Trichit Limited Vs

Harnam Singh Thakur, Member (Judicial)

This is a joint second motion company petition filed by the Petitioner Companies, namely, TRICHIT LIMITED (FORMERLY KNOWN AS VASUDEVA FUELS LIMITED) (Transferor Company /Petitioner Company No.1) and MAYADEVI POLYCOT LIMITED (Transferee Company /Petitioner Company No.2) in terms of Sections 230-232 of the Companies Act, 2013 read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

The Petitioner Companies have prayed for sanctioning of the Scheme of Amalgamation between the respective companies. The said Scheme is attached as Annexure A-4 of the petition.

The first motion application was filed jointly by the Applicant Companies before this Tribunal by Company Application No. CA (CAA) No. 19/Chd/Pb/2021 which was disposed of on 04.02.2022 wherein the meetings of Equity Shareholders, Preference Shareholders, Secured Creditors And Unsecured Creditors of the Applicant Company Nos.1 and 2 were dispensed with for the reasons recorded in the aforementioned order.

The main objects, date of incorporation, authorized and paid-up share capital and the rationale of the Scheme have been discussed in detail in the order dated 04.02.2022.

In the second motion proceedings, certain directions were issued by this Tribunal by order dated 05.04.2022 and the same were complied by filing affidavit by Diary No. 00207/01 dated 20.05.2022. The notice of hearing was published in “The Tribune” (English) and “Jagbani” (Punjabi) both Punjab Edition on 26.04.2022 and the original copies of the newspapers are attached as Annexure A-3 of the aforesaid affidavit. It is also stated in the affidavit furnished by petitioner companies that copies of notices were served upon the (1) Central Government through the Regional Director (Northern Region), Ministry of Corporate Affairs; (2) Registrar of Companies, Punjab and Chandigarh; (3) Official Liquidator and (4) The Chief Commissioner of Income Tax and the jurisdictional Income Tax Department, by way of speed post. Original postal receipts along with Tracking report and acknowledgement receipts are attached as Annexure A-2 of the aforesaid affidavit.

It is deposed by the authorized signatories of petitioner companies that No objections relating to the present Scheme from any stakeholder or general public at large till date. The aforesaid affidavit has been filed vide Diary No. 00207/01 dated 20.05.2022.

In response to the abovementioned notices, the statutory authorities have furnished their responses.

7.1 Registrar of Companies (RoC)/Regional Director (RD)

7.1.1 The Regional Director (RD) has filed its report dated 27.05.2022 along with the report of the Registrar of Companies by Diary No. 169 dated 30.05.2022.

7.1.2 In para 10 of the Regional Director sets out certain observation made in Para 26 of the report of Registrar of Companies, Punjab and Chandigarh dated 24.05.2022 which is reproduced below :-

“The Authorised Capital of the Transferee Company, after that the scheme becoming effective, shall be in accordance with Section 232(3) (i) of the Companies Act, 2013. As per Section 232(3) (i) of the Companies Act, 2013, the fee, if any, paid by the Transferor Companies on its authorised capital shall be set-off against any fee payable by the Transferee Company on its authorised capital subsequent to the amalgamation.”

7.1.3 The Regional Director has also pointed out that the Transferor Company has contravened the provisions of Section 186(7) of the Companies Act, 2013 in the Financial Year 2019-20 as they have given interest-free Loans & Advances as evidenced from the Balance Sheet enclosed with the petition. As per the Balance Sheet of the Financial Year ended on 31.03.2020 under Current Assets, short-term Loans & Advances, no interest is charged upon the amount of Rs. 3,96,20,018/-. It is stated that the Transferor Company has contravened the provisions of Section 186(7) of the Companies Act, 2013, which may having a material impact upon the exchange ratio of shares as recommended in the scheme. It is prayed to modify para 13.1 of the Scheme to comply with the provisions of Section 232(3) of the Act.

