2022 (11) TMI 1235 - AT - Companies Law

Appellate Tribunal modifies order, sets 30-day deadline for secured creditor objections. Presumed no objection after deadline.

The Appellate Tribunal allowed the appeal and modified the order, directing the secured creditor to raise objections to the amalgamation scheme within 30 ... Approval of scheme of Amalgamation - Section 230-232 of the Companies Act, 2013 - HELD THAT:- In view of the judgment in IN RE : MOHIT AGRO COMMODITIES PROCESSING PVT LTD., GUJARAT AMBUJA EXPORTS LTD. [2021 (6) TMI 1031 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL , PRINCIPAL BENCH , NEW DELHI] this Tribunal held that we are of the considered view that when the ‘Transferor and Transferee Company’ involve a parent Company and a Wholly Owned Subsidiary the meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors can be dispensed with as the facts of this case substantiate that the rights of the Equity Shareholders of the ‘Transferee Company’ are not being affected. The instant Appeal is allowed with modification of para 10 of the impugned order dated 17.02.2021 passed by the National Company Law Tribunal (Mumbai Bench-IV) to the extent that the secured creditor is hereby directed to raise objection, if any, to the Scheme within 30 days of the Notice of amalgamation before the NCLT failing which it shall be presumed that the said secured creditor has No Objection to the amalgamation. Issues Involved:1. Requirement of obtaining consent from the sole secured creditor for the Scheme of Amalgamation.2. Dispensation of meeting of the secured creditor.3. Legal precedents and judicial discretion in similar cases of amalgamation.Issue-wise Detailed Analysis:1. Requirement of obtaining consent from the sole secured creditor for the Scheme of Amalgamation:The Appellant challenged the order dated 17.02.2021 by the National Company Law Tribunal (NCLT) Mumbai Bench-IV, which directed the Transferee Company, Lasa Supergenerics Limited, to obtain consent from the sole secured creditor before the final date of hearing. The Tribunal had initially agreed to dispense with the meeting of the secured creditor but still required the consent of the secured creditor. The Tribunal's order emphasized that the scheme did not involve any arrangement with creditors and would not diminish the liability towards the secured creditor. The Appellant argued that the assets post-amalgamation would be more than sufficient to cover liabilities and that the secured creditor's rights would not be affected.2. Dispensation of meeting of the secured creditor:The Appellant contended that the Tribunal ignored the settled legal position in judicial precedents where dispensation and the requirement of consent/NOC were granted in cases of amalgamation under similar circumstances. The Appellant cited several cases, including Ambuja Cements Limited and Networth Portfolio and Finance Private Limited, where the Appellate Tribunal and the NCLT had dispensed with the meeting of secured creditors. The Appellant argued that the scheme did not involve any compromise or arrangement with creditors and that the net worth of both companies was highly positive, ensuring that liabilities would be met in the ordinary course of business.3. Legal precedents and judicial discretion in similar cases of amalgamation:The Appellant referenced multiple cases to support their argument, including:- Ambuja Cements Limited (Company Appeal (AT) No. 19 of 2021)- Networth Portfolio and Finance Private Limited (C.A.(CAA)/66/(MB)/2021)- Gujarat Enviro Protection and Infrastructure Private Limited (C.A.(CAA)/53/MB/2021)- Bluebell Vanijya Private Limited (C.A.(CAA)/1153/MB.IV/2021)- Poonam Roofing Products Private Limited (C.A.(CAA)/1169/MB.IV/2020)These cases highlighted that when the scheme did not involve any compromise with creditors and the financial position of the companies was positive, the requirement for convening meetings of secured creditors could be dispensed with. The Appellant also referred to the judgment in 'Mohit Agro Commodities Processing Pvt. Ltd in Company Appeal (AT) No. 59 of 2021,' where the Tribunal observed that the rights and liabilities of secured and unsecured creditors were not affected by the proposed scheme.Judgment:After considering the arguments and precedents, the Appellate Tribunal allowed the appeal and modified the impugned order. The Tribunal directed that the secured creditor must raise any objections to the scheme within 30 days of receiving the notice of amalgamation. If no objections were raised within this period, it would be presumed that the secured creditor had no objection to the amalgamation. This modification ensured that the secured creditor's rights were protected while facilitating the amalgamation process without unnecessary delays.The judgment emphasized the importance of judicial discretion in cases of amalgamation, particularly when the financial position of the companies involved was positive and the scheme did not compromise creditor rights. The Tribunal's decision aimed to balance the interests of the secured creditor with the operational efficiencies and benefits of the proposed amalgamation.