Court withdraws Company Petition under Companies Act 1956, orders costs to Central Govt.

The Court allowed the application for withdrawal of the Company Petition under Section 392 of the Companies Act, 1956. The Scheme of Demerger could not be implemented due to the failure to obtain necessary approvals from regulatory authorities. The Court recalled the previous order sanctioning the Scheme, dismissed the Company Petition as withdrawn, and directed the companies to inform the ROC accordingly. Costs were awarded to the Central Government. The plea to restrict the companies' right to file similar applications for two years was rejected, emphasizing their statutory remedies.

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Issues:
Application for withdrawal of Company Petition under Section 392 of the Companies Act, 1956 due to failure in obtaining necessary approvals for a Scheme of Demerger.

Analysis:
1. The joint application by the Transferor and Transferee companies under Section 392 of the Companies Act, 1956 sought the withdrawal of the main Company Petition approved by the Court for a Scheme of Demerger. The Scheme was conditional upon obtaining approvals from regulatory authorities, including the Department of Telecommunications (DoT) and Reserve Bank of India.

2. The DoT rejected the request for transfer of licenses from the Transferor to Transferee company, leading to the decision by the companies to withdraw the application. The Regional Director advised that the Income Tax Department's views should be ascertained, and the companies' right to file similar applications should be restricted for two years.

3. The Senior Counsel for the Applicant companies argued that since the Scheme had not been implemented, there was no tax implication in withdrawing the petition. Reference was made to a Bombay High Court case allowing the recall of a sanctioned Scheme if it could not be given effect due to valid reasons.

4. The Court, citing the Bombay High Court case, acknowledged its inherent power to recall the order sanctioning the Scheme if the conditions for its effectiveness were not met. The Central Government had no objection to the withdrawal, subject to certain conditions, including ascertaining ITD's views and awarding costs.

5. The Court clarified that as the demerger had not taken effect, there was no tax angle involved. It emphasized that the ITD could take action in accordance with the law in the future. The plea to restrict the companies' right to file applications for two years was rejected as it infringed on their statutory remedies.

6. The Court allowed the application for withdrawal with costs to be paid to the Central Government. The previous order approving the Scheme was recalled, and the Company Petition was dismissed as withdrawn. The companies were directed to inform the ROC and withdraw the earlier communication related to the Court's order.

This detailed analysis covers the issues involved in the legal judgment regarding the withdrawal of a Company Petition under the Companies Act, 1956 due to the failure to obtain necessary approvals for a Scheme of Demerger.

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