Augere Wireless Broadband India ... vs Bharti Airtel Limited
2016 Latest Caselaw 7456 Del

       IN THE HIGH COURT OF DELHI AT NEW DELHI

                                       Judgment reserved on:09.11.2016
                                    Judgment Pronounced on: 19.12.2016

CO. PETITION 530/2016

IN THE MATTER OF:-

AUGERE WIRELESS BROADBAND INDIA PRIVATE LIMITED

                             ... PETITIONER/TRANSFEROR COMPANY

                         AND

BHARTI AIRTEL LIMITED

                                           ..... TRANSFEREE COMPANY

                         Through:     Mr. Abhinav Vashisth, Sr. Advocate
                                      with Mr. Anirudh Das and Mr.
                                      Kamaljeet Singh, Advocates
                                       Ms. Aparna Mudium,          Assistant
                                      Registrar of Companies
                                      Mr. Rajiv Bahl, Advocate for the
                                      Official Liquidator
CORAM:
HON'BLE MR JUSTICE SIDDHARTH MRIDUL

                             JUDGMENT

SIDDHARTH MRIDUL, J

1. The present Petition under Sections 391 to 394 of the Companies Act,

1956 (hereinafter referred to as 'the Act') has been filed by Augere Wireless

Broadband India Private Limited (hereinafter referred to as 'Transferor

Company/Petitioner') to seek approval of the Scheme of Amalgamation

(hereinafter referred to as 'the Scheme') of the Transferor Company with

Bharti Airtel Limited (hereinafter referred to as 'Transferee Company').

2. The registered offices of the Transferor Company/Petitioner and

Transferee Company are situated at New Delhi, thus, this Court has the

necessary territorial jurisdiction to adjudicate this petition.

3. The Transferor Company/ Petitioner was incorporated under the Act,

vide certificate of incorporation dated 25.08.2010 issued by the Deputy

Registrar of Companies, National Capital Territory of Delhi and Haryana.

4. The Transferee Company was incorporated under the name of 'Bharti

Tele-ventures Limited' vide Certificate of Incorporation dated 07.07.1995

issued by the Registrar of Companies, NCT of Delhi and Haryana. The name

of the Transferee Company was thereafter changed to its present name vide

Fresh Certificate of Incorporation dated 24.04.2006 issued by the Registrar

of Companies, NCT of Delhi and Haryana.

5. The authorized share capital of the Transferor Company/Petitioner as

on 31.12.2015, is Rs.2,50,00,00,000/-, divided into 25,00,00,000 equity

shares of Rs. 10/- each. The issued, subscribed and paid-up share capital of

the company as on 31.12.2015 is Rs.1,96,15,380/-, divided into 19,61,538

equity shares of Rs.10/- each.

6. The authorized share capital of the Transferee Company as on

31.12.2015, is Rs.25,00,00,00,000/-, divided into 5,00,00,00,000 equity

shares of Rs. 5/- each. The issued, subscribed and paid-up share capital of

the company as on 31.12.2015 is Rs.19,98,70,00,510/-, divided into

3,99,74,00,102 equity shares of Rs.5/- each.

7. It has been averred on behalf of the Transferor Company/Petitioner

that there are no proceedings pending against them, under Sections 235 to

250A of the Act (and/or under their corresponding sections of the

Companies Act, 2013).

8. Copies of the Memorandum of Association and Articles of

Association of the Transferor Company/Petitioner and the Transferee

Company have been filed on record. The audited balance sheets as on

31.03.2015, along with the report of the auditors, have also been filed and

the same are on record.

9. A copy of the Scheme of Amalgamation has been placed on record

and the salient features of the Scheme have been incorporated and set out in

detail in the Petition. It has been stated therein that the Transferor Company/

Petitioner is a wholly owned subsidiary of the Transferee Company and the

proposed amalgamation shall result in pooling of resources, creating better

synergies across the group, optimal utilization of resources and greater

economies of scale. It has also been stated that the proposed Scheme will

result in faster and effective decision making, better administration and cost

reduction.

10. It has been submitted by the Transferor Company/Petitioner that the

Scheme, inter alia, provides for the transfer and vesting of the Transferor

Company/Petitioner along with all assets and liabilities into and with the

Transferee Company and the consequent dissolution, without winding up of

the Transferor Company/Petitioner.

11. So far as the share exchange ratio is concerned, the Scheme provides

that upon coming into effect of this Scheme, no consideration shall be

payable by the Transferee Company since the Transferor

Company/Petitioner is the wholly owned subsidiary of the Transferee

Company.