7.1.4 The petitioner companies have filed reply to the report of Regional Director by diary No. 00207/5 dated 13.07.2022, wherein it is stated that the said amount of Rs. 3,96,20,018 is wrongly inferred by the Regional Director as advance/loan granted by the Company, whereas, the amount is generated due to business activities carried on with respect to "VCL Fuels Undertaking" of ‘Vasedeva commercial limited’. Accordingly, the said amount of Rs. 3,96,20,018/- was shown as an amount recoverable in the next financial year 2020-21. The computation/working of the said amount of Rs. 3,96,20,018/- showing various business transactions is attached as Annexure A-2 of diary No. 00207/5 dated 13.07.2022. It is further stated that as these transactions are not in the category of loans or advances, they do not require the charging of any interest. It is further averred that the Scheme of Arrangement (Demerger) are not against the interests of any stakeholder, including any of the members or creditors. The share Capital of the Transferor Company and the Transferee Company post amalgamation shall be set off and adjusted as per the provisions of the Companies Act, 2013 and the rules made thereunder and the Petitioner Companies undertake to pay additional applicable fees, if any. as per the provisions of the Companies Act, 2013.

7.1.5  Thus, no adverse observation can be inferred from the report of the Regional Director/Registrar of Companies.

7.2 Income Tax Department

7.2.1 The Income Tax Department filed its report by Diary Nos. 00207/3 dated 27.05.2022 with respect to Petitioner Companies wherein it has been stated that a  demand  of  Rs.  25,28,241/-  for Assessment year 2020-21 in respect of Transferor Company and Rs. 14,510/- for Assessment year 2020-21 in respect of Transferee Company. It is stated that the Income Tax Department has no objection if all the demand outstanding and liability of the Transferor Company are transferred to the Transferee Company.

7.2.2  The petitioner companies have filed response to the report of Income Tax Department vide diary No. 00207/6 dated 13.07.2022 stating that Clause 15 of the Scheme of Amalgamation takes care of transfer of tax liabilities from the Transferor Company to the Transferee Company. Clause 15 of the Scheme is reproduced below :

“15.1. Upon the Scheme coming into effect, all taxes/cess/duties paid, payable, received or receivable by or on behalf of the Transferor Company from the Appointed Date onwards including all or any refunds which includes refunds of Service Tax and any Goods and Service Tax refunds and claims or entitlements as to Minimum Alternate Tax credits, taxes paid in advance, as Minimum Alternate Tax and/or tax deducted at source, foreign tax credits including any refunds or claims pending with the revenue authorities and including the right of carry forward of accumulated losses, depreciation, Minimum Alternate Tax credits and entitlement of set-off of such losses, depreciation or Minimum Alternate Tax credits, if any, shall, for all purposes, be treated as the tax / cess / duty, liabilities or refunds, Minimum Alternate Tax paid, tax deducted at source, foreign tax credits and resulting entitlements for set-off, claims, and accumulated losses, credits and depreciation of the Transferee Company..”

7.2.3 In this context, this Tribunal is not shutting out the legitimate interest of the income-tax authorities to recover the lawful dues payable by the petitioner companies, as the scheme provides the savings in relation to the liabilities as well, the rights of the tax authorities remain intact, and they can proceed against the companies in accordance with the law, if any amount is found due and payable.

7.2.4  Thus, no adverse observation can be inferred from the report of the Income Tax Department.

7.3 Official Liquidator

7.3.1 The Official Liquidator filed its report by Diary No. 00207/2 dated 25.05.2022. The Official Liquidator in its report has reproduced the information on the incorporation of the Petitioner Companies, their capital structure, financial highlights, shareholding, etc. The Official Liquidator has also reproduced the extracts of Reports of the Statutory Auditors of the Petitioner Companies on the Financial Statements.

7.3.2  Thus, no adverse observation can be inferred from the report of Income Tax Department.

The certificate of the Statutory Auditors with respect to the Scheme between Petitioner Companies to the effect that the accounting treatment proposed in the Scheme is in compliance with applicable Indian Accounting Standards (Ind AS) as specified in Section 133 of the Act, read with rules thereunder and other Generally Accepted Accounting Principles is attached as Annexures- A-18 of the Petition.

We have heard the learned counsel for petitioner companies and learned counsel for the Income Tax Department and have perused the record carefully.

In the context of the above discussion, the Scheme contemplated between the petitioner companies, appears to be prima facie in compliance with all the requirements stipulated under the relevant Sections of the Companies Act, 2013. As the observations from the Statutory Authorities have been duly addressed by the Petitioner Companies and since all the requisite statutory compliances have been fulfilled, this Tribunal sanctions the Scheme of Amalgamation attached as Annexure- A-4 with the petition.

