R. Sudhakar, J. (President)

1. This CP(CAA)/63/CHE/2022 is a joint Company Petition filed by the Petitioner Company viz. LTIDPL INDVIT SERVICES LIMITED and WATRAK INFRASTRUCTURE PRIVATE LIMITED for the purpose of the approval of the Scheme of Arrangement, (Demerger) (hereinafter referred to as the 'SCHEME') as contemplated between the Petitioner Companies.) under Section 230 to 232 and other applicable provisions of the Companies Act, 2013 (for brevity 'the Act') read with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 (for brevity 'the Rules') pursuant to the Scheme proposed between the Petitioner Companies and the said Scheme is also annexed at Annexure A1' of the typed set filed along with the Petition.

2. The Registered office address of the Demerged Company is situated at Chennai, Tamil Nadu and falls within the jurisdiction of NCLT Chennai Bench. The Demerged Company had filed a company application bearing CA(CAA)15 & 17/(CHE)/2022 before the NCLT, Chennai Bench and directions were issued vide order dated 01.06.2022.

3. 1ST MOTION APPLICATION - IN BRIEF

3.1. The Petitioner Company had filed its First Motion Application vide CA/(CAA)/15 & 17(CHE)/2022 seeking directions for dispensation of meeting of the Equity Shareholders and Unsecured Creditors of the Demerged Company of the Petitioner Companies. Further it was represented that the there was 'NIL' secured creditors in the Petitioner Companies. Subsequent to the said order, the Petitioner Company has filed the present Petition before this Tribunal on 13.06.2022 for sanction of the Scheme of Arrangement by this Tribunal.

3.2. Based on such application moved under Sections 230-232 of the Companies Act, 2013; directions were issued by this Tribunal, vide order dated 01.06.2022, in which all the meetings of the Petitioner Companies was dispensed with. The said order is placed as 'Annexure A2' of the Application typeset.

4. RATIONALE OF THE SCHEME

The rationale of the scheme as given in the Scheme of Arrangement placed as "Annexure Al' of the Application typeset is extracted hereunder:

"2.1 The Investment Manager Business is managed by Board of Directors (majority of the Board are Independent) and its Committees for managing inter-alia the assets and investments of the Infrastructure Investment Trusts (InvIT) which are Regulated under the Securities Exchange Board of India (Infrastructure Investment Trusts) Regulations, 2014.

2.2 Segregation of the Investment Management Business from the Infrastructure Development Business to enable faster growth of both the businesses.

2.3 The demerger would facilitate focused growth, operational efficiencies, business synergies and increased operational and customer focus in relation to the Demerged Undertaking in the Resulting Company. The demerger would thus provide a platform for having a concentrated approach towards development of the Demerged Undertaking thereby resulting in better strategic, operational and administrative efficiency.

2.4 The demerger would facilitate and ensure "ease of business" and also enable focused growth of the Demerged Undertaking.

2.5 The proposed demerger will further enhance the function of the "Remaining Business" in the Demerged Company, with respect to the Function of Investment Management.

2.6 The proposed demerger, transfer and vesting of the Demerged Undertaking will enhance value for shareholders and allow a focused strategy in operation of the Demerged Undertaking which would be in the best interest of the Demerged Company and the Resulting Company, shareholders, creditors and all persons connected therewith.

2.7 There is no likelihood that the interests of any shareholder or creditor of either the Demerged Company or the Resulting Company would be prejudiced as a result of the Scheme. The demerger, transfer and vesting of the Demerged Undertaking of the Demerged Company into the Resulting Company will not impose any additional burden on the members of the Demerged Company or the Resulting Company. The Scheme is not in any manner prejudicial or against public interest and would serve the interest of all shareholders, creditors and stakeholders."

5. In the second motion application filed by the Petitioner Companies, this Tribunal vide order dated 20.07.2022 has directed the Petitioner Company to issue notice to the Statutory /Regulatory Authorities viz. (i) Regional Director (Southern Region), MCA (ii) RoC, Chennai, MCA (iii) the Income Tax Department, and other sectoral regulators, who may govern the working of the respective companies in relation to the Scheme, as well as for paper publication to be made in "New Indian Express" (All India Edition) and "Dina Mani" Tamil (Tamil Nadu Edition).

