TMI Blog2021 (7) TMI 707X X X X Extracts X X X X X X X X Extracts X X X X ..... . - C. P. (CAA) No. 1047 of 2020 in CA (CAA) No. 3481/MB/2019 - - - Dated:- 15-6-2021 - H. V. Subba Rao , Member ( J ) And Shyam Babu Gautam , Member ( T ) For Appearing Parties : Hemant Sethi, Darshita Parekh , Ria Menon, Advocates i/b Purnanand Co. and Rupa Sutar , Deputy Director ORDER Shyam Babu Gautam , Member ( T ) 1. Heard the learned counsel for parties. No objector has come before this Tribunal nor has any party controverted any averments made in the Petitions to the said Scheme. 2. The sanction of the Tribunal is sought under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 to the said Scheme. 3. The Petitioner Companies have approved the said Scheme by passing the Board Resolutions in their respective Board meetings held on 05th September, 2019 which are annexed to the Company Scheme Petition. 4. Learned Counsel appearing on behalf of the Petitioner Companies states that the Petitions have been filed in consonance with the Order passed in their Company Scheme Application No. CA (CAA)/1151/MB/2020/CP No. 1047/2020 of this Tribunal. 5. The Learned Counsel for the Petitioner Companies further states that, in p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plification of business processes. Elimination of duplication of administrative expenses, productivity improvements, and improved procurement. (iv) Carrying on and conducting the business more efficiently and advantageously, more productive and optimum utilization of various resources, strengthen its financial position and ability to raise resources for conducting business, stronger capital base for future expansion/growth. (v) Improved organizational capability and leadership, arising from the pooling of human capital that has diverse skills, talent and vast experience to compete successfully in an increasingly regulated and competitive industry. 9. The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai has filed a Report on 4th December 2020 stating therein, that the tribunal may pass appropriate orders after considering the observations made in paragraph IV of the said Report. 10. The Regional Director in paragraph IV of the Report has stated that:- a) In compliance of AS-14 (IND AS-103), the Petitioner Companies shall pass, such accounting entries which are necessary in connection with the scheme to comply with other applicable Accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Ten Only) cash. As against this all the Transferor Companies put together have loans and advances put together less that the said amount of proposed post-merger paid up share capital of Transferee Company. In fact, the inter-se balances of loans and advances once cancelled then only the net balance should be reflected in the books of Transferee Company which can be the corresponding real paid up share capital of the transferee company. f) As per Accounting Treatment clause 15.5 of the scheme, The difference between the amount recorded as share capital issued (plus any consideration in the form of cash or any other asset) and the amount of share capital of the Transferor Companies, after making adjustment as mentioned in 12.4 above, shall be credited to the Capital Reserves Account or debited to the Profit and Loss Account of the Transferee Company, as the case may be. In this regard the company proposes the accounting treatment of recording the assets at book value by pooling of interest method. It is submitted that the difference is to be credited to Capital Reserve Account arising out of Amalgamation and shortfall shall be debited to Goodwill account and not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bliss Housing Private Limited, Sanwad Estates Private Limited, Trustworthy Builders and Developers Private Limited, Unnathi Developers Private Limited have provided loans and advances to their sister concern, Crystalcity Mall Private Limited ( Crystalcity ). These amounts were invested in the form of a commercial transaction in the form of a strategic alliance, wherein Cristallo and Crystalcity were in-turn going to invest such amount in construction projects, and the return received by them would have been shared with the respective Petitioner Companies. In fact, as required under section 186(4) of the Companies Act, 2013, the auditors have also specifically stated in the notes to accounts of the balance sheet that the amount is given for commercial purpose . Till date, neither Cristallo nor Crystalcity have received any return on their investment, and that is the reason the Petitioner Companies have not received any amount on the advance given by them. 16. So far as the observation in paragraph IV(e) of the Regional Director's Report is concerned, the Petitioner Companies submit that there are no inter-se balances of loans and advances between the Petitioner Companies. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements if any, as required under the Companies Act, 2013 and the Rules made thereunder, whichever is applicable. Accordingly, the clarifications and undertakings given by the Petitioner Companies are hereby accepted. 22. The Official Liquidator, High Court, Bombay, has filed his report dated 2nd November 2020 in CA No. 1047 of 2020 in CA (CAA) No. 3481/MB/2019, inter alia stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved by this Tribunal. 23. From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy. Since all the requisite statutory compliances have been fulfilled, CP No. 1047/2020 in CA (CAA) 3481/2019 filed by the Petitioner Companies is made absolute in terms of prayers clause 17.1 to 17.7. Hence ordered. ORDER i. The said Scheme of Arrangement is hereby sanctioned and declared the same to be binding on the ( Transferor Companies and ( Transferee Company ) and their respective shareholders. ii. Appointed Date for the Scheme is fixed as 1st April 20 ..... 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