TaxTMI 
TaxTMI 
2025 (8) TMI 1481
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....e to parties on 25.03.2025, as it was passed in CP (CAA) No.34/230/HDB/2024 in CA(CAA) No.25/230/HDB/2024. As a consequence of the Impugned Order dated 10.03.2025, passed in CP (CAA) No. 34 / 230 / HDB / 2024, the proposal of amalgamation of the two enterprises namely Tianish Laboratories Private Limited (Tianish) and Matrix Pharmacorp Private Limited (Matrix), have been sanctioned, based upon the "Scheme of Amalgamation", which has been approved by the Board of Directors of the respective Companies. 3. During the proceedings as referred to as above, when the issue of merger was being considered, the Appellant had filed an Intervention Application being Intervention petition No. 4 / 2024 in CP(CAA) No. 34/230/HDB/2024, in CA (CAA) No. 25/230/HDB/2024 which has been dismissed by the Impugned Order dated 10.03.2025 (as corrected and made available to the parties on 18.03.2025), which has been put to challenge in Company Appeal (AT) (CH) No. 47 / 2025. 4. Since, both these Company Appeals involve consideration of a common question of fact and law, hence, for the purposes of brevity, they are being decided together. 5. We will take up the Company Appeal (AT) (CH) No. 47 / 2025....
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....s including the Respondent Companies as the Respondents are affiliated with Iquest Enterprises Pvt. Ltd. 11. The Appellant i.e. "RAKIA" has contended that it is a Judgment Creditor of Nimmagada Prasad and by extension he will be the Judgment Creditor of "Matrix" and "Tianish", because he claims that they are the part of Nimmagada Prasad's web of companies which operate as a single economic unit through Nimmagada Prasad (or his family) in disregard to their separate corporate and independent personalities. 12. The Appellant has contended that, it secured a decree dated 02.02.2022 from Ras Al Khaimah Court of First Instance, Civil Plenary Circuit in Civil case No. 60 of 2020 against Mr. Nimmagada Prasad, and on 05.09.2023 it filed an Execution Petition being CEP No. 19 of 2023 before Principal Special Court for Trial and Disposal of Commercial Disputes, City Civil Court, Hyderabad for executions of the said Decree. While the same was pending, in October 2023, RAKIA identified that Mr. Nimmagada Prasad, through one of his entities i.e. Iquest Enterprises Pvt. Ltd. is in the process of entering into a transaction involving the acquisition of an active pharmaceutical ingredients b....
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....to transaction in surreptitious manner to circumvent the undertaking / statement made to the Court, indirectly through its subsidiaries/affiliates. It is further contended that if the respondent-contemnors are allowed to deal with or enter into further transactions, may create third party interest, in further breach of the undertaking thereby adversely affecting the interest of the petitioner. Prima facie I find force in the aforesaid submissions. In view of the same, respondent Nos. 1, 2 and 4 are hereby directed to maintain status quo in relation to transactions in dispute existing as on today to be maintained till next date of hearing." 16. It will not be out of context to mention that Respondents 1,2 & 4 as mentioned in the above order are IQuest, Swathi & Nimagadda Prasad respectively and that the Transferor and the Transferee Companies in the instant case, i.e. Tianish Laboratories Private Limited (Tianish) and Matrix Pharmacorp Private Limited (Matrix), do not find a place there nor they were made as a party to the proceedings either before the Commercial Court or before the Contempt Court. 17. The cause title of the contempt proceedings of C....
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....e not party to the proceedings of contempt, because they are inextricably linked to the transactions in dispute before the Commercial Court, Hyderabad, which the Appellant attempts to establish by referring to documents like Matrix CRISIL Report and Tianish CRISIL Report which were on record in the proceedings of amalgamation before Ld. NCLT, Hyderabad. 20. Thus, the question, which would emerge for consideration for us would be that, in a proceedings, which are held before the Commercial Court, whether at all, there could be a status quo order and an implied drawing of a contempt as against the Transferor or the Transferee Company, when they are neither a party to the principal proceedings before the Commercial Court, nor they are party to the proceedings of the contempt, except for the applications filed to add them as party at a later stage, both in the Contempt proceedings as well as in the Commercial Execution Petition proceedings. 21. In response to the submissions of Ld. Counsel of the Appellant, the Ld. Counsel for the Respondents, has submitted that the arguments of the Ld. Counsel for the Appellant may not be sustainable for the reason being that, the Order of 19.07....
