AI Structured Summary
Not yet generated for this judgment
Judgment
Sr.
No. &
Para
No.","RD’s Report / Observation 3 rd
December, 2020",Response of Petitioner Companies
(a),"In addition to compliance of
AS14(IND AS-103) the Transferee
Company shall pass such
accounting entries which are
necessary in connection with the
Scheme to comply with other
applicable Accounting Standards
such as AS-5 (IND AS-8) etc","In so far as the observations made in
paragraph IV(a) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that the Petitioner Companies shall pass
such accounting entries as may be
necessary in connection with the Scheme to
comply with the accounting standard AS-14
(IND AS 103 is not applicable to Petitioner
Companies) and any other applicable
accounting standards such as AS-5 (IND
AS -8 is not applicable to Petitioner
Companies) to the extent applicable.
(b),"As per Part - I Definitions Clause 1
(1.2 & 1.5 & 1.11) of the Scheme.
Appointed Date"" means the 1 st
April, 2019.
Effective Date"" means the last of
the dates on which the conditions
specified in Clause 16 are complied
with. Any references in this Scheme
to the date of “coming into effect
of this scheme†or
“effectiveness of the schemeâ€
or “scheme taking effect†shall
mean the Effective Date.
“Record Date†shall mean the
date to be fixed by the Board of
Directors of the Resulting Company
for the purpose of issue of
Preference Shares of the Resulting
Company to the Equity shareholders
of the Demerged Company
In this regard, it is submitted that
Section 232(6) of the Companies
Act, 2013 states that the Scheme
under this section shall clearly
indicate an appointed date from
which it shall be effective and the
Scheme shall be deemed to be
effective from such date and not at
a date subsequent to the appointed
date. However, this aspect may be
decided by the Hon’ble
Tribunal taking into account its
inherent powers.
Further, the Petitioners may be
asked to comply with the
requirements and clarified vide
circular no. F. No. 7/12/2019/CL1
dated 21.08.2019 issued by the
Ministry of Corporate Affairs.","In so far as the observations made in
paragraph IV(b) of the Report of Regional
Director is concerned, the Petitioner
Companies submit that the Appointed Date
i.e. 1 st April, 2019 has been clearly
indicated in the Scheme in accordance with
provision of Section 232(6) of the
Companies Act, 2013 and the scheme shall
become effective from the Appointed Date.
The Petitioner Companies further submit
that they have already complied with the
requirements and clarification of circular
no. F. No. 7/12/2019/CL-I dated 21.08.2019
issued by the Ministry of Corporate Affairs
by clearly specifying the Appointed Date in
the Scheme and hence the question of
undertaking for compliance to the
requirements of the said circular does not
arise.
(c),"The Hon’ble Tribunal may
kindly seek the undertaking that
this Scheme is approved by the
requisite majority of members and
creditors as per Section 230(6) of
the Act in meetings duly held in
terms of Section 230(1) read with
subsection (3) to (5) of Section 230
of the Act and the Minutes thereof
are duly placed before the Tribunal.","In so far as the observations made in
paragraph IV(c) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that by the Order delivered on 17th July
2020 passed in C.A. (CAA) 1022/MB-
I/2020, the requirement to convene meeting
of the Equity Shareholders and the Secured
and Unsecured Creditors of the Petitioner
Companies was dispensed with by this
Tribunal.
(d),"Hon’ble NCLT may kindly direct
the petitioners to file an affidavit to
the extent that the Scheme enclosed
to Company Application &
Company Petition, are one and
same and there is no discrepancy /
any change/ changes are made, for
changes if any, liberty be given to
Central Government to file further
report if any required.","In so far as the observations made in
paragraph IV(d) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that the Scheme enclosed to the Company
Application and the Scheme enclosed to the
Company Petition are one & same and
there is no discrepancy / change in the
Scheme.
(e),"The Petitioners under provisions of
section 230(5) of the Companies
Act, 2013 have to serve notices to
concerned authorities which are
likely to be affected by
Amalgamation. Further, the
approval of the scheme by this
Hon’ble Tribunal may not deter
such authorities to deal with any of
the issues arising after giving effect
to the scheme. The decision of such
Authorities is binding on the
Petitioner Company(s).","In so far as the observations made in
paragraph IV(e) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that the Petitioners have served the notices
under section 230(5) of the Companies Act,
2013 to:
i. Central Government through the office of
Regional Director, Western Region,
Mumbai;
ii.Registrar of Companies, Mumbai;
iii.Concerned Income Tax authority;
on 24th and 25th July 2020. Further, the
Petitioner Companies have also filed a
compliance report with this Tribunal
submitting the proofs of serving the notices
to aforementioned regulatory authorities.
Further, the approval of the Scheme by this
Tribunal may not deter any such authorities
to deal with any of the issues arising after
giving effect to the scheme and the
Petitioner Companies submit that any issues
arising out of the Scheme will be met and
answered in accordance with the law.
