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TMI Blog2014 (7) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... J (Oral) 1. This second motion joint petition has been filed under Sections 391 to 394 of the Companies Act, 1956 (hereinafter referred to as the Act ) by M/s Vodafone Spacetel Limited (Transferor No.1/Petitioner Company No.1), Vodafone West Limited (Transferor No.2) and Vodafone Mobile Services Limited (Transferee Company/ Petitioner Company No.2) and their respective shareholders seeking sanction and approval of the Scheme of Amalgamation (hereinafter referred to as the Scheme). A copy of the proposed Scheme is filed alongwith the present application. 2. The Registered Offices of M/s Vodafone Spacetel Limited (Transferor No.1/ Petitioner Company No.1) and M/s Vodafone Mobile Services Limited (Transferee Company/ Petitioner Company No.2) are situated at New Delhi within the jurisdiction of this Court. The Registered Office of M/s Vodafone West Limited (Transferor No.2) is situated in the State of Gujarat and for which the said Company has filed Company Petition before the High Court of Gujarat at Ahmedabad for sanction of the Scheme. 3. The details of respective dates of incorporation of the Petitioner Companies, their authorized, issued, subscribed and paid up capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with. Copies of the newspapers containing the citations, CD containing the tracking report regarding dispatch of notice to the Unsecured Creditors of the Petitioner Companies and the certificate from the Post Office regarding dispatch of notices to the Unsecured Creditors of the Petitioner Companies have been filed along with Affidavits dated 24.07.2013 and 10.10.2013, affirmed by the Authorized Signatory of the Petitioner Companies. 10. Pursuant to the Notice issued by the Court, the Official Liquidator has filed his Report dated 08.04.2013. The Official Liquidator has in para 15 of the Report referred to an objection filed by M/s Skipper Limited, an unsecured creditor of the Petitioner/Transferor Company 1. The Official Liquidator has further stated that no complaint has been received against the proposed Scheme from any person or party interested in the Scheme till the date of filing of the Report. The Official Liquidator has further stated that subject to the submissions made in paras 15 and 16 of the Report, the affairs of the Petitioner/Transferor Company No.1 do not appear to have been conducted in a manner prejudicial to the interests of its members or to public interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Companies that no inquiry/case is pending against the said Companies at the time of original allotment of license from any Court of law or from any investigation authority. The Petitioner Companies have in reply submitted that to the best of the knowledge of the Petitioner Companies, there is no inquiry or case pending with regard to the original allotment of license. This aspect is not controverted by the Assistant Registrar of Companies appearing for the Regional Director. Learned Senior Counsel for the Petitioners further submits that the DoT by its communications dated 11.03.2014 and 13.03.2014 has granted its' in principle No Objection to the Scheme and in terms of the said letters, approval would be obtained from the DoT for transfer of licenses after the sanction of the Scheme by the respective High Courts. In view of the above, the concern of the Regional Director is addressed. 16. The third observation raised by the Regional Director relates to the pendency of the Scheme of Amalgamation in Co. Pet. No.488/2012 filed before this Court. It is submitted by the Senior Counsel for the Petitioners that the Scheme subject matter of Co.Pet 488/2012 since been sanctioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Department wherein it has been stated that from the Scheme, no direct adverse impact on the tax position could be noticed in so far as the amalgamation of the Transferor Companies into the Transferee Company is concerned. 20. The Regional Director has further referred to four observations raised by the Income Tax Department in the aforesaid letter dated 25.02.2014 i.e. (a) Income Tax Department should be permitted to proceed against Transferee Company in the event of any liability arising out of the transaction in question irrespective of approval granted by the High Court, (b) The Scheme is question should be subject to outcome of Company Appeals filed by the Revenue Department in connection with other Scheme of de-merger and merger filed in respect of Vodafone Group Companies, (c) There should not be any writing off any liability by the Transferor Companies and (d) As per para 3.7 of the Scheme, in case any amount is created to General Reserve Account in the financial statement of the Transferee Company, the same should not be utilized to pay any dividends under the Companies Act. 21. As regards the rights of the Income Tax Department to proceed against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeks the consolidation in one entity of the business of providing telecommunication services in terms of licenses granted by the DoT. Learned Senior Counsel further submits that similar objections raised in C.P. No. 488 of 2012 were not upheld by this Court. Learned Senior Counsel further submits that upon the Scheme becoming effective, the amount if any, credited to the General Reserve Account of the Transferee Company shall be dealt with in accordance with the applicable Accounting Standard 14 and the law. He further submits that the Petitioners undertake to comply with the accounting treatment as prescribed under Accounting Standard 14 i.e. 'Accounting for Amalgamation' issued by the Institute of Chartered Accountants of India. In view of the above, the concern of the Regional Director and the Income tax authorities has been addressed. 24. The Regional Director has at para 10 of the Report observed that the Appointed Date under the Scheme be shifted to 01.04.2013. Learned Senior Counsel for the Petitioner Companies submits that Appointed Date of 01.04.2012 as specified in the Scheme has been accorded approval by the Board of Directors and the shareholders of the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Registrar of Companies and the Income Tax Authorities would also be at liberty to examine all returns on merits including the returns pertaining to the past periods as may be permissible in accordance with statutory provisions of the Companies Act and the Income Tax Act. 28. At para 11 of the Report, the Regional Director has stated that the valuation of shares and swap ratio is to be calculated by a professional firm of Chartered Accountants. It is contended that the Petitioners have filed the certificate of M/s Ernst Young Private Limited which is a company and not a firm of Chartered Accountants. Learned Senior Counsel for the Petitioners in this respect submits that there is no provision in law which requires a report for the share exchange ratio or that such report has to be prepared only by chartered accountants. Without prejudice to the aforesaid, it is submitted that M/s Ernst Young Private Limited is a company providing various services like financial advisory, tax advisory, management consulting, valuation etc. Learned Senior Counsel submits that as per the instructions received from Ernst Young Private Limited, the team in respect of the present report com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Senior Counsel in support of his submissions relies upon the judgments in SANVIJAY ALLOYS (P) LIMITED, (2004) 122 COMPANY CASES 754, ZEE INTERACTIVE MULTIMEDIA, (2002) 111 COMPANY CASES 733 AND MAYFAIR LIMITED, (2004) 112 COMPANY CASES 748 and further submits that the present proceedings cannot and ought not to be permitted to be used by the Unsecured Creditors for recovery of their monies. 31. In the present case, the claims of the three Unsecured Creditors are disputed by the concerned Petitioner Companies. As regards M/s Matrix Cellular Services Private Limited, arbitration proceedings are pending with respect to the claim of the company and the Petitioner/Transferee Company. The other two Objectors, M/s Skipper Limited and Associated Towers Structure Private Limited have not yet initiated any proceedings for recovery of amounts purportedly due to them. This Court is of the view that the claim raised by the three Unsecured Creditors cannot be agitated in the present proceedings for sanction of the Scheme. It is however clarified that the sanction of the Scheme will not in any manner affect the Arbitration proceedings between the Transferee Company and M/s Matrix Cellul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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