Allowed

Rancore Technologies Private Limited. v. ----------------------------------------------------

Bombay HC1 Aug 2014CSP/140/2014

Case brief

AI extract

What is this about?

This court considered connected Company Scheme Petitions and Company Summons for Directions seeking sanction for a Scheme of Amalgamation between Infotel Telecom Limited, Rancore Technologies Private Limited (Transferor Companies) and Reliance Jio Infocomm Limited (Transferee Company). The court found the scheme fair, reasonable, compliant with law, and not contrary to public policy or prejudicial

What did the court decide?

Company Scheme Petition No 139 of 2014 and Company Scheme Petition No 140 of 2014 are made absolute in terms of the prayer clauses.

Rancore Technologies Private Limited. Vs… — Company and Corporate | Bombay HC (2014)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY SCHEME PETITION NO 139 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTIONS NO 39 OF 2014

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Infotel Telecom Limited … Petitioner Company

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AND

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COMPANY SCHEME PETITION NO 140 OF 2014

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CONNECTED WITH

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COMPANY SUMMONS FOR DIRECTIONS NO 40 OF 2014

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Rancore Technologies Private Limited … Petitioner Company

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In the matter of the Companies Act, 1956

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And

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In the matter of Sections 391 to 394 of the Companies Act, 1956 And In the matter of the Scheme of Amalgamation under provisions of section 391 to 394 of the Companies Act, 1956, of Infotel Telecom Limited; and Rancore Technologies Private Limited; With Reliance Jio Infocomm Limited.

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Called for Hearing

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Mr Peshwan Jehangir of M/s. Khaitan & Co., Advocates for the Petitioner Companies. Mr S V Barucha with Mr Neeta Masurkar i/b H.P. Chaturvedi for the Regional Director. Mr S Rama Kantha Official Liquidator present in both the Company Scheme Petitions.

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Coram: S.J. Kathawalla, J.

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Date: 1 August, 2014

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P.C :

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Heard Learned Counsel for the Parties. No objector has come before the Court to oppose the Scheme and nor has any party controverted any averments made in the Petitions.

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The sanction of the Court is sought under Sections 391 to 394 Companies Act, 1956 to the said Scheme of Amalgamation under provisions of section 391 to 394 of the Companies Act, 1956, of Infotel Telecom Limited; and Rancore Technologies Private Limited; With Reliance Jio Infocomm Limited.

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The Learned Counsel appearing on behalf of the Petitioner Companies states that the Transferor Companies are wholly owned subsidiaries of the Transferee Company, Reliance Jio Infocomm Limited and no new shares are required to be issued to the Transferor Companies and the entire share capital of the Transferor Companies will stand cancelled pursuant to the Scheme. In view of the judgment of this Court in Mahaamba Investment Limited v/s. IDI Limited (2001) 105 Company Cases, the filing of separate Company Summons for Directions and Company Scheme Petitions in relation to the said Scheme by the Transferee Company, Reliance Jio Infocomm Limited was dispensed with as per the orders dated 31 January 2014 in both Company Summons for Directions filed by the Transferor Companies respectively.

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The Learned Counsel for the Petitioner Companies states that the Petitioner in Company Scheme Petition No 139 of 2014 is engaged in the business of Telecommunications services. The Petitioner Company is the holder of National Long Distance (NLD) license and International Long Distance (ILD) License issued by Government of India, Ministry of Communications and & Information Technology, Department of Telecommunications (DoT) for NLD and ILD telecommunication services. The Petitioner Company also holds IP1 registration issued by DOT for passive as well as active Tower business. The Petitioner in Company Scheme Petition No 140 of 2014 is engaged in active research and

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development in the field of telecommunication including telecommunication systems and telecommunication networking system and providing consulting engineering services and IT support services. The Transferee Company is presently engaged in the business of providing telecommunication and other allied services (except GMPCS) in all Service Areas across India under a Unified License issued by Government of India, Ministry of Communications & Information Technology, Department of Telecommunications (DoT).

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The Learned Counsel for the Petitioner Companies states that proposed Scheme of Amalgamation is beneficial since interalia , both the Transferor Companies are wholly owned subsidiaries of the Transferee Company and the businesses of the Transferor Companies are similar to and/or complimentary to the business of the Transferee Company and can be conveniently combined with the activities and business of the Transferee Company. The proposed Scheme of Amalgamation will consolidate the Transferor Companies and the Transferee Company into one single unified larger company instead of several small entities carrying on similar and / or complementary businesses and the amalgamation will result in optimal utilization of resources, reduction of costs, economy, better governance and compliances, better administration and efficiency of operations and avoid duplication of work, thereby maximizing shareholder value as provided in the Scheme.

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The Petitioner Companies and the Transferee Company have approved the said Scheme by passing Board Resolutions which are annexed to the Company Scheme Petitions.

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The Learned Counsel for the Petitioners further states that, the Petitioner Companies have complied with all the directions passed in the respective Company Summons for Directions and that the respective Company Scheme Petitions have been filed in consonance with the order passed in the respective Summons for Directions.

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The Learned Counsel appearing on behalf of the Petitioner Companies have further stated that the Petitioner Companies have complied with all the requirements as per direction of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, the Petitioner Companies undertake to comply with all the statutory requirements, if any, under the Companies Act, 1956 and 2013, and rules made thereunder, whichever is applicable. The said undertaking is accepted.

