Transferred Company Scheme Petition No. 251 of 2017, Company Scheme Petition Nos. 765 of 2016, Company Summons for Direction No. 1 of 2016, Transferred Company Scheme Petition No. 350 of 2017, Company Petition No. 28 of 2016, Company Application (Main) No. 168 of 2015, Company Application No. 3 of 2016, Company Application No. 19 of 2016, .... Case: In Re: Cairn India Limited and Ors. Vs. Company Law Board

Case Number:Transferred Company Scheme Petition No. 251 of 2017, Company Scheme Petition Nos. 765 of 2016, Company Summons for Direction No. 1 of 2016, Transferred Company Scheme Petition No. 350 of 2017, Company Petition No. 28 of 2016, Company Application (Main) No. 168 of 2015, Company Application No. 3 of 2016, Company Application No. 19 of 2016, ...
Party Name:In Re: Cairn India Limited and Ors. Vs
Counsel:For Appellant: Janak Dwarkadas, Senior Counsel, Peshwan Jehangir, Krishna Kedia, Himanshu Vidhani and Sanika Gokhale, Advocates i/b Khaitan & Co.
Judges:B.S.V. Prakash Kumar, Member (J) and V. Nallasenapathy, Member (T)
Issue:Income Tax Act, 1961 - Sections 281, 281(1), 281(B); Reserve Bank Of India Act, 1934 - Section 42
Judgement Date:March 23, 2017
Court:Company Law Board
 
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Order:

(Mumbai Bench)

  1. Heard Learned Counsels for the Parries.

  2. No objector has come before this Tribunal to oppose the Scheme and nor has any party controverted any averments made in the Petitions.

  3. The sanction of this Tribunal is sought under Sections 391 to 394 of the Companies Act, 1956 as amended and the corresponding provisions of the Companies Act, 2013 for the Scheme of Arrangement between Cairn India Limited, i.e. Transferor Company and Vedanta Limited, i.e. Transferee Company (together "Petitioner Companies") and their respective shareholders and creditors ("Scheme").

  4. The Learned Counsels for the Petitioner Companies state that the Transferor Company is presently, inter alia, engaged in the business of oil and gas exploration, development and production; and the Transferee Company is presently, inter alia, engaged in the business of metals and mining with business interests across India, Zambia, Australia, Namibia, South Africa and Ireland. The Transferee Company is a metals and mining company with business interests in copper, iron, aluminum and zinc, and is also engaged in power generation.

  5. The Learned Counsels for the Petitioner Companies state that the proposed Scheme is beneficial since, inter alia, the proposed Amalgamation is expected to achieve the following benefits: (i) consolidation and simplification of the group structure; (ii) enhanced diversification as a global natural resources player; (iii) stability and enhancement in earnings and cash flow; (iv) operational effectiveness and cost optimization; and (v) stronger balance sheet resulting in improved allocation of capital, broader access to capital markets and lower cost of capital.

  6. The Learned Counsels for the Petitioner Companies state that the Hon'ble High Court of Bombay, Goa Bench has, vide its Order dated 14th December 2016 allowed the Transferee Company's application to shift its registered office from State of Goa to State of Maharashtra. Pursuant to the said Order of the High Court of Bombay, Goa Bench, the Regional Director, Western Region, Mumbai, vide an Order dated 2nd February 2017 confirmed the shifting of registered office from Goa to Mumbai.

  7. The Petitioner Companies have approved the said Scheme by passing Board Resolutions which are annexed to the Company Scheme Petitions.

  8. The Learned Counsels for the Petitioner Companies state that, the Petitioner Companies have complied with all the directions passed in the respective Company Summons for Directions and that the respective Company Scheme Petitions have been filed in consonance with the order passed in the respective Company Summons for Directions.

  9. The Learned Counsels appearing on behalf of the Petitioner Companies further state that the Petitioner Companies have complied with all the requirements as per directions of the Hon'ble Bombay High Court and also of this Tribunal and they have filed necessary affidavits of compliance. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, if any, under the Companies Act, 1956 and 2013, and rules made thereunder, whichever is applicable. The said undertaking is accepted.

  10. The Regional Director has filed an Affidavit dated 7th February, 2017 with respect to the Transferor Company ("Affidavit dated 7th February, 2017") and an Affidavit dated 3rd February, 2017 ("Affidavit dated 3rd February, 2017") and an Additional Affidavit dated 8th February, 2017 ("Affidavit dated 8th February, 2017") with respect to the Transferee Company (all collectively referred to as the "said Affidavits") which state that save and except as provided in the objections, it appears that the Scheme is not prejudicial to the interest of shareholders and public.

  11. In the Affidavit dated 7th February, 2017, save and except as stated in paragraphs V(a) to (d), it appears that the Scheme is not prejudicial to the interest of shareholders and public.

    .................

    (a) In addition to compliance of AS-14 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 etc.,

    (b) In view of para IV supra, as the Income Tax Department has taken objection to the scheme, Hon'ble NCLT may kindly issue notice to Income Tax Department in pursuance to provisions of Section 230(5) of the Companies Act, 2013 r/w. Rule-8 of Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

    (c) The tax implication if any arising out of the scheme is subject to final decision of Income Tax Authorities. The approval of the scheme by this Hon'ble Court may not deter the Income Tax Authority to scrutinize the tax return filed by the transferee Company after giving effect to the scheme. The decision of the Income Tax Authority is binding on the petitioner Company.

    (d) Since the Transferor Company has non-resident shareholders, and propose to issue Preference Shares, the Transferee Company to comply with FEMA Regulations/RBI Guidelines as applicable.

    .................

  12. As far as the observation in paragraph V(a) of the Affidavit dated 7th February, 2017 is concerned and in view of the paragraph 16 of the Affidavit in Reply dated 11th February 2017, the Learned Counsels for the Petitioner Companies, states that the Transferee Company undertakes to comply with all applicable Accounting Standards, such as prescribed under the Companies Act, 2013. The above undertaking is accepted.

  13. As far as the observation in paragraphs V(b) of...

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