2026 (1) TMI 1237 - AT - Companies Law

Approval of Scheme of Arrangement challenged as evading MPID Act; overwhelming creditor approval upheld and minority appeal dismissed

Approval of a scheme of arrangement was contested on grounds that it sought to circumvent attachments under the MPID Act and that the approving tribunal ... Approval of the Scheme of Arrangement - sustainability of the scheme - calculated attempt to bypass statutory attachments under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 - Ld. NCLT had exceeded its jurisdiction and had approved a scheme which violates MPID Act - locus to challenge the scheme - HELD THAT:- It is evident to mention the scheme is backed by 91.35% votes in value and above 90% votes in numbers and more than 75% total number of creditors have accepted the scheme. The appellant constitutes mere 0.26% of voting rights and as such has no locus to challenge the scheme. We have already held in Manu Rishi Guptha Vs ICICI Securities Ltd and Another [2025 (11) TMI 132 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI], a person who does not meet the threshold under Section 230(4) of the Companies Act, 2013, he cannot maintain an appeal as an aggrieved person - thus, the appellant has no locus standi to object to the scheme but nevertheless we are aware of the fact the scheme of compromise must satisfy the requirement of public interest, fairness and transparency and the Court cannot sanction the scheme that defeats such statutory rights. Now, section 230(6) of the Companies Act, 2013 makes a duly sanctioned compromise binding upon all the stakeholders viz the company and its creditors including the dissenting ones. The impugned order does not envisage the Ld. NCLT has exercised power of any authority under any other Act(s). The scheme is only for the class of creditors by virtue of which their entitlement is limited to a particular extent. The scheme does not exercise the powers of criminal or civil court to pass orders on the FIR(s) or criminal cases and it leaves it to the discretion of the concerned court/authorities under the Act(s) to deal with the matters before it. Further in Financial Technologies Ltd, now known as 63 Moons Technology Ltd Vs State of Maharashtra [2026 (1) TMI 1168 - BOMBAY HIGH COURT], the Hon’ble Division Bench of Bombay High Court examined the scheme vis a vis the provisions of the MPID Act and High Court held 'Having perused the Scheme of Arrangement and the order dated 28.11.2025 passed by the NCLT approving the same, we find that allowing this application would be in the interest of justice and in furtherance of settlement of the outstanding claims of the creditors / investors.' Thus the objections raised by the appellants to our mind is frivolous and coupled with the fact they have no locus standi to maintain/file objections; the NCLAT is not inclined to allow this appeal and accordingly the same is dismissed. Application disposed off. Issues: (i) Whether the appellants have locus standi to challenge the NCLT order sanctioning the Scheme of Arrangement. (ii) Whether a Scheme sanctioned under Section 230 of the Companies Act, 2013 can override or supplant attachment orders or criminal proceedings under the MPID Act, 1999, or compel creditors to withdraw such proceedings.Issue (i): Whether the appellants have locus to challenge the sanction of the Scheme.Analysis: The Tribunal examined the voting support for the Scheme and the statutory threshold under Section 230(4) of the Companies Act, 2013. The Scheme was approved by requisite majorities in value and number; the appellants hold 0.26% voting rights, which is below the statutory threshold necessary to object as an aggrieved person. The Tribunal applied authority that a person not meeting the Section 230(4) threshold cannot maintain an appeal under Section 421 as an aggrieved person.Conclusion: The appellants lack locus standi to challenge the Scheme. Conclusion is against the appellants.Issue (ii): Whether the sanctioned Scheme can override attachments or compel withdrawal/quashing of criminal proceedings under the MPID Act.Analysis: The Tribunal considered the terms of the Scheme, the NCLT's operative directions and Clauses in the Scheme regarding obligations of specified creditors, and the positions of the competent MPID authority and EOW. The Tribunal held that Section 230(6) makes a duly sanctioned compromise binding on stakeholders but the sanction itself does not automatically vacate attachments or quash criminal proceedings; any release or quashing of such proceedings or attachments depends on orders of the competent courts or authorities on applications made under the Scheme. The NCLT expressly clarified the sanction shall not override or affect subsisting attachment orders or be construed as quashing criminal proceedings. Competent authorities and a Supreme Court constituted Committee recorded support for implementing the Scheme subject to appropriate court orders for any relief from attachments or criminal liability.Conclusion: The Scheme, as sanctioned, does not override attachment orders under the MPID Act nor automatically quash criminal proceedings; the Scheme is not contrary to public policy on this ground. Conclusion is in favour of the respondent (scheme sanctioned).Final Conclusion: The appeal is without merit on the grounds considered; the appellants have no locus to object and the sanctions granted by the NCLT are affirmed, therefore the appeal is dismissed.Ratio Decidendi: A scheme sanctioned by the NCLT under Section 230, supported by the requisite majority, is binding on stakeholders in accordance with Section 230(6) and does not, by itself, override attachment orders or quash criminal proceedings under a special statute; relief from such orders requires separate appropriate orders by the competent courts or authorities.