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GO 29 Transfer Scheme AP Electricity Reforms Act 1998 Dated 31 May 2014

GO 29 Transfer Scheme AP Electricity Reforms Act 1998 Dated 31 May 2014

In exercise of powers conferred by Sections 23, 24 and 25 of the Andhra Pradesh Electricity Reform Act, 1998 (Act 30 of 1998) and as per Section 53 of AP Re-organisation Act, 2014, the Governor of Andhra Pradesh hereby makes the following rules for the purpose of providing and giving effect to the transfer of assets, properties, liabilities, obligations, proceedings and personnel of Andhra Pradesh Power Generation Corporation Limited to Telangana Power Generation Corporation Limited.

  1. The Andhra Pradesh Re-organization Act, 2014 received the President’s assent on 01 March 2014 for the re-organization of the existing State of Andhra Pradesh. The “Appointed Day” for the new State formation of “Telangana” is 02 June 2014. The Act requires the State of Andhra Pradesh to initiate activities related to creation of successor states including the apportionment of assets, liabilities, employees, contracts etc, between the two successor states. 
  2. This scheme of Apportionment/Demerger/Arrangement (hereinafter referred to as the “Scheme”) provides for and gives effect to the transfer of Assets, Properties, Liabilities, Obligations, Proceedings, Personnel, etc. relating to whole business of Andhra Pradesh Power Generation Corporation Limited (APGENCO) in terms of Sections 68 read with section 53 and other relevant provisions of the A.P. Re-organisation Act, 2014 ,and sections 23, 24 and 25 of the Andhra Pradesh Electricity Reforms Act, 1998 (Act of 30 of 1998 ) and in the manner provided for in the Scheme between the Transferor company, which would remain with the residuary State of Andhra Pradesh and Transferee Company to be transferred to the successor state of Telangana (the two states collectively referred as Successor States ) 
  3. The apportionment as embodied in this Scheme is intended to effectively provide for transfer of assets and liabilities in physical form or by making payment or adjustment through any other mode as may be agreed to by the two successor States on such apportionment.
  4. APGENCO is a company incorporated under the Companies Act, 1956, on 28 December 1998, having its registered office at Vidyutsoudha, Khairatabad, Hyderabad – 500 082. The Authorized capital as on 31st March, 2014 is 25,00,00,000 equity shares of Rs.100 each amounting to Rs.2,500 Crores. Issued, subscribed and paid up capital is 21,06,80,007 equity shares of Rs.100 each fully paid amounting to Rs.2,106.80 Crores.
  5. The main object of the APGENCO inter-alia is to carry on the business of purchasing, importing, exporting, producing, trading, manufacturing or otherwise dealing in Electric Power.
  6. Telangana Power Generation Corporation Limited (TGGENCO) is a company being incorporated under the Companies Act, 2013, and starts functioning on and from the appointed date that is 2nd June, 2014.
  7. The main object of the TGGENCO inter-alia is to acquire Demerged Undertaking of APGENCO pursuant to provisions of AP Reorganization Act, 2014 all things connected thereto and to carry on the business of purchasing, importing, exporting, producing, trading, manufacturing or otherwise dealing in Electric Power.
  8. The Scheme has been drawn up to comply with the conditions as specified in the A.P.

Reorganization Act, 2014 and other applicable laws such that:

  • all the assets and properties located in the Telangana Region as specified in Schedule ‘A’ are transferred from APGENCO (Transferor Company) to TGGENCO (Transferee Company) and vest with Transferee company on the Appointed Date;
    • all the liabilities relatable to assets, properties and projects located in the Telangana Region as specified in Schedule ‘A’ are transferred from APGENCO (Transferor Company) to TGGENCO (Transferee Company) and will become the liabilities of the Transferee company on the Appointed Date;
    • the properties and the liabilities, of Head quarters of APGENCO apportionable to Transferee Company (Telangana Region) existing immediately before the re-organization become properties and liabilities of the Transferee Company on Appointed Date;
    • the properties and the liabilities, transferred from APGENCO are transferred to the Transferee Company at the values appearing in the books of account of the APGENCO immediately before the reorganization / as per the values in the Balance sheet as on Appointed Date.
    • the transfer of Assets, Liabilities, Proceedings and Personnel of APGENCO will be on a ”going concern basis”
  • The Equity Shares held by the Government of Andhra Pradesh in APGENCO are allocated to Telangana Region as specified in Schedule ‘A’; 
  • The Scheme is divided into the following parts:
    • Part I, which deals with the  Definitions, and short title and extent;
    • Part II, which deals with the Assets, Liabilities of transferred Undertaking, residuary undertaking, reorganization of capital, personnel, etc.,
    • Part III, which deals with the general terms and conditions that would be applicable to Part II of the Scheme.
    • Part IV, which deals with the transfer scheme
  • The above mentioned clauses 8 to 10 are subject to revision or modification if any as may be notified from time to time.

1. DEFINITIONS

The existing definitions, words, terminology etc. hitherto being used, defined or interpreted by APGENCO shall continue to prevail even from the Appointed Date.

