Case Overview

Under consideration were two petitions filed under Sections 230-232 of the Companies Act, 2013: CP(CAA)/7(CHE)2026 by Porur Infra Estates Private Limited (Transferee Company) and CP(CAA)/9(CHE)2026 by Chennai Business Tower Private Limited (Transferor Company). The petitions sought sanction for a Scheme of Amalgamation whereby the Transferor Company would be amalgamated into the Transferee Company.

The rationale for the scheme, as detailed in Clause 2, was to consolidate the business of the Transferor Company, which owns a 2.4-million-sq.-ft. IT park called 'One Paramount' in Porur, Chennai, under the Transferee Company. The Transferee Company is a Special Purpose Vehicle (SPV) incorporated by the PRIME Offices Fund, a SEBI-registered Category II Alternative Investment Fund (Registration No. IN/AIF2/2324/1432) co-managed by Nuvama and Cushman & Wakefield Management Private Limited. The Transferee Company had already acquired 100% of the equity shares of the Transferor Company from Keppel Ltd (Singapore) on 24th September 2025 for a consideration of ₹2,550 crore, making it a wholly-owned subsidiary. The appointed date for the amalgamation was set as 24th September 2025.

The scheme proposed that no shares would be issued as consideration since the Transferor Company was already wholly owned. All assets, properties, and liabilities of the Transferor Company would be transferred to and vested in the Transferee Company. This included the transfer of pending litigations, notably an undisputed GST liability of ₹92,29,09,162 for the period from July 2017 to July 2021, which was under adjudication. The accounting was to be done using the 'Acquisition Method' per IND AS 103. Upon effectiveness, the Transferor Company would be dissolved without winding up.

Statutory authorities were notified as directed by the Tribunal. The Regional Director (RD) and the Official Liquidator (OL) filed reports with observations. The RD highlighted the need to comply with Sections 232(3)(i) and 240 of the Companies Act, 2013 concerning the increase in the authorized share capital of the Transferee Company and the payment of differential fees. The RD also noted the pending GST litigation. The OL raised concerns about the automatic modification clause (Clause 8.1) in the scheme and sought an undertaking that there would be no retrenchment of employees who were in service as of the Appointed Date.

The Income Tax Department filed a detailed memo reserving its rights to undertake independent proceedings under the Income Tax Act, 1961. It highlighted that the transaction involved a prior sale of the Transferor Company's shares by Keppel Ltd (Singapore). Keppel had purchased the shares for approximately ₹2,200 crore from erstwhile shareholders (RMZ Infinity Chennai Pvt Ltd and Millennia Realtors Pvt Ltd, and Canada Pension Plan Investment Board) and sold them to the Transferee Company for ₹2,550 crore, booking a short-term capital gain of approximately ₹350 crore. The Department contended that this gain was taxable in India at an effective rate of around 43.68% for foreign companies and that the Transferee Company, as the payer, was obligated to withhold Tax Deducted at Source (TDS) under Section 195 of the Income Tax Act. It also noted that the prior sale by the erstwhile shareholders to Keppel might have tax implications that needed verification.

In response to these observations, the Petitioner Companies submitted undertakings. They undertook to comply with all provisions of the Companies Act, 2013, including filing a revised Memorandum of Association for the increased authorized capital. They undertook to handle the outcome of the pending GST litigation appropriately. They undertook that no employee in service as of the Appointed Date would be retrenched, except in case of voluntary resignation. They also undertook that no automatic modification of the scheme would occur without prior specific approval from the Tribunal under Section 232(1)(b). Regarding the Income Tax concerns, the companies undertook to comply with the provisions of the Income Tax Act, 1961, and pay any taxes in accordance with law, without prejudice to their rights.

Final Outcome

The Tribunal sanctioned the Scheme of Amalgamation. It held that the scheme was prima facie beneficial and not detrimental to the interests of shareholders or creditors. It approved the dissolution of Chennai Business Tower Private Limited without winding up and the transfer of all its assets and liabilities to Porur Infra Estates Private Limited with effect from the Appointed Date of 24th September 2025.

The order clarified that the sanction did not create any embargo on the rights of the Income Tax Department to assess the transactions highlighted in its memo and undertake appropriate recovery proceedings in accordance with law. It further clarified that the order did not grant exemption from payment of any stamp duty, taxes, or other charges due under any law.

The Transferee Company was directed to file a certified copy of the order with the Registrar of Companies within 30 days, upon which the Transferor Company would stand dissolved. The Transferee Company was also directed to file its revised Memorandum and Articles of Association and pay any differential fee for the enhanced authorized capital.

Topics: Corporate Amalgamation, Tax Liability, Regulatory Compliance