(f),"The Petitioner Companies be
directed to place on record of this
Tribunal the list of assets to be
demerged with complete details its
respective valuation","In so far as observations made in paragraph
IV(f) of the Report of Regional Director is
concerned, the Petitioner Companies
through their Counsel submit that list of
assets and liabilities (with complete details
and respective valuation) to be demerged is
submitted with the Office of Registrar of
Companies, Mumbai and is hereby placed
on record of this Tribunal:
(Amount in INR)
Particulars Water Infrastructure
Business Undertaking
I. Liabilities
(1) Non - current Liabilities:
(a) Other Long-Term Liabilities
(9,60,74,907)
(2) Current Liabilities:
(a) Trade Payables 5,52,27,893
(b) Short Term Provisions 9,84,99,025
Total Liabilities 5,76,52,012
II. Assets
(1) Non â€" current Assets:
(a) Non â€" current Investments
12,10,51,000
(b) Long Term Loans & Advances
76,72,349
(2) Current Assets:
(a) Inventory 6,93,07,610
(b) Trade Receivables 15,50,59,515
(c) Cash & Cash Equivalents 43,21,107
(d) Short-Term Loans &
Advances 2,97,95,636
Total Assets 38,72,07,217
(g),"As regards Part-II-Clause 9(9.1.1)
of the Scheme, (Accounting
Treatment in the books of VEPL or
Resulting Company), the Scheme
provide that the scheme is in
compliance of Section 2(19AA) of
the Income Tax Act, 1961. In this
regard it is submitted that to be
eligible for Section 2(19AA)
compliance, the Demerged
Company and the Resulting
Company shall have the same set of
shareholders in same ratio. In the
instant scheme, the Resulting
Company has different
Shareholders (including one
corporate shareholder). Then how
the scheme shall be in compliance
of the section 2(19AA). The
Petitioner Company be directed to
place on record full facts in the
matter.","In so far as the observations made in
paragraph IV(g) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that the Petitioner Companies have served
the notices under section 230(5) of the
Companies Act, 2013 to concerned
Income-tax authorities on 24th July 2020
and 25th July 2020. Further, the Petitioner
Companies have also filed a compliance
report with this Tribunal submitting the
proofs of serving the notices to concerned
Income-tax authorities. Further, the
approval of the Scheme by this Tribunal
may not deter Income-tax authorities to
deal with Income-tax related issues arising
after giving effect to the Scheme and the
Petitioner Companies submit that any
Income-tax related issues arising out of the
Scheme will be met and answered during
the course of regular Income-tax
assessment in accordance with the
provisions of the Income-tax Act, 1961.
(h),"As regards Part-II-Clause 9(9.1.4)
of the Scheme, (Accounting
Treatment in the books of VEPL or
Resulting Company), it is provided
that the excess of the Net Assets
value of the subject undertaking to
be demerged shall be accounted as
General Reserves in the books of
Resulting company. In this regard it
is stated that such excess should be
treated as reserves arising out of
Demerger and shall not be
available for declaration of
dividend.","In so far as the observations made in
paragraph IV(h) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that Part-II-Clause 9(9.1.4) of the Scheme
provides that “the difference being the
excess of the Net Assets Value (i.e.
excess of value of assets over the value
of liabilities set forth in the closing
balance sheet of VIL as on the close of
business hours on the date immediately
preceding the Appointed Date) of the
Water Infrastructure Undertaking,
transferred to and recorded by VEPL
over the face value of Preference Shares
issued as per Clause 7.1 above, after
considering the adjustments mentioned
in Clause 9.1.3 above, if surplus, shall
be credited to General Reserve Account
of VEPL.â€
The Petitioner Companies through their
Counsel submit that, pursuant to aforesaid
clause, General Reserve (if any) to be
recorded in the books of Resulting
Company shall not available / utilized for
declaration of dividend.
(i),"As regards Part-II-Clause 9(9.1.5)
of the Scheme, (Accounting
Treatment in the books of VEPL or
Resulting Company), it is stated that
subsequent to issue Preference
Shares by Resulting Company to the
equity shareholders of Demerged
Company the equity shares held by
the VIL (Demerged) Company in
VEPL (Resulting) Company shall
stand called. This clause is not
convincing since, the Resulting
Company is already paying the
consideration part by way of
Preference shares. There is no logic
to cancel the equity shares (above
51%) held in the subsidiary
company by the Demerged
Company. This clause is against the
interest of Shareholders. The
Petitioner Company be directed to
place on record full facts of the
matter","In so far as the observations made in
paragraph IV(i) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that the Scheme provides for Demerger of
Water Infrastructure Business Undertaking
of the Demerged Company (VIL) into the
Resulting Company (VEPL). Water
Infrastructure Business Undertaking is
defined under Part-I- Clause 1 (1.17) of the
Scheme which includes: (i) infrastructure
development projects related to Water &
Waste Water carried out by the Demerged
Company (VIL); (ii) Demerged
Company’s (VIL’s) 51% equity
investment in the Resulting Company
(VEPL); and (iii) the Demerged
Company’s (VIL’s) investment in
preference shares of Vishvaraj Waste
Water Management Private Limited.
