TaxTMI 
TaxTMI 
2026 (8) TMI 588
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.... "the 1956 Act") or Sections 230-233 of the Companies Act, 2013 (in short, "the 2013 Act") for sanction of merger or amalgamation with other companies or NBFCs. 3. On August 13, 2014, a proposed scheme for amalgamation of 5 other companies, being transferor companies, with the petitioner no. 1-company (as a transferee company) was submitted for approval of the RBI. According to the petitioners, the purpose of such amalgamation was to effectively utilise the funds of the transferor companies to increase the capital of the petitioner. Although, according to the petitioners, all requisite documents were submitted along with the said scheme, the RBI raised frivolous queries and sought further documents in connection with the application for grant of approval for amalgamation on several subsequent occasions, including the following dates: (i) November 27, 2014, (ii) August 6, 2015, (iii) October 29, 2015, (iv) November 20, 2015, (v) January 14, 2015, (vi) December 5, 2016, (vii) November 29, 2018 and (viii) March 12, 2018. 4. According to the petitioner, on each such occasion, requisite information, with relev....
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....a cryptic remark was allegedly made that the same was pending since August 13, 2014 as the petitioners had not provided the required documents. 12. Learned senior counsel for the petitioners alleges that no particulars of the purported documents, which were allegedly required by the RBI but not supplied, were given. It is further contended that the other purported grounds alleged in the first show-cause notice dated March 15, 2018 were given up. 13. On October 19, 2020, an order was passed directing the petitioner to file an appeal before the Appellate Authority in terms of Section 45-IA of the Reserve Bank of India Act, 1934 (hereinafter referred to as "the 1934 Act") in a writ petition filed by the petitioners challenging the validity of the Order dated November 21, 2019 passed by the RBI. 14. Pursuant thereto, an appeal was filed before the Central Government, the Appellate Authority under the Act, on October 29, 2020, along with communication revealing the prayer for grant of NOC with regard to the scheme and submission of documents in terms of Section 45-IA(7) of the 1934 Act. The appeal was heard on April 6, 2021. Vide order dated June 10, 2021, the Appellate Authori....
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....ication. 24. However, on April 29, 2026, the RBI issued another Notification raising the NOF requirement to Rs.1000 Cr. 25. The RBI filed a reply to the supplementary affidavit giving computation sheets to argue that the NOF criteria were not met by petitioner no. 1 prior to 2015. 26. According to learned senior counsel for the petitioners, the said ground was never a part of the show-cause notice or the impugned orders, thus, hit by the principle laid down in Mohinder Singh Gill and others v. Chief Election Commissioner, New Delhi and others, reported at (1978) 1 SCC 405. 27. Learned senior counsel for the petitioners submits that due to the still-subsequent Notification dated April 29, 2026, stipulating NOF of Rs.1000 Crore, prayers (a) and (b) of the writ petition have become redundant, since even if approval for amalgamation is granted, the cumulative NOF of the petitioner no. 1 and the amalgamating entities shall be less than Rs. 1000 Crore. 28. However, since the impugned orders cancelling the certificate of registration of the petitioner no. 1 operate as a stigma and a serious deterrent to future business of the petitioners, the petitioners limit their prayer ....
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....ave also been annexed, demonstrating negative NOF of the petitioner no. 1-Company. 35. The petitioners, it is submitted, cannot benefit from their own procrastination in furnishing appropriate documents and information in reply to the notices issued by the RBI or seek equitable relief when they did not themselves come in equity. If such relief is granted today, it is contended that a legal fiction would be created by directing the RBI to consider the amalgamation application, the question of which does not arise after cancellation of the certificate of registration. 36. Another fallacy of the arguments of the petitioners, it is submitted, is pre-supposition of the fact that if RBI had consented to their application for amalgamation, the petitioners would have achieved the required NOF post-merger. The argument completely renders the relevant provisions of the 2013 Act (Sections 230-233) as otiose, since the next step would have been to approach the National Company Law Tribunal for getting the scheme of amalgamation approved under strict judicial scrutiny, the outcome of which could have gone either way. 37. Lastly, it is submitted that it is apposite to mention that the C....
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....approval of the scheme in the first place and, secondly, upon such approval, the petitioners, on amalgamation, actually meeting the requirement of Rs. 2 Crore NOF. 46. During pendency of the writ petition, the RBI has adjudicated upon the amalgamation application and turned it down, which has not been assailed independently before any competent forum, although arguments in that regard have been advanced at the hearing of the present writ petition. The justification and reasons given for such refusal do not come within the ambit of the ratio laid down in Mohinder Singh Gill and others v. Chief Election Commissioner, New Delhi and others, reported at (1978) 1 SCC 405 as the order itself, which contains reasons for rejection (whatever might be the qualitative worth of such reasons) is not under challenge, thus precluding any scope of justification for such order being given by way of affidavits in the writ petition. 47. It was well within the authority of the RBI to decide on the reply given by the petitioner no. 1-Company to the Show-Cause Notices, including on the ground that the petitioner no. 1-Company did not meet the Rs. 2 Crore NOF criterion. 48. At the time of the sub....
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....se Notice, the petitioner no. 1-Company did not consistently maintain NOF of Rs. 25 lakh, which was the then requirement. The RBI has taken a reasoned decision thereon, which cannot be reopened on merits by the Writ Court upon a re-appreciation of such materials and evidence which were produced by the petitioner no. 1-company before the RBI, which was affirmed in appeal by the Central Government, the Appellate Authority, on October 29, 2020. 57. Since the Appellate Authority relied on the observations of the RBI in its order, keeping in view the position that such order of the Appellate Authority need not be as elaborate as a judicial order, we do not find any patent illegality or lack of jurisdiction tainting the order of the Appellate Authority. 58. The grounds, on which the cancellation of the first petitioner's certificate of registration was directed, were primarily two-fold - first, that petitioner no. 1 did not meet the Rs. 2 Crore NOF threshold as required under the 2015 Notification; and secondly, that the petitioner no. 1-company did not comply with the NOF of Rs. 25 lakh between the years 2012 and 2015, even prior to the 2015 Notification. Even if the writ petition....