Delhi High Court
M/S Usha Breco Reality Limited vs ........... on 12 September, 2014
Author: Sanjeev Sachdeva
$~37
*IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 365/2014
IN THE MATTER OF
M/S USHA BRECO REALITY LIMITED ..... Petitioners
Through: Mr. Amit Goel, Advocate for the
Petitioner.
Mr. P.K. Mallik, Deputy
Registrar of Companies for the
Regional Director.
Mr. S.B. Gautam, the Official
Liquidator.
CORAM:
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
ORDER
% 12.09.2014
SANJEEV SACHDEVA, J (ORAL)
Co. Appl. 2025/2014 (on behalf of the Regional Director
for condonation of delay)
This is an application filed by the Regional Director
seeking condonation of delay in filing the reply.
Learned counsel for the petitioner submits that
Petitioner has no objection to the delay being condoned in
filing the reply.
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In view of the above, the delay is condoned and the
reply is taken on record.
The application is allowed.
Co. Appl. 2010/2014 (on behalf of the Official Liquidator
for condonation of delay)
This is an application filed by the Official Liquidator
seeking condonation of delay in filing the report.
Learned counsel for the petitioner submits that
petitioner has no objection to the delay being condoned in
filing the report.
In view of the above, the delay is condoned and the
report is taken on record.
The application is allowed.
CO.PET. 365/2014
1. This second motion joint petition has been filed under
sections 391 to 394 of the Companies Act, 1956
("Act") seeking sanction of the Scheme of
Amalgamation ("Scheme") of Usha Breco Realty
Limited (hereinafter referred to as Transferor
Company) with Usha Breco Limited (hereinafter
referred to as Transferee Company) (hereafter
collectively referred to as Petitioner Companies). A
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copy of the Scheme has been enclosed with the
Petition.
2. The registered offices of the Petitioner Companies are
situated at New Delhi, within the jurisdiction of this
Court.
3. The details of the respective dates of incorporation of
the Petitioner Companies, their authorized, issued,
subscribed and paid-up capital have been given in the
Petition.
4. The copies of the Memorandum and Articles of
Association as well as Annual Accounts along with the
audited Balance Sheets for the year ended 31 st March
2013 have also been enclosed with the Petition.
5. The copies of Resolutions passed by the Board of
Director of the Petitioner Companies approving the
Scheme of Amalgamation have also been filed along
with the Petition.
6. Learned counsel for the Petitioner Companies
submitted that no proceedings under sections 235 to
251 of the Act are pending against the Petitioner
Companies.
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7. The Petitioner Companies had earlier filed C.A. (M)
No. 59 of 2014 seeking directions of this Court for
dispensation/convening of meetings. Vide order dated
3rd April 2014, this Court allowed the application and
dispensed with the requirement of convening meeting
of shareholders of Transferor Company and directions
were given for convening of meeting of Unsecured
Creditors of the Transferor Company and the
Shareholders, Secured Creditors and Unsecured
Creditors of the Transferee Company. The Transferor
Company had no Secured Creditors. From the report of
the Chairperson at the above said meetings it is
apparent that the Scheme was approved unanimously
by the Unsecured Creditors of the Transferor Company,
Shareholders and Unsecured Creditors of Transferee
Company. The Chairperson of the meeting of the
Secured Creditors of Transferee Company has reported
that all the secured creditors of the Transferee
Company had been paid off by the Transferee
Company before the date of the meeting and therefore
as on the date of meeting, the Transferee Company had
no secured creditors.
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8. The Petitioner Companies had thereafter filed the
present Petition seeking sanction to the Scheme of
Amalgamation. By Order dated 29 th May 2014, notice
of the Petition was directed to be issued to the Regional
Director, Northern Region, Ministry of Corporate
Affairs and the Official Liquidator attached with this
Court. Citations were also directed to be published in
"Business Standard" (English, Delhi Edition) and
"Jansatta" (Hindi, Delhi Edition). An Affidavit of
Publication has been filed by the Transferee Company
showing compliance regarding publication of Citations
in the aforesaid newspapers. Copies of the newspaper
cuttings, in original, containing the publications have
also been filed along with the affidavit of publication.
9. In response to the notice issued, the Official Liquidator
sought information from the Petitioner Companies.
Based on the information received, learned Official
Liquidator has filed his report dated 5 th September
2014, wherein he has stated that he has not received
any complaint against the proposed Scheme
from any person/ party interested in the Scheme in any
manner and that the affairs of the Transferor Company
do not appear to have been conducted in a
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manner prejudicial to the interest of its members,
creditors or to public interest as per the 2 nd proviso of
Section 394(1) of the Act.
10. In response to the notice issued in the Petition,
the Regional Director, Northern Region, Ministry of
Corporate Affairs has filed his Affidavit dated 5 th
September 2014. Relying on 7.1 of Part-B of the
Scheme of Amalgamation, he has stated that all the
employees of the Transferor Company shall become the
employees of the Transferee Company without any
break or interruption in their services upon sanctioning
of the Scheme of Amalgamation by the Court.
