Tribunal allows merger without shareholder meeting based on legal precedent

The Tribunal set aside the NCLT's order and dispensed with the convening meeting of shareholders of the Transferee Company. The Appellant successfully argued that judicial precedents allowed for dispensing with meetings in cases of merger involving wholly owned subsidiaries. The Tribunal emphasized the importance of following precedent law and ruled in favor of the Appellant, allowing the appeal and closing any pending applications without costs.

---

---

Issues Involved:
1. Dispensation of the meeting of shareholders of the Transferor Companies.
2. Dispensation of the meeting of secured and unsecured creditors of the Transferor Companies.
3. Dispensation of the meeting of shareholders of the Transferee Company.
4. Consideration of judicial precedents in similar cases.

Detailed Analysis:

1. Dispensation of the meeting of shareholders of the Transferor Companies:
The NCLT dispensed with the convening of the meeting of shareholders of the Transferor Companies. It was observed that the consent affidavits of the shareholders had been obtained and placed on record, thus eliminating the necessity for convening and holding the meetings.

2. Dispensation of the meeting of secured and unsecured creditors of the Transferor Companies:
The NCLT noted that there were no secured creditors for the Transferor Companies, hence, the requirement for convening and holding a meeting did not arise. For unsecured creditors, the consent affidavits were already placed on record, and thus, the necessity of convening and holding a meeting was also dispensed with.

3. Dispensation of the meeting of shareholders of the Transferee Company:
The NCLT directed the Transferee Company to convene the meeting of its shareholders, despite the fact that 5 out of 6 shareholders had given their consent. The Tribunal did not accept the prayer to dispense with the meeting as not all shareholders had consented.

The Appellant argued that since the Transferor Companies are wholly owned subsidiaries of the Transferee Company, and 100% of the share capital of the Transferor Companies is held by the Transferee Company, no new shares are required to be issued or allotted as consideration from the proposed amalgamation. The proposed scheme of arrangement would not result in any dilution in the shareholding of the shareholders of the Transferee Company, and the financial position of the Transferee Company would remain highly positive post-amalgamation.

4. Consideration of judicial precedents in similar cases:
The Tribunal referred to several judicial precedents, including decisions from the Hon'ble High Courts and this Tribunal, which held that in cases of merger/amalgamation of a wholly owned subsidiary and its parent company, the meetings of the creditors/shareholders can be dispensed with. These precedents include:

- *In re-Ambuja Cements Ltd.*: The Tribunal dispensed with the meetings of equity shareholders, secured and unsecured creditors.
- *Mohit Agro Commodities Processing Pvt. Ltd.*: The Tribunal allowed the appeal by dispensing with the convening of the meetings.
- *Mahaamba Investment Ltd. Vs. IDI Limited*: The Hon'ble High Court of Bombay held that filing a separate petition by the Transferee Company is not necessary.
- *MASTERJI METALLOYS PVT. LTD. with GOODLUCK STEEL TUBES LTD.*: The Hon'ble High Court of Delhi dispensed with the requirement to convene meetings of shareholders and creditors.
- *SHILPI CABLETRONICS LTD. & ORS.*: The Hon'ble High Court of Delhi dispensed with the convening of meetings of shareholders and creditors.

The Tribunal emphasized that the NCLT failed to consider these judicial precedents and the decisions of this Tribunal, which form judicial precedents. The Tribunal cited the Hon'ble Supreme Court's observation that precedent law must be followed by all concerned, and deviation from the same should only be on a procedure known to law.

Conclusion:
The Tribunal concluded that the NCLT erred in not considering the decisions of this Tribunal and judicial precedents. The Tribunal held that the Appellant had made out a prima facie case for interference with the order passed by the NCLT. Consequently, the order passed by the NCLT dated 08.06.2022 was set aside, and the convening meeting of shareholders of the Transferee Company was dispensed with. The Company Appeal (AT) No. 147 of 2022 was allowed, with no order as to costs, and any pending applications were closed.

---