Further in this Scheme (as defined hereinafter), unless repugnant to the meaning or context thereof, the following expressions shall have the meaning mentioned herein below:

  • “Act” means the Andhra Pradesh Reorganization Act, 2014.
  • Apportionment” or “Apportioned” means the transfer by way of apportionment of the assets and liabilities of the Transferor Company to the Transferee Company formed pursuant to re-organization of Andhra Pradesh State, as set out in Part II hereof including the method of apportionment  prescribed in  Schedule A of this Scheme and includes any changes made to the apportionment schedule pursuant to Audit of financials of APGENCO drawn as on 01 June 2014. 
  • “Appointed Date” means 02nd Day of June, 2014 or such other date as may be notified by the Government of India in the official Gazette of India.
  • “APGENCO” or “Transferor Company” means Andhra Pradesh Power Generation Corporation Limited, a company established by the Government of existing state of Andhra Pradesh with the principal object of engaging in the business of Generation of Electricity in the state of Andhra Pradesh;
  • “TGGENCO” or “Transferee Company” means Telangana Power Generation Corporation Limited, a company established by the Government of existing state of Andhra Pradesh with the principal object of acquiring the Demerged Undertaking of APGENCO pursuant to provisions of the Act and engaging in the business of Generation of Electricity in the successor state of Telangana;
  • “Asset” includes dams, tunnels, intake and outlet structures of water conductor systems, generating stations with associated plant, machinery equipment, land, building, offices, stores, furniture, fixtures, vehicles, residential quarter and guest houses and amenities and installations pertaining thereto and other movable and immovable assets, cash in hand, cash at bank investments, book debts, corporeal or incorporeal, tangible and  intangible assets, benefits, licenses, consents, authorities, registrations, liberties, patents trademarks and powers of every kind, nature and description whatsoever privileges, liberties, easements, advantages, benefits and approvals, contracts, deeds, schemes, bonds, agreements and other instruments and interest of whatever nature and wherever situate;  
  • “Effective date” means the relevant date notified by an order made by the Government of Andhra Pradesh for effecting transfer of Assets, Liabilities, Proceedings or Personnel of APGENCO or the Appointed Date, whichever is later;
  • “Liabilities” includes all liabilities, debts, duties obligations and other outgoing including statutory Liabilities and Government levies of whatever nature along with Contingent Liabilities (provided in Schedule H) including but not limited to Bank Guarantees (provided in Schedule G) which may arise in regard to dealings before the effective date in respect of the Demerged and Residuary Undertakings excluding however personnel and personnel related matters.
  • “Personnel” means workmen, employees, staff and officers of APGENCO by whatever name called and includes those trainees receiving stipend from APGENCO including those on deputation to other organizations or institutions;
  • “Proceedings” includes all Proceedings of whatever nature including suits, cases, appeals, complaints, petitions. Applications, conciliatory arbitration whether civil or criminal or otherwise;
  • “Population Ratio” means the ratio of 58.32:41.68 as per 2011 Census in relation to the State of Andhra Pradesh and Telangana as defined under Section 2(h) of the Act.  
  • “Board” means Board of Directors or Board in relation to Transferor Company and the Transferee Company, as the case may be, shall, unless it be repugnant to the context or otherwise, includes a committee of directors or any person duly constituted and authorized by the respective Boards of Directors.
  • “Companies Act” means the Companies Act, 1956 and Companies Act, 2013, to the extent applicable, and includes any statutory re-enactment or modification thereof, or amendment thereto, from time to time.
  • “Demerged Undertaking” or “Transferred Undertaking” means the whole of business as outlined in Schedule B of this scheme relatable to Telangana Region of the Transferor Company, and the share of assets and liabilities of common assets, on a going concern basis, apportioned in terms of this scheme which shall include (without limitation):
    • all assets and properties wherever situated, whether movable or immovable, freehold or leasehold, tangible or intangible, including investments in, and advances to, as part of the business activity, including without limitation all funds, investments, plant and machinery, estates, buildings, offices (including marketing offices, corporate and administrative offices and liaison offices), machinery, capital work in progress, furniture, fixtures, office equipment, vehicles, computer installations, electrical including any other hardware or software applications, appliances, accessories, power lines, water pipelines and deposits all other interests in connection with or relating or Apportioned to the Demerged Undertaking, including licenses, approvals, certificates, clearances, exemptions and all benefits.
    • all agreements, contracts, engagements, permits, quotas, rights, registrations, entitlements, industrial and other licences, bids, all assignments and grants thereof, tenders, letters of intent, expressions of interest, development rights (whether vested or potential and whether under agreements or otherwise), municipal permissions, approvals, consents, subsidies, tax credits, incentives, tenancies in relation to office and/or residential properties for the employees, investments or interest (whether vested, contingent or otherwise) either solely or jointly with other parties, goodwill, trade marks, trade names, trade secrets, product registrations, patents, copyrights, all other intellectual property, bank accounts, receivables, privileges, insurance claims and policies, powers of attorney, and authorities, certifications, all other rights including sales tax deferrals and exemptions and other benefits, lease rights, licences, powers and facilities of every kind, nature and description whatsoever, rights to use and avail of telephones, emails, telexes, facsimile, VSATs connections and installations and any other communication devices, utilities, electricity and other services, provisions, funds, benefits of all agreements, contracts and arrangements and all other interests in connection with or relating to the Demerged Undertaking’, including licenses, approvals, certificates, clearances, exemptions and all benefits; 
  • all deposits or benefits of any deposits, balances, earnest moneys and/or security deposits paid or received by the Transferor Company directly or indirectly in connection with or relating to the Demerged Undertaking’; 
    • all books, records, files, papers, engineering and process information, computer programmes along with licenses, drawings, backup copies, websites, domain names, manuals, data, catalogues, quotations, sales and advertising materials, lists of present and former customers and suppliers, customer credit information, customer pricing information, and other records, whether in physical form or electronic form in connection with or relating to the Demerged Undertaking’; and 
    • debts, duties, obligations and liabilities (including contingent liabilities) relatable to the Demerged Undertaking;  

