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2023 (12) TMI 1220 - AT - Companies LawSanction of the Scheme of Amalgamation - NCLT fixed the Appointed Date to 01.10.2022, while allowing the Chennai Second Motion Petition and sanctioning the Scheme, when the NCLT Mumbai, had sanctioned the Scheme filed by the Transferee Company with the Appointed Date of 01.10.2020. It is argued that since NCLT, Mumbai, had by way of an Order dated 06.06.2022, already sanctioned the Scheme with the Appointed Date as 01.10.2020, the impugned order by changing the Appointed Date to 01.10.2022, has made the Scheme unworkable . HELD THAT - It is not in dispute that the NCLT, Mumbai had already sanctioned the Scheme with the Appointed Date of 01.10.2020, vide Order dated 06.06.2022. In the IA filed on 31.03.2023, the Appellants had sought for rectification of the Appointed Date to 01.10.2020, which was dismissed on the ground that NCLT did not have the power to review its own order. It is seen from the record that the Appointed Date as per the Scheme is 01.10.2020 and the same is within a period of one year from the date of filing of the Application for Approval of the Scheme with NCLT i.e., 29.09.2021 . It is relevant to rely on the Judgment of this Tribunal, in which matter, this Tribunal placed reliance on the Judgment of the Hon ble Apex Court in Miheer H. Mafatlal v. Mafatlal Industries Limited., 1996 (9) TMI 488 - SUPREME COURT , in which case, the Court had laid down the broad contours of the jurisdiction of the Company Court in granting a sanction to the Scheme holding that jurisdiction of the Company Court while sanctioning the Scheme is supervisory only, i.e., to observe that the procedure set out in the Act is met and complied with and that the proposed scheme of compromise or arrangement is not violative of any provision of law, unconscionable or contrary to public policy. The Court is not to exercise the appellate jurisdiction and examine the commercial wisdom of the compromise or arrangement arrived at between the parties. It is held by this Tribunal in the Accelyst Solutions Private Limited 2021 (3) TMI 1009 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL PRINCIPAL BENCH NEW DELHI , that the settled legal position, while exercising its power in sanctioning a Scheme of Amalgamation, the Courts / Tribunal has to examine as to whether, the Provision of Statute has been complied with . The Courts / Tribunal would have no further jurisdiction to sit in Appeal over the Commercial Wisdom of the Shareholders of the Company . In the instant case, apart from the fact that NCLT Mumbai, had already fixed the Appointed Date of the Scheme as 01.10.2020, the date of filing of the Application for Approval of the Scheme with NCLT Chennai is 29.09.2021 and therefore is within a period of one year, and hence, attracts Clause 6(c) of the MCA General Circular No. 09/2019 dated 21.08.2019 - Additionally, NCLT has the discretion to fix the Appointed Date which could be beneficial to the interests of the Company, which in the instant case ought to have been fixed at 01.10.2020 as having two different Appointed Dates, would render the Scheme unworkable. The NCLT has powers under Rule 11 of the NCLT Rules, 2016, to fix the Appointed Date, which would be beneficial to the Scheme of Amalgamation. Appeal allowed.
Issues Involved:
1. Whether the NCLT was correct in fixing the Appointed Date to 01.10.2022 while sanctioning the Scheme of Amalgamation. 2. Whether the NCLT has the discretion to fix an Appointed Date beneficial to the interests of the Company. Summary: Issue 1: Fixing the Appointed Date The appeal was filed under Section 421 of the Companies Act, 2013, against the NCLT Chennai's order which modified the Appointed Date to 01.10.2022 instead of 01.10.2020. The NCLT reasoned that the justification provided in the Scheme did not meet the requirements set out in the MCA circular dated 21.08.2019, which mandates that if the Appointed Date is predated by a year or more, specific justification must be provided. The Appellants argued that the Appointed Date of 01.10.2020 was within a year from the date of filing the First Motion Application on 29.09.2021, and thus did not require additional justification. They also contended that the NCLT Mumbai had already sanctioned the Scheme with the Appointed Date of 01.10.2020, making the Scheme unworkable with different dates. Issue 2: Discretion to Fix Appointed Date The NCLT Chennai's decision was challenged on the grounds that it did not consider the commercial wisdom of the shareholders and the statutory compliance. The Tribunal referred to previous judgments, including the Supreme Court's ruling in Miheer H. Mafatlal v. Mafatlal Industries Limited, which emphasized that the Court's role is supervisory and not appellate. The Tribunal found that the NCLT Mumbai had already fixed the Appointed Date as 01.10.2020, and the date of filing the application with NCLT Chennai was within a year, thus complying with the MCA circular. The Tribunal also noted that having two different Appointed Dates would render the Scheme unworkable. Conclusion: The Tribunal allowed the appeal, setting aside the NCLT Chennai's orders dated 22.03.2023 and 09.10.2023, and reinstated the Appointed Date as 01.10.2020. The Tribunal emphasized that the NCLT has the discretion to fix an Appointed Date beneficial to the Scheme and that the commercial wisdom of the shareholders should be respected.
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