Notwithstanding the submission that no investigation is pending against the petitioner companies, if there is any deficiency found or, the violation committed qua any enactment, statutory rule or regulation, the sanction granted by this Tribunal will not come in the way of action being taken, albeit, in accordance with the law, against the concerned persons, directors and officials of the petitioners.

While approving the scheme as above, it is clarified 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, payment is due or required 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:

i. That all the property, rights and powers of the Transferor Company be transferred, without further act or deed, to the Transferee Company and accordingly, the same shall pursuant to Sections 230 & 232 of the Companies Act, 2013, be transferred to and vested in the Transferee Company for all the estate and interest of the Transferor Company but subject nevertheless to all charges now affecting the same; and

ii. That all the liabilities and duties of the Transferor Company be transferred, without further act or deed, to the Transferee Company and accordingly the same shall pursuant to Sections 230 to 232 of the Companies Act, 2013, be transferred to and become the liabilities and duties of the Transferee Company;

iii. All benefits, entitlements, incentives and concessions under incentive schemes and policies that the Transferor Company is entitled to include under Customs, Excise, Service Tax, VAT, Sales Tax, GST and Entry Tax and Income Tax laws, subsidy receivables from Government, grant from any governmental authorities, direct tax benefit/exemptions/deductions, shall, to the extent statutorily available and along with associated obligations, stand transferred to and be available to the Transferee Company as if the Transferee Company was originally entitled to all such benefits, entitlements, incentives and concessions;

iv. All contracts of the Transferor Company which are subsisting or having effect immediately before the Effective Date, shall stand transferred to and vested in the Transferee Company and be in full force and effect in favour of the Transferee Company and may be enforced by or against it as fully and effectually as if, instead of the Transferor Company, the Transferee Company had been a party or beneficiary or obliged thereto;

v. All the employees of the Transferor Company shall be deemed to have become the employees and the staff of the Transferee Company with effect from the Appointed Date, and shall stand transferred to the Transferee Company without any interruption of service and on the terms and conditions no less favourable than those on which they are engaged by the Transferor Company, as on the Effective Date, including in relation to the level of remuneration and contractual and statutory benefits, incentive plans, terminal benefits, gratuity plans, provident plans and any other retirement benefits;

vi. That the Appointed Date for the scheme shall be 01.04.2021 as specified in the Scheme;

vii. That the proceedings, if any, now pending by or against the Transferor Company be continued by or against the Transferee Company;

viii. That the Transferee Company shall, without further application, allot to the existing members of the Transferor Company shares of Transferee Company to which they are entitled under the said Scheme;

ix. That the fee, if any, paid by the Transferor Company on their authorized capital shall be set off against any fees payable by the Transferee Company on its authorized capital subsequent to the sanction of the ‘Scheme’;

x. That the assessment under the Income Tax Act will be in accordance with the provisions of the Section 170 (2A) of the Income Tax Act, 1961.

xi. That the Transferee Company shall file the revised memorandum and articles of association with the concerned Registrar of Companies and further make the requisite payments of the differential fee (if any) for the enhancement of authorized capital of the Transferee Company; after setting off the fees paid by the Transferor Companies;

xii. That the Petitioner Companies shall, within 30 days after the date of receipt of this order, cause a certified copy of this order to be delivered to the concerned Registrar of Companies for registration and on such certified copy being so delivered, the Transferor Company shall be dissolved without undergoing the process of winding up. The concerned Registrar of Companies shall place all documents relating to the Transferor Company registered with him on the file relating to the said Transferee Company, and the files relating to the Companies and Transferee Company shall be consolidated accordingly, as the case may be; and

xiii. That any person interested shall be at liberty to apply to this Tribunal in the above matter for any directions that may be necessary.

As per the aforesaid directions, formal orders in Form No. CAA-7 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 be issued after the filing of the Schedule of Properties within three weeks from the date of receiving a certified copy of this order by the petitioners.

All the concerned Regulatory Authorities are to act on a copy of this order annexed with the Scheme duly authenticated by the Registrar of this Bench.

The Company Petition CP (CAA) No. 8/Chd/Pb/2022 is allowed and disposed of accordingly.