Company Petition No. 179 of 2010 · High Court · 2010

Order

The petitioner in Company Petition No.179 of 2010 is the Demerged company and the petitioners in Company Petition Nos.180, 181 & 182 of 2010 are the Resulting companies. All these petitions are filed under Sections 391 and 394 of the Companies Act seeking sanction of the Scheme of Arrangement proposed between the Demerged Company and the Resulting Companies and their respective shareholders and creditors w.e.f.

1.4.2010.

I have heard Sri V.S. Raju, the learned counsel appearing for the petitioners as well as the learned Assistant Solicitor General of India. The Demerged company was originally incorporated on

12.8.1974 in the name and style of M/s. Priya Foods Private Limited. Later the name was changed as M/s. Ushodaya Enterprises Private Limited and a fresh Certificate of Incorporation was obtained on

17.4.1986. Again the name of the Company was changed to Ushodaya Enterprises Limited as it became a Deemed Public Company under Section 43A(1A) of the Companies Act, 1956 and a fresh Certificate of Incorporation was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on 18.04.2001. Later on the Company was converted into a Private Limited Company and had changed its name to M/s. Ushodaya Enterprises Private Limited and a fresh Certificate of Incorporation consequent on change of name was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on

28.03.2007 after complying the necessary formalities under the Companies Act, 1956. The Registered office of the Demerged company is situated at 6-3-570, Eenadu Complex, Somajiguda, Hyderabad and its main objects are to carry on business of printers, publishers and owners of Daily Newspapers, Journals, Weeklies, Fortnightlies, Magazines and all other publications and undertakings in any language and etc., (morefully described in para-5 of the Company Petition No.179 of 2010). The authorized capital of the Demerged company is Rs.150,00,00,000/- divided into 1,50,00,000 equity shares of Rs.100/- each. The issued, subscribed and paid-up capital of the said company is Rs.1,26,28,000/- divided into 1,26,280 equity shares of Rs.100/- each. The first Resulting company/ETPL was originally incorporated under the name and style of M/s. Mayuri Film Distributors Private Limited on 13.4.1991 under Certificate of Incorporation. Later on the company had changed its name as M/s. Eenadu Television Private Limited and a fresh Certificate of Incorporation was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on 26.8.2010 after complying the necessary formalities under the Companies Act,

1956. The Registered office of the 1st Resulting company/ETPL is situated at 1-10-76, Fairfields, Begumpet, Hyderabad and its main objects are to establish and run the business of broadcasting services including terrestrial and satellite television and radio broadcasting, cable network and such other medium of entertainment and etc., (morefully described in para-10 of the Company Petition No.179 of 2010). The authorized capital of the 1st Resulting company/ETPL is Rs.25,00,000/- divided into 2,50,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of the 1st Resulting company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each. The second Resulting company/Prism was originally incorporated under the name and style of M/s. Five Stars Investigation and Security Services Private Limited on 29.12.2008 under corporate identity. Later on the company had changed its name as M/s. Prism TV Private Limited and a fresh Certificate of Incorporation was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on

24.8.2010 after complying then necessary formalities under the Companies Act, 1956. The Registered Office of the 2nd Resulting company/Prism is situated at 5-9-209/1, Ground Floor, Besides Hydri Plaza, Chiragali Lane, Abids, Hyderabad and its main objects are to establish and carry on the business of Television Broadcasting in all its forms both within and outside India for this purpose to establish studios, news networks and other related infrastructure and etc., (morefully described in para-15 of the Company Petition No.179 of 2010). The authorized capital of the 2nd Resulting company/Prism is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of the 2nd Resulting company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each. The third Resulting company/PTPL was originally incorporated under the name and style of M/s. ANG Enterprises Private Limited on

