Bombay High Court · 2010

Limited (“Cornershop Entertainment” or “the First AND Cornershop Animation Company Private Limited (“Cornershop Animation” or “the Second Transferor Company”) AND Digital Media Convergence Limited (“Digital Media” or “the Third Transferor Company”) AND Re- Med Services Private Limited (“Re-Med Services” or “the Fourth Transferor Company”) WITH ETC Networks Limited (“ETC” or “the Transferee Company”) Mr. Hemant Sethi i/b Hemant Sethi & Co. advocates for Petitioners Mr.C.J.Joy i/b Shri S.K. Mohapatra for the Regional Director in all the Petitions. Mr. Mehul Shah i/b ANS Law Associates for Tata Communications Limited, One of the Unsecured Creditors of Digital Media Convergence Limited, the Third Transferor Company Mr. P. Rama Rao, Official Liquidator in all the Company Petitions . CORAM : S.J. KATHAWALLA J DATE: 16TH APRIL 2010 P.C

1. Heard learned counsel for parties.

2. The sanction of the Court is sought to a Scheme of Amalgamation (“the Scheme”) presented under Sections 391 to 394 of the Companies Act, 1956 for Amalgamation of Cornershop Entertainment Company Private Limited and Cornershop Animation Company Private Limited and Digital Media Convergence Limited and Re-Med Services Private Limited, the Transferor Companies with ETC Networks Limited, the Transferee Company.

3. Counsel appearing on behalf of the Petitioners has stated that they have complied with all the requirements as per directions of this Hon’ble Court and they have filed necessary affidavits of compliance in the Court. Moreover, Petitioner Companies undertake to 3 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 Regional Director has filed his affidavit in the above petitions stating that save and except as stated in paragraph 6 thereof, the Scheme does not appear to be prejudicial to the interest of shareholders and public. The paragraph 6 of the said affidavit reads thus:- “That the Deponent respectfully submits that the Transferee Company is a listed with The Bombay Stock Exchange and National Stock Exchange. However, the Transferee Company has not obtained “No Objection Certificate” from the respective Stock Exchanges. This is for information of this Hon’ble High Court.”

5. The Counsel appearing on behalf of the Petitioners states that the entire issued, subscribed and paid-up share capital of First Transferor Company is held by the Transferee Company. The entire issued, subscribed and paid-up share capital of Second Transferor Company, Third Transferor Company and Fourth Transferor Company is held by the First Transferor Company. Hence, all the Transferor Companies are wholly owned subsidiaries, directly or indirectly of the Transferee Company. My attention has been drawn to the order dated 5th day of February, 2010 dispensing with the filing of a separate Application and Petition by the Transferee Company. In this view of the matter, it would appear that no further action under Section 391 to 394 of the Companies Act at the instance of the Transferee Company is required for the Scheme to take effect.

6. In any case, perusal of the Scheme would show that upon the Scheme becoming effective, the entire paid-up capital of the Transferor Companies shall stand cancelled and the Transferee Company shall not be issuing any new equity shares in as much as there is no variation in the equity share capital of the Transferee Company; consequently, the interest of the existing equity shareholders of the Transferee Company is not 4 impacted in any manner whatsoever.

7. The Clause 24 (f) of the Listing Agreement reads thus:- “(f) The company agrees that it shall file any scheme/petition proposed to be filed before any Court or Tribunal under sections 391,394 and 101 of the Companies Act, 1956, with the stock exchange, for approval, at least a month before it is presented to the Court or Tribunal.” In the instance case no application and petition along with the Scheme is required to be filed by the Transferee Company, as there is no re-organisation of the share capital of the Transferee Company, as no new shares are being allotted to the shareholders of the Transferor Companies in the Transferee Company. However, as a precautionary measure, the Transferee Company has in all fairness filed the Scheme under Clause 24(f) with the Bombay Stock Exchange and the National Stock Exchange by their letter dated_22nd January, 2010_stating that the proposed Scheme envisages merger of direct / indirect wholly owned subsidiaries of the Company, hence there would be no issue of shares by the Company upon merger of the subsidiaries. The Counsel for the Petitioners submits further that no written response or objection has been received from the stock exchanges. The Transferee Company has been verbally communicated by the stock exchanges that no approval is required by the Transferee Company as the Transferee Company has not filed an application / petition with this Hon’ble Court.

8. Reliance is placed upon unreported Judgment of the Delhi High Court in Company Petition No. 124 of 2008 in the matter of Scheme of Amalgamation of Bharti Aquanet Limited with Bharti Airtel Limited where the Regional Director, Northern Region had taken similar objection. 5

9. In my view on plain reading of Clause 24(f) of the listing agreement makes it abundantly clear that permission of Stock Exchanges(s) are required to be taken only, if any, application / Petition is to be filed by the Company with the Court/Tribunal. Since no application or Petition is filed by the Transferee Company in the instance case for the reasons set out in paragraphs 30 & 31 of the Petition, no approval of the Stock Exchange(s) is required to be taken. The objection of the Regional Director is therefore required to be rejected and same is hereby rejected.

10. The Official Liquidator has filed his report stating that the affairs of the Petitioner/Transferor Companies have been conducted in a proper manner and that the said Companies may be ordered to be dissolved by this Hon’ble Court.

11. The Counsel appearing on behalf of the Petitioner states that the dues of the two Objecting Creditors of Digital Media Convergence Limited, the Third Transferor Company, who had filed their objection to the Scheme have been duly paid and they have withdrawn their objection. Mr. Mehul Shah, the Counsel for Tata Communications Limited, one of the Unsecured Creditors of the Third Transferor Company appeared and stated that he has no objection to the Scheme. None of the other parties concerned has come forward to oppose the Scheme.

12. Upon perusal of the entire 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 any public policy.

13. There is no objection to the Scheme and since all the requisite statutory compliances have been fulfilled, Company Scheme Petition No 80 of 2010; Company Scheme Petition No 81 of 2010; Company Scheme Petition No. 82 of 2010 & Company Scheme Petition No. 83 of 2010 are made absolute in terms of prayer clause (a) respectively.

14. The Petitioners to lodge copy of this order and the Scheme duly authenticated by the 6 Company Registrar, High Court, (O.S) Bombay with the concerned Superintendent of Stamps for the purpose adjudication of stamp duty, payable, if any, on the same within 60 days from the date of order.

15. The Petitioners in all the petitions to pay costs of Rs. 7500/- each to the Regional Director and to the Official Liquidator.

16. Costs to be paid within four weeks from today. Petitioner to comply with statutory compliances, applicable, if any.

17. Filing and issuance of the drawn up order is dispensed with. All concerned authorities to act on a copy of this order, the Scheme duly authenticated by Company Registrar, High Court, (O.S), Bombay. ( S.J. KATHAWALLA J)