2011 (3) TMI 1471 - HC - Companies Law

Amalgamation - transferee company is a wholly owned subsidiary of the transferor company - Regional Director submitted that the individual assets and liabilities and values thereof pertaining to Passive Infrastructure Assets of the transferor company proposed to be transferred to the transferee company are not mentioned in the Scheme - petitioner companies in their rejoinder stated that the transferee company is 100 per cent subsidiary of the transferor company and that the proposed transfer of the Passive Infrastructure Assets is to restructure the holding of assets within the group companies controlled by the transferor company in a more efficient manner consistent with the diverse needs of the business. It has been further submitted that the present Scheme is not a Scheme of Arrangement with respect to the creditors of the companies and none of the creditors of the transferor company are being transferred to the transferee company by way of present Scheme Held that - No objection has been received to the Scheme of Arrangement from any other party. approval accorded by the equity shareholders, secured and unsecured creditors of the petitioner companies to the proposed Scheme of Arrangement, and there being no surviving objection to the same by the Regional Director, Northern Region, there appears to be no impediment to the grant of sanction to the Scheme of Arrangement. Consequently, sanction is hereby granted to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. The petitioner companies will comply with the statutory requirements in accordance with law. petition is allowed

Summary

Issues:
1. Sanction of Scheme of Arrangement under sections 391 to 394 of the Companies Act, 1956 between two companies.

Analysis:
The judgment pertains to a joint petition filed by two companies seeking the court's sanction for a Scheme of Arrangement. The transferor and transferee companies, both located in New Delhi, were incorporated under the Companies Act, 1956. The Scheme aimed to transfer the Telecom Infrastructure Undertaking from the transferor to the transferee company to enhance operational efficiency and create a distinct corporate identity. The share exchange ratio indicated that no shares or consideration would be issued by the transferee company to the transferor company or its shareholders, as it was a restructuring within the group of companies controlled by the transferor. The Board of Directors of both companies had approved the Scheme, and previous court directions had dispensed with the need for shareholder and creditor meetings.

The Regional Director raised concerns regarding the lack of detailed mention of assets and liabilities in the Scheme, the absence of a valuation report, and the necessity for approvals from the Department of Telecommunications for license transfers. The petitioners clarified that the Scheme did not involve creditors, no consideration was involved in the asset transfer, and no shares were to be issued by the transferee company. They cited previous judgments to support their position, indicating that objections raised did not hold. The Income-tax Department's objections were dismissed based on previous orders in a similar matter.

With no objections from other parties and approval from shareholders and creditors, the court granted sanction to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. The companies were directed to comply with statutory requirements, file a certified copy of the order with the Registrar of Companies, and ensure payment of stamp duty. The 'Passive Infrastructure Assets' of the transferor company were to merge with the transferee company effective from the appointed date of Arrangement. The court clarified that the order did not exempt the companies from paying stamp duty as per the law. The petition was allowed in the specified terms.