shall be dealt with by the respective Authority in accordance with the extant Laws and Rules governing such Duty, taxes or other charges, as applicable; and (3) The Transferor Company relating to Apparel Division be transferred without further act or deed to the Resulting Company and accordingly, the same shall, pursuant to section 232 of the Companies Act, 2013, be transferred to and vest in the Resulting Company for all the state and interest of the Transferor therein, but subject nevertheless, to all the charges now affecting the same; and (4) All the liabilities including taxes, levies and charges, if any, and duties of the Transferor Company relating to the Apparel Division be transferred without further act or deed to the Resulting Company and accordingly t ..... 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