2018 (8) TMI 1030 - AT - Companies Law

Scheme of Arrangement - De-merger of the company - Objection of scheme sanctioned by the NCLT - Protection of the interest of the appellant - It is claimed by the Appellant that it was entitled to notice as Judgement Creditor and as the notice was not issued to the Appellant, the Scheme suffered for suppressing material fact and thus the NCLT could not have passed the orders as it has been done. NCLT then dealt with the approval accorded by the members and the creditors of the companies to the proposed Scheme and affidavits of Regional Director where no objections had been raised and held that there was no reservation to grant sanction to the Scheme. NCLT thus sanctioned the Scheme under Section 230 to 232 of the new Companies Act of 2013 and has given further directions and passed orders as have been reproduced earlier. Held that - According to us even if the Appellant continues to raise disputes regarding the question whether or not TDS was rightly deducted or to find fault with the commercial property given by Respondents and the buyers Agreement, we are not entering into those aspects as it appears that the Appellant has again claimed issues as mentioned in Para 8 supra, to be pending before the Hon ble Arbitral Tribunal. They are not issues for us to settle. Here we find substance in the submissions of the learned counsel for Respondents that even if the claims as calculated by the Appellant are kept in view, and even if the Appellant was allowed to participate in the meeting of creditors, the value of his dues, considering the financial statements of the companies, was not such so as to tilt the outcome of the meetings of secured or unsecured creditors of the Companies. There is substance in the argument for the learned counsel for Respondents that in spite of public notice if the Appellant did not attend the meetings or raise the objections, subsequently, he could not be heard. The Appellant cannot have grievance as the project with which Appellant is concerned continues to remain with EMAAR even if some other projects have been merged with MGF. - For such reasons, we do not find any substance in this appeal. The same is rejected. - Decided against the appellant.

Summary

Issues Involved:
1. Approval of the Scheme of Arrangement between the Respondent Companies.
2. Objections raised by the Appellant regarding the Scheme of Arrangement.
3. Alleged suppression of material facts by the Respondent Companies.
4. Non-inclusion of the Appellant in the list of secured and unsecured creditors.
5. Satisfaction of the Arbitral Award dated 12.05.2016.
6. Impact of the Scheme on the Appellant's ability to recover dues.

Detailed Analysis:

1. Approval of the Scheme of Arrangement between the Respondent Companies:
The National Company Law Tribunal (NCLT) approved the proposed Scheme of Arrangement between the Respondent Companies, Emaar MGF Land Limited (Demerged Company) and MGF Developments Limited (Resulting Company). The NCLT directed that all property, rights, liabilities, and duties of the Demerged Undertaking be transferred to the Resulting Company as per Section 232 of the Companies Act, 2013.

2. Objections raised by the Appellant regarding the Scheme of Arrangement:
The Appellant objected to the demerger, claiming that the Respondent Companies had not fulfilled their commitments under an Arbitral Award dated 12.05.2016. The Appellant argued that the Scheme did not account for their dues and that they were not notified of the creditors' meetings. The NCLT rejected these objections, noting that the Appellant had no locus standi as the awarded amount had been paid.

3. Alleged suppression of material facts by the Respondent Companies:
The Appellant contended that the Respondents suppressed the fact of the Arbitral Award dated 12.05.2016 in their Company Application. The NCLT found no merit in this argument, stating that the Board of Directors approved the Scheme on 11.05.2016, before the Award was announced in the evening of 12.05.2016. Thus, there was no suppression of material facts.

4. Non-inclusion of the Appellant in the list of secured and unsecured creditors:
The Appellant argued that they should have been included in the list of creditors as they became a Judgment Creditor on 12.05.2016. The Respondents countered that the lists were prepared based on the financial position as of 29.02.2016, and updating the list in real-time was not feasible. The NCLT and the appellate tribunal found this explanation reasonable and rejected the Appellant's claim.

5. Satisfaction of the Arbitral Award dated 12.05.2016:
The Appellant claimed that the Arbitral Award had not been fully satisfied, citing issues with TDS deductions and the marketability of the allotted property. The NCLT observed that the awarded amount had been paid in tranches by 02.09.2016 and rejected the Appellant's objections. The appellate tribunal also noted that any disputes regarding the Award were pending before the Arbitral Tribunal and were not within their purview to settle.

6. Impact of the Scheme on the Appellant's ability to recover dues:
The Appellant expressed concern that the demerger would leave them without an entity from which to recover their dues. The Respondents assured that both companies would continue to exist post-demerger, and the project related to the Appellant's grievance remained with Emaar. The appellate tribunal found no substance in the Appellant's argument and noted that public notices for the creditors' meetings were published, which the Appellant ignored.

Conclusion:
The appellate tribunal upheld the NCLT's decision to approve the Scheme of Arrangement, finding no merit in the Appellant's objections. The Appellant's appeal was dismissed, and they were ordered to pay costs to each Respondent.