2019 (1) TMI 1844 - Tri - Companies Law

Approval of the Scheme of Arrangement - Sections 230 to 232 of the Companies Act 2013 read with the Companies (Compromises Arrangements and Amalgamations) Rules 2016 and the National Company Law Tribunal Rules 2016 - HELD THAT - Upon considering the approval accorded by the members and creditors of the Petitioner Company 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 by the undertakings filed and also 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 - While approving the Scheme It is further clarified that this order should not be construed as an order granting exemption from payment of stamp duty taxes including income tax GST etc or any other charges if any and payment in accordance with law or in respect of any permission/compliance with any other requirement which may be specifically required under any law. The scheme is approved - petition disposed off.

Summary

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 raised by creditors and shareholders.
4. Representations and no-objections from regulatory authorities.
5. Conditions imposed by the Department of Telecommunications (DoT).
6. Compliance with accounting standards and statutory requirements.

Detailed Analysis:

1. Approval of the Scheme of Arrangement:
The petition was filed under Sections 230 to 232 of the Companies Act, 2013, seeking approval for a Scheme of Arrangement. The Scheme involves the transfer of the Demerged Undertaking from the Transferor Company to the Transferee Company, including the issuance of equity shares and redeemable preference shares as outlined in clause 6 of the Scheme.

2. Compliance with Procedural Requirements:
The initial application sought dispensation from convening meetings of shareholders and creditors. The Tribunal directed the publication of notices in specified newspapers and service of notices to relevant regulatory authorities. The Petitioners complied with these directions, as evidenced by affidavits and acknowledgments from the respective offices.

3. Objections Raised by Creditors and Shareholders:
An unsecured creditor, S2 Infotech International Limited, raised objections due to an outstanding debt. However, the creditor's debt constituted less than 5% of the total outstanding debt, disqualifying them from objecting under Section 230(4) of the Companies Act, 2013. Similarly, a shareholder's objections were dismissed as they held only 9 shares, far below the 5% threshold required to raise an objection.

4. Representations and No-Objections from Regulatory Authorities:
The Regional Director and the Income Tax Department raised no objections to the Scheme. The Transferee Company undertook to meet the tax liabilities of the Demerged Undertaking from the effective date.

5. Conditions Imposed by the Department of Telecommunications (DoT):
The DoT outlined several conditions for the transfer of the Demerged Undertaking, including:
- A one-year period for the transfer/merger.
- Conditions related to lock-in periods, market share limits, and spectrum usage charges.
- Requirements for bank guarantees and compliance with spectrum limits.
- Clearing of all demands related to licenses before the merger.

The Transferee Company undertook to comply with these conditions and submitted relevant undertakings to the DoT.

6. Compliance with Accounting Standards and Statutory Requirements:
Certificates from statutory auditors confirmed that the accounting treatment proposed in the Scheme conforms to the Accounting Standards specified under Section 133 of the Companies Act, 2013.

Conclusion:
Upon considering the approvals from members and creditors, and the no-objections from regulatory authorities, the Tribunal found no impediments to sanctioning the Scheme. The Petitioners are bound by their undertakings and must comply with statutory requirements. The order does not exempt them from paying stamp duty, taxes, or other charges. The Scheme is approved, and the petition is disposed of accordingly.