Explanation: 

  • For the purpose of this Scheme, it is clarified that the liabilities pertaining to the Demerged Undertaking’ are: 
    • The liabilities which accrue or arise out of the activities or operations of Business of Demerged Undertaking;
      • Specific loans and borrowings raised, incurred and utilised solely for the activities or operation of Business of Demerged Undertaking. 
      • Contingent liability existing on the Appointed date, which would be relatable to the Business of Demerged Undertaking based on the suitable method of Apportionment agreed upon by Board of both the Transferor and Transferee Company;
      • Liabilities other than those referred to in sub-clauses (i) and (ii) above, if any, being the amounts of general or multipurpose borrowings of the Transferor Company, as at the end of business on the date immediately preceding the Appointed Date in the manner apportioned under the scheme. 
    • Any question that may arise as to whether a specified asset or liability pertains or does not pertain to the Business or whether it arises out of the activities or operations of the Business shall be decided by mutual agreement between the Board of the Companies in the Successor States upon re-organisation. Further, in the event a mutual agreement could not be arrived, the decision of Central Government or any of its appointed nominee for this matter would be final.
  • “Existing Pensioner” means all the persons eligible for the pension as on the effective date of transfer from APGENCO and shall include family members of the personnel as per the applicable scheme
  • “Head Quarter’s Assets and Liabilities” means the Assets and Liabilities pertaining to the head quarters of APGENCO situated at Hyderabad.
  • “Residuary Undertaking” means  the whole of the business as outlined in Schedule C of this Scheme relating to Residuary Andhra Pradesh Region of Transferor Company on a going concern basis and all the estate, assets, rights, title, interests, business, undertakings, activities, operations and the divisions of the Transferor Company, save and except the Demerged Undertaking’.
  • “Residuary Andhra Pradesh Region” means on and from the Appointed Date territories as existing in state of Andhra Pradesh other than those specified in the Sec.3 of part II of the Act.
  • “Schedule” means the Schedules appended to the APGENCO Re-organization Scheme 2014.
  • “State Governments” means the Governments of the successor states formed upon reorganization and includes Government of Andhra Pradesh and State of Telangana formed under AP Re-organization Act, 2014.
  • “Scheme” means this composite Scheme of Apportionment/Arrangement called as the APGENCO Re-organization Scheme, 2014 including any modification or amendment hereto. 
  • “Terminal Benefits” means the gratuity, pension/commutation of pension, leave encashment, dearness and other applicable relief, medical benefit and other applicable benefits including the right to have the appropriate revisions in the above benefits consistent with the practice that were prevalent in the APGENCO.
  • “Telangana Region” means on and from the Appointed Date territories as included in Section 3 of part II of the Act.
  • “Old Stations” meansthe individual power stations as specified in the Andhra Pradesh Electricity Regulatory Commission (APERC) Order O.P. No. 27 of 2006 and O.P. No. 4 of 2007 dated 4th July 2013 and includes the Srisailam Left Bank Power House as approved and notified by the APERC Order O.P. No. 7 of 2006 dated 17th June 2011
  • “Contingent assets” includes all recoverable expense from Distribution Companies and income tax recoverable from Distribution Companies.

2. SHORT TITLE AND EXTENT:

  • This Scheme be called the APGENCO Re-organization Scheme, 2014.
  • These scheme extend to all Assets, Liabilities, Proceedings and Personnel of the Andhra Pradesh Power Generation Corporation Limited in the whole of the existing state of Andhra Pradesh as defined in AP Reorganization Act, 2014 and also to assets, liabilities, Proceedings and Personnel, which are situated outside the State.
  • Date when the Scheme comes into Operation: Though this Scheme shall become effective from the Effective Date, the provisions of this Scheme shall be applicable and come into operation from the Appointed Date i.e., 02nd Day of June, 2014 or such other date as may be notified by the Governor of Andhra Pradesh vide Gazetted notification.

