Ht Music And Entertainment ... vs ................
2014 Latest Caselaw 7116 Del

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*IN THE HIGH COURT OF DELHI AT NEW DELHI

+    CO.PET. 544/2014
     IN THE MATTER OF
HT MUSIC AND ENTERTAINMENT COMPANY LTD
                                .....Petitioner
                 Through: Mr.         Anirudh     Das    and    Mr.
                             Kamaljeet Singh, Advocates for
                             the Petitioner.

                             Mr.      Atma        Sah,   Assistant
                             Registrar of Companies for the
                             Regional Director.

     CORAM:
     HON'BLE MR. JUSTICE SANJEEV SACHDEVA

                        ORDER

% 23.12.2014

SANJEEV SACHDEVA, J (ORAL)

1. This second motion petition has been filed under sections 391-394 of the Companies Act, 1956 ("Act") seeking sanction of the Scheme of Arrangement (Restructuring) ("Scheme") between Noble Broadcasting Corporation Private Limited Ltd

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(hereinafter referred to as Transferor Company) and HT Music and Entertainment Company Limited (hereinafter referred to as the Petitioner/Transferee Company) and their respective Shareholders and Creditors. A copy of the Scheme has been enclosed with the Petition.

2. The registered office of the Petitioner Company is situated at New Delhi, within the jurisdiction of this Hon‟ble Court. The registered office of the Transferor Company is situated at Chennai, outside the jurisdiction of this Court.

3. Learned Counsel for the Petitioner Company submits that the separate Company Petition filed by the Transferor Company at the High Court of Judicature at Madras for the sanction of the Scheme has been approved by the High Court of Judicature at Madras.

4. Details with regard to the date of incorporation of the Petitioner Company, their authorized, issued, subscribed and paid up capital have been given in the Petition.

5. Copies of the Memorandum and Articles of Association of the Petitioner Company and the =====================================================

Transferor Company and the audited accounts of the Petitioner Company and the Transferor Company as on 31st March 2013 and 31 st March 2014 respectively have also been enclosed with the Petition.

6. Copies of the Resolutions passed by the Board of Directors of the Petitioner Company approving the Scheme of Amalgamation have also been placed on record.

7. Learned Counsel for the Petitioner Company submits that no proceedings under Sections 235 to 251 of the Companies Act, 1956 is pending against the Petitioner Company.

8. The Petitioner Company had earlier filed C.A (M) No. 118 of 2014 seeking dispensation from convening the meetings of the Equity Shareholders and Unsecured Creditors of the Petitioner Company. Vide order dated 14th August 2014, this Court allowed the application and dispensed with the requirement of convening the meetings of the Equity Shareholders and Unsecured Creditors of the Petitioner Company. Since the Transferee Company does not have any Secured

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Creditors, hence the requirement for convening the meeting of the same does not arise.

9. The Petitioner Company had thereafter filed the present Petition seeking sanction to the Scheme of Amalgamation. Vide order dated 1st September 2014, notice of the Petition was directed to be issued to the Regional Director, Northern Region, Ministry of Corporate Affairs, Noida. Citations were also directed to be published in „"Hindustan Times" (English Edition) and "Hindustan" (Hindi Edition). Affidavit of Service and Publication has been filed by the Petitioner Company showing compliance regarding service of the Petition on the Regional Director, Northern Region and also regarding publication of citations in the aforesaid newspaper. Copies of the newspaper cuttings, in original, containing the publications have also been filed along with the Affidavit of Service.

10. In response to the notice issued in the Petition, Learned Regional Director, Northern Region, Ministry of Corporate Affairs has filed his Affidavit/Report dated 20th November 2014. Relying on Clause 8.1 of Part III of the Scheme, the Regional Director has stated that all permanent employees of the Transferor Company in =====================================================

relation to the Radio Business Undertaking shall become the employees of the Petitioner/ Transferee Company on and from the effective date without any interruption in their service. Further, it is submitted that a letter has been written to the Income Tax Authorities, but despite notice, no comments have been received from the Income Tax Office.

11. Further, learned Regional Director at Para 9 (i) of his Affidavit has observed that upon the sanctioning of the Scheme, the Petitioner Company has to make a payment of INR 7,35,00,000/- to the Transferor Company as lump sum consideration on the Effective Date and that since the Petitioner Company is a loss making company and that according to the Balance Sheet of the Petitioner Company as on 31 st March 2014 the Petitioner Company does not have any liquidity to meet out the said liability.

12. In response to the above observation, the Petitioner Company in the Reply Affidavit dated 24th November 2014, has submitted that the Petitioner Company is a Wholly Owned Subsidiary of HT Media Limited and the Board of Directors of HT Media Limited at their meeting held on 25 th July 2014 has approved an =====================================================

investment into the Petitioner Company. Further, learned Counsel for the Petitioner Company submits that HT Media Limited is the holding company of the Petitioner/Transferee Company and it shall be infusing investment into the Petitioner Company which would enable the Petitioner Company to discharge the consideration as provided for in the Scheme.

