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TMI Blog2021 (1) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... he appointed date and valuation date is different. The Appellants to put the entire issue at rest, are agreeable and filed an affidavit to this effect that the appointed date should be same as the Valuation Date i.e. 31.07.2018. Since a considerable amount of time have been lost and as the Appellants are agreeing under the scheme that the appointed date may be such date as the NCLT may decide i.e. the valuation date (31.07.2018) - the appeal is allowed and the appointed date shall be the valuation date i.e. 31.07.2018. - COMPANY APPEAL (AT) NO. 128 OF 2020 - - - Dated:- 19-1-2021 - (Justice Jarat Kumar Jain) Member (Judicial) , (Mr. Balvinder Singh) Member (Techncial) And (V.P. Singh) Member (Technical) Mr. Sudipto Sarkar, Sr. Advocate with Ms Navpreet Ahluwalia, Mr Adish Sharma and Mr. Deepak Chawla, Advocates for Appellants. Mr Kamal Kant Jha, Advocate for Respondent JUDGMENT Mr. Balvinder Singh, Member (Technical) Introduction The present appeal has been preferred by the Appellants under Section 421 of the Companies Act, 2013 against the impugned order dated 02.03.2020 passed by the National Company Law Tribunal, Mumbai Bench, Mumbai ( NCLT i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Transferor Companies and to the shareholders of the ultimate holding Company RHI Magnesita. Therefore, we are of the considered view that the Scheme is devised/ designed majorly to benefit the Two shareholders of Transferor Company-I and few shareholders of Transferor Company-II which in turn the undue advantage ultimately flows to the shareholders/ holding Company, i.e. RHI Magnesita. In view of the above analysis, we are of the considered view that the Scheme appears to benefit only a few shareholders of Transferor Company to be unfair and unreasonable and contrary to the public policy, public shareholders of the listed Company therefore, we deem it fit not to sanction/ approve the proposed Scheme of Amalgamation. Therefore, we do not sanction/ approve the Scheme as prayed for. Brief Facts of the Case 3. The brief facts of the case are that the 1st Appellant is primarily engaged in business of purchase, sale, import, export and marketing of refractories, refractory products, chemicals, formulations and related equipment required in industries such as steel plants, furnaces, power house and cement plants. 2nd Appellant is engaged in the business of manufacturing an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scheme enclosed with the Company Petition; Appellants shall pass such accounting entries which are necessary in connection with the scheme; as per definition of the scheme, appointed date means the 1st day of January, 2019. 8. Arguments were heard and after hearing the arguments the Tribunal passed the order dated 2.3.2020 thereby rejecting the scheme of amalgamation based on the aforementioned observations. 9. Having being aggrieved by the impugned order, the Appellant therefore, preferred the instant Appeal before this Appellate Tribunal. Submission on behalf of the Appellants 10. The learned counsels for the Appellants have submitted that the NCLT has rejected the scheme filed by the appellants on the ground that the appointed date of the Scheme is 01.01.2019 whereas the Valuation Date is 31.07.2018. The appellants stated that the appointed date under the Scheme was specified as 01.01.2019 but Clause 1.1.3 of the Scheme provides that the Appointed Date can be such other date as may be fixed by the NCLT. 11. It is further submitted on behalf of the Appellants that the tribunal while passing the impugned order has based its findings on a very limited ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the responsibility of ensuring the protection of the public shareholders. Admittedly, in the present case, no objection was raised by the SEBI in respect of the said scheme. Since no suspicion was ever raised by SEBI in respect of the said scheme, it cannot be said that the scheme is against the interest of public shareholders and therefore in violation of public policy. 15. The learned counsel for the Appellants contended that a bare perusal of the impugned order, would make it evident that it is a case of judicial overreach, as the NCLT, while examining the said scheme for the purposes of according its approval has delved into issues, which it need not have. The scope of judicial intervention, while approving a scheme is very limited and has been well defined by this Appellate Tribunal as well as the Hon ble Supreme Court of India in a catena of judgments. The Learned Counsel for the Appellants have put their reliance in the matter of UFO Moviez India Ltd. Anr. V. UOI, Company Appeal (AT) No. 48 of 2019, wherein, a scheme of merger was rejected by the NCLT inter alia on the basis that the scheme is effecting the share price and is devaluing the investment of the publ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant was never given an opportunity to clarify or assuage any of the doubts which have now come to be expressed by the NCLT in the impugned order concerning the Valuation methodology basis which it has gone on to reject the said scheme. 20. It is stated by and on behalf of the Appellant that for the purpose of the scheme which is being proposed, notices in compliance of Section 230(5) of the Companies Act were duly sent to Regulatory Authorities such as Income Tax Authority concerned, the Regional Director, Ministry of Corporate Affairs, Western Region, the Registrar of Companies, Maharashtra, Mumbai, the Reserve Bank of India, the Competition Commission of India, the Official Liquidator, High Court of Bombay, BSE Limited, the National Stock Exchange of India Limited, and the Securities Exchange Board of India, however, no objection whatsoever was received from any of the said authorities. 21. It is further stated by learned counsel for the Appellants that the Regional Director, the Ministry of Corporate Affairs i.e. the Respondent herein had raised certain observations qua the said scheme, which have been enumerated under Para 8 of the impugned order. Insofar as these observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e scheme and therefore, the concerned parties are free to mutually agree upon a specific calendar date in this regard. 24. Learned counsel for the Appellants in its written submission stated that to put the entire issue at rest they are agreeable and filed an affidavit to this effect that the appointed date should be same as the Valuation Date i.e. 31.07.2018. 25. Appellants lastly prayed that the scheme of Amalgamation proposed by the Appellants may be sanctioned by setting aside the impugned order dated 02.03.2020 passed by the NCLT, Mumbai Bench in Company Scheme Petition No. 2199 of 2019. Submission on behalf of the Respondent 26. Short reply affidavit has been filed on behalf of the Respondent viz. Regional Director, Western Region. The learned counsel for the Respondent stated that they had filed the report and had given their observations dated 24.06.2019 before the NCLT, Mumbai Bench (which are enumerated under para 7 above). It is further submitted on behalf of the Respondent that there is nothing more to add that what is stated earlier in the representation dated 24.06.2019 before the NCLT and the matter may kindly be decided on its own merits. Appraisal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that before the NCLT, Mumbai the Appellants brought to their notice that all the procedures prescribed u/s 230-232 of the Companies Act, 2013 were followed. This was noticed by the NCLT. However, by impugned order dated 02.03.2020, the NCLT rejected the Scheme of Amalgamation on certain ground which was not required to be noticed for determination of Amalgamation u/s 230-232 of the Companies Act, 2013. 32. The NCLT while passing the impugned order have overreached its scope of Judicial Intervention in determination of the Scheme of Amalgamation u/s 230-232. NCLT have failed to point out any material illegality under the scheme and also accepted the clarifications submitted by the Appellant against the objections raised by the Regional Director, Western region. Since no minority shareholders have raised any objections against the scheme thus, the commercial wisdom of the shareholders shall not be overlooked by the NCLT. We are of the view that the scheme cannot be said to be violative of public policy just on the ground that NCLT considered that the scheme appears to benefit only a few shareholders of Transferor Company without giving any reasonable findings for the same. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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