AI Structured Summary
Not yet generated for this judgment
Judgment
P.S.N. Prasad, J
This Joint petition has been filed by the Petitioner Companies under Sections 230 to 232 of the Companies Act, 2013 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the National Company Law Tribunal Rules, 2016, for the purpose of the approval of the Scheme of Arrangement outlining the Demerger of Retail Trading Business (Demerged Undertaking) of Demerged Company into Resulting Company. The copy of the Scheme has been placed on record.
The "Demerged Company", Carlton Overseas Private Limited is a company incorporated on April 19, 1993 under the Companies Act, 1956 having its registered office at J-5, 3rd Floor, Saket, New Delhi -110017.
The "Resulting Company", Carlton Retail Private Limited is a company incorporated on October 23, 2018 under the Companies Act, 2013, having its registered office at J-5, Barsati Floor Road, J-1/20, Saket, Near Gurudwara, New Delhi - 110017.
A perusal of the Petition discloses that First Motion Application seeking direction for dispensation with the requirement of convening meeting of equity shareholders, secured creditors and unsecured creditors of the Petitioner Companies was filed before the NCLT, Delhi Bench vide Company Application No. CA(CAA) No. 155 (ND) 2019 and based on such joint application moved under Section 230-232 of the Companies Act, 2013, the meetings of shareholders and creditors of the Petitioner Companies were dispensed with vide order dated November 26, 2019 by NCLT, Delhi Bench. The Petitioner Companies were also directed vide order dated November 26, 2019 to serve notice of Company Application No. CA (CAA) No. 155(ND)/2019 upon the Regional Director, Registrar of Companies, Official Liquidator and Income-Tax authorities.
The Petitioner Companies were directed vide second motion admission order dated December 20,2019, to carry out publication in the newspaper one in English and other in Vernacular having vide circulation in the area where the registered office of the Petitioner Companies are situated. In addition to the public notice, notices were directed to be served on to the Regional Director, Registrar of Companies and Income-Tax authorities.
It is seen from the records that the Petitioners have filed an affidavit on January 16, 2020, affirming compliance of the order passed by the Tribunal dated December 20, 2019. A perusal of the affidavit discloses that the Petitioners have affected the newspaper publication as directed in English Daily 'Business Standard' as well as in Hindi Daily 'Jansatta' on January 08, 2020 in relation to the date of hearing of the petition. Further, the copies of petition have been duly served to the Regional Director, Registrar of Companies and Income-Tax authorities in compliance of the order and in proof of service has also been placed on record.
The Regional Director (Northern Region) has filed its representation dated February 10, 2020 in which it is submitted that basis report from Registrar of Companies, no prosecution has been filed nor any inspection or investigation has been conducted in respect of Petitioner Companies.
No objections were raised by the Regional Director (North Region) during hearing on 08/05/2020. It is accordingly seen that no objection has been raised by the Regional Director (Northern Region) in respect of the Scheme.
The Income Tax Department has submitted its report in which it has been submitted that the assessment is pending for the A.Y. 2018-19. Penalty proceeding is pending for AY 2017-18.
Certificates of respective Statutory auditors of the Petitioner Companies have been placed on record to the effect that Accounting Treatment proposed in the Scheme of Arrangement is in conformity with the Accounting Standard notified by the Central Government as specified under the provisions of Section 133 of the Companies Act, 2013.
It has been also affirmed by the Petitioner Companies that the Scheme is in interest of the Petitioner Companies, their shareholders, creditors, employees and all concerned stakeholders.
In view of the foregoing, upon considering the consent accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavit filed by the Ld. Regional Director, Northern Region, Ministry of Corporate Affairs, there appears to be no impediment in sanctioning the present Scheme.
It has further submitted by the Ld Counsel of the Petitioner Companies that pursuant to newspaper publications as aforesaid, neither the Petitioner Companies nor the advocates have received any objection to the said Scheme.
Consequently, sanction is hereby accorded to the Scheme under Section 230 to 232 of the Companies Act, 2013.
The shareholders of the applicant companies are the best Judges of their interest, fully conversant with market trends, and therefore, their decision should not be interfered with by Tribunal for the reason that it is not a part of judicial function to examine entrepreneurial activities and their commercial decisions. It is well settled that the Tribunal evaluating the Scheme of which sanction is sought under Section 230-232 of the Companies Act of 2013 will not ordinarily interfere with the corporate decisions of companies approved by shareholders and creditors.
In the case of Hindustan Lever Employees Union V. Hindustan Lever Limited (1995) 5 SCC 491 the three judges Bench of Hon'ble Supreme Court held that:
'A company court does not exercise appellate jurisdiction over a scheme and its jurisdiction is limited to ascertaining fairness, justness and reasonableness of the Scheme and to ensure that neither any law has been violated or public interest compromised in the process.'
Right to apply for the sanction of the Scheme has been statutorily provided under Section 230-234 of the Companies Act, 2013 and therefore, it is open to the applicant companies to avail the benefits extended by statutory provisions and the Rules.
The Petitioners shall however remain bound to comply with the statutory requirements in accordance with law.
Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the Scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the Petitioners.
While approving the Scheme as above, we further clarify that this order should not be construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges, if any, and payment in accordance with law or in respect to any permission/compliance with any other requirement which may be specifically required under any law.
THIS TRIBUNAL DO FURTHER ORDER
That all the property, rights, interests and powers of the Demerged Undertaking be transferred without further act or deed to the Resulting Company and accordingly the same shall pursuant to Section 230- 232 of the Companies Act 2013 be transferred to and vest in the Resulting Company.
That all the liabilities and duties of the Demerged Undertaking be transferred without further act or deed (to the Resulting Company and accordingly the same shall be in pursuant to Section 230-232 of the Companies Act 2013 and become the liabilities and duties of the Resulting Company; and
That all proceedings now pending by or against the Demerged Undertaking be continued by or against the Resulting Company.
That all the employees of the Demerged Undertaking in service, on the date immediately preceding the date on which the Scheme takes effect, i.e. the Effective Date shall become the employees of the Resulting Company on such date without any break or interruption in service and upon terms and condition not less favorable than those subsisting in the Demerged Company on the said date.
With the issue and allotment of the New Equity Shares by the Resulting Company to the equity shareholders of Demerged Company in accordance with clauses 16 of the Scheme, the existing issued and paid up equity share capital held by existing shareholders in the Resulting Company shall, without any further application, act, instrument or deed, be cancelled.
That Petitioner Companies shall within thirty days of the date of the receipt of this order cause a certified copy of this order to be delivered to the Registrar of Company for registration and on such certified copy being so delivered the Registrar of Companies shall place all documents relating the Demerged Undertaking of Demerged Company registered on the file kept by him in relation to the Resulting Company.
That any person interested shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary
The petition stands disposed of in the above terms.
Let copy of the order be served to the Parties.