SECTION 1 – DEMERGED UNDERTAKING

  1. Upon the Scheme coming into effect from the Appointed Date, all the operational Units of the Demerged Undertaking’ (including all the estate, Assets, rights, title, interest and authorities including accretions and appurtenances of the Demerged Undertaking of whatsoever nature including but not limited to the list of undertakings outlined in Schedule B of the Scheme) would vest with the Transferee Company as a going concern and shall as per the provisions of this Scheme in relation to the mode of vesting and Section 53 of the Act and without further act, instrument or deed, would be deemed to have been apportioned and transferred to and vested in the Transferee Company on the Appointed Date.
  2. In respect of all the movable assets owned by APGENCO in relation to the Demerged Undertaking as on the Effective Date and the assets which are otherwise capable of being transferred by physical delivery or endorsement and delivery or novation and delivery, including cash in hand, shall be so transferred to Transferee Company and deemed to have been physically handed over by physical delivery or by endorsement and delivery or novation and delivery, as the case may be, to Transferee Company to the end and intent that the property and benefit therein passes to Transferee Company with effect from the Appointed Date.
  3. In respect of such of the assets and liabilities located/held at the Head quarters of the Transferor Company shall be apportioned between the Transferee Company and Transferor Company on the basis of mutual agreement. 
  4. In respect of the investments in public, private or commercial undertaking companies held by APGENCO before the Appointed Date are apportioned on region basis where the projects are located.
  5. In respect of investments in projects having multiple units falling within the territories of States of Andhra Pradesh and Telangana shall be apportioned on the basis of population.
  6. The Transferor Company (by its Board of Directors) and the Transferee Company (by its Board of Directors), either by themselves or through a committee appointed by them in this behalf, may give such directions as they may consider necessary to exercise operational control and all rights arising out of the agreements already entered while making investments in the public, private or commercial undertaking or to review the position relating to the satisfaction of the projects in which the investments are made and all matters connected there with. 
  7. Upon apportionment of the assets and liabilities, such assets and liabilities shall be transferred in physical form on mutual agreement or by making payment or adjustment through any other mode as may be agreed to by the respective boards.
  8. The Contingent Assets, Disputed Receivables, if any, of APGENCO as on the Appointed date to be apportioned based on the Power Supply Ratio;
  9. Upon the Scheme coming into effect and subject to the provisions of this Scheme, all contracts, deeds, bonds, agreements, schemes, arrangements and other instruments of whatsoever nature in relation to the Demerged Undertaking’ to which the Transferor Company is a party or to the benefit of which the Transferor Company may be eligible, and which are subsisting or having effect immediately before the Effective Date in relation to the operational units apportioned as set out in Clause 1 above, shall be in full force and effect on or against or in favour as the case may be of the Transferee Company and may be enforced as fully and effectually as if, instead of the Transferor Company, the Transferee Company had been a party or beneficiary or oblige thereto.
  10. Without prejudice to the other provisions of the Scheme and notwithstanding the fact that vesting of the Demerged Undertaking’ occurs by virtue of Part II of the Scheme itself, the Transferee Company may, at any time after the coming into effect of this Scheme in accordance with the provisions hereof, if so required, under any law or otherwise, execute deeds (including deeds of adherence), confirmations or other writings or tripartite arrangements with any party to any contract or arrangement to which the Transferor Company is a party or any writings as may be necessary to be executed. The Transferee Company shall, under the provisions of Part II of this Scheme, be deemed to be authorized to execute any such writings on behalf of the Transferor Company and to carry out or perform all such formalities or compliances referred to above on the part of the Demerged Undertaking’ to be carried out or performed.
  11. For the avoidance of doubt and without prejudice to the generality of the foregoing, it is clarified that upon the coming into effect of this Scheme, all insurance claims and policies, consents, permissions, licenses, approvals, certificates, clearances generally and relating to operational units apportioned as set out clause 1 to 10 above and all branches, powers of attorney, authorities given by, issued to or executed in favour of the Transferor Company, all certifications and approvals, trademarks, patents and domain names, copyrights, industrial designs, trade secrets, product registrations and other intellectual property and all other interests relating to the Transferor Company, be transferred to and vested in the Transferee Company as if the same were originally given by, issued to or executed in favour of the Transferee Company, and the rights and benefits under the same shall be available to the Transferee Company.
  12. All the property, assets and liabilities of the Demerged Undertaking’ shall be transferred by the Transferor Company to the Transferee Company at the values appearing in the books of account of the Transferor Company as on Appointed day i.e., 02nd June, 2014;
