IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 915 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 937 OF 2009 In the matter of: The Companies Act, 1956; AND In the matter of: Sections 391 to 394 (read with Section 78 and Sections 100 to 103) of the Companies Act, 1956; AND In the matter of: UTV Software Communications Limited, a company incorporated under the provisions of the Companies Act, 1956 having its registered office at 1181 - 1182, 8th floor, Solitaire Corporate Park, Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai 400 093; AND In the matter of: The Scheme of Arrangement pursuant to Sections 391 to 394 (read with Section 78 and Sections 100 to 103) and other applicable provisions of the Companies Act, 1956 for the transfer to and vesting in UTV Software Communications Limited, a company incorporated under the provisions of the Companies Act, 1956 having its registered office at 1181 - 1182, 8th floor, Solitaire Corporate Park, Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai 400 093 (the “Petitioner Company” or “Transferee Company”) of (i) the entire assets and business of UMP Plc, a company incorporated under the provisions of the Isle of Man Companies Act 2006 having its registered office at PO Box 95, 2a Lord Street, Douglas, Isle of Man IM99 1 HP (the “Isle of Man Transferor Company”); and (ii) the entire assets and business of UTV Motion Pictures (Mauritius) Limited, a company incorporated under the provisions of the Mauritius Companies Act 2001 having its registered office at Les Cascades, Edith Cavell Street, Port Louis, Mauritius (the “Mauritius Transferor Company”); and for the reorganisation and utilisation of the securities premium account, reserves and the Business Restructuring Reserve Account of the Petitioner Company. UTV Software Communications Limited, a company incorporated under the provisions of the Companies Act, 1956 having its registered office at 1181 - 1182, 8th floor, Solitaire Corporate Park, Guru Hargovindji Marg, Chakala, Andheri (E), Mumbai 400 093. ) ) ) ) ) ) ) ) ) ………Petitioner Company Coram:- S.J Kathawalla, J. Dated: - 8th January, 2010 Nikhil Sakhardande with Nandish Vyas i/b AZB & Partners for the Petitioner Company Mr. C.J. Joy with Mr. K.R. Choudhary i/b Mr.S.K. Mohapatra for Regional Director PC: 1. Heard learned counsel for the parties. 2. The sanction of the court is sought under Sections 391 to 394 (read with Section 78 and Sections 100 to 103) of the Companies Act, 1956 to a Scheme of Arrangement of UTV Software Communications Limited, “Petitioner Company” or “Transferee Company”, UMP Plc, the “Isle of Man Transferor Company” and UTV Motion Pictures (Mauritius) Limited, the “Mauritius Transferor Company” which inter alia provides for an arrangement of the Isle of Man Transferor Company and Mauritius Transferor Company with the Transferee Company. 3. Counsel appearing on behalf of the Petitioner Company has stated that they have complied with all statutory requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Company undertakes to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the Rules made thereunder. The undertaking is accepted. 4. The Regional Director has filed an Affidavit stating therein that the Scheme is not prejudicial to the interest of shareholders and public. However, in paragraph 6 of the said affidavit the Regional Director has stated that : 6. That the Deponent further submits that:- (i) Under the present scheme of amalgamation, as regards issue allotment of shares by the Transferee Company to the shareholders of the Isle of Man Transferor Company, the Transferee Company may be directed to comply with the RBI Guidelines and approval of concerned Regulatory Authorities in this regard . (ii) As per clause 10.2.1 of Part B of the scheme, the whole of the balance remaining in Business Restructuring Reserve (created by Transferee Company from Securities Premium Account) is no longer required for set off, then such part or whole of the balance, so determined, shall be transferred back to General Reserve Account. In this connection the Transferee Company may be directed not to utilize the same for declaration of dividends in future. (iii) The Transferee Company has violated the provisions of Section 295(1)(d) of the Act in respect of loans given and guarantee provided by the Transferee Company on behalf of UTV News Limited during the financial year 2007-08, in which Mr. Rohinton Screwvala, Mrs Zarina Mehta and Mr. Deven Khote the common directors holding equity capital in excess of 25% of UTV News Limited. The said facts of violation of section 295(1)(d) of the Act have been admitted by the Company Secretary of the Transferee Company in his affidavit dated 18/11/2009 and undertakes to file for a compounding application under section 621A of the Companies Act, 1956. 