AI Structured Summary
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Judgment
The Court is convened by videoconference today ( 8th Day of April, 2021).
The Counsel for the Applicant Companies submits that the present Scheme is a Composite Scheme of Arrangement Between Madhouse Mobile
India Private Limited (Transferor Company) and GroupM Media India Private Limited (Transferee Company or Demerged Company-1 or Resulting
Company-2) and Mediaedge CIA India Private Limited (Demerged Company-2 or Resulting Company-1) and their respective Shareholders and
Creditors (“the Schemeâ€) under the provisions of Sections 230 to 232 of the Companies Act, 2013.
The Counsel for the Applicant Companies further submits that the First Applicant Company is engaged in the business of providing advertising
agencies and other markets with the best and most comprehensive mobile related media and applications services. The Second Applicant Company is
engaged in the business of advertising and media related services including: media planning and media buying, brand content, digital media, consumer
research, internet marketing (digital, direct, cash), content creation, social media marketing, out of home advertising and entertainment, sponsorship
and sports marketing and the Third Applicant Company is engaged in the engaged in business of media planning and buying, digital media, mobile,
search, performance marketing, social media analytics and insights, Sport, Entertainment & Cause, Multi-cultural, Content, Retail, Integrated Planning.
The Counsel for the Applicant Companies submits that the Board of Directors of the Applicant Companies in their respective meetings held on 10th
Day of February, 2021 have approved the proposed Scheme. The Board Resolution approving the Scheme for the Applicant Companies is annexed as
“Annexure D (Colly)â€, to the Company Scheme Application.
The Appointed Date for the Composite Scheme of Arrangement is 1st April, 2019.
The Authorised, Issued, Subscribed and Paid-up Share Capital of the Applicant Companies as on 31st day of March, 2020 is as under:
a. The Authorised Share Capital of the First Applicant Company is Rs. 5,00,00,000/- divided into 5,00,000 Equity Shares of Rs.100/- each. Issued,
subscribed and paid up Share Capital of the First Applicant Company is Rs.2,50,00,000/- divided into 2,50,000 Equity Shares of Rs. 100/- each.
b. The Authorised Share Capital of the Second Applicant Company is Rs.2,40,00,000/- divided into 2,40,00,000 Equity Shares of Rs. 1/- each. Issued,
Subscribed and Paid-up Share Capital of the Second Applicant Company is Rs.80,00,000/- divided into 80,00,000 Equity Shares of Rs. 1/- each.
c. The Authorised Share Capital of the Third Applicant Company is Rs. 1,00,00,000/- divided into 10,00,000 Equity Shares of Rs. 10/- each. Issued,
Subscribed and Paid-up Share Capital of the Third Applicant Company is Rs.1,00,000/- divided into 10,000 Equity Shares of Rs.10/- each.
The Counsel for the Applicant Companies further submits that the rationale for the Scheme, for the Amalgamation of Madhouse into GroupM and
Demerger of Demerged Undertaking 1 of GroupM into Mediaedge and Demerger of Demerged Undertaking 2 of Mediaedge into GroupM is as
follows:
a) Amalgamation of Madhouse into GroupM;
Madhouse is a part of global brand named GroupM which provide various business services like advertising and media related services
including: media planning and media buying, brand content, digital media, consumer research, internet marketing (digital, direct, cash),
content creation, social media marketing, out-of-home advertising and entertainment, sponsorship and sports marketing. The GroupM
controls Madhouse and other brands worldwide and thus consolidation of the scattered entities around the globe will bring the brand
under one roof. In India the GroupM had decided to consolidate Madhouse division under single entity.
