IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.712 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 691 OF 2009 In the matter of the Companies Act I of 1956. AND In the matter of Sections 391 to 394 of the Companies Act I of 1956. AND In the matter of Scheme of Arrangement between Vodafone Essar Limited; Vodafone Essar Mobile Services Limited; Vodafone Essar East Limited; Vodafone Essar Gujarat Limited; Vodafone Essar South Limited; Vodafone Essar Digilink Limited; Vodafone Essar Cellular Limited, and Vodafone Essar Infrastructure Limited, and their respective Shareholders. Vodafone Essar Limited …..Petitioner Mr. Virag Tulzapurkar, Senior Counsel with Ms. Niti Dixit i/b Mr. Punit B Anand, for the Petitioner. Mr.C.J. Joy with Mr. S.C. Pal i/b Mr.S. K Mahapatra for Regional Director. 1 Coram: Dr. D.Y. CHANDRACHUD, J. Dated: 17TH DECEMBER, 2009 MINUTES OF THE ORDER (1) Heard Learned Counsel for the parties. (2) Sanction of the Court is sought under Sections 391 to 394 of the Companies Act 1956 to a Scheme of Arrangement between Vodafone Essar Limited; Vodafone Essar Mobile Services Limited; Vodafone Essar East Limited; Vodafone Essar Gujarat Limited; Vodafone Essar South Limited; Vodafone Essar Digilink Limited; Vodafone Essar Cellular Limited, and Vodafone Essar Infrastructure Limited, and their respective Shareholders. (3) Separate petitions under Sections 391 to 394 of the Companies Act were filed by the Second Transferor Company Vodafone Essar Mobile Services Limited, by the Third Transferor Company Vodafone Essar East Limited before the Calcutta High Court; by the Fourth Transferor Company Vodafone Essar Gujarat Limited before the Gujarat High Court, by the Fifth Transferor Company Vodafone Essar South Limited, by the Sixth Transferor Company Vodafone Essar Digilink Limited, by the Seventh Transferor Company Vodafone Essar Cellular Limited before the High 2 Court of Judicature at Madras and by the Transferee Company Vodafone Essar Infrastructure Limited before the High Court of Delhi at New Delhi; for appropriate directions. (4) Clause 5.4 of the said Scheme of Arrangement provides as under:- 5.4 EFFECT OF NON-RECEIPT OF APPROVALS 5.4.1 In the event this Scheme is not sanctioned by all the Courts or other competent authorities referred to in Clause 5.3.1 above before which this Scheme is presented for approval, the Scheme shall stand implemented without the demerger of the Passive Infrastructure Assets of the relevant Transferor Company(ies) in respect of which the Scheme has not been sanctioned, and this Scheme shall stand revoked, cancelled and be of no effect in respect of such Transferor Company(ies), save and except in respect of any act or deed done prior thereto or as to any rights and/or liabilities which might have arisen or accrued pursuant thereto and which shall be governed and be preserved as is specifically provided in the Scheme or as may otherwise arise in law. The provisions in the Scheme relating to such Transferor Company(ies) in respect of which the Scheme has not been sanctioned shall stand invalidated and such invalidity shall attach only to such part dealing with such Transferor Company(ies). The 3 remaining portion of the Scheme shall continue in full force and effect. In such an event, the relevant Transferor Company(ies) in respect of which the Scheme has not been sanctioned shall bear and pay its costs, charges and expenses for and/or in connection with the Scheme. (5) Counsel appearing on behalf of the Petitioner has stated that the Petitioner has complied with all requirements in accordance with the directions of this Court and has filed necessary affidavits of compliance in the Court. Moreover, the Petitioner undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made there under. (6) The Regional Director has filed an affidavit stating therein in para 6(i) that as the first Transferor / Petitioner Company has foreign investment to the extent of 64.38%, the first Transferor / Petitioner Company may be directed to file with the Reserve Bank of India the present Scheme of Arrangement along with the Order of this Hon'ble High Court on the present Company Petition; in para 6((ii) that the first Transferor / Petitioner Company may be directed to obtain necessary approval of the concerned Regulatory Authorities of the Ministry of Telecommunications in respect of the present Scheme of Arrangement if applicable and in para 4 6(iii) that the Regional Director has received a letter dated 07-09-2009, from the Assistant Commissioner of Income Tax, Ahmedabad on tax aspects in respect of the fourth Transferor Company i.e. Vodafone Essar Gujarat Limited and which shall be placed before the Hon'ble High Court of Gujarat and that save and except as stated in para 6, the Scheme does not appear to be prejudicial to the interest of the shareholders and public. (7) The Petitioner has filed a Rejoinder dated 08-12-2009 and in para 7(i) has