TMI Blog2019 (5) TMI 1891X X X X Extracts X X X X X X X X Extracts X X X X ..... apital which should not deemed to be inequitable or unfair transaction. The Regional Director, Northern Region, Ministry of Corporate Affairs, Registrar of Companies, Official Liquidator and Income Tax Department have not raised any objections to the proposed Scheme of Amalgamation. The learned counsel for the petitioner-companies has referred to clause 7.1 of the Scheme which provides that all legal proceedings pending by or against the Transferor Companies shall be continued by or against the Transferee Company and that clause 9.8 provides that all taxes paid or payable by the Transferor Companies shall be deem to be the corresponding item paid by the Transferee Company. The objections/observations to the Scheme received from RD and IT Department have been adequately replied by the Petitioner Companies and hence, there is no impediment in the sanction of the Scheme - the scheme is approved - application allowed. - CP (CAA) No. 25/Chd/Hry/2018 - - - Dated:- 17-5-2019 - M.K. Shrawat, Member (J) and Pradeep R. Sethi, Member (T) For the Appellant: Atul V. Sood For the Respondent: Afsar Ali, Assistant Registrar JUDGMENT M.K. Shrawat, Member (J) This i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt through e-mail to the equity shareholders, secured and unsecured creditors of the petitioner companies whose meetings were to be convened and statutory authorities are also part of the record. 5. Reports dated 22.11.2018 of the Chairperson along with the report of the Scrutinizer in respect of the meetings of unsecured creditors of the Petitioner Company No.1 and 2 and equity shareholders, secured and unsecured creditors of the Petitioner Company No.3 was filed by Diary No.4590 dated 26.11.2018. 6. The Chairperson has reported that the unsecured creditors of the Petitioner Company No.1 and 2 and equity shareholders, secured and unsecured creditors of the Petitioner Company No.3 have unanimously approved the Scheme. Thereupon, the instant petition was filed for approval of the Scheme in terms of Rule 15 of the Rules. 7. The main objects, date of incorporation, authorized and paid-up share capital, interest of employees and rationale of the Scheme were already discussed in detail in First Motion order dated 27.09.2018 passed by this Tribunal. 8. It is further submitted that the certificates of statutory auditors of the Petitioner Companies have been filed with the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 18.2 above, the Relevant Shareholders of the Transferee Company as on the Record Date, shall be paid, for the equity shares held by them and which are cancelled and extinguished, a sum of ₹ 21,60,088 per equity share of face value ₹ 20,000 each, so cancelled and extinguished, as per valuation carried out by independent valuers, SSPA CO. (Chartered Accountants). Further, as per the provisions of section 115-O of the Income Tax Act, 1961, the Transferee Company shall additionally bear the dividend distribution tax @ 20.555% amounting to ₹ 4,44,006 per equity share so cancelled and extinguished or as may be applicable as per the tax laws then in force. Also, Article 54 of the Articles of Association empowers the Transferee Company to reduce its share capital in any manner for the time being authorized by law. The Company may, from time to time, by special resolution, reduce its Capital and any Capital Redemption Reserve Account or Share Premium Account in any manner and with and subject to any authorization and consent required by law. 12. When the petition was listed on 24.12.2018, the following directions were issued:- The petition be listed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usiness of the petitioner-companies and it is also stated that since the Company is a downstream investment of foreign owned and controlled company, Reserve Bank of India may be treated as Sectoral Regulator for that purpose. The petitioner companies shall also file the affidavit at least two days before the date fixed to the effect that no objections to the Scheme have been received by the petitioner-companies. The petitioners shall at least two days before the date of hearing of the petition file an affidavit of service regarding paper publication as well as service of notices on the authorities specified above including the sectoral regulator as well as to objectors, if any. Registry shall also report before the date fixed as to whether any objection has been received to the proposed Scheme in the registry. 13. The learned counsel for the petitioner companies filed compliance affidavit of Mr. Rohit Gupta, the authorized representative of the Petitioner Companies dated 11.03.2019 (diary No.1275 dated 15.03.2019). Copies of newspaper publications in 'Indian Express' (English) Delhi NCR Edition, 'Business Standard' (Hindi), Delhi NCR Edition both dated 05. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a proposal in the scheme that 21 shareholders of the Transferee Company shall be paid, for the equity shares held by them and which are cancelled and extinguished, a sum of ₹ 21,60,088 per equity share, as per valuation carries out by independent valuers, SSPA Co, Chartered Accountants. It is also mentioned that no compromise or arrangement pertaining to the buy-back of securities shall be sanctioned unless compliance of Section 68 of Companies Act, 2013 is made which inter alia requires a special resolution of the company by virtue of Section 230(10) of the Companies Act, 2013. 18. The Transferee Company in its reply to the report of the Regional Director, Northern Region, Ministry of Corporate Affairs, submitted that the Transferee Company undertakes to comply with the the provisions of the Section 232(3)(8)(i) read with Section 233(11), 233(12) and Section 2 (68) (ii) of the Companies Act, 2013 and shall pay applicable fee, if any, post the consolidation of the authorized share capital of the Transferor Companies with the authorized share capital of the Transferee Company. 