TMI Blog2021 (5) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... CA/323 and 324/CAA/2020 - - - Dated:- 27-4-2021 - Sucharitha R., Member (J) And Anil Kumar B., Member (T) For the Appellant : Pawan Jhabakh, Advocate ORDER Anil Kumar B., Member (T) 1. Under consideration are Two Company Petition No. 2[CHE]/CAA/2021 and CP/4[CHE]/CAA/2021 filed by the above mentioned Petitioner Companies under section 230 -232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules 2016. The instant Company Petition is in the matter of the Scheme of Arrangement by virtue of which the transfer and vesting of the Demerged Business of M/s. Severn Glocon India Private Limited (hereafter refereed as Petitioner/Demerged Company ) into and with M/s. Severn Glocon Valves Private Limited (hereafter referred as Petitioner/Resulting Company ) as a going concern, M/s. Severn Glocon India Private Limited CP/2[CHE]/CAA/2021 2. The Petitioner/Demerged Company viz., Severn Glocon India Private Limited is a Private Company, which was incorporated on 01.03.2004 under the provisions of Companies Act, 1956. The registered office of the Demerged Company is situated at F 96 F 97, SIPCOT Industrial Park, Irungattukk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny and filed the result of meeting of Equity shareholders of the Resulting Company along with Company Petition Annexed as Annexure-A8 . The Resulting Company has no Secured Creditor or Unsecured Creditor and furnished a certificate from a Chartered Accountant to this effect. The Applicant Companies have complied with all the orders passed by the Bench. 7. The Board of Directors of the Demerged Company and Resulting Company vide their resolution dated 20.07.2020 respectively approved the said scheme of Arrangement. 8. On perusal of the rationale of the scheme of Arrangement, the Board of Directors of the Demerged Company and Resulting Company have considered the proposed Scheme: i) The Demerged Business of Demerged Company (SGIPL) has significant potential for growth. The nature of risk, competition, challenges, opportunities and business operations of the Demerged Business necessitates focused management approach. Thus, the Scheme, which envisages demerger of the Demerged Business into a separate company, would enable this business to innovate, scale up and run independently to pursue growth opportunities in a more focused manner which may not be fully realised if the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spection or investigation pending against both the Companies. v) As per clause 9 of Part B of the Scheme provides the Accounting Treatment in the books of the Resulting Company, which states that the Resulting Company shall record the Assets and liabilities of the Demerged Undertaking at their respective book values and will account in accordance with the Indian Accounting Standard (Ind AS) 103 for Business Combination prescribed under section 133 of the Companies Act, 2013, as notified under the Companies (Indian Accounting Standard) Rules, 2015. vi) It is further submitted that the Appointed Date as per the Clause 1.2 of Part A of the Scheme, the Appointed Date is mentioned as Effective Date, which is not acceptable as per Section 232(6) of the Companies Act, 2013. The Appointed date is significant in respect of demerger since the consideration for transfer/demerger of identified business is to be arrived at beforehand by valuation of assets and liabilities of the demerged business, concerned. 11. In response to the observation made by the RD in para 4 of his Report, the Petitioner Companies filed an affidavit by one Mr. Vanchinathan Kalayanasundaram before this T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, the Learned Counsel for the Petitioner Company has pressed into service, the circular issued by the Ministry of Corporate Affairs F. No. 7/12/2019/CL-I dated 21.08.2019 and submitted that the above circular of the Ministry has clarified that the 'Appointed Date' need not be a specific calendar date and may be tied to the occurrence of an event and explained that in the present case, the 'Appointed Date' is connected to an event. The Learned Counsel for the Regional Director submitted that the reply given by the Petitioner Company was not acceptable by the Regional Director and that they have decided to raise an objection in relation to the Scheme. 13. In order to better address the said issue, it is necessary to understand the spirit of the Ministry of Corporate Affairs circular No. F. No. 7/12/2019/CL-I dated 21.08.2019. The Supreme Court in the case of Marshall Co. India Ltd. -vs- ITO (223 ITR 809) has held that every scheme of amalgamation has to necessarily provide a date with effect from which the amalgamation/transfer should take place. Such date shall precede the date of sanctioning of the Scheme by the Court, the date of filing of the certified copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; shall also be the Acquisition Date' and date of transfer of control to confirm to Indian Accounting Standards 103. 16. We have examined the scheme and it is seen from the Definition clause 1.2 and 1.12 of the Scheme that the Appointed Date and Effective Date as reproduced below:- Appointed Date means the Effective Date; Effective Date means the date on which the last of the conditions mentioned in Clause 14.1 of Part-C of the Scheme is fulfilled and the Scheme made effective. Clause 14.1 reproduced given below:- 14.1 this effectiveness of the Scheme is, and shall be conditional upon and subject to: a) Certified copies of the orders of the Tribunal sanctioning this Scheme being filed with relevant Registrar of Companies by SGIPL and the Resulting Company as per the provisions of the Act; b) SGIPL obtaining an approval from MEPZ Special Economic Zone and HEOU's for transfer of the letter of permission to the Resulting Company pursuant to the Scheme; and c) SGIPL obtaining an approval from SIP COT for transfer of the leasehold Properties pursuant to the Scheme. 14.2 this Scheme shall become effective on and from the effective d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th respect to Accounting Treatment 19. In short, there is no apprehension that any of the creditors would lose or be prejudiced if the proposed scheme is sanctioned. 20. The Petitioner Companies have filed Affidavit, stating that the scheme Proposed does not fall within the ambit of sections 4 and 5 of the Competition Act, 2002. 21. The scheme does not require any modification, except to the Appointed Date as mentioned supra, as it appears to be fair and reasonable, not contrary to public policy and also not violative of any provisions of law. All the statutory compliances have been made under section 230-232 of the Companies Act, 2013 r/w the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The Scheme of Arrangement between the Demerged Company and the Resulting Company was duly approved by the shareholders of respective companies. Taking into consideration all the above, the Company Petition is allowed and the scheme of Arrangement annexed with the petition is hereby sanctioned which shall be binding on all the members, creditors and shareholders. 22. While approving the scheme as above, we further clarify that this order will not be construed as a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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