Approval for Scheme of Arrangement between Companies for Telecom Infrastructure Transfer

The court granted sanction to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956, between two companies based in New Delhi. The Scheme involved the transfer of Telecom Infrastructure Undertaking without issuing shares or consideration. Despite objections raised by the Regional Director and the Income-tax Department, the court approved the Scheme as there were no objections from other parties and approval from shareholders and creditors. The companies were directed to fulfill statutory requirements, merge assets, and pay stamp duty as per the law.

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Issues:
1. Sanction of Scheme of Arrangement under sections 391 to 394 of the Companies Act, 1956 between two companies.

Analysis:
The judgment pertains to a joint petition filed by two companies seeking the court's sanction for a Scheme of Arrangement. The transferor and transferee companies, both located in New Delhi, were incorporated under the Companies Act, 1956. The Scheme aimed to transfer the Telecom Infrastructure Undertaking from the transferor to the transferee company to enhance operational efficiency and create a distinct corporate identity. The share exchange ratio indicated that no shares or consideration would be issued by the transferee company to the transferor company or its shareholders, as it was a restructuring within the group of companies controlled by the transferor. The Board of Directors of both companies had approved the Scheme, and previous court directions had dispensed with the need for shareholder and creditor meetings.

The Regional Director raised concerns regarding the lack of detailed mention of assets and liabilities in the Scheme, the absence of a valuation report, and the necessity for approvals from the Department of Telecommunications for license transfers. The petitioners clarified that the Scheme did not involve creditors, no consideration was involved in the asset transfer, and no shares were to be issued by the transferee company. They cited previous judgments to support their position, indicating that objections raised did not hold. The Income-tax Department's objections were dismissed based on previous orders in a similar matter.

With no objections from other parties and approval from shareholders and creditors, the court granted sanction to the Scheme of Arrangement under sections 391 and 394 of the Companies Act, 1956. The companies were directed to comply with statutory requirements, file a certified copy of the order with the Registrar of Companies, and ensure payment of stamp duty. The 'Passive Infrastructure Assets' of the transferor company were to merge with the transferee company effective from the appointed date of Arrangement. The court clarified that the order did not exempt the companies from paying stamp duty as per the law. The petition was allowed in the specified terms.

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