dealt with the contention raised in para 6(i) of the affidavit of the Regional Director and has stated that pursuant to the Scheme no shares shall be issued or transferred to any person within or outside India. The Transferee Company is a wholly-owned subsidiary of the Petitioner Company. The Scheme does not contemplate a change in the shareholding of either the Petitioner Company or the Transferee Company. The Scheme also does not involve any foreign exchange related transaction. The Petitioner has stated before the Court that there is no provision under the Foreign Exchange Management Act, 1999, as amended, or under the rules, regulations or circulars issued thereunder or otherwise which requires the Petitioner Company to file the Scheme or the order of this Hon’ble High Court approving the Scheme with the Reserve Bank of India. 5 (8) The Petitioner has in para 7(ii) of the Rejoinder dealt with the contention in para 6(ii) of the affidavit of the Regional Director and has contended that the Petitioner Company is a mobile telecommunications service provider and holds a Unified Access Services Licence for the Mumbai Service Area, with effect from 20th October 2008, issued by the Department of Telecommunications (the “Licence”). Condition 6 of the Licence inter alia, states as follows: “6.3 Further, the Licensee may transfer or assign the Licence Agreement with prior written approval of the Licensor to be granted on fulfillment of the following conditions and if otherwise, no compromise in competition occurs in the provision of Telecom Services :- (i)*** (ii) Whenever amalgamation or restructuring i.e. merger or demerger is sanctioned and approved by the High Court or Tribunal as per the law in force, in accordance with the provisions, more particularly Sections 391 to 394 of Companies Act, 1956; and (iii) *** (iv)***” It has been stated that the Petitioner is not transferring the Licence to the Transferee Company pursuant to the Scheme, hence Condition 6.3 of the Licence is not applicable. The Petitioner Company shall continue to hold its License and to provide licensed telecommunications services even after the completion of 6 the demerger. Therefore, there is no requirement for the Petitioner Company to seek approval of the Department of Telecommunications for the Scheme. However, if applicable the Petitioner Company will obtain necessary approval from the Department of Telecommunication in respect of the Scheme of Arrangement. Further, it is submitted that the Transferee Company is registered as an Infrastructure Provider Category – I by the Department of Telecommunications which permits the Transferee Company to establish and maintain Passive Infrastructure Assets (as defined in the scheme of arrangement) to lease, rent or sell such assets to licensees of Telecom Services licensed under Section 4 of the Indian Telegraph Act, 1885. A true copy of the Registration Certificate for Infrastructure Provider Category – I dated 17 June 2008 issued by the Department of Telecommunications is annexed as Exhibit A thereto. (9) The Petitioner has in para 7(iii) of the said Rejoinder dealt with the contention raised in para 6(iii) of the affidavit of the Regional Director and has contended that the Deputy Commissioner of Income Tax, Circle- 8, Ahmedabad has filed certain objections to the Scheme before the 7 Gujarat High Court and that Vodafone Essar Gujarat Limited, another Transferor Company and the Petitioner before the Gujarat High Court, propose to file a response to such objections before the Gujarat High Court. Nothing contained in this Order will foreclose the consideration of those objections and the passing of Orders thereon. (10) From the material on record, the Scheme appears to be fair and reasonable and is not violative of any provision of law or contrary to public policy. None of the parties concerned have come forward to oppose the Scheme. (11) Since all the requisite statutory compliances have been fulfilled, Company Petition No.712 of 2009 is made absolute in terms of prayer clauses (a) to (f). This would be subject to the approval of the Scheme by the Delhi High Court in the Petition which has been filed by the Transferee in relation to the grant of approval qua the Petitioner. Moreover, it is clarified that the sanction granted by this Order is qua the Petitioner, which has its registered office in the State of Maharashtra. The sanction, will, it is clarified, not affect any Order that may be passed by the other High Courts whose sanction has also been sought under Sections 391 to 394. (12) The Petitioner to pay costs of Rs.7500/- to the Regional Director within four weeks from today. 8 (13) Filing and issuance of the drawn up order is dispensed with. (14) All authorities concerned to act on a copy of this order along with Scheme and form of minutes duly authenticated by the Company Registrar, High Court (O.S.), Bombay. (DR. D.Y. CHANDRACHUD, J) 9