  13. It is clarified that, upon the coming into effect of the Scheme, the liabilities and obligations of the Transferor Company in relation to the Apportioned Assets set out in Clause 1 to 8 above and being a part of the Demerged Undertaking shall, without any further act or deed be and stand transferred, or shall be deemed to have been transferred on the Appointed Date to the Transferee Company’, and shall become the liabilities and obligations of the Transferee Company’ which shall undertake to meet, discharge and satisfy the same;
  14. Where any of the liabilities and obligations of the Transferor Company as on the Appointed Date deemed to be transferred to the Transferee Company have been discharged by the Transferor Company after the Appointed Date and prior to the Effective Date, such discharge shall be deemed to have been for and on account of the Transferee Company, and all loans raised and used and all liabilities and obligations incurred by the Transferor Company for the operations of the Transferee Company after the Appointed Date and prior to the Effective Date shall be deemed to have been raised, used or incurred for and on behalf of the Transferee Company and to the extent they are outstanding on the Effective Date, shall also without any further act or deed be and stand transferred to the Transferee Company and shall become the liabilities and obligations of the Transferee Company which shall meet, discharge and satisfy the same.
  15. Upon the coming into effect of the Scheme, all legal, taxation or other proceedings (including before any statutory or quasi- judicial authority or tribunal) by or against the Transferor Company under any statute, whether pending on the Appointed Date or which may be instituted any time in the future and in each case relating to the Transferee Company shall be continued and enforced by or against the Transferee Company after the Effective Date. The Transferee Company shall be added as party to such proceedings and shall prosecute or defend such proceedings in co-operation with the Transferor Company.
  16. If proceedings are taken against the Transferor Company in respect of the matters referred to in sub-clause 14 above, it shall defend the same in accordance with the advice of the Transferee Company and at the cost of the Transferee Company, and the latter shall reimburse and indemnify the Transferor Company against all liabilities and obligations incurred by the Transferor Company in respect thereof. 
  17. The Transferee Company undertakes to have all legal, taxation or other proceedings initiated by or against the Transferor Company referred to in sub-clause 14 above transferred into its name and to have the same continued, prosecuted and enforced by or against the Transferee Company to the exclusion of the Transferor Company.
  18. With effect from the Appointed Date and up to and including the Effective Date:
    1. the Transferor Company shall be deemed to have been carrying on and to be carrying on all business and activities relating to the Transferee Company and stand possessed of all the estates, assets, rights, title, interest, authorities, contracts, investments and strategic decisions of the Transferee Company, including the rights and interest in any documents specified in Clause   hereof, for and on account of, and in trust for and for the benefit of the Transferee Company’; and
    1. all income, profits, costs, charges, expenses (including costs, charges and expenses relating to employees of the Transferor Company engaged in the Demerged Undertaking) and taxes accruing to the Transferor Company or losses arising or incurred by it (including the effect of taxes if any thereon), relating to the Demerged Undertaking’ shall for all purposes, be treated as the income, profits, costs, charges, expenses and taxes or losses, as the case may be, of the Transferee Company.
    1. The Transferor Company undertakes that it will from the date of approval of the Scheme by the Board of Directors of the Transferor Company and the Transferee Company, or the Appointed Date, whichever is earlier, and upto and including the Effective Date preserve and carry on the Demerged Undertaking’ with diligence and prudence.
  19. The transfer and vesting of the assets, liabilities and obligations of the Transferee Company under the Scheme and the continuance of the proceedings by or against the Transferee Company shall not affect any transaction or proceedings already completed by the Transferor Company on and after the Appointed Date to the end and intent that the Transferee Company accepts all acts, deeds and things done and executed by and/or on behalf of the Transferor Company as acts, deeds and things done and executed by and/or on behalf of the Transferee Company.
  20. The amount, if any, disallowed in the hands of the Transferor Company under section 43B or 40(a) of the Income tax Act, 1961 for the assessment years prior to the Appointed Date shall be eligible to be claimed by the Transferee Company on fulfillment of the conditions as laid down in sections 43B or 40(a) of the Income tax Act, 1961.
  21. Upon the Scheme becoming effective, the accounts of Transferor Company and Transferee Company as on the Appointed Date shall be reconstructed in accordance with the terms of this Scheme. Transferor Company and/or Transferee Company shall be entitled to revise their respective income-tax returns, TDS returns, and other statutory returns as may be required under respective statutes pertaining to direct taxes and indirect taxes, such as sales-tax; value added tax; excise duties; service tax; etc, and shall also have the right to claim refunds, advance tax credits, credit of tax under Section 115JB, credit of tax deducted at source, credit of foreign taxes paid/withheld, etc, if any, as may be required consequent to implementation of the Scheme
  22. All cheques and other negotiable instruments, payment orders received in the name of Transferor Company relatable to the Demerged Undertaking after the Effective Date shall be accepted by the bankers of Transferee Company and credited to the account of Transferee Company. Similarly, the bankers of Transferee Company shall honour cheques issued by Transferor Company between the Appointed Date and the Effective Date relatable to the Demerged Undertaking.

