Spectra Isp Networks vs ----
2012 Latest Caselaw 5127 Del

$~A19
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                 Date of Judgment:30th August,2012

+      CO.PET. 283/2012

      IN THE MATTER OF THE COMPANIES ACT, 1956 AND
          IN THE MATTER OF SECTIONS 391 TO 394 OF
                  THE COMPANIES ACT, 1956
         SCHEME OF ARRANGEMENT AND DEMERGER

       SPECTRA ISP NETWORKS
       PVT LTD & ORS.                       ..... Petitioner No.1
                                            (Demerged Company)
                                 And

       CITYCOM NETWORKS PVT. LTD. ..... Petitioner No.2
                                   (Resulting Company)
                    Through: Mr.P. Nagesh with Mr.Anand
                             M.Mishra, Adv. for the petitioner
                             companies.
                             Mr. K.S. Pradhan, Dy. Registrar
                             of Companies for the Regional
                             Director.
       CORAM:
       HON'BLE MS. JUSTICE INDERMEET KAUR

                 ORDER

% 30.08.2012

1. This Second motion joint petition has been filed under Sections

391 to 394 of the Companies Act, 1956( hereinafter referred to as „Act‟)

by the petitioner Companies seeking sanction of the Scheme of

Arrangement and Demerger (hereinafter referred to as „Scheme‟)

2. The petitioner companies had earlier filed C.A. (M) No. 54 of

2012 seeking directions of this Court for (a) dispensation of the

meetings of Equity Shareholders and Preference Shareholders of

Demerged Company and dispensation of the meetings of Equity

Shareholders of Resulting Company (b) direction for convening the

meetings of Secured and Unsecured Creditors of the Petitioner

Companies. Vide Order dated 23rd March 2012, this court allowed the

application and was pleased to direct convening the meetings of the

Secured and Unsecured Creditors of the Petitioner Companies and

dispensed with the requirement of convening meetings of Equity

Shareholders and Preference Shareholders of Demerged Company and

dispensation of the meetings of Equity Shareholders of Resulting

Company. The Chairpersons appointed by this Court have filed their

respective reports stating that the Scheme of Arrangement and

Demerger has been approved unanimously at the aforesaid meetings

convened on 05.05.2012.

3. The Petitioner Companies have thereafter filed the present

petition seeking sanction of the Scheme of Arrangement. Vide order

dated 01.06.2012, notice in the Petition was directed to be issued to the

Regional Director, Northern Region, the Citations were also directed to

be published in "Financial Express" (English, Delhi Edition) and "Danik

Jagran" (Hindi, Delhi Edition). Affidavit of service and publication

dated 27.08.2012 has been filed by the Petitioners showing compliance

regarding service of the petition on the Regional Director, Northern

Region and also regarding Publication of Citations in the aforesaid

News papers on 07.08.2012, copies of the news papers cuttings, in

original, containing the publications have been filed with the affidavit of

service.

4. In response to the notice issued in the Petition, learned Regional

Director, Northern Region, Ministry of Corporate Affairs has filed his

affidavit / report dated 23rd August, 2012. Relying on clause 8 of Part -

B of the Scheme of Arrangement, he has stated that, upon sanction of

the Scheme of Arrangement all the staff / employees of the Transferor

Company / Demerged Company engaged in "ISP Business" shall

become the employees of Transferee Company without any break or

interruption in their services upon sanctioning of the Scheme of

arrangement by the Hon‟ble Court.

5. The Regional Director further at para 4 and 4.1 of its

representation / affidavit had stated that "Para 14 of Part-B of the

Scheme, provides that the object clause of the Demerged Company

would stand altered and amended and after sub-clause 1 of Clause III

(A) of the Memorandum of Association of the Demerged Company, the

following sub - clause 2 shall be added.....". Further in para No.4.1, the

Learned Regional Director has submitted that the "Memorandum of

Association of a Demerged Company can be changed/altered only after

following the procedure prescribed under the relevant provisions of the

Companies Act, 1956. It is, therefore, submitted that the Demerged

Company may be asked to follow the procedure prescribed under the

Companies Act, 1956.

6. He further submitted in para No. 5 of the affidavit dated August

23, 2011 that both the Petitioner Companies vide their letter dated

18.07.2012 have intimated that certain charges are proposed to be

transferred from the De-merged Company to the Resulting Company.

Further in para No. 5.1 of its representation / affidavit, the Regional

Director has submitted that the name of the Demerged Company cannot

be substituted in the Charge Documents as such for satisfaction of

charge, the Demerged Company is required to file Form No. 17. In view

of this the Regional Director observed that the Petitioner Companies

may be asked to comply with the relevant provisions of the Companies

Act, 1956 for satisfaction and creation of charge in Demerged Company

and Resulting Company, respectively.

7. In response to the observations made by Ld. Regional Director at

para 4, 4.1, 5 and 5.1 of the representation / affidavit, the Petitioner

Companies filed their respective reply on 29.08.2012 stating that the

pursuant to the Scheme of Arrangement and Demerger, the Object

Clause of the Memorandum of Association of the Demerged Company

will stand amended on approval of this Scheme by the Hon‟ble Court

and the charges as mentioned in the Scheme of Arrangement and

Demerger will stand transferred to the Resulting Company automatically

on approval of this Scheme by the Hon‟ble Court. Further it is submitted

that the approval of Scheme in terms of Section 391-394 of the

Companies Act, 1956 is a 'Single Window Clearance' and no further

act on the part of any of the Petitioner Companies is required to be done

after the approval of the Scheme, for giving effect to the said

amendment in the Memorandum of Association of the Demerged

Company and for the transfer of the charges from the Demerged

Company to the Resulting Company.

