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TMI Blog2019 (11) TMI 1654X X X X Extracts X X X X X X X X Extracts X X X X ..... record while allowing certain prayers, rejected the prayer relating to dispense with the convening of the meetings of unsecured creditors of Applicant Company No. 4 and equity shareholders, secured and unsecured creditors of Applicant Company No. 5 vide its order dated 07.06.2019. 3. The applicant-companies, aggrieved with the order dated 07.06.2019, to the limited extent of declining their prayer seeking dispensation of meetings of unsecured creditors of Applicant Company No.4 and equity shareholders, secured and unsecured creditors of Applicant Company No.5, preferred Company Appeal (AT) No.180 of 2019 before the Hon'ble National Company Law Appellate Tribunal, New Delhi (NCLAT) 4. The Hon'ble NCLAT vide its order dated 19.08.2019, allowed the said Company Appeal (AT) No.180 of 2019 and set aside the order of this Tribunal and the relevant paragraphs of the said Appellate order read as under:- "5. After hearing learned counsel for Appellants we find that the Appellants DLF Phase IV Commercial Developers Ltd. (Transferor Company No. 1), DLF Real Estate Builders Ltd. (Transferor Company No. 2), DLF Residential Builders Ltd. (Transferor Company No.3) and DLF Utilities Ltd. (Deme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th February, 2019 vide Diary No. 787/19 as also the law propounded by various Hon'ble High Courts, submitted that in similar circumstances meetings of Shareholders and Creditors were dispensed with. We have referred to some of these judgments and the legal position enunciated therein would warrant the conclusion that the impugned order is per incuriam. It is noticed elsewhere in this judgment that following of the judicial precedent and observing the judicial view propounded by a Coordinate Bench in compliance is a matter of judicial discipline and the only course open to a Coordinate Bench of equal strength taking a different view is to refer the matter to a larger Bench. This is the law of the land declared by the Hon'ble Apex Court and has to be observed and adhered to strictly. 7. Indisputably, the proposed scheme of amalgamation between the Holding Company and its Subsidiaries is regulated by provisions of Chapter XV of the Act, Section 230 whereof provides for passing of an order by the Tribunal directing convening of a meeting of the creditors or class of creditors, members or class of members, as the case may be. Sub-section 9 thereof vests discretion in the Tribunal to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idavit, and in the event of the views expressed by the Coordinate or Larger Benches being squarely applicable, followed the same. Such application of mind being abysmally absent, the impugned order is unsustainable and has to be set aside to the extent it relates to directions for convening of the meetings of Unsecured Creditors of Appellant No. 4 and the meetings of the Equity Shareholders, Secured and Unsecured Creditors of Appellant No.5. 9. The appeal is allowed and the impugned order is set aside to the extent indicated hereinabove and directions passed thereunder. The matter is remanded to the Tribunal for fresh consideration of the first joint motion application preferred by the Applicants/Appellants having regard to the settled position of law and the views and precedents of Coordinate or Larger Benches of the Tribunal. Any observations made in this order shall not be construed as an expression of opinion on the merits of the case." 5. In terms of the said order of the Hon'ble NCLAT applicantcompanies filed the instant CA No.741 of 2019 praying for passing of necessary orders. 6. Heard the learned senior counsel for the applicantcompanies and carefully perused the plea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or publication." 8. The learned senior counsel Dr. U.K. Chaudhary appearing for the applicant-companies, while drawing our attention to the orders of the Hon'ble NCLAT, submitted that in view of the majority decision in Jupiter Alloys & Steel (India) Limited And Jupiter Wagons Limited in T.A. No. 11/2017 connected with C.A. No. 896/2016 of the NCLT, Kolkata Bench, the prayer of the applicant companies is required to be allowed. 