IDEA CELLULAR LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) To put straight the controversy in focus, which is the subject matter of the present appeal, we may mention that a Scheme of Amalgamation of Spice Communication Limited (hereinafter referred to as the Spice, for short) with Idea Cellular Limited (hereinafter referred to as the appellant) was allowed by the learned Company Judge vide orders dated 5.2.2010. As per the Scheme of Amalgamation (hereinafter referred to as =the Scheme') as approved, all the affairs including business, assets and liabilities of Spice were taken over by the appellant. Spice was also having certain licenses namely UAS-Unified Access Service License for Punjab, by the Union of India, Department of Telecommunication (hereinafter referred to as the respondent) under Section 4 of the Indian Telegraph Act, 1885 (hereinafter referred to as the Act). There was a clause in the Scheme, as per which this licence also stood transferred to the appellant.

(2.) According to the respondent, such a course of action was not permissible without specifically taking its prior approval and the amalgamation of Spice with the appellant was resorted to without the knowledge of or taking consent of or notice of the proceedings to the respondent. On coming to know of the sanctioning of the Scheme, the respondent moved an application for recall of orders dated 5.2.2010 and de-merger of the two companies. This application alongwith other miscellaneous application filed by the respondent has been decided by the learned Company Judge vide orders dated 4.7.2011. The learned Company Judge has recorded a finding that non-disclosure and suppression of material facts from the Court, while seeking sanction of the Scheme, amounts to fraud played upon the Court and the sanction of the Scheme was in contravention of the licence condition and merger guidelines. Notwithstanding this finding, the learned Company Judge has taken a view that it would not be feasible or plausible to recall orders dated 5.2.2010 vide which the scheme of amalgamation was sanction in its entirety as it was not possible to 'unscramble the eggs'. Instead, vide impugned order the sanctioning order dated 5.2.2010 has been modified to bring sanctioned scheme, in the present case, and in conformity with the Licence and Merger Guidelines, 2008. Consequently, the modification which is done is to the effect that;

(3.) The appellant feels aggrieved by the aforesaid findings of the learned Company Judge regarding modification carried out in the order imputing fraud upon the appellant and also carrying out aforesaid modification in the order dated 5.2.2010 vide which Scheme was sanctioned. For this reason, the appellant has challenged that part of the order by preferring Company Appeal 42/2011. The DoT, on the other hand, also feels dissatisfied with the outcome of the proceedings/demerger application filed by it as according to the DoT, once findings of fraud has been returned by the learned Company Judge itself, there was no other course of action left for the Court to recall sanctioning order dated 5.2.2010 inasmuch as fraud vitiates every action. This has prompted DoT to file Company Appeal 67/2011.