Court approves demerger and transfer scheme benefiting companies & members, dismisses telecom policy circumvention allegations.

The court sanctioned the scheme of arrangement involving the demerger and transfer of the PMRTS Business Division from Arvind Mills Limited to Arya Omnitalk Radio Trunking Services Private Limited. The scheme was unanimously approved by shareholders, complied with statutory requirements, and addressed objections raised by the Regional Director. Financial viability and transparency concerns were addressed, and allegations of circumventing telecom policy were dismissed. The court found the scheme to be in the companies' and members' interest, granting the petitioner's prayer and directing payment of costs to the Central Government Standing Counsel.

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Issues Involved:
1. Sanctioning of the scheme of arrangement in the nature of demerger.
2. Compliance with statutory requirements and obtaining necessary approvals.
3. Objections raised by the Regional Director regarding the scheme.
4. Financial viability and transparency of the demerger.
5. Allegations of the scheme being a camouflage to circumvent telecom policy.

Issue-Wise Detailed Analysis:

1. Sanctioning of the Scheme of Arrangement in the Nature of Demerger:
The petitioner sought the court's sanction for a scheme of arrangement involving the demerger and transfer of the PMRTS Business Division from Arvind Mills Limited to Arya Omnitalk Radio Trunking Services Private Limited (AORTSPL). The petitioner company, a significant player in the textile industry, decided to spin off its PMRTS division to achieve focused growth and operational efficiency. The scheme was approved unanimously by both equity and preference shareholders in meetings convened as per the court's directions.

2. Compliance with Statutory Requirements and Obtaining Necessary Approvals:
The court directed the petitioner to convene meetings of shareholders, which were duly held, and the scheme was approved unanimously. The petitioner complied with the court's order to publish notices in specified newspapers and served notice to the Central Government through the Regional Director. The petitioner also addressed the need for prior written permission from the licensor for the transfer of the PMRTS license as per telecom policy guidelines.

3. Objections Raised by the Regional Director Regarding the Scheme:
The Regional Director raised concerns that the petitioner could have opted for section 293(1)(a) of the Companies Act, 1956, instead of sections 391/394. However, the petitioner argued that the telecom license could not be transferred under section 293(1)(a) due to specific non-transferable conditions attached to the license. The petitioner provided the latest financial statements and clarified that the scheme was necessary to comply with the telecom policy, which allows for license transfer under a court-sanctioned scheme of arrangement.

4. Financial Viability and Transparency of the Demerger:
The objections included concerns about the financial transparency of the PMRTS division and the resulting company's financial health. The petitioner provided a chartered accountant's certificate and explained that the financial details of the PMRTS division were based on the company's books of account. The resulting company, AORTSPL, although recently incorporated with a small paid-up capital, was backed by a well-established group with significant turnover and plans to raise capital post-demerger.

5. Allegations of the Scheme Being a Camouflage to Circumvent Telecom Policy:
The Central Government argued that the scheme was a camouflage to bypass the telecom policy's restrictions on license transfer. The petitioner countered that the scheme was a legitimate business strategy to achieve operational efficiency and that prior written permission from the licensor would be sought post-court sanction. The court found that the petitioner had complied with all necessary statutory requirements and had not attempted to circumvent any legal processes.

Conclusion:
After considering all objections and submissions, the court found that the scheme of arrangement was in the interest of the companies and their members. The court sanctioned the scheme, granting the prayer in terms of paragraph 25(a) of the petition. The petitioner was directed to pay costs to the Central Government Standing Counsel.

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