11. Further, the learned Regional Director in Para 4 of his
Affidavit submits that the Income Tax Officer (Hq.),
CIT-VI, New Delhi vide its Letter dated 12.08.2014
has forwarded the comments of Deputy Commissioner
of Income Tax, Circle 18(1), New Delhi. They have
stated that the consideration of Amalgamation is prima
facie not reasonable as the Transferor Company is
continuously in losses for a period of continuous 7
financial years. The purpose of Amalgamation seems to
be set off losses of the Transferor Company with the
profit of Transferee Company. Further, it has been
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stated in para 3 of the letter that on behalf of the
Income Tax Department that approval of
Amalgamation must be subject to the following:
"(i) The Income Tax Department must be
permitted to retain its recourse for recovery
of any existing or future tax liabilities of the
Transferor Company or the Transferee
Company, in respect of the assets sought to
be transferred under the proposed Scheme,
and this protection must be made explicit by
this court in its final order and has to bind
all the parties to the Scheme, particularly
the Transferor and Transferee Companies.
There should be no limitation on the powers
of the Income Tax Department for recovery,
including imposition of penalties, etc.
(ii) That without prejudice to the above the
approval of the Scheme, should in no
manner affect the tax treatments of the
transactions under the Income Tax Act,
1961 or any other applicable taxing statute,
nor would sanction of the Scheme or the
effect thereof serve as a defence for the
Companies concerned against tax treatment
under the abovementioned statutes."
12. Learned Counsel for the Petitioners submits that the
Petitioner Companies do not have any objection if the
Scheme is approved subject to the conditions
mentioned by the Regional Director in its Affidavit.
Mr. Rakesh Sharma, Director of Transferor as well as
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Transferee Company has filed separate undertakings
dated 10 th September 2014 both on behalf Transferor
and Transferee Company to the effect that they do not
have any objection if the Scheme of Amalgamation of
the Petitioner No. 1 with Petitioner No. 2 is approved
subject to the conditions mentioned in para 4 of the
Affidavit filed by the Regional Director, Northern
Region, Ministry of Corporate Affairs.
13. It is thus directed that the Income Tax Department is
permitted to retain its recourse for recovery of any
existing or future tax liabilities of the Transferor
Company or the Transferee Company, in respect of the
assets sought to be transferred under the proposed
Scheme irrespective of the sanction of the scheme. The
sanction of the scheme would not affect the powers of
the Income Tax Department for recovery, including
imposition of penalties, etc. as permissible under law.
14. It is clarified that the approval of the Scheme, would in
no manner affect the tax treatments of the transactions
under the Income Tax Act, 1961 or any other
applicable taxing statute, nor would the sanction of the
Scheme serve as a defence for the petitioners against
tax treatment under the abovementioned statutes.
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15. In view of the aforesaid undertaking given by the
Petitioners, the concern of the Regional Director has
been duly addressed.
16. No objection has been received to the Scheme from any
other party. Mr. Rakesh Sharma, Director of Transferee
Company has filed an affidavit dated 3 rd September
2014 confirming that neither the Petitioner Companies
nor their Counsel have received any objection pursuant
to the citations published in the newspapers.
17. In view of the approval accorded by the Shareholders
and Creditors of the Petitioner Companies;
representations/reports filed by the Regional Director,
Northern Region and the Official Liquidator, attached
with this Court to the proposed Scheme of
Amalgamation, there appears to be no impediment to
the grant of sanction to the Scheme of Amalgamation.
Consequently sanction is hereby granted to the Scheme
of Amalgamation under Section 391 and 394 of the
Companies Act, 1956. The Petitioner Companies
will comply with the statutory requirements in
accordance with law.
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18. Certified copy of the order will be filed with the
Registrar of Companies within 30 days from the date of
receipt of the same. In terms of the provisions of
Sections 391 and 394 of the Act, and in terms of the
Scheme the whole of the undertaking, the properties,
rights and powers of the Transferor Companies be
transferred to and vest in the Transferee Company
without any further act or deed. Similarly, in terms of
the Scheme, all the liabilities and duties of the
Transferor Companies be transferred to the Transferee
Company without any further act or deed. Upon the
Scheme coming into effect, the Transferor Companies
shall stand dissolved without following the process of
winding up.
19. It is, however, clarified that this order will not be
construed as an order granting exemption from
payment of stamp duty or taxes or any other charges, if
payable in accordance with any law; or permission/
compliance with any other department which may be
specifically required under any law.
20. Learned counsel for the Petitioner Companies states
that the Petitioner Companies (Collectively) would
voluntarily deposit a sum of Rs. 50,000/- with the
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Common Pool Fund of the Official Liquidator within
three weeks from today. The said statement is accepted.
21. The Petition is allowed in the above terms.
Order Dasti.
SANJEEV SACHDEVA, J
SEPTEMBER 12, 2014
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