19. The Deputy Commissioner of Income Tax, Bangalore has filed its report dated 08.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may- (a)…………. (b) either with or without extinguishing or reducing liability on any of its shares,- (i)…… (ii) pay off any paid-up share capital which is in excess of the wants of the company, alter its memorandum by reducing the amount of its share capital and of its shares accordingly….. . 25. The learned counsel for the petitioner-companies has relied upon the shareholding pattern of Transferee Company (ITW India Private Limited) as on 31.07.2018, which is as follows:- S. No Name and address of the Shareholders No. of Shares Face Value Total Amount at Face value Fair market value per share Total consideration being paid to each shareholder 1. Illinois Tool Works Inc. Adcom Building, 155 Harlem Ave Glenview IL 60025 6,744 20,000 13,48,80,000 - Nil 2. Anita Khandelwal B - 5, Shastri Nagar, Jaipur (Raj.) 302016 3 20,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited Anand Bunglow Opp Devdeep Duplex Motinagar Society, Dhumketu Marg Paldi, Ahmedabad, 380007 1 20,000 20,000 21,60,088 21,60,088 13. Hobart LLC 155 Harlem Avenue Glenview Illinois 60025 USA 1 20,000 20,000 21,60,088 21,60,088 14. Podile Gita Vani 5-91-2nd Floor 4TH Lane, Lakshmipuram Guntur, 522007 1 20,000 20,000 21,60,088 21,60,088 15. Kailashben Kiritbhai Shah Aarohi Complex 4th Floor Nr Rasranjan Vijay Cross Road Navrangpura, Ahmedabad, 380009 1 20,000 20,000 21,60,088 21,60,088 16. Amita Nitesh Thakkar Nitesh Arjun Thakkar 1101-1102 Kailash Palace, Upashraya lane Ghatkoper (E), Mumbai Maharashtra, 400077 1 20,000 20,000 21,60,088 21,60,088 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 3. STOKVIS TAPE GROUP B.V. NETHERLAND Het Rond 7, 3701, HS Zeist, Netherland 2 equity shares of ₹ 20,000 each 40,000 4. Chandmal Chhajed Kalavati Chhajed A/96 Silver Apartment, Shankar Ghanekar Marg, Dadar, Mumbai, Maharashtra 400028 2 equity shares of ₹ 20,000 each 40,000 5. Madhusudana Rao Dandamudi Plot No 98 Huda Enclave, Road No 70 Jublee Hills Film Nagar Hyderabad Andhra Pradesh 500033 2 equity shares of ₹ 20,000 each 40,000 6. Nagasiromani Dandamudi Plot No 98 Huda Enclave Road No 70 Jubilee Hills Film Nagar Hyderabad Andhra Pradesh 500033 2 equity shares of ₹ 20,000 each 40,000 7. Rama Krupa Mulpury Plot No 98, Huda Enclave Road No 70 Jubilee Hills Filmnagar, Hyderabad Andhra Pradesh, 500033 2 equity shares of ₹ 20,000 each 40,000 8. Sonal D Shah Preeti N Shah 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dandamudi Krishna Rao C/O D.M.Rao Plot No 98 Huda Enclave Road No 70 Jubilee Hills Film Nagar Hyderabad 500033 1 equity shares of ₹ 20,000 each 20,000 20. M Bhawarlal Jain B Chanda Kanwar A/4 Garden Apartments NO 68 Puraswalkam High Road Chennai 600007 1 equity shares of ₹ 20,000 each 20,000 21. Swan Securities Pvt Ltd. 44,Valencia, Juhu Tara Road Santacruz West, Mumbai, 400049 1 equity shares of ₹ 20,000 each 20,000 22. Annarao Krishnarao Lokapur Madhuri Annarao Lokapur Krishnatara 3 Sindh Society Baner Road Aundh Pune, 411007 1 equity shares of ₹ 20,000 each 20,000 TOTAL 13,55,00,000 Position after proposed reduction: S. No. Shareholder(s) Details of Shareholding Amount in (Rs.) 1. Illinois Tool Works Inc. Adcom Building, 155 Harle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s is permitted to reduce the share capital in any manner, thereby a selective reduction is permissible within the framework of law. On the question of valuation as well, an observation was that valuation of shares is a technical matter, which requires considerable skill and experience. If the stakeholders are satisfied with the value, can approve the transaction of reduction of share capital which should not deemed to be inequitable or unfair transaction. 32. In view of the above discussion, we conclude that the Regional Director, Northern Region, Ministry of Corporate Affairs, Registrar of Companies, Official Liquidator and Income Tax Department have not raised any objections to the proposed Scheme of Amalgamation. The learned counsel for the petitioner-companies has referred to clause 7.1 of the Scheme which provides that all legal proceedings pending by or against the Transferor Companies shall be continued by or against the Transferee Company and that clause 9.8 provides that all taxes paid or payable by the Transferor Companies shall be deem to be the corresponding item paid by the Transferee Company. 33. In view of the above discussion, we conclude that the objections/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be set off against any fees payable by the Transferee Company on its authorized capital subsequent to the sanction of the 'Scheme'; and vii) That the Petitioner Companies do, within 30 days after the date of receipt of the order of this Tribunal, cause a certified copy of this order to be delivered to the Registrar of Companies for registration and on such certified copy being so delivered, the Transferor Companies shall be dissolved without undergoing the process of winding up and the concerned Registrar of Companies shall place all documents relating to the Transferor Companies and registered with him on the file kept in relation to the Transferee Company and the files relating to the said Transferor and Transferee Companies shall be consolidated accordingly, as the case may be; and viii) That the Transferee Company shall deposit an amount of ₹ 25,000/- (Rupees Twenty Five Thousand only) with the Pay Accounts Officer in respect of the Regional Director, Northern Region, Ministry of Corporate Affairs and ₹ 25,000/- (Rupees Twenty Five Thousand only) in favour of The Company Law Tribunal Bar Association Chandigarh within a period of three weeks f ..... 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