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TMI Blog2022 (4) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... er alia seeking for the sanction of Scheme of Demerger (for brevity 'Scheme') amongst the Demerged Company, the First Resulting Company and the Second Resulting Company. The joint petition is maintainable in terms of Rule 3(2) of the Rules. 2. The Petitioner Companies No. 1 to 3 filed First Motion Application bearing C.A (CAA) No. 34/BB/2020 before this Tribunal for seeking to dispense with the meetings of the Equity Shareholders of the Demerged Company and Resulting Companies No. 1 and 2; Secured and Unsecured Creditors of the Demerged Company for considering the scheme of Demerger. Based on such Application, necessary directions were issued on 04.11.2020 in which the convening and holding of the meeting of the Equity shareholders, Secured and Unsecured Creditors of the Demerged Company and Equity Shareholders of the Resulting Companies 1 and 2 were dispensed. Since there were no Creditors in the Resulting Companies No. 2 and 3, there was nothing to convene their meeting. Further, the Petitioner Companies were also directed to issue paper notification one in English Language "Economic Times" and one in vernacular language "Sanjayvani" about the dispensation of the meetin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2020. 6. It is further submitted that a separate Certificate of Statutory-Auditors of the Petitioners No. 1 to 3 has been placed as Annexure - A17, A18 and A19 of the Petition, stating that the Accounting Treatment contained in Part IV (Clauses 16, 17 & 18) of the Scheme is in compliance with the Accounting Standards notified under Section 133 of the Companies Act, 2013 and the Rules made thereunder and other generally accepted accounting principles. 7. The copy of the audited and unaudited balance sheet of the Petitioner No. 1 is attached as Annexure A3 and A4 of the petition. The copy of the audited and unaudited Balance Sheet as on 31st March 2020 of the Petitioner No. 2 is attached as Annexure -A6 & A7 of the petition and audited and unaudited balance Sheet for the Petitioner No. 3 is attached as Annexure A9 & A10 respectively to the Petition. 8. The Board Resolution approving the Scheme by the Petitioners No. 1, 2 & 3 dated 25th December 2019 and 29th May 2020 is annexed at Annexure A11, A12 and A13 of the petition. 9. As per the Scheme, the Appointed Date shall mean close of business hours of 31st March 2020 or such other date as may be approved by the Tribunal and agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank. Hence, the Demerged Company may be directed to obtain the same to the Hon'ble NCLT before the approval of the scheme. 13. In response to the report of RD, the Learned Counsel for the Petitioners No. 1 to 3 have filed a reply affidavit vide Diary No. 1927, dated 26.07.2021 and submitted as follows:- (i) In response to the observation made at para 2 (a) of the RD report, it is stated that since the details of identification of assets pertaining to the respective undertakings is given in the scheme itself, therefore the observation does not call for a response. (ii) In response to the observation made in para 2 (b) of the RD report it is stated that the Demerged Company has two business divisions, namely, the (i) Liquid Paints Division and (ii) Powder Coatings Division. The factories of both the divisions are clearly demarcated and operated separately. The business dynamics and operating cycle of each of the division is completely different from each other. Further, the Demerged Company also has a few investment properties not related to the above two business lines. With a view to streamline the operations with a separate and dedicated management for each of the divisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice may not normally be given to the commission and it is informed that as of date, the said matter have not been filed with the Commission under the provisions of the Act. Therefore, it is requested that before passing an appropriate order, the NCLT may seek an undertaking from the companies involved that approval of the commission is not required for the said matters. 15. In response to the Competition Commission of India, the Petitioner has filed an reply vide Diary No. 119 dated 07.01.2022 stating that the current petition filed with the Hon'ble Tribunal is for sanction of a Scheme of Demerger and that it does not amount to a 'combination' as detailed in Section 5 of the Competition Act, 2002 or requiring the approval of the Competition Commission of India under Section 6 of the said Act. Accordingly, the Petitioners hereby undertake and state that no approval of the Competition Commission of India is required for the sanction of the present scheme of Demerger. 16. The Learned Counsel for the Income Tax Department submitted that the IT department has filed its report vide Diary No. 726 dated 23.02.2022 and submitted that in respect of M/s. Southfield Paints Limi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Scheme (Annexure-A1) is approved and we hereby declare the same to be binding on all the shareholders and creditors of the Petitioner Companies and on all concerned. While approving the Scheme, it is clarified that this order should not be construed as an order in any way granting exemption from payment of any stamp duty, taxes, or any other charges, if any, and payment in accordance with law or in respect of any permission/compliances with any other requirement which may be specifically required under any law. AND THIS TRIBUNAL DOES FURTHER ORDER; i) That all the property, rights and powers of the liquid paints division and powder coatings division of the Demerged Company shall be transferred, without further act or deed, to the Resulting Companies No. 1 & 2 and accordingly, the same shall pursuant to Sections 230-232 of the Companies. Act, 2013, be transferred to and vested in the Resulting Companies No. 1 & 2 for all the estate and interest of the Demerged Company but subject nevertheless to all charges now affecting the same; and ii) That all the liabilities and duties of the liquid paints division and powder coatings division of the Demerged Company be transferred, with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Minister National Relief Fund", within a period of four weeks from the date of receipt of certified copy of this order; and
ix) That any person interested shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary; and
x) That approval/sanctioning of the Scheme shall not be construed as an exemption from any of the provisions under the Income Tax Act, 1961 or the Companies Act, 2013,-and that the authorities under both the Acts, are at liberty to take appropriate action, in accordance with law, if so advised.
21. As per the above directions, Form No. CAA-7 of Companies (Compromise, Arrangements and Amalgamation) Rules, 2016, formal orders be issued on the Petitioner Companies on filing of the Schedule of Property i.e. (i) freehold property of the liquid paints division and powder coatings division of the Demerged Company and (ii) leasehold property of the liquid paints division and powder coatings division of the Demerged Company by way of affidavit of the Demerged Company respectively.
22. Accordingly, the C.P (CAA) No. 01/BB/2021 is disposed of.
Copy of this order be communicated to the Counsel for the Petitioner Company. X X X X Extracts X X X X X X X X Extracts X X X X
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