SECTION 2 – RESIDUARY UNDERTAKING 

  • The Residuary Undertaking and all the assets, liabilities and obligations pertaining thereto viz.  
    • All the operational Units of the Transferor Company remaining after apportionment as set in Part-II of Clause 1 in favour of the Transferee Company including all the estate, assets, rights, title, interest and authorities including accretions and appurtenances of the Remaining Undertaking would continue to vest with the Transferor Company post Appointed Date. The details of Residual undertaking are provided in Schedule C of the Scheme.
    • Similarly,  such of the assets of the Transferor Company as are movable in nature and remaining after apportionment as set in Part-II of Clause 1 in favour of the Transferee Company continue to vest with  the Transferor Company post Appointed Date.
    • Such of the assets including investments and liabilities located/held at the Head quarters of the Transferor Company remaining after apportionment on mutually agreed basis as outlined in sub-clause 3 of Section 1 of this part upon reorganization shall continue to belong to and be vested in and be managed by the Transferor Company;
  • All legal, taxation or other proceedings by or against the Transferor Company under any statute, whether pending on the Appointed Date or which may be instituted in future whether or not in respect of any matter arising before the Effective Date and relating to the Residuary Undertaking (including those relating to any property, right, power, liability, obligation or duties of the Transferor Company in respect of the Residuary Undertaking) shall be continued and enforced by or against the Transferor Company (or successor thereof). The Transferee Company shall in no event be responsible or liable in relation to any such legal, taxation or other proceeding against the Transferor Company.
  • The Transferor Company has not and shall not be deemed to have transferred, and shall continue to hold, all rights and interests in and bear all obligations and liabilities, including all assets, liabilities, proceedings, and Personnel, relating to all the Residuary Undertakings other than the Demerged Undertaking transferred to Transferee Company
  • With effect from the Appointed Date and up to and including the Effective Date, the Transferor Company:
    • shall be deemed to have been carrying on and to be carrying on all business and activities relating to the Residuary Undertaking for and on its own behalf;
    • all profits accruing to the Transferor Company thereon or losses arising or incurred by it (including the effect of taxes, if any, thereon) relating to the Residuary Undertaking shall, for all purposes, be treated as the profits, taxes or losses, as the case may be, of the Transferor Company (or successor thereof).

SECTION 3 – LIABILITIES

  • LOANS, FIXED DEPOSITS AND RELATED SECURITY
    • In so far as loans, borrowings of the Transferor Company are concerned, the loans, borrowings which are to be transferred to the Transferee Company in terms of Clause hereof (the “Transferred Borrowings”) being a part of the Demerged Undertaking shall, upon coming into effect of the Scheme and subject to sub-clause (b) below, without any further act or deed, become loans, borrowings of the Transferee Company, and all rights, powers, duties and obligations in relation thereto shall be and stand transferred to and vested in and shall be exercised by or against the Transferee Company as if it had entered into such loans, incurred such borrowings. The details of list of Assets within the precincts of Andhra Pradesh hypothecated to Financial Institutions for funded projects in Telangana and vice versa are outlined in Schedule D of this Scheme.
    • Further, if the Assets referred to in sub-clause (a) above, of the Demerged Undertaking or Residuary Undertaking are subject to security documents or arrangements in favour of third parties for any financial assistance or obligation taken by Demerged Undertaking and the liabilities in respect thereof are to be classified in Residuary Undertaking or vice versa, Demerged Undertaking or Residuary Undertaking, as the case may be, will substitute such properties, assets and rights with different properties, assets and rights belonging or transferred to them, to be given as security documents or arrangements in favour of third parties for any financial assistance or arrange to discharge the assets from such encumbrance within 3 to 6 months or otherwise the concerned state governments have to arrange guarantees for release of collateral securities offered by APGENCO to financial institutions and banks mentioned in Schedule-D.
    • Without prejudice to the provisions of Clause -1 of Section 1 of Part-II or the foregoing clauses, and upon the Scheme becoming effective, the Transferor Company and the Transferee Company shall execute any instruments or documents or do all the acts and deeds as may be required by the lenders (including but not limited to Banks, Financial Institutions etc.), including the filing of necessary particulars and/or modification(s) of charge, with the Registrar of Companies, respectively to give formal effect to the above provisions. 
    • The Transferor Company and/or the Transferee Company shall enter into and execute such further deeds, documents or writings as may be required to give full effect to the above provisions. 
    • Upon the coming into effect of the Scheme, the Transferee Company alone shall be liable to perform all obligations in respect of the liabilities and obligations of the Demerged Undertaking enumerated in Clause -1 of Section 1 of Part-II above, and the Transferor Company shall not have any obligations in respect thereof. 
    • It is expressly provided that, save as mentioned in this Clause no other terms or conditions of the liabilities and obligations of the Transferee Company enumerated in Clause  above shall be modified except to the extent that such amendment is required by necessary implication or by any agreement entered into with the respective lender. 
    • The provisions of this Clause shall operate notwithstanding anything to the contrary contained in any deed or writing or the terms of sanction or issue or any security document, all of which instruments shall stand modified and/or superseded by the foregoing provisions.
  • PENSION BOND LIABILITY:
    • The existing pension liability vested on APGENCO vide G.O.Ms No. 11 dated 30.01.2000 pertaining to employees drawing pension from Telangana Region are to be transferred to the Transferee Company or a Master Trust set-up by the Transferee Company in terms of Clause hereof based in the proportion of net fixed assets of Old Stations. The detailed rationale of appropriation method has been outlined in Schedule F of this Scheme.
    • The liability pertaining to Telangana Region being a part of the Demerged Undertaking shall, upon coming into effect of the Scheme, and all rights, powers, duties and obligations in relation thereto shall be and stand transferred to and vested in and shall be exercised by or against the Transferee Company as if it had incurred such pension liability.
    • Furthermore, the associated guarantee in relation to sub clause (a) of Clause 27 issued by Government of existing state of Andhra Pradesh for principal repayment and interest thereon shall be apportioned between the Government of both the Successor states of Telangana and Andhra Pradesh based on the ratio of existing pension liability divided between Transferor Company and Transferee Company

