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2024 (11) TMI 1008 - AT - Companies LawAmendment of scheme of amalgamation - section 230-232 read with section 234 of the Companies Act, 2013 - Jurisdiction of NCLT to modify the scheme - HELD THAT - The amendment can therefore be done at any stage. In IN THE MATTER OF . HAMBURG SUD INDIA PRIVATE LIMITED, MAERSK LINE INDIA PRIVATE LIMITED 2023 (3) TMI 1541 - NATIONAL COMPANY LAW TRIBUNAL MUMBAI BENCH-IV , the Ld NCLT Mumbai while seized of a First Motion Petition passed directions for changing the valuation and the swap ratio. Admittedly the present modification to scheme will not require any further / revised adherence in so far as the regulations for inbound merger are concerned. Further, as per FEMA Notification No. FEMA.389/2018-RB dated March 20, 2018 Foreign Exchange Management (Cross Border Merger) Regulations, 2018 , point 9(1) states any transaction on account of a cross- border merger undertaken in accordance with these Regulations shall be deemed to have prior approval of the Reserve Bank of India as required under Rule 25A of the Companies (Compromises, Arrangement and Amalgamations) Rules, 2016. Hence, the proposed modification would also need no additional approval from Reserve Bank of India. If the impugned order is allowed to sustain then the scheme will have to be remodified to reflect such justification which will result into another round of lengthy compliances all of which would have to be undertaken for the third time. The Impugned Order is liable to be set aside and the Appeal with the prayers stands allowed.
Issues Involved:
1. Amendment of the Scheme of Amalgamation. 2. Jurisdiction of NCLT to modify the scheme. 3. Impact of the amendment on shareholders and creditors. 4. Compliance with statutory regulations and approvals. 5. Procedural delays and judicial precedents. Issue-wise Detailed Analysis: 1. Amendment of the Scheme of Amalgamation: The primary issue revolves around the amendment of the Scheme of Amalgamation between the Appellant Company and the Respondent Companies. The Appellant Company sought to amend the scheme due to a minor change in the share capital of the Transferor Companies, which resulted in a minuscule alteration in the swap ratio. The swap ratio changed from 2.0242 to 2.0225 for Transferor Company No. 1 and from 2.7998 to 2.7915 for Transferor Company No. 2. The Appellant Company argued that this change was insignificant and did not alter the fundamental terms of the scheme. 2. Jurisdiction of NCLT to Modify the Scheme: The Appellant Company contended that the NCLT has the power under Section 231 of the Companies Act, 2013, to sanction modifications in the scheme for its proper implementation. The Tribunal can supervise and direct modifications as necessary. The Appellant Company argued that the NCLT erroneously dismissed the application for modification, despite having the jurisdiction to approve such changes, especially when all necessary approvals from shareholders were obtained. 3. Impact of the Amendment on Shareholders and Creditors: The Appellant Company asserted that the modification had no adverse impact on creditors, as the change was limited to the swap ratio affecting shareholders only. The creditors had already approved the original scheme, and their consent was not required for the minor amendment. The NCLT's decision to reject the modification was challenged on the grounds that it would lead to unnecessary procedural delays and costs, impacting shareholders negatively. 4. Compliance with Statutory Regulations and Approvals: The Appellant Company ensured compliance with all statutory requirements, including obtaining fair share exchange ratio reports, certificates from statutory auditors, and consent affidavits from shareholders and creditors. The modification did not require additional approval from the Reserve Bank of India, as it complied with the Foreign Exchange Management (Cross Border Merger) Regulations, 2018. The Appellant Company argued that the NCLT should have considered these compliances and the deemed approval of shareholders. 5. Procedural Delays and Judicial Precedents: The Appellant Company highlighted that the NCLT's decision to reset the process and file a fresh first motion application was against judicial precedents where modifications of greater significance were allowed. The Appellant Company cited several cases where similar amendments were sanctioned by the NCLT, emphasizing that the proposed change was minor and justified. The delay in proceedings was also criticized, with the Appellant Company arguing that the NCLT should have expedited the process in the interest of justice. Conclusion: The judgment concludes that the NCLT's impugned order is set aside, and the appeal is allowed. The Appellant Company's request for amendment is justified, given the minor nature of the change and the compliance with statutory requirements. The NCLT is directed to allow the modification without requiring a fresh first motion application, thus preventing unnecessary procedural delays and ensuring fairness to all stakeholders involved. Pending applications are disposed of accordingly.
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