6. In compliance to the said directions issued by this Tribunal, the Petitioner Companies have filed an affidavit of service before the Registry of this Tribunal on 05.09.2022 in SR No. 5214 and a perusal of the same discloses that the Petitioner Companies has effected paper publication as directed by the Tribunal in one issue of "New Indian Express" (All India Edition) in English and "Dina Mani" Tamil (Tamil Nadu Edition) in Tamil on 06.08.2022. It is also seen that notices have been also served to (i) The Regional Director, Southern Region 01.08.2022 (ii) Registrar of Companies Chennai on 01.08.2022 (iii) Income Tax Department, Chennai on 27.07.2022. Pursuant to the service of notice of the petition the following statutory authorities have responded as follows;

7. STATUTORY AUTHORITIES

7.1. REGIONAL DIRECTOR

The Regional Director, Southern Region (hereinafter referred to as 'RD') to whom the notice was issued in the first motion, has filed his Report before this Tribunal in SR No. 5247 in 08.09.2022 and has stated that clause 9 of Part III of the Scheme provides for the protection of the employees of the Demerged Company. All staff and employees of the Demerged Company, in service on the effective date, shall be deemed to have become permanent employees of the Resulting Company, with effect from the Effective Date, without any break in their service and other benefits.

7.1.2. Further at Para 8, the RD has observed that as per clause 12 of Part III of the Scheme, the Resulting Company shall issue and allot to the shareholders of Demerged Company, for 1,39,50,007 fully paid equity shares of Rs. 10 each held in the Demerged Company; 2,23,82,900 fully paid up equity shares of Rs. 10 each of the Resulting Company shall be issued as consideration upon effectiveness of the Scheme of Arrangement (Demerger). Further all equity shares as aforesaid of Resulting Company shall be allotted to M/s. L & T Infrastructure Development Projects Limited including the entitlement of 06 equity shares of the Demerged Company which is held jointly with M/s. L & T Infrastructure Development Projects Limited by six individual shareholders holding 01 equity share each.

7.1.3. It is also stated in Para 10 of the RD Report, it was submitted that as per the Report of the ROC, Chennai, the Demerged Company and the Resulting Company have filed their statutory returns up to 31.03.2021. ROC, Chennai has further stated that there is no prosecution /complaint /inspection /investigation is pending against the companies involved in the scheme of Arrangement (Demerger).

7.1.4. Thus, after examining the Scheme, except the observations as extracted supra, the Regional Director in their Report has stated that they have decided not to make any objection to the Scheme.

7.2. THE INCOME TAX DEPARTMENT

7.2.1. On Notice being served to the Income tax department vide order dated 20.07.2022, they have filed the reply in the following manner stating that there are outstanding arrears pending from Petitioner Company 1/Demerged Company:-

7.2.2. In response to the above it can be seen from Clause 7 of Part III of the scheme that the pending legal proceedings against the Demerged Company shall be transferred to the Resulting Company. Further, the Hon'ble NCLAT in the matter of Joint Commissioner of Income Tax (OSD), Circle (3)(3) - 1, Mumbai Vs. Reliance Jio Infocomm Ltd. in Company Appeal (AT) Nos. 113 has held that in view of the decision of the Hon'ble Supreme Court in Department of Income Tax Vs. Vodafone Essar Gujarat Ltd. (2015) 16 SCC 629 liberty was given to the Income tax Department to take out appropriate proceedings for recovery of any tax statutorily due from transferor or transferee company or any other person liable to pay such tax due, the scheme of arrangement as approved by NCLT was not be interfered with.

7.2.3. Further, this Tribunal is of the view that the Clause 7 of Part III of the scheme provides the savings in relation to the liabilities as well, all the Tax authorities are entitled to proceed against the Transferee Company in accordance with law, if any amount is found due and payable. The Hon'ble NCLAT also in the Ad2Pro Creative Solutions Private Limited Vs. Regional Director (SER) MCA, in Company Appeal (AT) No. 98 of 2019, in relation to the dues of the Income Tax has held in para 7 as follows;

"7..........Admittedly, proceedings are pending in appeal before ITAT and depending upon the outcome of such proceedings, the Transferee Company has undertaken to satisfy all demands emanating from and raised by the competent tax authorities. The Scheme having been approved and sanctioned and the same being in consonance with law, no fault can be found with the Transferee's undertaking to satisfy all demands raised by the tax authorities as finally determined by due process. The Appellants are justified in maintaining that the tax liabilities would be satisfied by the Transferee as determined by the competent forum seized of the matter in accordance with the approved Scheme which admittedly does not come in conflict with any express provision of the Companies Act, 2013. The legitimate interests of the concerned Tax Authorities have been lawfully protected and their right to recover the tax dues as determined by ITAT or any other competent forum as the case may be, remains intact."

