TMI Blog2021 (1) TMI 147X X X X Extracts X X X X X X X X Extracts X X X X ..... (Technical) And Mrs.Suchitra Kanuparthi Hon ble Member (Judicial) For the Petitioner : Sr. Adv. Mr. ZalAndhyarujinaa/w Mr. Karan Bhidei/b AZB Partners, Advocates ORDER Per : Rajesh Sharma, Member ( Technical ) 1. The court is convened through video conference today. 2. The counsel for the Applicant Companies submits that the proposed Scheme inter-alia provides for the transfer and vesting of the Passenger Vehicles Undertaking (as defined in the Scheme) of the Applicant Company 1 to the Applicant Company 2 as a going concern on a slump sale basis, and reduction of Securities Premium Account (as defined in the Scheme) of the Applicant Company 1 and various other matters consequential to or otherwise integrally connected with the above pursuant to Sections 230 to 232 of the Companies Act, 2013 in the manner provided in the Scheme. For commercial reasons, the Applicant Companies have chosen to affect the transfer of the Passenger Vehicles Undertaking by the mechanism of a slump sale {as defined u/s 2(42C) of the Income Tax Act 1961}, through the captioned Scheme of Arrangement. 3. The rationale and purpose of the Scheme is as under: (a) The Applicant Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cle space makes the business ready to realise its potential. Further, this restructuring would facilitate mutually beneficial strategic alliances for the PV Business in the future, as stated by the Applicant Companies in the scheme. (c) The Applicant Company 1 has Accumulated Losses (as defined in the Scheme) amounting to ₹ 11,173.59 Crore and also has balance in the Securities Premium Account (as defined in the Scheme) amounting to ₹ 22,194.89 Crore, as on June 30, 2020. Accordingly, for a better presentation of the financial position of the Applicant Company 1, the Board of the Applicant Company 1 considered it prudent to consider a reduction of its share capital without extinguishing or reducing its liability on any of its shares by writing down a portion of its Securities Premium Account, which is lost or is unrepresented by available assets, with a corresponding adjustment to the Accumulated Losses of the Applicant Company 1. 4. The Counsel for the Applicant Companies submits that the Board of Directors of the Applicant Company 1 and Applicant Company 2 at their respective board meetings both held on July 31, 2020 have approved the Scheme. Shareholders m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany 1, addressed to each of the shareholders, at their last known e-mail addresses as per the records of the Applicant Company 1. Shareholders whose e-mail address are not available, shall be provided an opportunity by way of notice in the advertisement of notice mentioned in point 8 below to register their e-mail address to receive the notice of the said meeting. 8. At least 30 (thirty) days before the aforesaid meeting of the Equity Shareholders of the Applicant Company 1 to be held as aforesaid, an advertisement of notice convening the said meeting, indicating the day, date and time aforesaid be published once each in Free Press Journal in English and Navshakti in Marathi, both circulated at Mumbai, and stating that copies of the Scheme and the statement required to be furnished pursuant to Section 230 (3) of the Companies Act, 2013 can be obtained free of charge by emailing the Applicant Company 1 at inv_rel@tatamotors.com. 9. The Applicant Company 1 undertakes to: (i) issue notice convening meeting of the Equity Shareholders as per Form No. CAA.2 (Rule 6) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016; (ii) issue statement con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the Scheme or resolution, if any, proposed at the aforesaid meeting by any person(s). 15. The value and number of the shares of each Equity Shareholder shall be in accordance with the books/ register of members of the Applicant Company 1 or depository records and where the entries in the books/ register of members/ depository records are disputed, the Chairperson of the Meeting shall determine the value for the purposes of the meeting of Equity Shareholders and his/her decision in that behalf would be final. 16. The Chairperson shall report to this Tribunal, the result of the aforesaid meetings within 30 (thirty) days of the conclusion of the aforesaid meeting, and the said report shall be verified by his Affidavit as per Rule 14 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. 17. The Counsel for the Applicant Companies further submits that the Applicant Company 2 is a wholly owned subsidiary of TML Business Services Limited. The Applicant Company 1 directly and indirectly, holds 100% equity interest in TML Business Services Limited as also the Applicant Company 2. Moreover, the Ld. Counsel submits that the Applicant Company 2 has obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to the PV Business), none of the Secured Creditors of Applicant Company 1 hold any security / encumbrance over the assets forming part of the Passenger Vehicles Undertaking. 