09.07.1996 under Certificate of Incorporation. Later on the company had changed its name as M/s. Panorama Television Private Limited and a fresh Certificate of Incorporation was issued by the Registrar of Companies, Andhra Pradesh, Hyderabad on 26.8.2010 after complying the necessary formalities under the Companies Act, 1956. The Registered office of the 3rd Resulting company is situated at 8-3- 677/23, SKD Nagar, Yellareddyguda, Hyderabad and its main objects are to carry on the business of broadcasting, telecasting, relaying, transmitting or distributing in any manner, any audio, video or other programmes or software for television, radio, internet or any other media through, including but not limited to, terrestrial satellite, cable, direct to home, internet or interactive television network and also to telecast, broadcast, relay through any media including satellite, radio, computers, distribute through any cable and satellite channels on cable networks, Direct to Home, Internet, Interactive Television or transmit the information / advertisement / products of the company or any other person and etc., (morefully described in para-20 of the Company Petition No.179 of 2010). The authorized capital of the 3rd Resulting company is Rs.10,00,000/- divided into 1,00,000 equity shares of Rs.10/- each. The issued, subscribed and paid-up capital of the 3rd Resulting company is Rs.1,00,000/- divided into 10,000 equity shares of Rs.10/- each. It is stated that the Demerged Company has over the years developed three distinct business, namely, “publications” (Telugu newspaper), “Television Broadcasting Business” (broadcasting of television channels in various languages), and “Priya Foods” (manufacturing and marketing of food items). It is further submitted that the Demerged Company’s Television Broadcasting Business comprises of 12 television channels grouped under the following heads: namely a) “Telugu Channels”, namely, ETV Kannada, ETV Bangla, ETV Marathi, ETV Gujarati and ETV Oriya and c) “Hindi and Urdu Channels”, namely, ETV Rajasthan, ETV Uttar Pradesh, ETV Madhya Pradesh, ETV Bihar, and ETV Urdu. Further each of the aforesaid three groups of the Television Broadcasting Business has significant potential for growth, but is faces severe competition and challenges which require focus and different skill sets. Further each of these groups has the potential to attract different sets of investors, requires different kind of investments and needs to pursue different business strategies. It is further stated that in order to lend greater focus to the operation of each of the three groups of the Television Broadcasting Business, the Demerged company proposed to reorganize and segregate the television broadcasting business. In view of the advantages of arrangement, the Board of Directors of the Demerged and the Resulting Companies at their respective meetings held on 28.8.2010 approved the scheme of arrangement between the Demerged company and the Resulting companies and their respective shareholders and creditors w.e.f.

1.4.2010 subject to the approval of the shareholders and confirmation by this Court. The salient features of the Scheme of Arrangement have been specified in para-24 of the Company Petition No.179 of 2010. The material placed before this Court shows that the Demerged company has filed Company Application No.728 of 2010 dispensation of convening of the meeting of the shareholders and the same was ordered by this Court by order dated 14.9.2010. So far as the Resulting companies are concerned, similar applications were filed being Company Application Nos.729 to 731 of 2010 and the same were also ordered on 14.9.2010 dispensing with convening of the meetings of the shareholders of the Resulting companies. It is stated that though the Demerged company availed term loans from Union Bank of India, Indian Bank, Standard Chartered Bank, Dena Bank and Karur Vysya Bank and State Bank of India, there is no objection to the proposed arrangement from the said secured creditors as their interest will not be affected. It is also stated that the Demerged company is an Unlisted company and that all the shareholders of the Demerged company are interested in the Scheme of Arrangement. All the Resulting Companies are also Unlisted Companies and the shareholders of the respective companies are interested in the Scheme of Arrangement. It is also stated that the Resulting Companies have not availed any secured or unsecured loans and that no investigations or proceedings are pending under the provisions of the Companies Act either against the Demerged Company or the Resulting Companies. In response to the notice ordered by this Court, the Registrar of Companies, A.P., Hyderabad, filed a common affidavit in all the company petitions raising the following objections: “(a) The Demerged company has availed secured loans and they have to furnish NOCs from secured creditors if any. (b) The Resulting companies should pay the stamp duty wherever applicable as per the Regulations of Andhra Pradesh Stamp Act.” To satisfy the Objection No.1 raised by the Registrar of Companies, the learned counsel for the petitioners has placed before this Court the letters of all the secured creditors vide Memo dated

15.12.2010 expressing no objection for the proposed Scheme of Arrangement. So far as the Objection No.2 regarding the stamp duty is concerned, it is made clear that the same should be paid by the Resulting Companies at appropriate time. Having regard to the facts and circumstances noticed above, particularly keeping in view that the secured creditors of the Demerged Company have consented to the Scheme of Arrangement as proposed and resolved by the Board of Directors of all the Companies, I am of the opinion that it is a fit case where the Scheme of Arrangement as proposed can be sanctioned. It is also relevant to note that despite the notice of admission of Company Petitions by paper publications no objections whatsoever have been received from any quarter. The Scheme of Arrangement apart from being in the best interest of the companies and their respective shareholders and creditors is not opposed to any provision of law or public interest. Accordingly, the Scheme of Arrangement as approved by the Board of Directors of the Demerged company as well as the Resulting companies in the meeting of their respective Board of Directors is hereby sanctioned and it is declared that the same is binding on all the shareholders, creditors and employees of the companies. The parties to the Scheme of Arrangement or other persons interested shall be at liberty to apply to this Court for any directions that may be necessary in regard to the working of the Scheme of Arrangement. A certified copy of this order shall be filed before the Registrar of Companies within 30 days from the date of receipt of this order. All the Company Petitions are accordingly allowed. No costs. Dt. 15.12.2010 _____________ G. ROHINI, J.