5. The Counsel for the Petitioner Company submits that the registered offices of UMP Plc, the Isle of Man Transferor Company and UTV Motion Pictures (Mauritius) Limited, Mauritius Transferor Company are situated at PO Box 95, 2a Lord Street, Douglas, Isle of Man IM99 1 HP and Les Cascades, Edith Cavell Street, Port Louis, Mauritius and the present scheme has already been sanctioned by the High Court of Justice of the Isle of Man and the Supreme Court of Mauritius in the procedure filed by the said companies before the said courts. 6. The Counsel further submits that the proposed Scheme also involves reduction of share capital and the said reduction will be carried out as an integral part of the Scheme. He also states that the proposed reduction does not involve other diminution of liability in respect of unpaid capital or payment to the shareholders of paid up share capital and that the interest of creditors will not be affected by the said Scheme. Moreover, all the secured creditors of the Transferee Company have already given their respective consents to the Scheme and individual notices were issued to all the unsecured creditors of the Transferee Company and that no one has come forward to object to the proposed Scheme. Mr. Sajid Ali, company secretary of the Transferee Company has filed an affidavit dated 6th January, 2010, quantifying the amount of reduction of capital (by way of transfer from the Securities Premium Account to the Business Restructuring Reserve Account) as Rs. 750/- crores. 7. Mr. Sajid Ali, company secretary of the Transferee Company has also filed an affidavit dated 7th January, 2010, in reply to the issues raised by the Regional Director. In the said affidavit the Transferee Company has given undertakings that they will (i) comply with the RBI Guidelines and approval of concerned Regulatory Authorities; (ii) not utilize the amount transferred back from the Business Restructuring Reserve Account to General Reserve Account in accordance with clause 10.2.1 of Part B of the scheme of arrangement for the purposes of declaration of dividend; and (iii) file a compounding application under section 621A of the Companies Act, 1956 for the violation of the provisions of Section 295 (1) (d) of the Companies Act, 1956, as specified in paragraph 6 (iii) of the affidavit of the Regional Director. The said undertakings are accepted. 8. The counsel for the Petitioners states that it was not contended that the violations of Sections 295 of the Act affect or prejudice the scheme as such. Nor was it contended that the scheme has been proposed mala-fide or for the benefit of any particular person or persons, firm or company. Further, this court has already held that a mere violation of the provisions of Sections 295 of the Act would not warrant a rejection of a scheme of amalgamation under Sections 391 to 394 of the Act. The Transferee Company has also undertaken to file for a compounding application under section 621A of the Companies Act, 1956. The said undertaking is accepted. 9. 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. None of the parties concerned has come forward to oppose the Scheme. 10. Since all the requisite statutory compliances have been fulfilled, Company Petition No.915 of 2009 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (n), and the reduction of capital as mentioned hereinabove is approved. So far as the violation of Section 295 of the Companies Act, 1956 by the Petitioner Company is concerned, the Registrar of Companies/ Regional Director, Western Region, are at liberty to take appropriate action pursuant to the Companies Act, 1956 against the Petitioner Company. 11. The Petitioner Company to lodge a copy of this order and the Scheme with the concerned Superintendent of Stamps for the purposes of adjudication of stamp duty payable, if any, on the same within 60 days from the date of the order. 12. The Petitioner to pay costs of Rs.7,500/- to the Regional Director. Costs to be paid within four weeks from today. 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 duly authenticated by the Company Registrar, High Court, Bombay (S.J. Kathawalla J.)