20. The Learned Counsel submits that the PV Business Liabilities , Government of Gujarat Loan and PV Working Capital Liabilities has been defined in the Scheme as follows: PV Business Liabilities means ordinary course liabilities pertaining to the PV Business and continuing as on the Appointed Date such as contingent liabilities, PV Working Capital Liabilities, liabilities arising out of PV Contracts, and, upon receipt of necessary approvals and such other directions as may be applicable, the Government of Gujarat Loan; Government of Gujarat Loan means loan of amount INR 587.08 Crore, outstanding to the Government of Gujarat pursuant to loan agreement dated March 30, 2013 and all documents and / or government resolutions related thereto; The Counsel further submits that while Applicant Company 1 has availed of working capital loan facilities from its lenders, however no working capital loan facilities are being transferred as part of the Scheme from Applicant Company 1 to Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... panies Act, 2013; and (iii) advertise the notice convening meeting as per Form No. CAA.2 (Rule 7) of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The undertaking is accepted. 24. Mr. N. Chandrasekaran, Non-Executive Chairman of Applicant Company 1 and failing him Ms. Vedika Bhandarkar, Independent Director and Chairperson of the Audit Committee of Applicant Company 1, is appointed as the Chairperson for the aforesaid meeting of the Secured Creditors of the Applicant Company 1. 25. The scrutinizer for the aforesaid meeting of Secured Creditors of the Applicant Company 1 shall be Mr P N Parikh (Membership No. FCS 327), failing him Ms JigyasaVed (Membership No. FCS 6488) and failing her Mr Mitesh Dhabliwala (Membership No. FCS 8331) of M/s Parikh Associates, Practicing Company Secretaries. 26. The quorum for the aforesaid meeting of the Secured Creditors of Applicant Company 1 shall be 3 (three) persons present in person or through authorised representative through video conferencing and/ or other audio-visual means. In case the required quorum as stated above is not present at the commencement of the meeting, the meeting shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive shareholders as contemplated under Section 230(l)(b) and not in accordance with the provisions of Section 230(l)(a) of the Companies Act, 2013 as there is no compromise and/or arrangement with the creditors and as no sacrifice is called for by the creditors, a meeting of the Equity Shareholders of the Applicant Company 1 is proposed to be held in accordance with the provisions of Section 230(l)(b) of the Companies Act, 2013. Further, the Applicant Company 1 s net worth post giving effect to the Scheme remains in the positive. Moreover, the adjustment to the Securities Premium Account as contemplated in the Scheme does not involve any financial outlay but is merely an accounting treatment and therefore, would not affect the ability or liquidity of the Applicant Company 1 to meet its obligations/ commitments or have any adverse impact on the creditors. Therefore, the meeting of the Unsecured Creditors of the Applicant Company 1 is not required to be convened. The Applicant Company 1 has 5,777 Unsecured Creditors having in the aggregate an amount of ₹ 27,605.90Crore as on September 30, 2020. Out of this, the number of Unsecured Creditors relating to Passenger Vehicles Undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (thirty) days from the date of receipt of such notice, to the Tribunal and copy of such representations shall simultaneously be served upon the Applicant Company 1, failing which, it will be presumed that the aforesaid authorities have no representations to make on the Scheme. 33. The Applicant Company 2, pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016, is directed to serve notice along with a copy of the Scheme upon: (i) Regional Director, Western Region, Ministry of Corporate Affairs, Mumbai, Maharashtra, (ii) the Registrar of Companies, Mumbai, (iii) Income Tax Authority within whose jurisdiction the assessments of the Applicant Company 2 are made (mentioning the PAN of Applicant Company 2 PAN: AAHCT8301P) at the following address: The Deputy / Assistant Commissioner of Income Tax Circle 1(3)(1), 5th Floor, Aayakar Bhavan, Maharishi Karve Road, Mumbai 400020, and (iv) Goods and Service Tax Authority (mentioning GST RC No. 27AAHCT8301P1ZT) at the following address: (a) GST Bhavan (Vikrikar Bhavan), Sales Tax Officer, FORT_701, Dockyard Rd, Dockyard, Ekta Nagar, Mazgaon, Mumbai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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