12. It has been further submitted on behalf of the Petitioner that the

Scheme has been approved by the respective Board of Directors (BODs) of

the Transferor Company on 18.01.2016 and of the Transferee Company on

26.10.2015 and 27.10.2015, respectively. Copies of the BODs resolutions

dated 18.01.2016, 26.10.2016 and 27.10.2015, have been filed and the same

are on record.

13. The Transferor Company/Petitioner and Transferee Company had

earlier filed CA (M) No. 60/2016 seeking directions of this Court to dispense

with the meetings of the equity shareholders, secured and unsecured

creditors of the Transferor Company/Petitioner and Transferee Company.

Vide order dated 30.05.2016, this Court allowed the application and

dispensed with the convening of the meetings of the Equity Shareholders,

Secured Creditors and Unsecured Creditors of the Transferor

Company/Petitioner and Transferee Company to approve the Scheme.

14. Further, this Court, by way of the said order dated 30.05.2016, also

dispensed with the requirement of filing of any Application/Petition by the

transferee company seeking sanction of this Court to the Scheme.

15. The Transferor Company/Petitioner has thereafter filed the present

Petition seeking sanction of the Scheme of Amalgamation. By way of order

dated 12.07.2016, notice in the petition was directed to be issued to the

Regional Director, Northern Region and the Official Liquidator. Citations

were also directed to be published in 'Indian Express' (English) and

'Jansatta' (Hindi). Affidavit of service dated 27.09.2016 has been filed by

the Transferor Company/Petitioner showing compliance with the order dated

12.07.2016, regarding service on the Regional Director, Northern Region

and the Official Liquidator and also regarding publication of citations in the

newspapers on 01.09.2016.

16. In response to the notices issued in the Petition, the Regional Director,

Northern Region, Ministry of Corporate Affairs, New Delhi has filed an

affidavit dated 29.09.2016. The Regional Director raised some objections

which are summarised as hereinunder:

 At paragraph 10 (i) of the Affidavit, the Regional Director has

stated that the Scheme does not specify the Appointed Date.

 At paragraph 10 (ii) directions have been sought from the Court,

for the Transferor Company and the Transferee Company to

comply with all the requirements notified by the Ministry of

Telecommunications with the terms and conditions of the license

agreement.

17. In response, by way of an affidavit in reply dated 04.10.2016, it has

been stated by the Transferor Company/Petitioner, that the Appointed Date

has been clearly set out and defined at Clause 1.4.4 of the Scheme. The

Appointed Date has been defined to mean the effective Date i.e. the date

when all approvals in terms of Clause 4.7.1 of the Scheme are received and

certified copy of the order of this Hon'ble Court approving the Scheme is

filed with the Registrar of Companies, National Capital Territory of Delhi

and Haryana. It has been further stated that the Scheme provides for the

amalgamation of the Transferor Company/Petitioner with the Transferee

Company and accordingly, in terms of Clause 3.1.1 of the Scheme, the entire

business of the Transferor Company/Petitioner as a going concern, on the

Effective Date shall stand transferred to the Transferee Company. It has thus

been further submitted that there is no legal or other impediment for the

Appointed Date to be the Effective Date, more particularly in the case of an

amalgamation where, on the Effective Date, the entire business of the

Transferor Company/Petitioner shall stand transferred to the Transferee

Company.

18. A perusal of the record, makes it clear that the Appointed Date has

been defined in the Scheme to mean the Effective Date. Accordingly, the

observations of the Regional Director at paragraph 10 (i) of the

Representation/Affidavit stand satisfied.

19. It has further been stated by way of the said affidavit in reply dated

04.10.2016 that upon the sanction of the Scheme, matters as set out in letter

dated 01.06.2016, by the Department of Telecommunications; in letter dated

22.08.2016 by the Transferee Company in reply to the said letter dated

01.06.2016; and the aspect of transfer of telecom licenses as set out at

Schedule I of the Scheme, would be the subject matter of appropriate

proceedings before the Department of Telecommunications, Ministry of

Communications, Government of India. In view thereof, it has been

submitted that no directions as prayed for at paragraph 10 (ii) of the

Affidavit of the Regional Director are called for.

20. In view of the foregoing, it has been stated on behalf of the Regional

Director that all the objections raised on behalf of the Regional Director

stand satisfied.

