2026 (1) TMI 339 - AT - Companies Law

Objections to amalgamation scheme and objector's locus standi; appeal dropped after transfer of proceedings, costs cut to Rs 2.5 lakh

An objector challenged dismissal of its objections to a scheme of amalgamation on the ground of maintainability/locus standi. NCLAT held that the scheme ... Maintainability of application due to lack of locus standi - dismissal of objections to a scheme of amalgamation - HELD THAT:- Admittedly the amalgamation scheme provides for the transfer of legal and other proceedings hence, there are no cause to continue this appeal. The appellant may seek impleadment of Respondent no.2 in such petition u/s. 9 of IBC or lest pursue its remedy as per law, hence it is not inclined to interfere in dismissal of his objections. However, at this stage, the appellant prays the cost imposed of Rs. 10 lacs be reduced as the appellant acted bona fide in filing the objections for the reasons aforesaid. Though the learned senior counsel for the respondent objects to the bona fide of the appellant but submits has no objection if the cost imposed is reduced. Since no serious objection is raised by the learned senior counsel for the Respondent qua the cost imposed and has rather no objection if the cost is reduced to Rs. 2.5 lakhs, hence the cost reduced to Rs. 2.5 lac, to be paid in the account of Prime Minister National Relief Fund, within six weeks from today. The proof of deposit of cost be submitted to the Ld. Registrar of this Tribunal within a week thereafter. Appeal disposed off. Issues: (i) Whether the Appellate Tribunal should interfere with the NCLT order dismissing the appellant's objections to the Scheme of Amalgamation on grounds of lack of locus standi and related contentions; (ii) Whether the cost of Rs.10 lakhs imposed upon the appellant should be reduced.Issue (i): Whether the dismissal of the objection application by the NCLT is liable to be interfered with by the Appellate Tribunal.Analysis: The Scheme of Amalgamation expressly provides for transfer and continuation of all legal proceedings of the transferor in the transferee. The appellant was neither a shareholder nor a recognized creditor of the respondent and raised objections which the NCLT found to be non-maintainable and calculated to obstruct a scheme approved by creditors and sanctioned by the NCLT. Given the scheme's provision for transfer of proceedings and the pendency of the appellant's separate Section 9 IBC remedy, there is no cause to continue the appeal or to disturb the NCLT's dismissal of the objections.Conclusion: Appeal on the objection to the Scheme of Amalgamation dismissed; no interference with the NCLT order.Issue (ii): Whether the monetary cost imposed by the NCLT on the appellant should be reduced.Analysis: The appellant sought reduction of the cost on grounds of bona fide action. The respondent raised no serious objection to reduction and proposed Rs.2.5 lakhs. The Tribunal exercised its discretion to moderate the quantum of costs while maintaining a monetary penalty payable to the Prime Minister's National Relief Fund.Conclusion: Cost reduced from Rs.10,00,000 to Rs.2,50,000 payable to the Prime Minister's National Relief Fund within six weeks; proof of deposit to be filed with the Registrar within a week thereafter.Final Conclusion: The appeals are disposed of by dismissing the challenge to the NCLT's dismissal of objections and by reducing the imposed costs, leaving the sanction and scheme implementation undisturbed.Ratio Decidendi: Where a sanctioned scheme of amalgamation provides for transfer and continuance of legal proceedings, intervening objections by persons lacking locus standi who seek to obstruct a scheme approved by creditors and sanctioned by the NCLT will not ordinarily justify interference by the Appellate Tribunal; costs imposed may be moderated in exercise of discretion where reduction is unopposed on merits.