1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO. 888 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 876 OF 2009 GOLD MOVIES PRIVATE LIMITED ….Petitioner / Transferor Company AND COMPANY PETITION NO. 889 OF 2009 CONNECTED WITH COMPANY APPLICATION NO.877 OF 2009 ONE ENTERTAINMENT NETWORK PRIVATE LIMITED …..Petitioner / Transferor Company WITH COMPANY PETITION NO. 890 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 878 OF 2009 STAR INTERNATIONAL NETWORKS PRIVATE LIMITED ….Petitioner/Transferor Company WITH COMPANY PETITION NO. 891 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 879 OF 2009 V MUSIC AND INTERACTIVE CHANNELS INDIA PRIVATE LIMITED....Petitioner/ Transferor Company 2 WITH COMPANY PETITION NO. 892 OF 2009 CONNECTED WITH COMPANY APPLICATION NO. 875 OF 2009 STAR INDIA PRIVATE LIMITED....Petitioner/ Transferee Company In the matter of: The Companies Act, 1956; AND In the matter of: Sections 391 to 394 of the Companies Act, 1956; In the matter of: The Scheme of Amalgamation of : (i) STAR Television Entertainment Limited, a company incorporated under the laws of British Virgin Islands (“BVI”) (“Transferor Company No. 1”); (ii) STAR Asian Movies Limited, a company incorporated under the laws of BVI (“Transferor Company No. 2”); (iii) STAR Asia Region FZ LLC, a company incorporated under the laws of United Arab Emirates (“UAE”) (“Transferor Company No. 3”); (iv) Gold Movies Private Limited, a company incorporated under the provisions of the Companies Act, 1956 (“Transferor Company No. 4”); 3 (v) One Entertainment Network Private Limited, a company incorporated under the provisions of the Companies Act, 1956 (“Petitioner Company” or “Transferor Company No. 5”); (vi) Star International Networks Private Limited, a company incorporated under the provisions of the Companies Act, 1956 (“Transferor Company No. 6”); (vii) V Music and Interactive Channels India Private Limited, a company incorporated under the provisions of the Companies Act, 1956 (“Transferor Company No. 7”); and (viii) STAR India Private Limited, a company incorporated under the provisions of the Companies Act, 1956 (“Transferee Company”) and their respective shareholders. CORAM: S.J. Kathawalla J. DATE: 18th February, 2010 Mr. Iqbal Chagla, Senior Advocate with Mr. Porus Kaka, Mr. Sanjay Jain, Mr. Lynn Pereira, Mr. Sunil Agarwal, Mr. Kunal Mehra and Mr.Abhinav Ashwin, Advocates i /b. AZB & Partners for the Petitioners. Mr. P Ramarao, Official Liquidator, in C.P. No.888 of 2009, C.P. No. 889 of 2009, C.P. No. 890 of 2009 and C.P. No. of 891 of 2009. Mr. C.J. Joy i/b Mr. S.K. Mohaptra for Regional Director in C.P. No.888 of 2009, C.P. No. 889 of 2009, C.P. No. 890 of 2009, C.P. No. of 891 of 2009 and C.P. 892 of 2009. Mr. Suresh Kumar, Advocate for Applicant in C.A. No. 64 of 2010 4 PC: 1. Heard learned counsel for the parties. 2. The sanction of the Court is sought under Sections 391 to 394 of the Companies Act, 1956 to the Scheme of Amalgamation of STAR Television Entertainment Limited (“Transferor Company No.1”), STAR Asian Movies Limited (“Transferor Company No. 2”), STAR Asia Region FZ LLC (“Transferor Company No.3”), Gold Movies Private Limited (“Transferor Company No. 4”), One Entertainment Network Private Limited (“Transferor Company No. 5”), Star International Networks Private Limited (“Transferor Company No. 6”) and V Music and Interactive Channels India Private Limited (“Transferor Company No. 7”) with Star India Private Limited (“Transferee Company”) and their respective shareholders. 3. Counsel appearing on behalf of the Petitioners have stated that they have complied with all requirements as per directions of this Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies undertake to comply with all statutory requirements, if any, as required under the Companies Act, 1956 and the rules made there under. Undertaking is accepted. 4. The Official Liquidator has filed a report in Company Petition Nos.888 of 2009 to 891 of 2009 stating therein that the affairs of the Transferor Companies have been conducted in a proper manner and that the Transferor Companies may be ordered to be dissolved. 5. The Regional Director has filed an affidavit stating therein that save and except what is stated in paragraph 6 thereof, the scheme does not appear to be prejudicial to the interest of the shareholders and the public. The paragraph 6 of the said affidavit reads as under :- 5 6. That the Deponent further submits that :- (a) The Transferor Companies No. 1, 2 & 3 are Foreign Entities. Hence as regards issue of shares by the Transferor Company pursuant to clause 13.2, 13.3 and 13.4 of the scheme to the Transferor Companies No. 1, 2 & 3, the Transferee Company may be directed to comply with the FEMA/ RBI Regulations in this regard. (b) The authorised share capital of the Transferee Company after merging of the authorized share capital of the Transferor Companies are not sufficient to issue fresh shares by the Transferee Company and as per clause 10.2 of the scheme Transferee Company proposes to increase its authorised capital up to Rs. 219,50,05,030/ - which is beyond the merged authorised share capital of Rs. 122,25,00,000/- In this connection the Transferee Company may be directed to comply with the provisions of section 94/97 read with Schedule X of the Companies Act, 1956 in respect of filing of necessary forms with the Registrar of Companies and payment of ROC fees and Stamp Duty as applicable on additional increase of the authorised share capital to the extent of Rs. 97,25,05,030/-. (c) The Transferee Company may also be directed to obtain necessary approval/ permission from the nodal administrative ministry viz. Ministry of Information & Broadcasting, New Delhi in the matter. 