8. In the case of PMP Auto Industries Ltd. (1994) Vol. 80 Comp.

Cases 289, the Hon‟ble Bonbay High Court held as follows:-

"Section 391 invests the court with powers to approve or sanction the scheme of amalgamation/arrangement which is for the benefit of the company. In doing so, if there are any other things which, for effectuation, require a special procedure to be followed - except reduction of capital - then the court has power to sanction them while sanctioning the scheme itself. It would not be necessary for the company to resort to other provisions of the Companies Act or to follow other procedures prescribed for bringing about the changes requisite for effectively implementing the scheme, which is sanctioned by the court. Not only is section 391 a complete code, as held by the courts, but, in my view, it is intended to be in the nature of a "single window clearance" system, to ensure that the parties are not put to avoidable, unnecessary and cumbersome procedure of making repeated applications to the court for various other alterations or changes which might be needed effectively to implement the sanctioned scheme, whose overall fairness and feasibility has been judged by the court under section 394 of the Act."

The counsel for the Petitioner Companies on instructions says that

the Petitioner Companies will file the requisite forms, if any, required in

law.

9. The Ld. Regional Director further at para 6 of its representation /

affidavit dated 23.08.2012 has submitted that the Demerged Company is

carrying on the business of Internet Service Provider including value

added service and that it is not clear whether the Demerged Company

has obtained any Licenses from the Ministry of Telecommunication

regarding providing Internet Service. Further in para No. 6.1, the

Learned Regional Director has submitted that both the Transferor and

Transferee Companies may be asked to obtain the necessary approval

from the Ministry of Telecommunication for transfer of licenses after

the sanction of the scheme by this Hon‟ble Court pursuant to the

Ministry of Telecommunication letter no. 820-1/2003 -LR dated

9th June 2003 in which the Ministry of Telecommunication has clarified

that the licensee may transfer the license with prior written approval of

Licensor even in cases of Scheme of Amalgamation under Section

391/394of Companies Act, 1956.

10. In response to the observations made by Ld. Regional Director at

para 6 and 6.1 of the representation / affidavit, the Petitioner Companies

have stated that the Demerged Company as well as Resulting Company

are in the same business of providing internet services and therefore

they already have a license dated 05.07.2007 and 06.08.2008

respectively from the Ministry of Telecommunication. The license

agreement does not provide any restriction on transfer of the license

agreement. Further that in terms of the circular no. 820-1/2003 - LR

dated 9th June 2003 issued by Ministry of Telecommunication and with

regard to the comment of the Regional Director, both the companies

undertake to take written approval from the Ministry of

Telecommunication after the Scheme is sanctioned by the Hon‟ble

Court.

11. In view of the reply filed by the Petitioner Companies and

undertaking given by the Petitioner Companies and after hearing the oral

submissions made by Mr. P. Nagesh, Ld. Counsel for the Petitioners,

this Court is of the view that the observations made by the Regional

Director have been sufficiently answered by the Petitioner Companies

and the Scheme of Arrangement & Demerger needs to be sanctioned by

this Court.

12. No objection has been received to the Scheme of Amalgamation

from any other party. In this regard, Mr. P. Nagesh, Advocate of

Petitioner Companies has filed an affidavit dated 27th August, 2012

stating that neither he nor the management of Petitioner Companies has

received any notice from any person opposing the Petition pursuant to

the citations published in the Newspapers respectively.

13. No objection has been received to the Scheme of Arrangement

and Demerger from any other party, Mr. Krishan Kumar, Company

Secretary of Transferor / Demerged Company and Mr. Kishore Gogar,

Company Secretary of Transferee Company have filed their respective

affidavits dated 27th August 2012 confirming that neither the Petitioner

Companies nor their Legal Counsel have received any objection

pursuant to the citations published in the Newspapers.

14. Even today, During the Course of hearing Mr. K.S. Pradhan,

Deputy Registrar Of Companies for Regional Director (Northern

Region) states that he has no objection to the present Scheme being

sanctioned.

15. In view of the approval accorded by the Shareholders and

Creditors of the Petitioner Companies, representations/ reports filed by

the Regional Director, Northern Region to the proposed Scheme of

Arrangement and Demerger, and the reply affidavit dated 29.08.2012 of

the Petitioner Companies, and the submissions made in the Court today

there appears to be no impediment to the grant of Sanction to the

Scheme of Arrangement and Demerger. Consequently sanction is

hereby granted to the Scheme of Arrangement and Demerger under

Section 391 and 394 of the Companies Act, 1956. The Petitioner

Companies will comply with the statutory requirements in accordance

with law. Certified copy of the order be filed with the Registrar of

Companies within 30 days from receipt of the same. In terms of the

provisions of Section 391 and 394 of the Companies Act, 1956 and in

terms of the Scheme, the ISP Business / Undertaking, comprising of the

properties whether movables or immovable, all debts, liabilities,

contingent liabilities, duties and obligations of every kind, nature and

description, all documents of title, deeds, papers, contracts, licenses,

permissions, approvals, Registration, Authorizations, Rights, lease etc.

of the Transferor / Demerged Company be transferred to and vest in the

Transferee / Resulting Company without any further act or deed. It is,

however, clarified that this order will not be construed as an order

granting exemption from payment of stamp duty or taxes or any other

charges, if payable in accordance with any law; or permission/

compliance with any other requirement which may be specifically

required under any law.

16. Learned counsel for the petitioners states that the Petitioner

Companies would voluntarily deposit a sum of Rs. 1,00,000/- in the

Common Pool Fund of the Official Liquidator within three weeks from

today. The statement is accepted.

17. The petition is allowed in the above terms.

INDERMEET KAUR, J AUGUST 30, 2012 rb