2018 (7) TMI 195 - Tri - Companies Law

Amalgamation of National Multi-Commodity Exchange of India Limited with Indian Commodity Exchange - Held that - The provisions of sub-sections (3) and (6) of Section 230 shall apply mutatis mutandis in case of merger and amalgamation of companies. But in the case at hand, the Honourable Supreme Court vide its orders granted liberty to NOL to raise all issues before this Tribunal subject to all objections. As stated by NOL in the affidavit that the stage of amalgamation proceedings was also brought to the notice of the Honourable Supreme Court and the Honourable Supreme Court, after considering the stage of the amalgamation proceedings and the provisions of the Companies Act, gave liberty to NOL to raise all issues before this Tribunal. No doubt, the Honourable Supreme Court gave liberty to NOL to raise all issues before this Tribunal, but it is subject to all objections, even as per the order of the Honourable Supreme Court. Therefore, in view of Section 230(4) and the judgment of Rainbow Denim Ltd. (2000 (12) TMI 871 - SUPREME COURT OF INDIA), this is not the stage for NOL to raise objections. In case the Scheme is approved by the shareholders and unsecured creditors and in case NMCE comes up before this Tribunal with a petition to sanction the Scheme, then, at that stage, NOL is at liberty to raise all objections and all such objections raised by NOL have to be considered by this Tribunal before approving of the Scheme. This Tribunal is of the considered view that necessary directions can be given to NMCE and ICEX to conduct meetings for approval of the proposed Scheme. The order dispensing meetings or order to conduct meetings in respect of proposed merger of NMCE with ICEX is subject to final result in the SLPs pending before the Honourable Supreme Court of India, the proceedings before the Appellate Authority under PMLA and T.P. on the file of this Tribunal relating to shareholding rights of NOL. The Objector NOL is also given liberty to raise all the objections in respect of the Scheme of merger of NMCE with ICEX in the petition seeking sanction of the Scheme, if any, is filed, subject to order of the Honourable Supreme Court in the pending SLPs

Summary

Issues Involved:
1. Objections by Neptune Overseas Limited (NOL) regarding the amalgamation of National Multi-Commodity Exchange of India Limited (NMCE) with Indian Commodity Exchange Limited (ICEX).
2. Legal standing of NOL's shareholding and voting rights in NMCE.
3. Compliance with net worth requirements and regulatory directions.
4. Allegations of fraud and mismanagement by NOL's representatives.
5. Legal implications of pending litigations and orders from higher courts.

Issue-Wise Detailed Analysis:

1. Objections by Neptune Overseas Limited (NOL) regarding the amalgamation:
NOL objected to the proposed amalgamation of NMCE with ICEX, citing that it holds 30.18% of equity shares in NMCE and that its voting rights were extinguished during pending litigation. NOL argued that the merger would foreclose its legitimate claims and be detrimental to public interest and policy. NOL also expressed concerns about the poor financial background of ICEX and the non-transparent conduct of NMCE.

2. Legal standing of NOL's shareholding and voting rights in NMCE:
The Tribunal noted that NOL's shareholding and voting rights were interfered with due to an order by the Forward Markets Commission (FMC) dated 23.07.2011, which was under challenge before the Supreme Court. The Supreme Court's interim order indicated that all actions taken pursuant to the FMC order were subject to the final result of the Special Leave Petitions (SLPs). The Tribunal acknowledged that NOL's shareholding was in legal dispute across multiple forums, including the Supreme Court, the Appellate Tribunal under PMLA, and the Tribunal itself.

3. Compliance with net worth requirements and regulatory directions:
NMCE was required to meet a minimum net worth of ?100 crores as per regulatory directions. NMCE argued that it was compelled to pursue the amalgamation to comply with these requirements, as it could not achieve the net worth criteria independently due to irregularities committed by NOL's representatives. SEBI had directed NMCE to increase its membership and meet the net worth criteria, failing which it would face penalties.

4. Allegations of fraud and mismanagement by NOL's representatives:
NMCE alleged that NOL's controlling members, particularly Kailash R. Gupta, committed serious fraud by siphoning funds and acquiring shares through illegal means. NMCE had lodged FIRs and initiated legal proceedings against Gupta and others. The Enforcement Directorate had attached a significant portion of NOL's shares under the Prevention of Money Laundering Act (PMLA), and these actions were also subject to the outcome of pending litigations.

5. Legal implications of pending litigations and orders from higher courts:
The Tribunal emphasized that the shareholding and voting rights of NOL were subject to the final outcome of the SLPs pending before the Supreme Court. The Tribunal recognized that if NOL succeeded in the SLPs, it would regain the ability to exercise its voting rights and deal with its shareholding. The Tribunal also noted that NOL had the liberty to raise all objections regarding the merger during the petition seeking sanction of the Scheme.

Conclusion:
The Tribunal concluded that necessary directions could be given to NMCE and ICEX to conduct meetings for approval of the proposed Scheme, subject to the final result of the SLPs and other pending proceedings. NOL was granted the liberty to raise all objections in the petition seeking sanction of the Scheme, if filed. The objections raised by NOL were disposed of accordingly, and the matter was listed for further hearing.