• The proposed arrangement will result in administrative and operational rationalization, organizational efficiencies, reduction in
overheads, administrative and operational costs and other expenses and optimal utilization of various resources;
• It will prevent cost duplication and the resultant operations would be substantially more cost-efficient;
• A consolidation of the Transferor Company with the Transferee Company by way of Amalgamation of the Transferor Company into the
Transferee Company under the applicable Indian laws would lead to a more efficient utilization of the brand of the Transferor Company
and create a stronger base for future growth of the Amalgamated Entity (as defined below) in the business segment in which the Transferee
Company operates;
• The Amalgamation would not adversely affect the financial position of the Transferee Company, and post the Amalgamation, the
Amalgamated Entity would be able to meet its debts and liabilities, as and when they arise.
b) Demerger of Demerged Undertaking 1 from GroupM to Mediaedge and Demerger of Demerged Undertaking 2 from Mediaedge to
GroupM.
With the launch of Wavemaker brand globally by WPP, it was decided to integrate the clients of „erstwhile Essence brand‟ under
GroupM brand legal entities. Similarly, it was decided to integrate the clients of „Wavemaker‟ was under a single entity;
• The consolidation of Wavemaker business and Essence related business to Mediaedge and Wavemaker related business in GroupM, by
way of the Scheme, including its business undertaking will lead to significant benefits for the respected businesses, enabling the business
activities comprised in all two businesses to be carried out by a separate and independent management with greater focus, attention and
specialization for sustained growth;
• The nature of the Demerged Undertaking 1 and Remaining business 1 are distinct and independent of each other. The nature of the
Demerged Undertaking 2 and Remaining business 2 are distinct and independent of each other. The nature of risk and return involved in
the Demerged Undertaking is also distinct from the Remaining Business;
• The Demerger will also provide scope for independent collaboration and expansion for each brand / division without committing the
existing organization in its entirety;
• The Demerger will allow optimum utilization of financial, managerial, technological and marketing enterprise, marketing networks,
manpower and other resources and would enable respective management(s) of the Companies to concentrate on core businesses and
strengthen competencies and provide independent opportunities to increase scale of operations;
• The Demerger would provide greater transparency and visibility to the operational and financial performance of the Demerged
Undertaking 1 and Demerged Undertaking 2 and would provide higher degree of independence as well as accountability;
• The Demerger will enable both GroupM and Mediaedge to achieve and fulfill their respective objectives more efficiently and
economically, with focused management and utilization of resources and talent, and for administrative convenience and;
• The Scheme does not have any adverse effect on either the shareholders, the employees or the creditors of GroupM/ Mediaedge. The
financial position of GroupM and Mediaedge shall not be adversely affected by the Scheme. Both GroupM and Mediaedge will continue to
remain financially stable and be able to meet and pay their debts as and when they arise.
The Counsel for the Applicant Companies state that as per the valuation report of the M/s SSPA & Co., Chartered Accountants, Registered Valuer
(IBBI/RV/06/2020/126), the consideration proposed is as under
a. Demerger of Demerged Undertaking 1 from GroupM to Mediaedge
1 (One) equity share of Mediaedge of INR 10 each fully paid up for every 3,882 (Three Thousand Eight Hundred and Eighty two) equity
shares of GroupM of INR 1 each fully paid up
b. Demerger of Demerged Undertaking 2 from Mediaedge to GroupM.
79 (Seventy Nine) equity shares of Group M of INR 1 each fully paid up for every 1 (One) equity share of Mediaedge of INR 10 each fully
paid up
c. Amalgamation of Madhouse into GroupM
1 (One) equity shares of Group M of INR 1 each fully paid up for every 8 (Eight) equity shares of Madhouse of INR 100 each fully paid up
That the meeting of the Equity Shareholders of the First Applicant Company be convened and held through Video Conferencing or Other Audio-
Visual Means (VC/OAVM), on Tuesday, 29th June, 2021 at 10:30 A.M. for the purpose of considering and, if thought fit, approving with or without
modification(s) the proposed Scheme.
That the meeting of the Equity Shareholders of the Second Applicant Company be convened and held through Video Conferencing or Other
Audio-Visual Means (VC/OAVM), on Tuesday, 29th June, 2021 at 11:00 A.M. for the purpose of considering and, if thought fit, approving with or
without modification(s) the proposed Scheme.