9. In Jupiter Alloys & Steel (India) Limited, the issue considered was "whether the Tribunal has power to grant dispensation of the shareholders' meeting regarding the proposed scheme of amalgamation where all the shareholders have given consent, whereas the Companies Act, 2013 has authorized only for the dispensation of the meeting of creditors where creditors having at least 90% value agreed and confirmed by way of an affidavit scheme of compromise or arrangement". The Hon'ble Member (Judicial) and Hon'ble Member (Technical) who constituted the Division Bench when the matter was heard at the first instance, took different views, vide their separate orders dated 14.03.2017. The issue was referred to a third Member and the learned Third Member concurred wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be exercised in arbitrary and wanton manner and should be exercised after considering entire facts and circumstances. It cannot be ignored that almost all the High Courts have exercised this discretion since long and dispensed with the calling of the meetings in appropriate situations. The precedents created by the High Courts to dispense with the requirement of convening the meetings are worth and continuation of such precedents are virtue in the era of ease of doing businesses as well as future course of corporate actions. A settled issue should not be unsettled without proper reasons. Thus the notion that calling of meetings is mandatory does not stand. Regard being had to the precedents set forth by the Hon'ble High Courts, I am of the view that I have no reason to depart from the precedents created by the Hon'ble High Courts to dispense with the requirements of convening the meetings of the shareholders and creditors of the Company, if the Bench is satisfied in all respects. In the instant case both the applicant companies have few shareholders and all of them have given their written consents/affidavits and post merger there shall be positive net worth and the creditors a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the applicant companies 1 to 4 and it is a scheme between wholly owned subsidiary companies and their holding company, and hence consent is not required for dispensing with their meetings. The learned counsel further submits that the net worth of the transferee company is highly positive and the assets of the demerger company and the transferee company are more than sufficient to discharge their respective liabilities. It is also stated that the unsecured creditors of the demerger undertaking will become the unsecured creditors of the transferee company which is extremely financially strong company and the net worth of the demerger companies post sanction of scheme will be Rs.1.14 crores whereas the net worth of the transferee company post sanction of the scheme will be Rs.22,777.17 crores and hence, the proposed scheme is in no way prejudicial to the interest of shareholders or creditors of any of the applicant companies. The learned senior counsel placed reliance on the following decisions in support of the said submissions:- (i) Mahindra Forgings Global Limited & others and Mahindra CIE Automotive Limited, 2017 SCC Online NCLT 11936; (ii) Berkeley Design Automation India Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case it is stated that the transferee company, directly and indirectly has 100% holding in the transferor company No. 4 and the scheme is between the wholly owned subsidiary companies and their holding company and the net worth of the demerged company, post sanction of the scheme will be Rs.1.14 crores whereas the net worth of transferee company will be Rs.22,777.17 crores and the unsecured creditors of demerged company will become the unsecured creditors of the transferee company 14. We have carefully perused the proposed scheme and in the circumstances and in view of the decisions on which the learned senior counsel placed reliance and in view of the directions given in Jupiter Alloys & Steels (India) Limited (supra), we find that the subject prayer deserved to be allowed subject to the discussion in the succeeding para. 15. In the case of Jupiter Alloys & Steels (India) Limited (supra) the shareholders of both the applicant companies had given their written consent/affidavits. However, in the present case, written consent/affidavits of the equity shareholders of Applicant Company No. 5 are not filed. We may add here that the written consent/affidavits of unsecured credito ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been dispensed with. (iv) Advertisement of dispatch of notices to the creditors and equity shareholders as above shall be published in accordance with Rule 7 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 with suitable changes as may be practicable. (v) Both the applicant Companies No. 4 and 5 shall furnish copy of the Scheme free of charge within 1 day of any requisition for the same made by every creditor as mentioned above or member of the concerned Applicant Companies. (vi) Both the applicant companies No. 4 and 5 to serve the notice upon the Regional Director, Northern Region, Ministry of Corporate Affairs, New Delhi, Registrar of Companies, Income Tax Department within whose jurisdiction the assessments of the applicant companies No. 4 and 5 are made, the Official Liquidator in case of both the applicant companies and BSE, NSE and SEBI in case of transferee company/applicant company No. 5, pursuant to Section 230(5) of the Companies Act, 2013 read with Rule 8 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 with suitable changes in the notice relating to waiver of the meetings. If no response is received by the Trib ..... X X X X Extracts X X X X X X X X Extracts X X X X
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