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The Regional Director has filed an Affidavit on 24 July 2014 stating therein that save and except as stated in paragraph 6 (a), (b), (c) and (d) of the said affidavit, it appears that the Scheme is not prejudicial to the interest of shareholders and public.

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(a) Clause 12.2 of the Scheme states that the excess or deficit, if any, remaining after recording the accounting entries shall be adjusted in reserves (whether capital or revenue including balance in profit and loss account). In this regard, it is submitted that surplus, if any, arising out of this scheme, be transferred to Capital Reserve account of Transferee Company and deficit if any, arising may be adjusted as disclosed in that clause.

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(b) Clause 12.3 of the Scheme states that suitable adjustments including to ensure uniform accounting methods and policies between the Transferor Companies and the Transferee Company may be made as considered appropriate by the Board of Directors of the Transferee Company and effect thereof shall be given in the reserves of the Transferee Company. In this regard, it is submitted that the Transferee Company shall pass such accounting entries which are necessary in connection with this Scheme to comply with other Accounting Standard such as AS-5, etc.

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(c) It is respectfully submitted that the tax issue, if any, arising out of the Scheme is subject to final decision of Income Tax Authority. The approval of the Scheme by this Hon’ble Court may not deter the Income

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Tax Authority to scrutinize the tax returns filed by the Petitioner Companies after giving effect to the amalgamation. The decision of the Income Tax Authority is binding on the Transferor Companies and Transferee Company.

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(d) Clause 16 of the Scheme provides for Modification of Scheme wherein the Board of Directors of the Transferor Companies and Transferee Company have been authorised to make any amendments to the Scheme, if necessary, after the Scheme is approved by the Hon’ble High Court. Such liberty shall not be exercised by the Board of Directors without obtaining further approval from the Hon’ble High Court. The Transferor Companies and Transferee Company shall be directed to undertake to this effect.

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As far as the observation in paragraph 6(a) of the Affidavit of Regional Director is concerned, the Learned Counsel for the Petitioner Companies, states that the Petitioner Companies undertake that surplus if any arising out of the Scheme, shall be transferred to Capital Reserve account of Transferee Company and deficit, if any arising shall be adjusted as per clause 12.2 of the Scheme.

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As far as the observation in paragraph 6(b) of the Affidavit of Regional Director is concerned, the Learned Counsel for the Petitioner Companies, states that, as regard to Clause 12.3, the Transferee Company will pass such accounting entries which are necessary in connection with the Scheme to comply with any applicable accounting standards.

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As far as the observation in paragraph 6(c) of the Affidavit of Regional Director is concerned, the Learned Counsel for the Petitioner Companies states that the Petitioner Companies undertake to comply with all applicable provisions of the Income Tax Act and that all tax issues arising out of the Scheme will be met and answered in accordance with law.

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As far as the observation in paragraph 6(d) of the Affidavit of Regional Director is concerned, the Learned Counsel for the Petitioner Companies states that the Petitioner Companies undertake that no modification or variation of the Scheme will be given effect to unless such modification or variation is approved by this Hon’ble High Court.

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The Learned Counsel for the Regional Director on instructions of Mr M Chandanamuthu, Joint Director Legal, in the office of the Regional Director, Ministry of Corporate Affairs, Western Region, Mumbai, states that they are satisfied with the undertakings given hereinabove by the Petitioner Companies through its counsel. The undertakings given by the Petitioner Companies mentioned hereinabove are accepted.

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The Official Liquidator has filed his report on 16 July 2014 in the Company Scheme Petitions 139 and 140 of 2014 stating therein that the affairs of the Petitioner Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved.

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From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provisions of law and is not contrary to public policy.

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Since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No 139 of 2014 and Company Scheme Petition No 140 of 2014 filed by the Petitioner Companies are made absolute in terms of prayer clauses (a) to (f) and (j) of the respective Company Scheme Petitions.

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The Petitioner Companies to lodge a copy of this order and the Scheme, duly authenticated by the Company Registrar, High Court (O.S.), Bombay with the concerned Superintendent of Stamps, for purposes of adjudication of stamp duty payable, if any, on the same within 60 days from the date of the Order.

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The Petitioner Companies are directed to file a copy of this order alongwith a copy of the Scheme of Arrangement with the concerned Registrar of Companies, electronically, along with e-Form 21/INC28 in addition to physical copy as per relevant provisions of the Companies Act, 1956 and the Companies Act, 2013 and Rules made thereunder whichever are applicable.

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The Petitioner Companies in the Company Scheme Petition to pay costs of Rs 10,000/- to the Regional Director, Western Region, Mumbai each. Costs to be paid within four weeks from the date of the order.

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The Petitioner Companies in the Company Scheme Petitions to pay costs of Rs 10,000/- to the Official Liquidator, each. Costs to be paid within four weeks from the date of the order.

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Filing and issuance of the drawn up order is dispensed with.

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All concerned regulatory authorities to act on a copy of this order along with Scheme attached thereto, duly authenticated by the Company Registrar, High Court (O. S.), Bombay.

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(S.J. Kathawalla, J.)

Rancore Technologies Private Limited. v. ----------------------------------------------------

Case brief

What is this about?

What did the court decide?

Rancore Technologies Private Limited. v. ----------------------------------------------------

Case brief

What is this about?

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