2014 (7) TMI 874 - HC - Companies Law

Scheme of Amalgamation - The Petitioner Companies have placed on record communications from Unsecured Creditors to the effect that they shall be opposing the scheme. However, none of these Unsecured Creditors have appeared before this Court or filed objections to the Scheme before this Court. - Held that - In view of the approval accorded by the shareholders of the Petitioner Companies, the Report filed by the Official Liquidator, Affidavit filed by the Regional Director and the Replies of the Petitioner Companies to the Reports of the Official Liquidator and the Regional Director, there appears to be no impediment to the grant of sanction to the Scheme. - sanction to the scheme granted.

Summary

Issues Involved:
1. Jurisdiction and Registered Offices
2. Compliance with Procedural Requirements
3. Objections by Unsecured Creditors
4. Observations by the Regional Director
5. Observations by the Income Tax Department
6. Appointed Date for the Scheme
7. Valuation of Shares and Swap Ratio
8. Compliance with Other Legal Requirements

Detailed Analysis:

1. Jurisdiction and Registered Offices:
The registered offices of M/s Vodafone Spacetel Limited (Transferor No.1) and M/s Vodafone Mobile Services Limited (Transferee Company) are situated in New Delhi, within the jurisdiction of this Court. The registered office of M/s Vodafone West Limited (Transferor No.2) is in Gujarat, and a separate petition has been filed in the High Court of Gujarat for sanction of the Scheme.

2. Compliance with Procedural Requirements:
The Petitioner Companies had earlier sought and obtained dispensation from convening meetings of Equity Shareholders, Secured Creditors, and Unsecured Creditors. Notices were issued to the Regional Director (Northern Region) and the Official Liquidator, and citations were published in specified newspapers. Affidavits were filed confirming compliance with the service of notices and publication requirements.

3. Objections by Unsecured Creditors:
Three Unsecured Creditors, M/s Skipper Limited, M/s Matrix Cellular Services Private Limited, and M/s Associated Towers Structure Private Limited, raised objections. The claims were disputed by the Petitioner Companies, and it was clarified that proceedings under Sections 391-394 of the Act cannot be used for recovery of monies. The objections were not upheld as the claims were to be pursued through appropriate legal remedies.

4. Observations by the Regional Director:
The Regional Director raised several observations:
- Approval of DoT: Approval from the Department of Telecommunication (DoT) was required for the transfer of licenses. The Petitioner Companies confirmed that the DoT had provided a No Objection Certificate, and all necessary approvals would be obtained.
- Pending Inquiries: The Petitioner Companies confirmed that no inquiries or cases were pending against them regarding the original allotment of licenses.
- Pending Schemes: Concerns about pending schemes were addressed as the relevant schemes had already been sanctioned by various High Courts.
- Appointed Date: The Regional Director suggested shifting the Appointed Date to 01.04.2013, but the Petitioner Companies justified the original date of 01.04.2012, which was approved by their boards and shareholders.

5. Observations by the Income Tax Department:
The Income Tax Department raised four observations:
- Proceedings Against Transferee Company: The Court clarified that any liability of the Transferor Companies would be borne by the Transferee Company, and the Income Tax Authorities could raise valid demands.
- Pending Appeals: The pending appeals related to other schemes were not connected to the present Scheme.
- Writing Off Liabilities: There should be no writing off of liabilities by the Transferor Companies.
- General Reserve Account: Any amount credited to the General Reserve Account should not be used to pay dividends.

6. Appointed Date for the Scheme:
The Appointed Date of 01.04.2012 was upheld as it was approved by the boards and shareholders of the Petitioner Companies. The Court cited precedents supporting the prerogative of companies to choose the Appointed Date.

7. Valuation of Shares and Swap Ratio:
The valuation was conducted by M/s Ernst & Young Private Limited, a company providing various financial services. The Court found no legal requirement for the valuation to be done exclusively by a firm of Chartered Accountants and upheld the valuation.

8. Compliance with Other Legal Requirements:
The Court clarified that the sanction order would not exempt the Petitioner Companies from paying stamp duty or other charges and that compliance with all other laws was required. The Petitioner Companies were also directed to deposit a sum of Rs. 2 lakh to the Common Pool fund of the Official Liquidator.

Conclusion:
The Scheme of Amalgamation was sanctioned under Sections 391-394 of the Companies Act, 1956. The Petitioner Companies were directed to comply with statutory requirements and obtain necessary approvals from the DoT. The order would be binding on the shareholders and creditors and was subject to the sanction by the High Court of Gujarat. The Petition was allowed in the specified terms.