That the meeting of the Equity Shareholders of the Third Applicant Company be convened and held through Video Conferencing or Other Audio-
Visual Means (VC/OAVM), on Tuesday, 29th June, 2021 at 12:00 Noon for the purpose of considering and, if thought fit, approving with or without
modification(s) the proposed Scheme.
That all the above Applicant Companies to comply with the General Circular No. 39/2020 dated 31st day of December 2020 as regards conduct of
the meeting of shareholders through Video Conferencing or Other Audio-Visual Means (VC/OAVM) and to report this Tribunal about the compliance
of the same.
That at least one month before the said meetings of the Equity shareholders of the Applicant Companies to be held as aforesaid, a notice
convening the said meetings at the place, day, date and time as aforesaid, together with a copy of the Scheme, a copy of statement disclosing all
material facts as required under Section 230(3) of the Companies Act, 2013 read with Rule 6 of the Companies (Compromises, Arrangements and
Amalgamations) Rule, 2016 and the prescribed Form of Proxy, shall be sent by Courier / Registered Post / Hand Delivery / Speed Post or through
Email (to those shareholders whose email addresses are duly registered with the Applicant Companies for the purpose of receiving such notices by
email), addressed to each of the Shareholders of the Applicant Companies, at their last known address or email addresses as per the records of the
respective Applicant Company, as on cut-off date determined by the Board of Directors of respective Applicant Company.
That at least one month before the meetings of the shareholders of the Applicant Companies to be held as aforesaid, a notice convening the said
meetings, indicating the place, day, date and time of meeting as aforesaid be published and stating that copies of the Scheme and the statement
required to be furnished pursuant to Section 230(3) of the Companies Act, 2013 read with Rule 6 of the Companies (Compromises, Arrangements and
Amalgamations) Rule, 2016 and the Form of Proxy can be obtained free of charge at the Registered Office of the Applicant Companies as aforesaid
and / or at the office of its Advocates, M/s. Ajit Singh Tawar & Co., B - 1404, Simran Sapphire CHS, Sector 34C, Kharghar, Navi Mumbai â€
410210.
That a composite notice of the aforesaid meetings of the Applicant Companies shall be advertised in two local newspapers viz. “Business
standard†in English and translation thereof in “Navshakti†in Marathi, both circulated in Mumbai not less than one month before the date fixed
for the meetings. Considering the lockdown prevailing due to COVID-19 pandemic, the Applicant Companies will have option to publish notices online
in the respective e-newspaper editions.
The Applicant Companies undertake to:
i. Issue Notice convening meeting(s) of the shareholders of Applicant Companies in Form No. CAA.2 as per Rule 6 of the Companies (Compromises,
Arrangements and Amalgamations) Rules, 2016;
ii. Issue Statement containing all the particulars as per Section 230(3) of the Companies Act, 2013;
iii. Issue Form of Proxy in Form No. MGT-11 as per Rule 19 of the Companies (Management and Administration) Rules, 2014; and
iv. Advertise the composite Notice convening meeting(s) in Form No. CAA.2 as per Rule 7 of the Companies (Compromises, Arrangements and
Amalgamations) Rules, 2016.
Mr. Vishandas Hardasani, Director of the Applicant Companies failing him Mr. Tushar Vyas, Director in the First Applicant Company and
Authorized Representative of the Second and Third Applicant Company shall be the Chairman of the meetings of the Equity Shareholders of the
Applicant Companies to be held as aforesaid or any adjournments thereof.
The Chairman for the aforesaid meetings shall be paid an amount of Rs. 10,000/- per meetings of Equity Shareholders for the services rendered.
The Scrutinizer for the aforesaid meetings shall be CS Kumudini Bhalerao, Membership No.- F6667, Partner in M/s. Makarand M. Joshi & Co.,
who shall be paid an amount of Rs. 10,000/- per meetings of equity shareholders for the services rendered.
