NCLAT fixes uniform appointed date for amalgamation scheme after conflicting orders from different benches

NCLAT Chennai allowed appeal against NCLT Chennai's order fixing appointed date as 01.10.2022 for scheme of amalgamation. NCLT Mumbai had earlier sanctioned the same scheme with appointed date 01.10.2020. NCLAT held that having two different appointed dates rendered the scheme unworkable. Court emphasized that NCLT's jurisdiction in sanctioning schemes is supervisory only, examining statutory compliance rather than commercial wisdom. Since application was filed within one year of appointed date and NCLT Mumbai had already fixed 01.10.2020, NCLAT directed uniform appointed date of 01.10.2020 for scheme workability.

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Issues Involved:
1. Whether the NCLT was correct in fixing the Appointed Date to 01.10.2022 while sanctioning the Scheme of Amalgamation.
2. Whether the NCLT has the discretion to fix an Appointed Date beneficial to the interests of the Company.

Summary:

Issue 1: Fixing the Appointed Date
The appeal was filed under Section 421 of the Companies Act, 2013, against the NCLT Chennai's order which modified the Appointed Date to 01.10.2022 instead of 01.10.2020. The NCLT reasoned that the justification provided in the Scheme did not meet the requirements set out in the MCA circular dated 21.08.2019, which mandates that if the Appointed Date is predated by a year or more, specific justification must be provided. The Appellants argued that the Appointed Date of 01.10.2020 was within a year from the date of filing the First Motion Application on 29.09.2021, and thus did not require additional justification. They also contended that the NCLT Mumbai had already sanctioned the Scheme with the Appointed Date of 01.10.2020, making the Scheme unworkable with different dates.

Issue 2: Discretion to Fix Appointed Date
The NCLT Chennai's decision was challenged on the grounds that it did not consider the commercial wisdom of the shareholders and the statutory compliance. The Tribunal referred to previous judgments, including the Supreme Court's ruling in Miheer H. Mafatlal v. Mafatlal Industries Limited, which emphasized that the Court's role is supervisory and not appellate. The Tribunal found that the NCLT Mumbai had already fixed the Appointed Date as 01.10.2020, and the date of filing the application with NCLT Chennai was within a year, thus complying with the MCA circular. The Tribunal also noted that having two different Appointed Dates would render the Scheme unworkable.

Conclusion:
The Tribunal allowed the appeal, setting aside the NCLT Chennai's orders dated 22.03.2023 and 09.10.2023, and reinstated the Appointed Date as 01.10.2020. The Tribunal emphasized that the NCLT has the discretion to fix an Appointed Date beneficial to the Scheme and that the commercial wisdom of the shareholders should be respected.

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