SECTION 4 – REORGANISATION OF CAPITAL

  • The provisions of this Section shall operate notwithstanding anything to the contrary in any other instrument, deed or writing;
  • In consideration of the provisions of Part II of this Scheme and as an integral part of this Scheme, the share capital of the Transferee Company and the Transferor Company shall be restructured and reorganized in the manner set out in Clauses below.
  • Upon the Scheme coming into effect and in consideration of the Apportionment pursuant to Part II of the Scheme, the issued, subscribed and paid up equity share capital of the Transferor Company shall be reduced by the ratio of Gross fixed assets relatable to the Demerged undertaking as provided in the Andhra Pradesh Electricity Regulatory Commission Order no. O.P. No. 27 of 2006 and O.P. No. 4 of 2007 dated 4th July 2013 and in terms of mutual agreement between both the Successor States read with the Act.
  • The reduction of paid-up capital of the Transferor Company pursuant to the Scheme shall be given effect as an integral part of this Scheme and all other applicable provisions of the Act to such reduction of capital of the Transferor Company and the Transferor Company shall not be required to convene any separate meeting for that purpose. 
  • It is hereby clarified that the amount by which the Paid-up share capital of the Transferor Company is reduced in terms of this Clause, shall be credited to the account of the Transferee Company after creating the necessary authorized capital with the Registrar of Companies as per the provisions of Companies Act, 2013 read with the Rules. the Transferee Company shall issue new share certificates to the Government of Telangana in accordance with the Companies Act, 2013 and rules from there under.
  • The Transferee Company shall, if and to the extent required, apply for and obtain any approvals from the concerned regulatory authorities for the issue and allotment of equity shares by the Transferee Company.

SECTION- 5- PERSONNEL

  • Existing sanctioned posts and other organogram of the Transferor Company shall be apportioned as detailed in Schedule E of this Scheme. The posts apportioned to Transferee Company shall stand transferred and vest with Transferee Company.
  • Upon the transfer of personnel pursuant to this scheme, the TGGENCO personnel shall form part of the services of TGGENCO, with the status and in the post scale of pay and seniority being maintained in the same manner as in APGENCO on the effective date of transfer.
  • The Transferee Company undertakes to engage, on and from the Effective Date, such employees transferred from the Transferor Company (including such employees engaged by the Transferor Company in the ordinary course of business) engaged in the Demerged Undertaking and who are in the employment of the Transferor Company as on the Effective Date, on terms and conditions not less favourable than those on which they are engaged by the Transferor Company, with continuity of service. The Transferee Company undertakes to continue to abide by any agreement/settlement entered into by the Transferor Company in respect of the Transferee Company with employees of the Transferor Company in relation to the Transferee Company. The Transferee Company agrees that for the purpose of payment of any compensation, gratuity and other terminal benefits, the past services of such employees with the Transferor Company shall also be taken into account, and agrees and undertakes to pay the same as and when payable.
  • The transfer of personnel shall be further subject to the following conditions, namely:-
    • that the terms and conditions of the services applicable to them on the effective date of the transfer notified for the purpose shall not in any way be less favourable than or inferior to those applicable to them immediately before the said effective date;
    • all such personnel shall have continuity of service in all respects;
    • all benefits of service accrued before the said effective date shall be fully recognized and protected and taken into account for all purposes including the payment of terminal benefits;
    • subject to the above, the personnel shall cease to be in the service of APGENCO and shall not assert or claim any benefit of service under the State Government or the Transferor Company. Except as provided in the Andhra Pradesh Electricity Reform Act, 1998, these Rules;
    • Subject to sub-clause (35) to (37), the Transferee Company shall adhere to rules framed by the Government of Successor state of Telangana governing the conditions of service of personnel transferred to the Transferee Company and till such time, the existing service conditions of APGENCO shall mutatis mutandis apply.
  • All Proceedings including disciplinary Proceedings pending against the personnel prior to the effective date of transfer from APGENCO to TGGENCO, or which may relate to misconduct, lapses or acts of commission or omission committed before the effective date of transfer notified for the purpose, shall not abate and may be continued by the relevant Transferee. Provided that all disciplinary cases finalized as on the date of the effective date of transfer notified for the purpose shall not be reopened by the Transferee,
  • In respect of all statutory and other schemes and employment related matters including the provident fund, gratuity fund, pension and any other superannuation fund or any other special fund created or existing for the benefit of the personnel, the relevant Transferee shall stand substituted for APGENCO  for all purposes and all the rights, powers and obligations of APGENCO in relation to any and all such employees transferred to Transferee Company and the services of the personnel shall be treated as having been continuous for the purpose of the application of this sub-rule.
  • The personnel on the payrolls of APGENCO as on the Appointed Date and not having been transferred to TG GENCO under the foregoing sub-clauses would be deemed to be employee of APGENCO.

