2018 (12) TMI 805 - AT - Companies Law

Judgments Uphold Validity of Amalgamation Scheme, Dismiss Appeals challenging NCLT Approval

K.J. Suwresh Mr K. Lakshmisuthaa Versus M/s. Teamlease Staffing Services Pvt. Ltd. And TeamLease Services Ltd.

K.J. Suwresh Mr K. Lakshmisuthaa Versus M/s. Teamlease Staffing Services Pvt. Ltd. And TeamLease Services Ltd. - [2018] 211 Comp Cas 331 (NCLAT - Del) Issues:1. Validity of the scheme of amalgamation approved by NCLT Chennai and Mumbai.2. Allegations of lack of notice to shareholders and creditors.3. Dispute over payments under Share Purchase Agreement (SPA).4. Knowledge and consent of the appellants regarding the scheme of amalgamation.Issue 1: Validity of the scheme of amalgamation approved by NCLT Chennai and Mumbai:In Company Appeal 30/2018, the appellant challenged the Impugned Order of NCLT, Chennai, accepting the scheme of amalgamation between two transferor companies and a transferee company under Section 230 of the Companies Act, 2013. The NCLT Chennai accepted the scheme after considering various factors, including share capital, creditor affidavits, and compliance with necessary formalities. Similarly, Company Appeal 167/2018 arose from the Impugned Order of NCLT, Mumbai, approving the same scheme subject to Chennai NCLT's sanction. The appellants in both appeals alleged lack of notice and raised objections, claiming to be aggrieved parties. However, the NCLT Mumbai also approved the scheme, leading to the subsequent filing of CA 167/2018 after CA 30/2018. The judgments rejected both appeals, upholding the validity of the amalgamation scheme approved by both NCLT benches.Issue 2: Allegations of lack of notice to shareholders and creditors:The appellants, claiming to be aggrieved parties, alleged that they were not given notice regarding the amalgamation despite being shareholders and creditors. They contended that as 100% shareholders of one transferor company, they were entitled to notice, especially considering a Share Purchase Agreement (SPA) between them and the transferee company. The appellants argued that payments under the SPA were not fulfilled, leading to their objections against the amalgamation. However, the respondents argued that the appellants had knowledge of the proceedings and had even submitted affidavits consenting to the amalgamation, indicating their awareness and lack of objections at an earlier stage. The judgments noted the appellants' knowledge and rejected their claims of lack of notice as a ground for grievance.Issue 3: Dispute over payments under Share Purchase Agreement (SPA):The appellants raised concerns regarding payments under the SPA, claiming that they were yet to receive a significant amount from the transferee company. The dispute over payments, particularly related to Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) criteria, led to arbitration proceedings. The judgments highlighted the ongoing arbitration and stated that the payment dispute was not within the scope of the current appeals, emphasizing that the issue was being addressed separately through arbitration.Issue 4: Knowledge and consent of the appellants regarding the scheme of amalgamation:The judgments extensively discussed the appellants' knowledge and consent regarding the scheme of amalgamation. Affidavits submitted by the appellants in May 2017 indicated their awareness and support for the scheme, including dispensation with the creditors' meeting. The judgments emphasized that the appellants had actively participated in the process, including approving balance sheets and resigning as directors, indicating their involvement and understanding of the proceedings. Despite the appellants' arguments regarding the necessity of notice, the judgments concluded that the appellants were well-informed about the amalgamation process and had not raised objections earlier, leading to the rejection of both appeals.In conclusion, the judgments upheld the validity of the amalgamation scheme approved by NCLT Chennai and Mumbai, dismissing the appeals raised by the aggrieved parties based on lack of notice and payment disputes, emphasizing the appellants' prior knowledge and consent regarding the proceedings.