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TMI Blog2024 (4) TMI 336X X X X Extracts X X X X X X X X Extracts X X X X ..... a Creditor, in the Audited Financial Statements, such Claimant, is disentitled to Intervene, demand Documents or Object, to a Scheme, and it is outside to the purview of Section 230 233 of the Companies Act, 2013, before the Tribunal, to enter into the Merits of the Dispute. This Tribunal, on a careful consideration of respective contentions, advanced on either side, taking note of the surrounding facts and circumstances of the instant Appeal, especially, in the teeth of the Appellant / Petitioner, not figuring as a Creditor of the Respondents, in terms of its Audited Financial Statement, and the List of its Unsecured Creditors, being duly authenticated, of course, based on verification, by the Statutory Auditor, this Tribunal, comes to a consequent conclusion, that the Impugned Order, dated 09.02.2024, passed by the National Company Law Tribunal, Court No. V, Mumbai Bench, by making an observation that the Appellant, is not a Creditor of the Respondent Nos. 1 2, and as such, has no Locus, to object to the process of the Scheme, is free from any legal infirmities. Appeal dismissed. - [ Justice M. Venugopal ] Member ( Judicial ) And [ Mr. Arun Baroka ] Member ( Technical ) For the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ert the Applicant s status to that of a creditor in respect of amounts now claimed to be due for the period between 01.04.2018 to 31.03.2023 vis a vis Respondent No. 2. 28. The Bench has also procured the affidavits filed in replies of both the Respondent companies which categorically mention that the liabilities/obligations of any kind of the Transferor Company will be transferred to and become the liabilities/obligations of the Transferee Company. Thus, the sanction of the scheme will not impair or extinguish any creditor s claim. Reliance is also placed on Zee Interactive MultiMedia Ltd. (2002) 3 Comp Cas 733 (Bom) in which it was held that unless a creditor shows that the scheme is malafide or fraudulent, or that it would adversely affect creditors of the transferee company, or is shown to be contrary to law, the court should not come in the way of bonafide scheme of amalgamation. The court also observes the Respondent s claim that both the transferor and the transferee companies are financially healthy companies with a positive net worth and the Scheme is beneficial for all stakeholders of both companies. Hence, even if the Applicant is proved to be the creditor of the Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for holding, that the Previous Agreements , entered into between the Parties , in June 2018, do not establishes, the Appellant s right as Creditor . 9. The other argument raised by the Learned Counsel for the Appellant, is that, the Tribunal , instead of limiting the Order , to the entitlement of the Appellant, to seek the Documents , under the Scheme , had also decided upon the Appellant s right , to object to the Scheme . 10. The Learned Counsel for the Appellant, emphatically contends that the Tribunal , after taking up the issue of determining, whether the Appellant , is the Creditor of the Respondents Companies , had ignored the admissions, made by the Second Respondent , in their Reply dated 27.07.2023, annexed to the Affidavit in Reply , filed by the Respondents themselves. 11. The Appellant s case is that, they are entitled to the Scheme Documents , filed by the Respondents , under Section 230-232 of the Companies Act, 2013, firstly as a member of the Public , on account of Scheme , being a Public Process , which can be seen from the various sections and provisions of the Companies Act and second, as a Creditor of the Respondents ( Transferor and Transferee Companies ), b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fide or Fraudulent or that, it adversely affects the Creditors of the Transferee Company , or is shown to be contrary to Law , the Court should not come, in the way of Bona fide Scheme of Amalgamation . However, the Impugned Order , had failed to appreciate that the Scheme of Amalgamation , would in fact, be contrary to the provisions of the Copyright Act , 1957, if it does not provide for the pecuniary Claims of the Appellant . 17. The Learned Counsel for the Appellant, brings to the notice of this Tribunal , that the Appellant / Petitioner , is claiming a right of entitlement , to the Documents , on the basis that he is a Member of the public , as well as he is the Creditor of the Respondents Companies . Further, it is the submission of the Appellant s side, any Member of the Public , Creditor , Shareholder and Regulatory Authorities , are entitled to seeking documents as the Scheme proceedings , is a public process . 