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....ew of the principal proceedings, which were held before the Principal Special Court and beyond the orders passed on it. In view of the observation made in the Status Quo Order of 19.07.2024, it has to be confined to be read in relation to the use of the word "transactions", which has had to be read in the context and in correlation of the execution proceedings, and it cannot be made to be extended in a distorted manner to be read as if the Order of Status Quo of 19.07.2024 created an absolute bar to the effect, that no proceedings of Amalgamation as contemplated under Section 230 of the Companies Act could at all be carried forward or if carried, it has to be treated to be in violation of the Status Quo Order, as it has been rendered in contempt proceedings arising out of the execution proceedings arising out of the Principal Special Court. 25. The Ld. Counsel for the Appellant has further referred to the provisions contained under Section 230 (2) (a) of the Companies Act, and has contended that the Respondents have indulged in suppression of information and this will render the amalgamation proceedings bad in law. Section 230(2)(a) of Companies Act stipulates that the Company o....
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....be related and to be read in relation to the transactions, specifically covered under execution proceedings which cannot be widened to be read, to be applied to the proceedings of amalgamation under Section 230 of the Companies Act, under any set of circumstances. 29. They have further submitted that in addition, since, in the proceedings under Section 31 of the Competition Act or in the execution proceedings or even in the contempt proceedings, the Transferor or Transferee have not been arrayed as a party till the passing of the order of sanction of scheme of Amalgamation, they cannot be expected to carry any mandatory obligation of making a disclosure of these proceedings as contemplated under Sub Clause (a) of sub-section 2 of Section 230 of the Companies Act, because grant of an Interim Order in a contempt proceedings will not amount to be an investigation or a proceedings, which would be relevant for the purposes of carrying out the proceedings under Section 230 of the Companies Act. 30. The Ld. Counsel for the Respondent has further elaborated his argument, by submitting that if the corresponding provision is taken into consideration, as contained under sub-section (2) ....
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....ding debt as per the latest audited financial statement." 34. What is intended under the aforesaid provisions is that in a Scheme of Arrangement or a Compromise as principally contemplated under Section 230 of the Companies Act, a person who is holding a right of less than 10% of the shareholding or having outstanding debts amounting to less than 5% of the total outstanding debt, as per the latest audited Financial statement may not be a necessary person who is required to be impleaded in the proceedings of Amalgamation or Merger as contemplated under Section 230 of the Companies Act. 35. The Respondent have contended that, so far as the Intervention Application IA No. 4 / 2024 is concerned, since the Appellant did not satisfy the basic ingredients provided under the proviso to sub-section (4) of Section 230 of the Companies Act, that is, holding atleast 10% of the Shares of either of the Transferor or the Transferee Company, or having outstanding debts amounting to not less than 5% of the total outstanding debt, it will not be necessary party to the proceedings may not be necessary party to the proceedings. 36. They have further submitted that if the findings which had be....
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....Court of Telangana, while exercising its contempt powers under Section 10 of the Contempt of Courts Act, will only bind the parties who are the Judgment Debtors and it will not bind the party who is not a party to the proceedings either before the Hon'ble High Court or before the Court whose decree or order is sought to be executed. 40. By way of a repetition, we feel it apt to observe that knowledge of the contempt proceedings and orders passed in it, would only be limited to the extent which the Status Quo Order was made effective, which was in relation to the transactions in dispute, The transaction in dispute herein will always have a relativity to the principal proceedings under Section 31 of Competition Act (Mudhra-Matrix-Tianish structure), and it will have no nexus with the proceedings which are drawn under Section 230 of the Companies Act of the Amalgamation (Tianish and Matrix), which has been carried by the Transferor and the Transferee Company in a proceedings independent to the proceedings under Section 31 of the Competition Act. Further, knowledge cannot be presumed to be with the Respondents, when they are not party to the proceedings and more particularly, when a....
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....t and that the Appellants herein do not establish themselves to be the necessary party, it has proceeded to dismiss the Intervention Application. 43. The Ld. Counsel for the Appellant before the Tribunal and even before this Appellate Tribunal has made reference to various Judgments, which he intends to rely upon to support his contention as to why they would be the necessary party to the proceedings, and would be needed to be impleaded in the proceedings, the Ld. Counsel for the Respondent has sought to distinguish the cited Judgments, stating that facts and circumstances in those cited cases will be altogether from the instant case under consideration. 44. The Ld. Counsel for the Respondent, referring to Para 59 & 60 of the Judgment reported in 2011 SCC Online Mad 611, Essar Telecommunications Pvt. Ltd., has submitted that the proceedings in the matters of Essar Telecommunications Pvt. Ltd., clearly lays down that objection can only be raised with respect to the legality of the Scheme or being in violation of law in the light of the observations made in Para 59 to 61 which is extracted hereunder: "59. By way of the scheme of amalgamation, by merger, the liabilities....