13. Further, learned Regional Director at Para 9 (ii) of his Affidavit has observed that the qualification of the Auditor to the Balance Sheet as at 31 March 2013 of the Petitioner Company to the effect that "the company has accounted for tax assets (net) of Rs. 1,964,074 (previous year Rs. 819,860) as on 31 March 2013. The Company is confident that subsequent realization of deferred tax assets is virtually certain in the near future based on future projection and existing business model of the company". It is accordingly observed by the Registrar of Companies that this is not in line with the requirements of Accounting Standard-22 as on 31.3.2013 to determine virtual certainty and the Petitioner Company should have the same compounded. The Regional Director in the light of the same has further observed that the Balance Sheet of the

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Petitioner Company does not give a true and fair view of the affairs of the Company.

14. In response to the above observation, the Petitioner Company in the Reply Affidavit has submitted that the that in the Financial Year 2013 the management of the Petitioner Company was confident of realization of deferred tax assets in the subsequent financial years, as the Petitioner Company was performing well and was showing a consistent growth in revenue. Accordingly, it was determined to keep the deferred tax assets in the books and that the Regional Director has only referred to the qualification raised by the Auditor. The Petitioner Company have submitted that in the Financial Year 2014, due to change in business circumstances, the management of the Petitioner Company had determined to write off the deferred tax assets in the books of the Petitioner Company. It is also submitted that the balance sheet of the Petitioner Company was provided to the Registrar of Companies which clearly shows that the said amount has been charged to the Profit and Loss Account and has been accordingly written off. Learned Counsel for the Petitioner Company submits that the Petitioner

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Company shall be continuing its existence post sanction of the Scheme and will continue to be subject to the jurisdiction of the Registrar of Companies, NCT of Delhi and Haryana. Further, learned Counsel for the Petitioner Company undertakes that the Petitioner Company shall apply for compounding of the offences in accordance with law.

15. Further, learned Regional Director at Para 10 (a), (b) and (c) of his Affidavit has observed that the Petitioner Company be directed to obtain necessary approvals from the Ministry of Information and Broadcasting, Government of India, from the Wireless Planning & Coordination Wing (WPC), Department of Telecommunication, Ministry of Communications & Information Technology, Government of India and the Standing Advisory Committee for Frequency Allocation (SACFA), Department of Telecommunication, Ministry of Communications & Information Technology, Government of India.

16. In response to the above observation, the Petitioner Company in the Reply Affidavit, has submitted that the Petitioner Company shall with respect to the current licenses, approvals and permissions of the Transferor =====================================================

Company as related to the Radio Business Undertaking, apply for all necessary approvals and permissions as applicable and required under law from:

a. the Ministry of Information and Broadcasting, Government of India;

b. the Wireless Planning & Coordination Wing, Department of Telecommunication, Ministry of Communications & Information Technology, Government of India; and

c. the Standing Advisory Committee for Frequency Allocation (SACFA), Department of Telecommunication, Ministry of Communications & Information Technology, Government of India.

17. Further, the Petitioner Company has undertaken that upon the sanction of the Scheme by this Court, it shall take all steps as applicable and required under law, to intimate the concerned statutory authorities including the Ministry of Information & Broadcasting and the Ministry of Communications & Information Technology of the sanction order of this Court.

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18. It is clarified that the Scheme shall be subject to the Petitioner Company obtaining requisite clearance and permissions from the concerned departments of the Ministry of Information and Broadcasting and Ministry of Communications & Information Technology, Government of India referred to above.

19. In view of the above said clarification and undertaking the concerns raised by the learned Regional Director has been duly addressed.

20. No objection has been received to the Scheme from any other party. The Petitioner Company has also filed an Affidavit confirming that neither the Petitioner Company nor their counsel has received any objection pursuant to the citations published in the newspapers.

21. In view of the approval accorded by the shareholders of the Petitioner Company, Representation/Report filed by the Regional Director, Northern Region and the submissions of the Petitioner Company, there appears to be no impediment to the grant of sanction to the Scheme of Restructuring. Consequently, sanction is hereby granted to the Scheme of Restructuring under Sections 391-394 of the Companies Act, 1956. The

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Petitioner Company will comply with the statutory requirements in accordance with law.

22. Certified copy of the formal order be filed with the Registrar of Companies within 30 days from the date of receipt of the approval from the concerned departments of the Ministry of Information and Broadcasting and Ministry of Communications & Information Technology, Government of India. In terms of the provisions of sections 391 and 394 of the Companies Act, 1956, all the property, rights and powers of the Radio Business Undertaking of the Transferor Company be transferred to and vest in the Transferee Company without any further act or deed. Similarly, all the liabilities (including contingent liabilities) and duties of the Radio Business Undertaking of the Transferor Company be transferred to the Transferee Company without any further act or deed. The sanction order of this Court shall be binding on the shareholders and creditors of the Petitioner Company.

23. It is, however, clarified that this order will not be construed as an order granting exemption from payment of stamp duty 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.

24. The Petition is allowed in the above terms.

Order Dasti.

SANJEEV SACHDEVA, J DECEMBER 23, 2014 sv

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