18. According to the Appellant, there are two stages Viz. (a) Receiving the Documents and (b) the Persons eligible, to raise objections to the Scheme . Also that, a mere perusal of various provisions of the Companies Act, 2013, the Companies (Compromise, Arrangement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Appellant, contends that it is not the case of the Respondents, that they never utilised works belonging to the Appellant , and therefore, in the absence of any dispute , raised as contemplated under Section 33A, it is established beyond the reasonable doubt, that the Appellant , is the Creditor of both the Respondents. 25. According to the Appellant, the Copyright Act, 1957, places a Reverse Burden , upon the Respondents, to challenge the Proprietary of the Tariffs , published by the Appellant , and if they are Aggrieved , but too, after effecting the Payments of the Royalty , as published by the Appellant . 26. The Learned Counsel for the Appellant, points out that the C.A. 320 / 2023 in CP No. 200 / 2023, was filed, before the Tribunal , praying for a Copy of the CA (CA)/48/MB/2023 and all connected Documents, but, the same was rejected by the Tribunal , on irrelevant facts, and added further, that the Tribunal , had erred in deciding upon matters, which are not subject matter and Reliefs of the Application. 27. The Learned Counsel for the Appellant, refers to the decision of the Hon ble Supreme Court of India, in International Confederation of Societies of Authors and Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emphasized by sub-sections (9) and (10) of Section 19 of the Copyright Act, which indicate that the right of such authors to claim royalties remains unaffected in case of utilization of their works, in the case of a cinematograph film when it is communicated to public other than in a cinema hall, and in the case of a sound recording, whenever it is utilized in any form. 48. This Court is of the opinion that when the proviso added to Section 17 and third and fourth provisos added to Section 18 along with sub-sections (9) and (10) added in Section 19 of the Copyright Act are read together, the exclusive right of entities like the defendants herein, while communicating the sound recordings to the public becomes subject to the aforementioned provisions incorporated by amendment in Sections 17, 18 and 19 of the Copyright Act. The purpose and object of the amendment appears to have been achieved when Sections 13 and 14 (with the words subject to the provisions of this Act ) are read with the amended Sections 17, 18 and 19 of the said Act. 58. Equally, the contention raised by Mr. Khambata that the words subject to the provisions of this Act used in Sections 13 and 14 are relatable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 18 and sub-sections (9) and (10) in Section 19 of the Copyright Act, was not considered or was perhaps not brought to the notice of the Delhi High Court in the said case. There is no reference to the objects and reasons for which the amendment was brought about, and therefore, this Court is not persuaded to accept the opinion of the Delhi High Court in the said case, that the amendments of the year 2012 were merely clarificatory in nature and that the position of law has not undergone any change at all. 29. The Learned Counsel for the Appellant, points out that in the aforesaid decision in Indian Performing Right Society Limited, 2023 SCC OnLine Bom. 944, wherein at Paragraph Nos. 45 to 48 (mentioned Supra), in respect of Appellant s right, post the Amendment in the Copyright Act, in the year 2012, the Law , was lay down and since, there was no Stay on the aforesaid Order , it clearly proves that the Appellant is the Creditor of the Respondent Companies . 30. The Learned Counsel for the Appellant, submits that the Respondents had admitted (i) that they had entered into Settlement of Appellant s past dues, through a One Time Settlement . (ii) that the Second Respondent in respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and Section 230(4) of the Companies Act, 2013, do not come in the way of granting Documents to the Appellant and affording him to raise objections, if any. Respondents Contentions : 35. The Learned Senior Counsel for the Respondents submits that the instant Appeal , preferred by the Appellant , has no merits and deserves to be dismissed on all grounds, including lack of Locus and on No Cause of Action . 36. According to the Respondents only a Creditor , as per the Audited Financial Statements of the Transferor / Transferee Companies or a Shareholder of the Transferor / Transferee Companies , has the Locus to intervene in a Scheme , to oppose the same, as per decision in Astorn Research Limited, reported in (2013) SCC OnLine Guj 1510 (vide Common Judgment dated 02.04.2013 in CP No. 193-197 of 2012 of the Hon ble High Court of Gujarat. Therefore, the Tribunal , while rejecting the Appellant / Applicants request s for Documents, had rightly examined the Appellant s entitlement to the Reliefs , prayed for, in its Application , on the touch stone of whether the Appellant , is the Creditor of the Respondents or not and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Section 230(4) of the Companies Act, 2013. Also that, the Appellant s Claim is a Disputed Claim , and hence, the Appellant , is not entitled to oppose the Scheme . 