SECTION 6- TRANFER OF SHARES OF TGGENCO

  • Upon creation of Government of successor state of Telangana on the Appointed Date under the provisions of the Act, the equity shares of TGGENCO would deemed to be transferred by Government of residuary state of Andhra Pradesh to the Government of Telangana pursuant to provision 68 read with section 53 of the Act.
  • The Government of existing state of Andhra Pradesh undertakes that it will from the date of approval of the Scheme by the Governor of Andhra Pradesh upto and including the Appointed Date would preserve and carry on the Demerged Undertaking with diligence and prudence.

SECTION 7 – ACCOUNTING TREATMENT

  • In the books of the Transferor Company

Upon coming into effect of the Scheme, the Transferor Company shall give effect to the reorganization of capital as set out in Section 4 of this Scheme as at the Appointed Date as below:

  • The Paid-up capital of the Transferor Company is 10,68,74,003 equity shares of Rs. 100 each aggregating to Rs. 1,068.74 Crores and 10,38,06,004 equity shares of Rs. 100 each aggregating to Rs. 1,038.06 Crores is apportioned to Transferee Company.
    • The difference between the book value of the assets, liabilities, share capital of the Transferor Company that is transferred to the Transferee Company pursuant to the Scheme, if any, shall be adjusted with Reserves and Surplus A/c.
    • The application and consequential reduction of the Share Capital Account, as per subclause (a) above, shall be effected as an integral part of the Scheme itself as the same does not involve either diminution of liability in respect of unpaid Share Capital or payment to any shareholder of any paid-up Share Capital;
  • In the books of the Transferee Company

Upon coming into effect of the Scheme, the Demerged Undertaking’ shall give effect to the following accounting treatment as at the Appointed Date:

  • The Demerged Undertaking’ shall, record the assets and liabilities, paid-up capital vested in it pursuant to this Scheme, at the respective book values thereof as appearing in the books of the Transferor Company at the close of business  hours of 01/06/2014;
    • The difference between the total of the debits and credits shall be adjusted under the head Reserves and Surplus in the books of the Transferee Company. ; 
    • It is hereby clarified that pursuant to the provisions of Clause of the Scheme, all transactions during the period between the Appointed Date and Effective Date relating to the Demerged Undertaking’ would be duly reflected in the financial statements of the Transferee Company’, upon the Scheme coming into effect.

PART III – OTHER TERMS & CONDITIONS 

  • The Transferor Company and Transferee Company shall reconcile the figures of share capital and loans in the finance accounts of respective Governments.
  • The Transferor Company and the Transferee Company’ shall jointly make necessary application before the Registrar of Companies of Andhra Pradesh  and such statutory authorities on completion of the terms and conditions of the Scheme and give effect to the scheme for all matters incidental there to and connected there with including if necessary for change of the Registered Office of the Transferor Company and for the said purpose no separate permission of the respective State Governments would be necessary and such permission shall be deemed to have been granted by the State Governments.
  • The Transferor Company (by its Board of Directors) and the Transferee Company’ (by its Board of Directors) either by themselves or through a committee appointed by them in this behalf, may, in their full and absolute discretion, assent to any alteration or modification to this Scheme which either the Boards of Directors of the Transferor Company or the Transferee Company’, as the case may be, deem fit, or which the Central Government and/or any other Authority may deem fit to approve or impose. 
  • The Transferor Company (by its Board of Directors) and the Transferee Company’ (by its Board of Directors), either by themselves or through a committee appointed by them in this behalf, may give such directions as they may consider necessary to settle any question or difficulty arising under the Scheme or in regard to and of the meaning or interpretation of the Scheme or implementation hereof or in any matter whatsoever connected therewith, or to review the position relating to the satisfaction of various conditions to the Scheme and if necessary, to waive any of those to the extent permissible under law. 
  • Any issue as to whether any asset, liability, employee or litigation pertains to the Demerged Undertaking’ or not shall be decided by the Board of Directors of the Demerged  Company either by themselves or through a committee appointed by them in this behalf, and if considered necessary by them, after consultation with the Board of Directors of the Transferor Company, on the basis of evidence that they may deem relevant for the purpose (including the books and records of the Transferor Company). 
  • This Scheme is conditional upon and subject to such other sanctions and approvals including sanction of any State/Central Governmental Authorities or its nominees. In the event of any of the aforesaid sanctions and approvals are not being obtained and/ or the Scheme not being sanctioned by the appropriate authority, if any, this Scheme shall stand revoked, cancelled and be of no effect, save and except in respect of any act or deed done prior thereto as is contemplated hereunder or as to any rights and/ or liabilities which might have arisen or accrued pursuant thereto and which shall be governed and be preserved or worked out as is specifically provided in the Scheme or as may otherwise arise in law and agreed between the respective parties to this Scheme.
  • In the event of non-fulfillment of any or all obligations under the Scheme by any Company towards the other Company, inter-se or to third parties and non-performance of which will put the other Company under any obligation, then such Company will indemnify all costs/interest, etc. to the other Company. 
  • If any part of this Scheme is found to be unworkable for any reason whatsoever, the same shall not, subject to the decision of the Transferor Company and the Transferee Company, effect the validity or implementation of the other parts and/or provisions of this Scheme. 
  • Any issue not covered above shall be decided by both GENCOs in accordance with the principles laid down in the Reorganization Act 2014. 

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