TMI Blog2024 (11) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. - JUSTICE YOGESH KHANNA MEMBER (JUDICIAL) AND MR. AJAI DAS MEHROTRA MEMBER (TECHNICAL) For the Appellant: Mr Arun Kathpalia, Sr Advocate with Mr. Hemant Sethi, Mr Gaurav H Sethi, Mr. Deepanshu Chandra and Mr. Rahul H Pawar, Advocates For Respondent: None JUDGEMENT JUSTICE YOGESH KHANNA, MEMBER (JUDICIAL) The present Appeal is preferred under section 421 of the Companies Act, 2013 ( Act ) by the Appellant Company / Transferee Company against an order dated 22.04.2024 ( Impugned order ) passed by the Ld National Company Law Tribunal, Cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the First Motion Application, the Appellant Company carried out the following applicable compliances as under: i) Fair share exchange ratio report from Mr Akshat Jain, IBBI Registered Valuer on March 15, 2023. ii) Approval of the Scheme of Amalgamation by the board of directors of the Appellant Company on March 17, 2023 after considering the fair share exchange ratio report dated March 15, 2023 issued by Mr Akshat Jain, IBBI Registered Valuer iii) Approval of the Scheme of Amalgamation by the board of directors and the shareholders of the Respondent Company 1 on March 20, 2023 after considering the fair share exchange ratio report dated March 15, 2023 issued by Mr Akshat Jain, IBBI Registered Valuer v)Approval of the Scheme of Amalgamation by the board of directors and the shareholders of the Respondent Company 2 on March 20, 2023 after considering the fair share exchange ratio report dated March 15, 2023 issued by Mr Akshat Jain, IBBI Registered Valuer v) Certificate dated March 17, 2023 from two directors of the Appellant Company ensuring compliance with the Rule 9(1) of the Notification No. FEMA.389/2018-RB dated March 20 2018 of the Foreign Exchange Management (Cross Border M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of USD I.2828 each) Addition of shares (ordinary shares of USD I.2828 each) As on date (ordinary shares of USD I.2828 each) Swap ratio: 2.7998:1000 0.0083 2.7915:1000 Stated capital: 2,60,76,343 77,955 2,61,54,298 7. Consequently on 20.10.2023 before filing the second motion application, the Appellant Company filed C.A. No. 197/ 2023 in C.A. (CAA) No. 24 / CHD / HRY / 2023 ( said CA ) before Ld NCLT permitting amendment of the Scheme in terms of the powers available to the Ld NCLT and as provided for in the scheme itself vide clause 28 as under:-. 28. Subject to approval of the NCLT and other Appropriate Authorities, the Board of Directors of the Amalgamating Companies and the Amalgamated Company may assent to any modification(s) or amendment(s) in this Scheme which the NCLT may deem fit to direct or impose or which may otherwise be considered necessary or desirable for settling any question or doubt or difficulty that may arise for implementing and/or carrying out the Scheme and the Board of Directors of the Amalgamating Companies and the Amalgamated Company and after the dissolution of the Amalgamating Company, the Board of Directors of the Amalgamated Company be and are hereby a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fidavits of the shareholders of Transferor Companies towards the aforementioned amendments. The same were duly obtained and placed on record. 10. Thereafter, the Ld NCLT heard the said CA and passed an Impugned Order dated 22.04.2024 rejecting the said CA. It is alleged NCLT misconstrued the provisions of the Act particularly with respect to the amendment of the Scheme under Section 230-232 of the Act. It is alleged the Ld. NCLT in the Impugned Order acted against the interest of the Appellant Company, the Respondents Companies and their respective shareholders as it suggested to reset the clock and file fresh first motion application for the concerned matter and it all not only lead to waste of precious judicial time and legal cost but would also have a huge impact on the shareholders of the Appellant Company and the Respondent Companies, where by, fresh resolutions, certificates, consent affidavits, valuation reports may be required to be re-obtained along with re-setting of the Appointed Date. 11. It is argued the Ld. NCLT is well within its powers as stipulated under Section 231 of the Act read with Rule 17(1) of the Companies (Compromises, Arrangements and Amalgamations) Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it their objections, if any, during proceedings for Second Motion and final approval of the Scheme by NCLT. Heard. 14. In Bengal Tea Industries Ors. v. UOI Manu/WB/0451/1987; Sargon Geosynthetics Limited v. Maccaferri Environmental Solutions Private Limited 2008 SCC OnLine P H 906; Vodafone Digilink Limited Co. Appl. (M) No. 147/2012; ICICI Bank Limited CA No. 606 of 2001; Mahaamba Investments Ltd. Vs. IDI Limited CA (Lodg.) No. 1047 of 2000 etc.it was observed if the scheme does not provide for any arrangement with creditors, their consent is not required. There exists a catena of judgements all adverting to settled principles of law namely wherein if a scheme does not provide for any arrangement with creditors, then their consent towards the scheme can be dispensed with. The same squarely is applicable to the facts and circumstances of the present case. 15. We have gone through the record. No major amendment has been proposed to the scheme. The only change which has occurred is a miniscule change in the swap ratio of the Transferor Companies. Admittedly the Scheme is reasonable, just and fair to all the stakeholders of the respective Companies and in accordance with all extant la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tangible and intangible assets whereas residuary assets and liabilities were to be recorded at book value. The aforementioned modifications to the Scheme were sanctioned by the Ld.NCLT, Mumbai Bench. 20. Thus based on the judicial precedents cited above, the amendment can therefore be done at any stage. In Hamburg Sud India Private Limited CA (CAA)/290/MB-IV/2022 , the Ld NCLT Mumbai while seized of a First Motion Petition passed directions for changing the valuation and the swap ratio. 21. 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. 22. Last ..... X X X X Extracts X X X X X X X X Extracts X X X X
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