43. According to the Respondents, the Appellant is not recognised a Creditor in the Financial Statements of both the Respondents , and in fact for Novi, the Appellant / IPRS, has not even addressed any Correspondence / Notice / Demand to Novi, before filing the Appellant s Application. As regards Star, the Legal Notice dated 31.05.2022, addressed to Star is at the highest a Disputed Claim Viz. a Claim seriously disputed by Star . 44. The Learned Counsel for the Respondents, contends that when a Claim is raised by the Objector , being a Disputed Claim , and unless, such a Dispute or Liability are crystallised and settled in an Appropriate Court / Forum , ofcourse, in Appropriate Proceedings , the Scheme , cannot be stopped or delayed , and places reliance upon the decisions in (i) Emco Limited s case, reported in (2004) SCC OnLine Bom 422 (vide Paragraph Nos. 16 to 18) and (ii)Astorn Research Limited(2013) SCC OnLine Guj 1510 (vide Paragraph No. 9). 45. The Learned Counsel for the Respondents, proceeds to point out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable to the Appellant . 51. The Learned Counsel for the Respondents, brings to the notice of this Tribunal , that the legal issue as to whether Appellant / IPRS , is entitled to collect Royalty , is not only as between the Appellant / IPRS and Respondents , but, it is an industry wide issue, which is also pending determination, before the Hon ble High Court of Delhi and Hon ble High Court of Bombay (vide Order dated 04.01.2021) inter alia, held that the 2012 Amendments to the Copyright Act, 1957, are merely clarificatory in nature , and there is no change in the position of Law . 52. The Learned Counsel for the Respondents points out the decision of the Hon ble High Court of Delhi, in IPRS v. Entertainment Network (India) Ltd., reported in (2021) SCC OnLine Del 1, wherein, it is held that, there is no independent utilisation of underlying musical and literary works embodied in a sound recording , when Broadcast. Hence, no separate Licence , for underlying works , is required. 53. It is further represented that the likewise proceedings are pending before the Hon ble High Court of Bombay, wherein, by an Order dated 28.04.2023, it is held in favour of IPRS (vide decision in IPRS v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IPRS interest (if any created in the future) are adequately protected under the Scheme . In fact, the Appellant, on an earlier occasion, had acted in accordance with the aforesaid legal position and further that, when a Scheme of Amalgamation , was approved between Asianet Star Communications Pvt. Ltd. (Transferor Company ASCPL) and Star (the Transferee Company), the Appellant / IPRS, has now made all its Claims , in respect of Asianet Star Communications Pvt. Ltd. , against the surviving Transfer Company , Viz. Star . 58. The Learned Counsel for the Respondents, submits that a similar modus operandi , of the Appellant s Mala fide , is evident from the fact, that the Appellant / IPRS, has also filed a separate Petition / Application, under Section 9 of the I B Code, 2016, against the Respondents , to arm twist them into payment of its unjustified and untenable Royalty Demands . 59. The Learned Counsel for the Respondents, prays for dismissing of the instant Appeal , along with IA No. 1269 / 2024 (Stay Application), with costs. Respondents Decisions : 60. The Learned Counsel for the Respondents, relies on the decision in Zee Interactive Multimedia Ltd., in Re, reported in 2002, SCC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any is not sound and would not be able to pay it's debts after taking over the debts of the transferor company. The balance sheet shows that the transferee company is stronger than the transferor company. The transferor company is a subsidiary of a transferee company. It is not shown how the proposed scheme is unjust and unfair to the objecting creditor or to the creditors either of the transferor or transferee company. Both the companies have positive net worth. It is not shown even prima facie by the objecting creditor that he would be adversely affected by sanctioning of the scheme. 62. The Learned Counsel for the Respondents, seeks in aid of the decision of the Hon ble High Court of Bombay, in the matter of EMCO Limited and in the matter of Scheme of Arrangement between Vericalbiz.com (India) Ltd. and EMCO Ltd., wherein at Paragraph Nos. 17, 18 24, it is observed as under: 17. In view of this, even otherwise on merit in the present case, as affidavit of service is filed on record and as objector/intervenor/creditors are and through their respective lawyers, are objecting the Scheme of Arrangement, in my view the case of creditors and objection of dispensing the meeting as o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these two objections are disputed and are denying by the petitioner company. Therefore, on this sole ground itself, these two objection of intervenor creditors are rejected and cannot be considered while sanctioning Scheme or Arrangement in question. 