2011 (3) TMI 1842 - HC - Companies Law

Summary

Issues:
1. Scheme of Arrangement under Sections 391 to 394 of the Companies Act, 1956 between two companies.
2. Share exchange ratio and restructuring of Passive Infrastructure Assets.
3. Approval of the Scheme by the Board of Directors and shareholders.
4. Objections raised by the Regional Director and responses to those objections.
5. Objections by the Income Tax Department and their dismissal.
6. Compliance with statutory requirements and grant of sanction to the Scheme.

Analysis:
The judgment involves a joint petition filed under Sections 391 to 394 of the Companies Act, 1956 for the sanction of a Scheme of Arrangement between two companies. The transferor company and the transferee company, both situated in New Delhi, sought to restructure their Telecom Infrastructure Undertaking through the Scheme. The Scheme aimed to consolidate assets for more effective participation in a shared towers project, improve operational efficiency, and enhance financial flexibility. The share exchange ratio indicated that no shares or consideration would be issued by the transferee company to the transferor company or its shareholders.

The objections raised by the Regional Director primarily focused on the lack of details regarding the individual assets and liabilities transferred and the absence of a valuation report. However, the petitioners clarified that the transfer was within a group of companies for efficient asset holding and no consideration was involved, citing a previous judgment to support their stance. The objections were deemed not valid based on this clarification.

The Income Tax Department also raised objections similar to those in another case, but these objections were dismissed in line with the orders passed in the previous case. With no objections from any other party and approval from the relevant stakeholders, the court granted sanction to the Scheme of Arrangement. The petitioners were directed to comply with statutory requirements, and it was clarified that the order did not exempt them from paying stamp duty. The 'Passive Infrastructure Assets' of the transferor company were to merge into the transferee company effective from the appointed date of the arrangement.

In conclusion, the court allowed the petition in accordance with the terms outlined, emphasizing compliance with legal requirements and the effective merger of assets as per the sanctioned Scheme.