The Chairman of the respective Applicant Companies appointed for the aforesaid meeting(s) to issue the advertisement and send out the notices
of the meeting(s) referred to above. The said Chairman of the meeting(s) shall have all powers as per Articles of Association and also under the
Companies Act, 2013 in relation to the conduct of the meeting(s), including for deciding procedural questions that may arise at the aforesaid
meeting(s) or at any adjournment thereof or any other matter including an amendment to the Scheme or resolution, if any, proposed at the meeting(s)
by any person(s).
The quorum of the aforesaid meeting of the Applicant Companies shall be as prescribed under Section 103 of the Companies Act, 2013, present
either in person or proxy or by authorized representative. If the quorum is not present within half an hour from the time appointed for the holding of the
meeting, the members present shall be the quorum and the meeting shall be held.
The voting by proxy or authorized representative in case of body corporate be permitted, provided that a proxy in the prescribed form/authorization
duly signed by the person entitled to attend and vote at the meeting, is filed with the respective Applicant Companies at their respective registered
offices not later than 48 hours before the aforesaid meeting.
The value and number of the shares of each shareholder of the Applicant Companies shall be in accordance with the books / register of the
Applicant Companies and where the entries in the books / register are disputed, the Chairman of the respective meeting shall determine the value for
the purpose of the aforesaid meetings and his decision in that behalf would be final.
The Chairman of the meetings of the respective Applicant Companies to report to this Tribunal, the results of the aforesaid meetings within 30
(thirty) days of the conclusion of the meetings.
The Counsel for the Applicant Companies submits that there are no Secured Creditor in the Applicant Companies.
The Counsel for the First Applicant Company submits that there are 35 (Thirty- Five) Unsecured Creditors amounting to Rs. 10,85,90,002/-
(Rupees Ten Crores Eighty-Five Lakhs Ninety Thousand and Two only) as on 31st December, 2020. List of Unsecured Creditors of the First
Applicant Company is annexed as “Annexure B1†to the Additional Affidavit in support of Company Scheme Application.
The Counsel for the First Applicant Company submits that the Scheme is an Arrangement between the First Applicant Company and its
shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 and
as there is no Compromise and/or Arrangement with the creditors and as no sacrifice is called for, the meeting of the unsecured creditors is dispensed
with. Further, this Bench hereby directs the First Applicant Company to issue notice to their Unsecured Creditors as specified in section 230(3) of the
Companies Act, 2013, with the direction that they may submit their representation, if any, to the Tribunal and copies of such representation shall
simultaneously be served upon the First Applicant Company. The notice be sent by Registered Post AD/Speed Post/Email/Courier as may be feasible
in view of the lockdown owing to the Covid-19 pandemic. It shall be the responsibility of the First Applicant Company to ensure that the Creditors as
indicated above are put on notice regarding the Scheme, so that they may take an informed decision thereon.
The Counsel for the Second Applicant Company submits that there are 979 (Nine Hundred and Seventy-Nine) Unsecured Creditors in the Second
Applicant Company having outstanding amount of Rs. 22,904,894,097/- (Rupees Two Thousand Two Hundred and Ninety Crores Forty-Eight Lakhs
Ninety-Four Thousand and Ninety-Seven only) as on 31st December, 2020. List of Unsecured Creditors of the Second Applicant Company is
annexed as “Annexure B2†to the Additional Affidavit in Support of Company Scheme Application.
The Counsel for the Second Applicant Company submits that the Scheme is an Arrangement between the Second Applicant Company and its
shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section230(1)(a) of the Companies Act, 2013 and
as there is no Compromise and/or Arrangement with the creditors and as no sacrifice is called for, the meeting of the unsecured creditors is dispensed
with. Further, this Bench hereby directs the Second Applicant Company to issue notice to their Unsecured Creditors as specified in section 230(3) of
the Companies Act, 2013, with the direction that they may submit their representation, if any, to the Tribunal and copies of such representation shall
simultaneously be served upon the Second Applicant Company. The notice be sent by Registered Post AD/Speed Post/Email/Courier as may be
feasible in view of the lockdown owing to the Covid-19 pandemic. It shall be the responsibility of the Second Applicant Company to ensure that the
Creditors as indicated above are put on notice regarding the Scheme, so that they may take an informed decision thereon.