18. The petitioner company by its affidavit dated 8th April, 2004, resisted the objection of the said Jain Parmar Electronic Pvt. Ltd. and placed on record the material to show that the said amount is not payable and due and disputed the exagerated amount as claimed by Jain Parmar Electronic, as same was with sole purpose to mislead the Court and to recover their alleged due by obstructing the sanctioning of the present Scheme. The petitioner company has again relied on C.A. certificate for their financial position and for the positive net worth, dated 7th April, 2004. Basically of the EMCO Ltd. subsidiary company, as on 31st December, 2003. The petitioners further contended that in the affidavit that, as per the said C.A. certificate, after the said merger in the net worth of the petitioners company and its subsidiary company i.e. Certicalbiz. Com (India) Ltd. would be Rs. 66,26,24,338/-. The equipments are still lying with the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Intas Biopharmaceuticals Limited (the transferor company of Company Petition No. 196 / 12) filed Company Application No. 264 of 2012 before this Court seeking dispensation of the meetings of the equity shareholders and the secured creditors on the basis of their written consent and for further direction to hold meeting of the unsecured creditors of the company. This Court (Coram: Abhilasha Kumari, J) vide order dated 31.07.2012 ordered dispensation of the meeting of the equity shareholders and the secured creditors and also directed to hold meeting of the unsecured creditors. This Court further directed the company to hold meeting of the unsecured creditors of the company on 07.09.2012 for the purpose of considering and, if thought fit, approving with or without modifications, the proposed scheme of arrangement in the nature of amalgamation of the company with IPL / transferee company, as proposed between the company and its unsecured creditors. It was further directed that at least 21 clear days before the meeting to be held, as aforesaid, a notice be issued to all the unsecured creditors in the prescribed manner and appointed Shri Jainand Vyas, Vice President-Accountant or failin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit limit, mentioned in Proviso to Section 230(4) of the Companies Act, 2013. Assessment : 69. Before, the National Company Law Tribunal , Court No. V, Mumbai Bench, the Appellant / Petitioner , had filed C.A. 320 / 2023 in CP No. 200 / 2023, praying for (i) passing of an Order , in directing the Respondents / Original Applicants , to furnish a copy of the CA No. (CAA) 48 / MB / 2023, together with all Annexures and all other connected documents, Applications / Petition, to the Applicant (ii) to grant 4 weeks time to the Petitioner / Applicant, to file the Objections , against the Scheme, after the receipt of the copies of the First Motion Application . 70. Before the Tribunal , the First Respondent / Novi Digital Entertainment Private Ltd. (Transferor Company), had filed a Reply , by averring that the Appellant / Petitioner, is not a Creditor of the First Respondent , and that the present Application , pertains to Applicant s Alleged Claim for Royalty , in respect of the Authors of Literary and Musical works (underlying works), who are the members of the Applicant . 71. The stand of the First Respondent, before the Tribunal , is that the Applicant , is neither a Creditor nor a Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncially healthy Company , with positive network. 80. The Tribunal , in its findings at Paragraph No. 26 of the Impugned Order dated 09.02.2024 in C.A. 320 / 2023 in CP No. 200 / 2023, had clearly mentioned that the Appellant / Petitioner s name , was not included in the List of 194 Unsecured Creditors of the First Respondent and 1215 Unsecured Creditors of the Second Respondent (has annexed to CA Scheme No. 48 / 2023). 81. Be that as it may, this Tribunal , on a careful consideration of respective contentions, advanced on either side, taking note of the surrounding facts and circumstances of the instant Appeal , especially, in the teeth of the Appellant / Petitioner , not figuring as a Creditor of the Respondents , in terms of its Audited Financial Statement , and the List of its Unsecured Creditors , being duly authenticated, of course, based on verification , by the Statutory Auditor , this Tribunal , comes to a consequent conclusion, that the Impugned Order , dated 09.02.2024, passed by the National Company Law Tribunal , Court No. V, Mumbai Bench, by making an observation that the Appellant , is not a Creditor of the Respondent Nos. 1 2, and as such, has no Locus , to object to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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