21. Further, the Official Liquidator has filed report dated 21.09.2016, not

raising any objections to the proposed Scheme. However, the Official

Liquidator has made two observations in paragraphs 4 and 5 of his report,

which are reproduced as hereinunder:

"4. That the as per information furnished by the Transferor Company disputed tax liability in case of Transferor Company. A demand from Income Tax Department of Rs. 2,074,000/- but it does not form part of contingent liability. Further there is entry tax of Rs. 6,292,074/- during the year is paid as disputed liabilities. Assessment for the year 2014-25 is under progress.

5. That as per information, transferee Company having its registered office at Bharti Crescent, 1, Nelson Mandela Marg, Vasant Kunj, New Delhi-110070 has not been impleaded as petitioner in this petition."

22. In response to the Report of the Official Liquidator, the Transferor

Company/Petitioner has filed an affidavit dated 30.09.2016 stating as

hereinunder:

                  In   response    to   paragraph    4,    the   Transferor

                   Company/Petitioner      has stated submitted that the

demand of the Income Tax Department is disputed by the

Transferor Company/Petitioner and an Appeal has been

filed on 16th April 2016 before the Commissioner of

Appeals, Income Tax Department against Assessment

order dated 07th March 2016. Hence, at present, the same

is not stated as a contingent liability in the books of

accounts of the Transferor Company/Petitioner. It has

been further stated that the payment of Entry Tax of

Rs.62.9 lacs during the year 2014-15 is disputed and

proceedings in relation thereto, are pending before

various fora including the Hon'ble Supreme Court of

India. Moreover, in terms of Clause 3.1.2 (vi) and (xi) of

the Scheme of Amalgamation, the Transferee Company

i.e. Bharti Airtel Limited would, upon the Scheme

becoming effective, be the successor entity as regards all

pending proceedings. The Transferee Company shall also

be the successor entity with respect to pending

assessment proceedings and orders passed thereon under

the Income Tax Act, 1961.

 So far as the second observation in paragraph 5 is

concerned, it has been stated that this Court, vide order

dated 30th May, 2016, in Company Application (Main)

No.60 of 2016, dispensed with the requirement of filing

any application or petition by the Transferee Company

for sanction of the Scheme.

23. In view of the aforesaid, it has been stated on behalf of the Official

Liquidator that the observations stand satisfied.

24. Thus, it is evident that neither the Regional Director nor the Official

Liquidator has any further objection remaining to the grant of relief, as

prayed for by the Transferor Company/Petitioner, in the present petition.

25. The Transferor Company/Petitioner, vide affidavit dated 04.10.2016,

has submitted that neither the Transferor Company/Petitioner nor its counsel

has received any objection to the sanction of the Scheme, pursuant to the

citations published in the newspapers.

26. In view of the foregoing, and upon considering the approval accorded

by the members and creditors of the Transferor Company/Petitioner to the

proposed Scheme; and the affidavit filed by the Regional Director, Northern

Region, Ministry of Corporate Affairs and the circumstance that the

objections raised by the RD stand satisfied and the report filed by the

Official Liquidator attached to this Court and the circumstance that the

observations have been satisfied, there appears to be no impediment to the

grant of sanction to the Scheme. Consequently, sanction is hereby granted to

the Scheme under sections 391 to 394 of the Act. The Transferor

Company/Petitioner will however, comply with the statutory requirements,

in accordance with law.

27. A certified copy of this order, sanctioning the Scheme, be filed with

the ROC, within thirty (30) days of its receipt.

28. Resultantly, it is hereby directed that the Transferor

Company/Petitioner will comply with all provisions of the Scheme and, in

particular, those which are referred to hereinabove.

29. 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 Petitioner Company.

30. The Transferor Company/Petitioner shall stand dissolved without

being wound up.

31. It is made clear, that this order shall not be construed as an order

granting exemption, inter alia, from, payment of stamp duty or, taxes or, any

other charges, if, payable, as per the relevant provisions of law or, from any

applicable permissions that may have to be obtained or, even compliances

that may have to be made, as per the mandate of law.

32. The Transferor Company/Petitioner shall deposit a sum of

Rs.5,00,000/-, by way of costs, in the Delhi High Court Bar Association

Lawyers' Social and Welfare Fund, New Delhi, within a period of two weeks

from today.

33. Consequently, the petition is allowed in the aforesaid terms and is

accordingly disposed of.

SIDDHARTH MRIDUL, J DECEMBER 19, 2016 dn/sb