2022 (4) TMI 258 - AT - Insolvency and Bankruptcy

NCLT upholds Scheme of Amalgamation approval under Companies Act, 2013

Regional Director, Through Raj Singh S/o Shri Suraj Bhan Versus Nanak Consultants Pvt. Ltd., Kewaldeep Consultants Pvt. Ltd., Sayush Consultants and Investment Pvt. Ltd, Ganga Kaveri Credit and Holdings Pvt. Ltd., Sacred Heart Company Investment Pvt. Ltd., Kenstar Investment and Finance Pvt. Ltd., Osiatic Consultants and Investment Pvt. Ltd

Regional Director, Through Raj Singh S/o Shri Suraj Bhan Versus Nanak Consultants Pvt. Ltd., Kewaldeep Consultants Pvt. Ltd., Sayush Consultants and ... Issues Involved:1. Validity of the NCLT's approval of the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013.2. Alleged procedural irregularities in the filing and approval process of multiple schemes of merger.3. Compliance with statutory requirements and stakeholder approvals.4. Jurisdiction and scope of the NCLT's authority in approving schemes of amalgamation.Detailed Analysis:1. Validity of the NCLT's Approval of the Scheme of Amalgamation:The challenge in the Company Appeal (AT) No.175/2020 is directed against the Impugned Order dated 08.06.2020 passed by the NCLT, which approved the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013. The NCLT observed that the Official Liquidator did not raise any specific objections and noted that the affairs of the Petitioner Companies were not conducted in a manner prejudicial to the interests of members, creditors, or public interest. The dues of the Income Tax Department were secured, and statutory auditors confirmed that the accounting treatment in the Scheme was in conformity with the Accounting Standards.2. Alleged Procedural Irregularities:The Appellant contended that five different schemes of merger were filed simultaneously before different coordinate Benches of the NCLT, New Delhi, which led to procedural complications. The Appellant argued that the identity of the companies in the First Motion Petitions became fictional after the approval of each scheme, rendering pending applications for merger infructuous. The Appellant also claimed that the NCLT passed the order without giving them an opportunity to present their arguments, which was refuted by the record showing that the Appellant's counsel was present and heard.3. Compliance with Statutory Requirements and Stakeholder Approvals:The NCLT noted that all shareholders and debenture holders provided their consent to the Scheme, and meetings were held as directed. The approval of the Scheme by stakeholders was unanimous. The Appellant's claim that approval of stakeholders cannot justify contravening the Act was addressed by confirming that all statutory procedures were followed, including compliance with Section 133 of the Act. The Regional Director's report did not specify any requirement for additional hearings, and the NCLT passed the order after considering all arguments.4. Jurisdiction and Scope of NCLT's Authority:The NCLT's jurisdiction in sanctioning schemes of amalgamation was guided by the Supreme Court's decision in Mihir H. Mafatlal vs. Mafatlal Industries Limited, which outlined the parameters for court approval of schemes. The court must ensure that statutory procedures are followed, the scheme has majority approval, and it is not violative of any law or public policy. The NCLT found that all these conditions were met, and the stakeholders' rights were not adversely affected. The Official Liquidator's report also did not raise objections.Conclusion:The Tribunal concluded that the Appellant's unconditional approval for Schemes 1 and 3, the unanimous stakeholder consent, and compliance with statutory provisions justified the NCLT's approval of the Scheme. The appeal was dismissed, affirming the NCLT's order as having no illegality or infirmity. The judgment emphasized the supervisory, not appellate, jurisdiction of the court over the commercial wisdom of the stakeholders. The Registry was directed to upload the judgment and send a copy to the NCLT, New Delhi Bench-VI.