2017 (7) TMI 1451 - Tri - Companies Law

Sanction of Scheme of Arrangement for Amalgamation - Sections 230 and 232 of the Companies Act, 2013 - HELD THAT - From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy - Since all the requisite statutory compliances have been fulfilled, Company Scheme Petitions filed by the Petitioner Companies are made absolute in terms of prayer clause (a) of the respective Petitions. Petition allowed.

Summary

Issues Involved:
1. Sanction of the Scheme of Arrangement for Amalgamation under Sections 230 and 232 of the Companies Act, 2013.
2. Compliance with statutory requirements and accounting standards.
3. Appointment of the effective date for the scheme.
4. Approval from the Ministry of Information and Broadcasting.
5. Tax implications and compliance with Income Tax Department.
6. Observations and objections from the Regional Director and Registrar of Companies.
7. Compliance with conditions set by Bombay Stock Exchange and National Stock Exchange.
8. Change of name of the Transferee Company as per the scheme.
9. Costs and procedural compliance post-sanction.

Detailed Analysis:

1. Sanction of the Scheme of Arrangement for Amalgamation:
The Tribunal's sanction was sought under Sections 230 and 232 of the Companies Act, 2013, for the Scheme of Arrangement for Amalgamation between Videocon D2H Limited (Transferor Company) and Dish TV India Limited (Transferee Company) and their respective shareholders and creditors. The amalgamation aimed to consolidate business operations, enhance growth, reduce operational costs, and maximize shareholder value.

2. Compliance with Statutory Requirements and Accounting Standards:
The Petitioner Companies confirmed compliance with all statutory requirements as per the directions of the Tribunal and undertook to comply with all applicable provisions under the Companies Act, 1956/2013, and related rules. The Transferee Company agreed to pass necessary accounting entries to comply with applicable accounting standards, including AS-14 and AS-5.

3. Appointment of the Effective Date for the Scheme:
The Regional Director's report highlighted the absence of an "Appointed Date" in the scheme. The Petitioner Companies subsequently fixed the Appointed Date as 1st October 2017, addressing the concern.

4. Approval from the Ministry of Information and Broadcasting:
The scheme required a No Objection Certificate (NOC) from the Ministry of Information and Broadcasting (MIB). The Petitioner Companies had already served notice to the MIB and undertook to obtain the necessary approval, with the scheme's effectiveness being contingent on this approval.

5. Tax Implications and Compliance with Income Tax Department:
The scheme's tax implications were subject to the final decision of the Income Tax Authorities. The Petitioner Companies undertook to comply with the applicable provisions of the Income Tax Act and address all tax issues arising from the scheme in accordance with the law.

6. Observations and Objections from the Regional Director and Registrar of Companies:
The Regional Director's report included several observations, such as compliance with accounting standards, the necessity of fixing an appointed date, and obtaining an NOC from the MIB. The Registrar of Companies noted pending disputes regarding amounts payable for Income Tax, VAT, and Sales Tax. The Petitioner Companies undertook to address these observations and comply with the necessary requirements.

7. Compliance with Conditions Set by Bombay Stock Exchange and National Stock Exchange:
The Official Liquidator's report noted that the shares of the Transferee Company were listed on the Bombay Stock Exchange and National Stock Exchange, which had given conditional approvals. The Petitioner Companies undertook to comply with these conditions.

8. Change of Name of the Transferee Company as per the Scheme:
The scheme provided for the change of the Transferee Company's name to "Dish TV Videocon Limited" upon the scheme's effectiveness. The Petitioner Companies undertook to follow the prescribed procedure under the Companies Act, 2013, for the name change.

9. Costs and Procedural Compliance Post-Sanction:
The Petitioner Companies were directed to file a copy of the order and the amended Scheme of Arrangement with the Registrar of Companies within 30 days from the date of approval by the MIB. They were also required to lodge a certified copy of the order with the Superintendent of Stamps within 60 days. The Transferor Company was to carry on its business in trust for the Transferee Company between the Appointed Date and the Effective Date. Additionally, the Petitioner Companies were ordered to pay costs of Rs. 25,000 each to the Regional Director and the Official Liquidator within four weeks.

Conclusion:
The Tribunal found the scheme to be fair, reasonable, and compliant with legal provisions and public policy. Consequently, the Company Scheme Petitions filed by the Petitioner Companies were approved, subject to the conditions and undertakings provided.