2019 (1) TMI 1253 - Tri - Companies Law

Scheme of Amalgamation - approval of the Scheme of Arrangement - Held that - Considering the approval accorded by the members and creditors of the Petitioner Companies to the proposed Scheme, and the affidavits filed by the Regional Director, Northern Region, Ministry of Corporate Affairs, Income Tax Department and the Department of Telecommunication, there appears to be no impediment in sanctioning the present Scheme. Consequently, sanction is hereby granted to the Scheme under Section 230 & 232 of the Companies Act, 2013. The Petitioners shall however remain bound to comply with the statutory requirements in accordance with law. Notwithstanding the above, if there is any deficiency found or, violation committed qua any enactment, statutory rule or regulation, the sanction granted by this court to the scheme will not come in the way of action being taken, albeit, in accordance with law, against the concerned persons, directors and officials of the petitioners.

Issues Involved:
1. Approval of the Scheme of Arrangement under Sections 230 to 232 of the Companies Act, 2013.
2. Compliance with procedural requirements for convening meetings and notifications.
3. Objections from an unsecured creditor and its locus standi.
4. No objections from the Regional Director and Income Tax Department.
5. Conditions imposed by the Department of Telecommunications (DOT).
6. Compliance with DOT's conditions and undertakings by the petitioner companies.
7. Absence of pending proceedings under the Companies Act.
8. Conformity of the Accounting Treatment with Accounting Standards.
9. Final approval and compliance with statutory requirements.
10. Transfer of properties, rights, powers, liabilities, and duties to the transferee companies.

Detailed Analysis:

1. Approval of the Scheme of Arrangement:
The joint application was filed under Sections 230 to 232 of the Companies Act, 2013, seeking approval for a Scheme of Arrangement. The Scheme involved the demerger of two undertakings from the Transferor Company to two Transferee Companies, with the issuance of redeemable preference shares to the shareholders of the Transferor Company.

2. Compliance with Procedural Requirements:
The Tribunal had initially directed the convening of meetings of creditors and shareholders and required publication in specified newspapers. The petitioners complied with these directions, as evidenced by affidavits confirming the publication and service of notices to relevant authorities.

3. Objections from an Unsecured Creditor:
An objection was raised by an unsecured creditor with a claim of ?24,67,253. However, this amount constituted less than 5% of the total outstanding debt of the Transferee Company No. 1, rendering the creditor ineligible to object under Section 230(4) of the Companies Act, 2013.

4. No Objections from Authorities:
The Regional Director and the Income Tax Department filed representations indicating no objections to the Scheme. The DOT, however, imposed several conditions for the approval of the Scheme.

5. Conditions Imposed by DOT:
The DOT's conditions included a one-year period for the transfer/merger, compliance with lock-in conditions, unchanged spectrum validity, market share limitations, payment of differential spectrum fees, submission of bank guarantees, and adherence to spectrum caps and guidelines.

6. Compliance with DOT's Conditions:
The petitioner companies undertook to comply with the DOT's conditions as per the Scheme. They also confirmed the surrender of administratively allocated spectrum and submitted required undertakings to the DOT.

7. Absence of Pending Proceedings:
The petitioners affirmed that no proceedings for inspection, inquiry, or investigation under the Companies Act were pending against them.

8. Conformity with Accounting Standards:
Certificates from statutory auditors confirmed that the Accounting Treatment proposed in the Scheme conformed to the Accounting Standards notified by the Central Government under Section 133 of the Companies Act, 2013.

9. Final Approval and Compliance:
The Tribunal, considering the approvals from members, creditors, and authorities, found no impediment in sanctioning the Scheme. The petitioners were directed to comply with statutory requirements and were reminded that the sanction does not exempt them from any legal obligations, including payment of taxes and other charges.

10. Transfer of Properties, Rights, Powers, Liabilities, and Duties:
The Tribunal ordered the transfer of all properties, rights, powers, liabilities, and duties of the Demerged Undertakings to the respective Transferee Companies without further act or deed, pursuant to Section 232 of the Companies Act, 2013. The order also specified that any pending proceedings related to the Demerged Undertakings would continue against the Transferee Companies.

The petition was disposed of with directions for the petitioner companies to deliver a certified copy of the order to the Registrar of Companies within thirty days. The Tribunal also allowed any person to apply for necessary directions in the matter.

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