8. VALUATION REPORT

8.1. The Learned Counsel for the Petitioner Companies invited the attention of this Tribunal to the Valuation Report obtained from one MR. NAGALINGAM MUTHIAH, Registered Valuer, and the Certified True Copy of the the Valuation Report is placed at Page No. 13-14 of CA(CAA) 17/CHE/2022. The recommendation in the report is as follows:-

"For 1,39,50,007 fully paid equity shares of INR 10 each held in LTIDPL INDVIT SERVICES LIMITED; 2,23,82,900 fully paid equity shares of INR 10 each of WATRAK INFRASTRUCTURE PRIVATE LIMITED.

As L & T Infrastructure Development Projects Limited holds 100 % of the Equity shares of LTIDPL INDVIT SERVICES LIMITED, the recommended share allotment is arrived at a wholistic level."

9. ACCOUNTING TREATMENT

9.1. The Learned Counsel for the Petitioner Companies have stated that the Statutory Auditors of the Petitioner Companies have examined the Scheme and has certified that the Petitioner Companies have complied with proviso to Section 230 (7)/Section 232 (3) and the Accounting Treatment contained in the proposed Scheme of Arrangement is in compliance with the Applicable Indian Accounting Standards. The Certificates issued by the Statutory Auditors certifying the Accounting Treatment of the Petitioner Company are placed at Page No. 10 in SR No. 5213 filed with the petition.

10. OBSERVATIONS OF THIS TRIBUNAL

10.1. After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the petitioner companies seems to be prima facie beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In view of absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Arrangement appended as Annexure A1' along with CP(CAA)/63 & 62/CHE/2022.

10.2. The Learned Counsel for the Petitioner companies submitted that no investigation proceedings are pending against the Demerged Company or Resulting Company under the provisions of the Companies Act, 1956 or the Companies Act, 2013 and no proceedings against the petitioner companies for oppression or mismanagement have been filed before this Hon'ble Tribunal or erstwhile Company Law Board.

10.3. Notwithstanding the above, if there is any deficiency found or, 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 law, against the concerned persons, directors and officials of the petitioners.

10.4. 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.

11. THIS TRIBUNAL DO FURTHER ORDER:

(i) That all properties, rights and powers of Demerged undertaking be transferred without further act or deed to the Resulting Company and accordingly the same shall pursuant to Section 232 of the Companies Act, 2013 be transferred to and vested in the Resulting Company for all intents, purposes and interest of the Demerged undertaking subject nevertheless to all changes now affecting the same; and

(ii) That all the liabilities, (if any) and powers, engagements, obligations and duties of the Demerged undertaking shall pursuant to Section 232 (3) of the Companies Act, 2013 without further act or deed be transferred to the Resulting Company and accordingly the same become the liabilities and duties of the Resulting Company; and

(iii) That all proceedings now pending by or against the Demerged undertaking shall be continued by or against the Resulting Company including but not limited to Income Tax Act; and

(iv) That all the services of all the employees of the Demerged Company employed in the Demerged undertaking shall stand transferred to the Resulting Company on the same terms and conditions at which these employees are engaged by the Demerged Company without any interruption of service as a result of the transfer; and

(v) That the Resulting Company do without further application allot to such members of the Demerged Company, as have not given such notice of dissent, as is required by Clause 12 of Part III the SCHEME herein the shares in the Resulting Company to which they are entitled under the said SCHEME.

(vi) That the Resulting 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 Resulting Company after setting off the fees paid by the Demerged Company.

(vii) That the Appointed date for the Scheme shall be 01.01.2022 as mentioned in clause 3.4 of Part II of the SCHEME itself.

(viii) That the 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 Companies for registration and on such certified copy being so delivered, the Demerged undertaking shall be deemed to be transferred; and

(ix) That any person interested in the Scheme, shall be at liberty to apply to the Tribunal in the above matter for any directions that may be necessary;

12. Accordingly, the Company Petition stands allowed on the aforementioned terms.