Delhi High Court sanctions Vodafone Essar’s scheme of arrangement involving demerger of the passive infrastructure assets despite opposition by tax department

Recently the Delhi High Court sanctioned the Scheme of Arrangement (Scheme) in case of Vodafone Essar Mobile Services Limited, Vodafone Essar South Limited, Vodafone Essar Digilink Limited (all being the transferor / Petitioner Companies) and Vodafone Essar Infrastructure Limited (being the transferee company) (Judgment dated 29 March 2011 in Company Petition No. 334/2009) filed by the companies under Sections 391–394 of the Companies Act, 1956 for demerger of the Passive Infrastructure Assets (PIA).

Background of the case

• The Scheme envisaged the demerger of PIA of each of the transferor companies into the transferee companies under Sections 391–394 of the Companies Act, 1956.
• The Scheme was to restructure within the Group, the holding of the assets constituting the PIA in a more efficient manner consistent with the diverse needs of the business and does not involve any movement of assets or liabilities to any company outside the Group and that such transfer shall be without consideration.

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