1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.159 OF 2008 CONNECTED WITH COMPANY APPLICATION NO.1288 OF 2007 In the matter of the Companies Act, I of 1956 AND In the matter of Sections 391 and 394 of the Companies Act, I of 1956 AND In the matter of Scheme of Arrangement between Standard Distilleries & Breweries Private Limited and Pitambari Properties Private Limited and their respective shareholders Standard Distilleries & Breweries P.Ltd. ..Petitioner WITH COMPANY PETITION NO.160 OF 2008 CONNECTED WITH COMPANY APPLICATION NO.1289 OF 2007 Pitambari Properties P.Ltd. ..Petitioner CORAM : S.C.DHARMADHIKARI, J CORAM : S.C.DHARMADHIKARI, J CORAM : S.C.DHARMADHIKARI, J DATED : 6TH JUNE, 2008 DATED : 6TH JUNE, 2008 DATED : 6TH JUNE, 2008 Mr.Janak Dwarkadas, Senior Advocate a/w Mr.Zal Andhyarujina and Mr.Rajesh Shah for the petitioner 2 Mr.Bharadwaj a/w Mr.C.J.Joy for the Regional Director P.C.: 1. Heard Mr.Dwarkadas, Senior Counsel for the petitioner and Mr.Joy for the Regional Director. The presence of the Official Liquidator is not necessary. 2. This petition is under section 391 to 394 of the Companies Act, 1956. The request is to sanction the scheme of arrangement between the petitioner company and one Lalita Properties P.Ltd. and their respective shareholders. 3. The petitioner has stated in the petition that it is carrying on business in the investments. The objects and the financial position are disclosed. The petitioner company / Transferor Company / Demerged Company is also carrying on business of manufacture and distribution of Indian made foreign liquor. The transferee Company is incorporated on 05.11.07. Its objects are set out. 4. It has been stated in para 12 of the 3 petition that the management is of the opinion that the petitioner and the resulting company are all part of the same group, under same management having common shareholders. The management of the transferor company intends to segregate the real estate and the management of the transferee company. The transferor company / Resulting company intends to take over the real estate hence the transferor company / demerged company is interested to demerge and transfer the flat at NCPA Apartments to the Transferee company. The meeting held on 19.11.07 of the Board of Directors resolved that subject to the sanction of the appropriate court and subject to laws, permission of the Central Government and other authorities that may be necessary, the scheme be sanctioned. 5. The salient features of the scheme are set out alongwith copy thereof being annexed. All declarations have been made. The same are set out on oath. Thus, it is stated that all statutory compliances have been made. The Regional Director is the only authority concerned with this petition and he has filed an affidavit. Upon scrutiny and 4 verification of the scheme, the affidavit discloses that the flats at NCPA apartments shall be transferred and vested in the resultant company. Therefore, after the scheme of arrangement is sanctioned by this court, an advantage would be taken of the same to avoid payment of Taxes. The effect thereof and the orders of the court is to avoid capital gains and Income tax by the petitioner company. Therefore, the petitioner company be directed to comply with the provisions of applicable tax laws and pay the tax and dues on the transfer of the property. The other compliance sought is in respect of filing of necessary forms with the Registrar of Companies after payment of stamp duty and ROC fees. 6. Mr.Dwarkadas after taking instruction makes a statement that all necessary forms, with regard to compliance of section 94/97 read with Schedule X of Companies Act, 1956 would be filed in with the concerned authority and all charges in that behalf so also the fees would be paid. As far as objection of likelihood of avoidance of capital gains and income tax is concerned, Mr.Dwarkadas’s 5 submission is that the court cannot proceed on the basis that there is tax avoidance straightaway. The Regional Director’s affidavit expresses an apprehension. All that is sought is a statement from the petitioner that the petitioner must comply with the provisions of applicable tax laws by paying applicable taxes/duties regarding the transaction and the scheme in question. Therefore, he submits that as and when the authorities who are implementing the provisions of relevant tax laws raise any query or objection so also wish to scrutinise the transaction the petitioner will take such steps as are permissible in law, at that stage. Today, the court should not proceed and record any statement or undertaking as that would prejudice the petitioners. 7. Mr.Joy, on the other hand submits that the scheme envisages transfer and the moment there is a transfer of a property and vesting in the resultant company, then, tax laws become applicable. 8. In my view, in the limited Jurisdiction that I am exercising, I cannot straightaway proceed 6 on the basis that the laws pertaining to capital gains and income tax would be attracted of applicable to the scheme. If the scheme is not prejudicial to the interest of the creditors, shareholders and general public as stated by the Regional Director then, the Sanction cannot be refused. It is true that R.D.’s statement is conditional. In my view, all that can be observed, at this stage is that the order passed by this court sanctioning the scheme does not in any way prevent the Authorities who are implementing the relevant tax laws from taking such steps as are permissible under the tax laws with regard to the scrutiny of the Transaction or scheme in question, if it involves any tax liability. 9. With this clarification, the interest of both the sides is protected. Save and except this, and other compliances noted above, the scheme is not opposed. In the light of the clarification issued above and the statements recorded, I do not see any impediment in this court sanctioning the scheme. Company Petition succeeds. It is made absolute in terms of prayer clause (a) to (j). 7 Cost of Rs.5,000/- be paid to the Regional Director. The cost to be paid within four weeks from today. (S.C.DHARMADHIKARI,J.) (S.C.DHARMADHIKARI,J.) (S.C.DHARMADHIKARI,J.)