Since the Demerged Company’s
(VIL’) 51% equity investment in
Resulting Company (VEPL) is getting
transferred (as a part of Water
Infrastructure Business Undertaking) upon
Demerger to the Resulting Company itself,
the Scheme provides for cancellation of
such equity investment.
Further, Learned Counsel for the Petitioner
Companies submits that as on date there
are 7 (Seven) equity shareholders in the
Demerged Company and 4 (Four) equity
shareholders in the Resulting Company.
Learned Counsel of the Petitioner
Companies further submits that Petitioner
Companies have obtained Consent
Affidavits from all the Equity Shareholders
of the Demerged Company as well as the
Resulting Company. The Consent
Affidavits of the Equity Shareholders of the
Demerged Company are annexed as
Annexures G1 to G7 to the Company
Petition (page no. 207 to 231). The Consent
Affidavits of the Equity Shareholders of the
Resulting Company are annexed as
Annexures H1 to H4 to the Company
Petition (page no. 232 to 243).
(j),"As regards Part II-Clause 10(10.1
to 10.4 of the Scheme (Increase of
authorized share capital of VEPL),
and fee payable by the Petitioner
Company shall be in accordance
with the provisions of Section
232(3)(i) of the Companies Act,
2013, or other applicable
provisions of the Act.","In so far as observations made in paragraph
IV(j) of the Report of Regional Director are
concerned, the Petitioner Companies submit
that as per Clause 10 of the Scheme the
increase in its authorized share capital
pursuant to the Scheme becoming effective
shall be done by filing of the respective e-
forms with Registrar of Companies along
with the copy of this Order and the Scheme
and payment of the necessary fees as per
Section 232(3)(i) of the Companies Act,
2013, or other applicable provisions of the
Act.
(k),"In view of the observation raised by
the ROC Mumbai, mentioned at
para 22 above Hon’ble NCLT
may pass appropriate orders/ order
as deem fit
ROC Mumbai vide report/letter No.
ROC/ST A(S)/ 186950/ 230-
232/1249 dated 05-11-2020 has
mentioned that No investigation,
inspection, inquiry proceedings, No
Complaint Prosecution.
Observation of the ROC, Mumbai is
as under:-
As per the financial statement as
at 31-03-2019, the company has
huge liabilities in term of
borrowings and payable.
Interest of the creditors should be
protected.
May be directed on its merit","In so far as the observations made in
paragraph IV(k) of the Report of Regional
Director is concerned, the Petitioner
Companies through their Counsel submit
that there is no Compromise or
Arrangement with any of the Creditors of
the Petitioner Companies and no sacrifice is
called for In view of the fact that the
present Scheme is an arrangement between
the Applicant Companies and their
respective shareholders as contemplated
under section 230(1)(b) and not in
accordance with the provisions of section
230(1)(a) of the Companies Act, 2013; and
there is no Compromise or Arrangement
with any of the Creditors, by the Order
delivered on 17th July 2020 passed in C.A.
(CAA) 1022/MB-I/2020, the requirement to
convene meeting of the Secured and
Unsecured Creditors of the Petitioner
Companies was dispensed with by this
Tribunal. However, the Petitioner
Companies were directed to issue notice to
all its Creditors to whom the amounts are
due and payable by R.P.A.D./Speed
Post/E-mail with a direction that they may
submit their representations, if any, within a
period of thirty (30) days from the date of
receipt of such notice to the Tribunal and
copy of such representations shall
simultaneously be served upon the
Petitioner Companies.
As directed by this Tribunal, Petitioner
Companies have duly served notice to all its
Creditors (Secured as well as Unsecured).
Further, the Petitioner Companies have also
filed an affidavits with this Tribunal
submitting the proofs of serving the notices
to aforesaid Secured and Unsecured
Creditors which are annexed as Annexures
J1 to J2 to the Company Petition (page no.
250 to 386).
The Petitioner Companies through their
Counsel submit that till date no
representations / objections have been
received by the Petitioner Companies from
any of the aforesaid Secured and
Unsecured Creditors of the Petitioner
Companies.
iv. The Petitioner Companies shall comply with all the undertakings given by them.,,
v. All concerned shall to act on a copy of this Order along with Scheme duly authenticated by the Registrar of this Tribunal.,,
vi. The Petitioner Companies are directed to issue newspaper publications with respect to approval of the Scheme, in the same newspapers in which",,
previous publications were issued.,,
vii. The Petitioner Companies shall take all consequential and statutory steps required under the provisions of the Act in pursuance of the Scheme.,,
viii. Any person interested in the above matter shall be at liberty to apply to the Tribunal for any directions that may be necessary.,,
ORDER,,
The matter is taken up on VC. Heard Mr. Hemant Sethi Ld. Counsel and Ms. Rupa Sutar, Dy. Director from the office of RD (WR), Mumbai. The",,
Company Petition allowed, vide separate order.",,