NCLAT overturns scheme of amalgamation approval, orders NCLT to reconsider application under Sections 230-232

NCLAT set aside NCLT order sanctioning composite scheme of amalgamation under Sections 230-232 of Companies Act. The tribunal found NCLT failed to consider relevant clauses regarding scheme's separability and didn't exercise discretionary powers under Section 231(1)(b) to provide necessary directions or modifications. NCLAT directed NCLT to reconsider the second motion application within six weeks, taking into account Regional Director's observations and tribunal's clarifications for proper scheme implementation.

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Issues involved:
The judgment deals with the issues related to the approval of a composite scheme of amalgamation under Sections 230-232 of the Companies Act, read with Companies (Compromises, Arrangements and Amalgamation) Rules, 2016. The primary issue revolves around the rejection of parts B and C of the scheme by certain parties and the subsequent dismissal of the second motion seeking approval for part D of the scheme.

Details of the Judgment:

Issue 1: Consideration of Relevant Clauses of the Scheme

The Appellants challenged the impugned order for not considering the relevant clauses of the scheme of amalgamation, specifically Clause 1.2.2 and Clause 23.1. These clauses provided for the severability of different parts of the scheme and the automatic revocation of parts that could not be implemented. The Appellants argued that parts B and C of the scheme were automatically revoked due to non-approval, while part D should be considered separately.

Issue 2: Dismissal of Second Motion

The Appellants moved a second motion seeking sanction for part D of the scheme excluding parts B and C. However, the Ld. NCLT, New Delhi dismissed the application, citing the rejection of the proposed scheme by the other parties involved. The Appellants contended that the schemes were separable as per the provisions of the composite scheme of amalgamation.

Issue 3: Exercise of Discretion by NCLT

Section 231(1)(b) of the Companies Act empowers the NCLT to give directions or make modifications in the compromise or arrangement for proper implementation. The Appellants argued that the NCLT had the discretion to partly sanction the scheme, especially considering the separability of the scheme as per the clauses.

Issue 4: Legal Precedent and Objections

Reference was made to the case of 'Rama Investment Company Pvt. Ltd. vs. Ankit Mittal' where the Supreme Court set aside an order and approved a scheme of amalgamation in part. It was noted that the Official Liquidator and Income Tax department had no objections to the partial acceptance of the scheme.

Conclusion:

The National Company Law Appellate Tribunal directed the NCLT, New Delhi Bench to revisit the application of the second motion in light of the observations made by the Appellate Tribunal. The NCLT was instructed to consider the observations and clarifications of the Regional Director and dispose of the petition in accordance with the law within six weeks from the date of communication of the order. The appeal and pending applications were disposed of accordingly.

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