TMI Blog2022 (5) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... - - Dated:- 22-4-2022 - Ajay Kumar Vatsavayi, Member (J) And Manoj Kumar Dubey, Member (T) For the Appellant : P. Sriram, PCS For the Respondents : Priyanka S. Bhat and Ganesh R. Ghale, Adv ORDER Per Manoj Kumar Dubey, Member ( Technical ) 1. This is a Second Motion Petition jointly filed by Prestige Exora Business Parks Limited (for brevity, the Petitioner Company No. 1 / Demerged Company ) and Pluto Cessna Business Parks Private Limited (for brevity, the Petitioner Company No. 2 / Resulting Company ) under Sections 230 and 232 of the Companies Act, 2013 (for short to be referred hereinafter as the 'Act') and in terms of Rule 15 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (for brevity, 'Rules') by inter alia seeking for the sanction of Scheme of Arrangement (for brevity 'Scheme') between Prestige Exora Business Parks Limited ( Demerged Company ) and Pluto Cessna Business Parks Private Limited ( Resulting Company ). The joint petition is maintainable in terms of Rule 3 (2) of the Rules. 2. The Petitioner Companies filed First Motion Application bearing CA (CAA) No. 46/BB/2021 ( First Motion Applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the Companies Act, 2013 and relevant rules framed thereunder. 6. In addition to the above public notice, each of the Petitioner Companies shall serve the notice of the Petition on the following Authorities namely, (a) Regional Director (South East Region) Ministry of Corporate Affairs, (b) Registrar of Companies, Karnataka, Bengaluru, (c) Income Tax Department, Bengaluru, Reserve Bank of India, Bengaluru along with the copy of this Petition by speed post immediately and to such other Sectoral Regulator(s) who may govern the working of the respective companies involved in the Scheme. 4. In pursuant to the aforesaid notice, the authorized signatory of the Petitioner Companies has filed copies of proof of service of notice vide diary no. 953 dated 09.03.2022 along with original copies of newspaper publication in 'Business Standard' (English), and 'Kannada Prabha' (Kannada) dated 08.03.2022 and to the aforesaid statutory authorities i.e., The Registrar of Companies, Karnataka, The Regional Director, Hyderabad, The Jurisdictional Deputy Commissioner of Income Tax (Petitioner Company 1), The Jurisdictional Deputy Commissioner of Income Tax (Petitioner Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of a listed company into another entity (Wholly Owned Subsidiary of a foreign entity) is to be given to the Hon'ble NCLT before the scheme is allowed since the interest of public at large of a listed company (Holding Company) will be adversely affect by the Demerger. b) Since the Demerged Company is Wholly Owned Subsidiary Company of public listed company, the listed company/Demerged company need to comply with all stock exchange norms and SEBI (Listing Obligations Disclosure Requirements) 2015. c) The Resulting Company was incorporated only on 22.10.2020 and the appointed date is 10.03.2021. In this regard, the Petitioner Companies need to clarify the relevance of choosing an odd date 10.03.2021 as appointed date to the Hon'ble NCLT. d) As per clause 1.1.7 of the Scheme, through the present Scheme of Demerger, the business of owing operating Exora Business Parks along with the CAM business of providing maintenance services, utility services equipment related thereto as provided in clause 1.1.5 will be Demerged into the Resulting Company. e) Under the captioned rationale behind the Demerger, it was stated that the increase knowledge, expertise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Compounding Application under section 441 read with Section 135 of the Companies Act, 2013 after transferring the remaining due amount into a fund specified in Schedule VII of the Companies Act, 2013. k) As per Note No. 14 of the financial statements as at 31.03.2021 of the Resulting Company, it has statutory dues payable to the tune of Rs. 2,62,000/-. The Resulting Company need to furnish an Affidavit to the Hon'ble NCLT to the effect that it shall pay the dues as and when claim is crystalized. l) The Demerged Company is a highly profit-making company with huge turnover; whereas Resulting Company is just incorporated. Demerger of the undertaking to the Resulting Company will have a negative impact on the net outflow of Income Tax. Hence, the petitioner Companies shall give a detailed justification to the Hon'ble NCLT in this regard. m) The Demerged Company and the Resulting Company have Related party Transactions. The Petitioner Companies may be asked to show the compliance of Section 188 of the Companies Act, 2013 along with supportive documents to confirm the transactions are on 'Arm's length basis' or file Compounding Application under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed date, which the companies can determine based on the commercial decisions. However, the Demerged Company and the Resulting Company shall continue to the close the financials as at 31 March in accordance with the Companies Act, 2013 though the effect of Demerger shall be given effect from the Appointed Date. d) In response to the observation made at para 2(e) of the RD report, the petitioner companies that the Resulting company is part of Blackstone Group, a leading real estate management firm. Although the Resulting company is newly incorporated, the group's employees and the management team has expertise in managing similar projects globally and also in India which will help in improving the business operations of Demerged Undertaking. e) In response to the observation made at para 2(f) of the RD report, the petitioner companies that as on the Appointed Date of Demerger, the Demerged Undertaking had a negative net worth. Due to this, the share exchange ratio was determined as an aggregate of 10 equity shares of Rs. 10 each to i) all the equity shareholders (class A, B C) and ii) all the class B Optionally Convertible Redeemable Preference Shareholders of the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 682.64/-. Hence the company is not falling under the ambit of section 135(1) of the Companies Act, 2013. The copies of the Annual Report (containing the AGM Notice, Directors Report, etc.) for the last three financial years is attached as Annexure - 7 of the reply. j) In response to the observation made at para 2(k) of the RD report, the statutory dues of INR 262,000 outstanding on March 31, 2021 has already been paid by the Resulting Company as of April 2021. An affidavit confirming that the dues as and when the claims are crystalised shall be paid by the Resulting Company is attached as Annexure - 5 of the reply. k) In response to the observation made at para 2(1) of the RD report, it is stated that the income from the Demerged Undertaking would be offered for income-tax by Resulting Company. Accordingly, there will not be any negative impact on the outflow of income-tax. l) In response to the observation made at para 2(m) of the RD report, the Companies have complied with the provisions of section 188 of the Companies Act, 2022. In this regard, the AoC-2 explaining the related party transactions are on arm's length basis, thereby complying with provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HER ORDER : (i) That the Petitioner Companies do, within 30 days after the date of receipt of this Order cause a certified copy of this Order to be delivered to the Registrar of Companies, Karnataka for registration and on such certified copy being so delivered, the Demerged Company shall be dissolved without undergoing the process of winding up. The concerned Registrar of Companies shall place all documents relating to the Demerged Company registered with him on the file relating to the said Resulting Company and the files relating to Demerged Company and Resulting Company shall be consolidated accordingly, as the case may be; and (ii) That the Resulting Company shall deposit an amount of Rs. 75,000/- with the Pay Accounts Office, Chennai in respect of the Regional Director, South East Region, Ministry of Corporate Affairs, Hyderabad and Rs. 25,000/- in favour of The Prime Minister's National Relief Fund, within a period of four weeks from the date of receipt of certified copy of this Order; and (iii) That any person interested shall be at liberty to apply this Tribunal in the above matter for any directions that may be necessary. (iv) The approval/sanct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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