The Counsel for the Third Applicant Company submits that there are 413 (Four Hundred and Thirteen) Unsecured Creditors in Third Applicant
Company having outstanding amount of Rs. 4,31,13,08,324/- (Rupees Four Hundred and Thirty-One Crores Thirteen Lakhs Eight Thousand Three
Hundred and Twenty-Four only) as on 31st December, 2020. List of Unsecured Creditors of the Third Applicant Company is annexed as
“Annexure B3†to the Additional Affidavit in Support of Company Scheme Application.
The Counsel for the Third Applicant Company submits that the Scheme is an Arrangement between the Third Applicant Company and its
shareholders as contemplated under Section 230(1)(b) and not in accordance with the provisions of Section 230(1)(a) of the Companies Act, 2013 and
as there is no Compromise and/or Arrangement with the creditors and as no sacrifice is called for, the meeting of the unsecured creditors is dispensed
with. Further, this Bench hereby directs the Third Applicant Company to issue notice to their Unsecured Creditors as specified in Section 230(3) of
the Companies Act, 2013, with the direction that they may submit their representation, if any, to the Tribunal and copies of such representation shall
simultaneously be served upon the Third Applicant Company. The notice be sent by Registered Post AD/Speed Post/Email/Courier as may be feasible
in view of the lockdown owing to the Covid-19 pandemic. It shall be the responsibility of the Third Applicant Company to ensure that the Creditors as
indicated above are put on notice regarding the Scheme, so that they may take an informed decision thereon.
All the Applicant Companies to serve notice of the present Application complete with enclosures on â€" (1) the Regional Director (Western
region), Ministry of Corporate Affairs, Mumbai; (2) Registrar of Companies, Maharashtra, Pune; (3) Official Liquidator, High Court Bombay and (4)
Income Tax Authority within whose jurisdiction the Transferor Company 1 are assessed to tax, bearing PAN No. AAHCM6090J at ITO WD 4(3)(1)
Aayakar Bhavan, Mumbai; and (5) GST Authority within whose jurisdiction the Transferor Company 1 are assessed to GST, bearing GSTIN
27AAHCM6090J1Z2 at Jurisdictional Department Goregaon- East_701, MHCG0283, VM0303, RANGE-III, Mumbai, pursuant to Section 230(5) of
the Companies Act, 2013 and Rule 8 of the Companies (Compromises Arrangements and Amalgamations) Rules, 2016. If no response is received by
the Tribunal from such authorities within 30 days of the date of receipt of the notice, it will be presumed that they have no objection to the proposed
Scheme.
The Transferor Company is directed to serve notice along with copy of scheme upon Official Liquidator, High Court Bombay the Hon‟ble
Tribunal is appointing M/s. H. K. Chheda & Co., Chartered Accountants, having their office at 113, Sarsati Sadan, Room No. 22, 1st Floor, Keshvji
Naik Road, Chinch Bunder, Mumbai- 400009, having email as chhedahk@gmail.com, with a remuneration of Rs. 2,00,000/- along with the applicable
taxes for the services to assist the Official Liquidator to scrutinize books of accounts of the Transferor Company for the last five years. The Official
Liquidator may submit his representations, if any, within a period of thirty (30) days from the date of the receipt of such notice to the Tribunal and a
copy of such representation shall simultaneously be served upon the Transferor Company, failing which, it shall be presumed that the Official
Liquidator has no representations to make on the proposals.
The Applicant Companies shall host the notices of meetings directed herein, on their respective websites, if any.
The Chairman appointed for the Applicant Companies shall file a Compliance Report not less than 7 (seven) days before the date fixed for the
holding of the respective meeting(s) of shareholders of the Applicant Companies and do report to this Tribunal that the direction regarding the issue of
notices and the advertisement have been duly complied with as per Rule 12 of the Companies (Compromises, Arrangements and Amalgamation)
Rules, 2016.