6. With regard to the above issues raised by the Regional Director, the counsel appearing for the Transferee Company gives an undertaking that the Transferee Company will :- (i) comply with the applicable FEMA/ RBI Regulations; (ii) comply with the provisions of Section 94/97 read with Schedule X of the Companies Act, 1956 in respect of filing necessary forms with the Registrar of Companies and payment of ROC fees and stamp duty as applicable on additional increase on authorized capital to the extent of Rs. 97,25,05,030/-; and (iii) obtain necessary approval/ permission from the nodal administrative ministry viz. Ministry of Information & Broadcasting, New Delhi in the matter. Undertaking is accepted. 6 7. The Counsel for the Petitioner Company submits that the registered offices of Transferor Company No.1 (Star Television Entertainment Limited), Transferor No.2 (Star Asian Movies Limited) are incorporated under the laws of British Virgin Islands and Transferor No.3 (Star Asia Region FZ LLC) is incorporated under the laws of United Arab Emirates. Pursuant to Clause 20 and 21 of the Scheme, for making the amalgamation of Transferor Company No. 1, Transferor Company No.2 and Transferor Company No.3 with the Transferee Company operational, the Transferee Company undertakes to comply with the applicable laws of British Virgin Islands and United Arab Emirates. 8. The Income Tax Department has filed objections to the Scheme on principally two Grounds: (i) Firstly, the Scheme is for tax avoidance purposes to enable exemption from Capital Gains; and (ii) Secondly, concerns of the Revenue in respect of tax demands / proceedings / enquiries that are pending / may be taken against the Transferor Companies. Subsequent to the filing of the objections, the Authority for Advance Rulings (Income Tax) has by its order dated January 21, 2010 upheld the bona fides of the Scheme and the business purpose to concentrate the Indian language channels into the Transferee Company. This judgment is binding on the Revenue and hence, this judgment renders the objection now no longer in issue. On the second issue, pursuant to the Affidavit dated February 8, 2010 of the Transferee Company, filed in response to the Revenue’s objections, the Transferee Company has undertaken to cooperate with the Income Tax Department with respect to proceedings / enquiries under the Income Tax 7 Act, 1961 (either pending or to be resorted to) subject to its rights and remedies available under the law. The Transferee Company has also undertaken to discharge any final demands raised upon the Transferor Companies, subject to its rights and remedies available under the law. The Undertaking is accepted and accordingly the objection is answered to the satisfaction of the Revenue. 9. There is an objection by the landlord (Delite Impex Private Limited) of the Transferee Company in relation to the leased Delhi office premises of the Transferee Company, bearing no. 205, Okhla Industrial Estate, Phase III, New Delhi – 110 020, in relation to arrears of rent from the month of April 2009 onwards. The Transferee Company undertakes to handover the vacant and peaceful possession of the abovementioned premises to the landlord on or before May 31, 2010. The Transferee Company further undertakes to pay the rent to the landlord in relation to the abovementioned premises for the period April 1, 2009 to May 31, 2010 within 2 weeks from today after adjustment of the Security Deposit of Rs. 2,43,21,600 /- (Rupees Two Crores Forty Three Lakhs Twenty One Thousand Six Hundred Only) already provided by the Transferee Company to the landlord. The abovementioned Undertakings are accepted. 10. From the material placed 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. 11. Since all the requisite statutory compliances have been fulfilled; the Company Petition No. 888 of 2009, the Company Petition No. 889 of 2009, the Company Petition No. 890 of 2009 and the Company Petition No. 891 of 2009, filed by the Transferor Companies are made absolute in terms of 8 prayer clauses (a) to (i) respectively. The Company Petition No. 892 of 2009 filed by the Transferee Company is made absolute in terms of prayer clauses (a) to (l). 12. 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 the purpose of adjudication of stamp duty payable, if any, on the same within 60 days from the date of the order. 13. The Petitioners in all the Company Petitions to pay costs of Rs.7500/- each to the Regional Director, Western Region, Mumbai and the Petitioners in the Company Petition No 888 of 2009, Company Petition No. 889 of 2009, Company No. 890 of 2009 and Company Petition No. 891 of 2009 to pay costs of Rs.7500/- each to the Official Liquidator, High Court, Bombay. Costs to be paid within four weeks from today. 14. Filing and issuance of the drawn up order is dispensed with. 15. All authorities concerned to act on a copy of this order along with Scheme duly authenticated by the Company Registrar, High Court (O. S.), Bombay. (S.J. Kathawalla J.)