RELIANCE COMMUNICATION LTD Vs. STATE

JUDGEMENT

(1.) 1. These Petitions are filed by the Petitioners to obtain sanction of this Honourable Court to the Scheme of Arrangement between Reliance Communications Ltd. (Petitioner in Company Petition No.487/2009 - hereinafter referred to as the "Demerged Company") and Reliance Infratel Ltd. (Petitioner in Company Petition No.488/2009 - hereinafter referred to as "the Resulting Company") and their respective shareholders and creditors where under the Optic Fiber Undertaking of the Demerged Company shall stand transferred to and vested in the Resulting Company with effect from the appointed date in terms of the Scheme without any further act or deed pursuant to Sec. 394 of the Companies Act, 1956.

(2.) The Demerged Company was incorporated under the provisions of the Indian Companies Act, 1956 in Mumbai on 15th July 2004 under the name "Reliance Infrastructure Developers Private Limited.". Subsequently, the said name has undergone change and the present name of the Demerged Company is "Reliance Communications Limited" with effect from June 7, 2006. On the other hand, Resulting Company was incorporated on 16th April 2001 in the name and style of "Reliance Communications Rajasthan Private Limited". Subsequently, that name has been changed and the present name of the resulting Company is "Reliance Infratel Limited". The Resulting Company is a subsidiary of the Demerged Company. Originally, the Demerged Company held 100% shares in the Resulting Company. However, at present, it has been reduced to 95%, and 5% shares in the Resulting Company are held by institutions and Banks.

(3.) The authorised share capital of the Demerged Company is 300,00,00,000 equity shares of Rs. 5.00 each, valuing Rs. 1500 Crores. The issued, subscribed and paid-up capital of the Demerged Company is 2,06,40,26,881 equity shares of Rs. 5.00 each fully paid-up valuing Rs. 1032.01 crores. It is stated that the capital structure of the Demerged Company post the balance sheet as on March 31, 2008 has not undergone any change. Insofar as the Resulting Company is concerned, the authorised share capital of the said Company as on March 31, 2008 is 300 crores equity shares of Rs. 5.00 each valuing Rs. 1500 Crores. The issued, subscribed and paid up capital of the Resulting Company is 79,80,40,534 equity shares of Rs. 5.00 each valuing Rs. 399.02 Crores. It is stated that the capital structure of the Resulting Company post the balance sheet as on March 31, 2009 has not undergone any change. The objects of the respective companies are set out in their Memorandum of Association. The Demerged Company is presently engaged in the business of providing telecommunication services, whereas, the Resulting Company is engaged in the business of providing telecom infrastructure services. The Board of Directors of the Resulting Company vide Resolution dated Jan. 19, 2009, approved the Scheme of Arrangement between the Demerged Company and the Resulting Company and the respective shareholders and creditors. Similar approval was accorded by the Board of Directors of the Demerged Company vide Resolution dated Jan. 31, 2009. The rationale for the proposed scheme of arrangement is stated as under :