NCLAT | NCLT has the discretion to modify arrangements, but only when cogent; Otherwise deemed unwarranted

National Company Law Appellate Tribunal (NCLAT): A Coram of Justice Jarat Kumar Jain (Judicial Member) and Kanthi Narahari (Technical Member) accepted an appeal holding the impugned order, modifying the date of appointment, to be unwarranted.

In the present appeal, the appellant under Sections 230 to 232 of the Companies Act, 2013 submitted a scheme for amalgamation of the Transferor Company (Accelyst Solutions Pvt Ltd) into Transferee Company (Payment Technologies Pvt. Ltd.). NCLT, Delhi, even approved the scheme of amalgamation and the appointed date 07.10.2017. However, NCLT, Mumbai, modified the appointed date from 07.10.2017 to 01.04.2018, on the ground that considerable time has lapsed from the appointed date as mentioned in scheme with varying Board Resolution of the Scheme dated 27.03.2018 and Valuation Report dated 22.03.2018.

The counsel for the appellant submitted that NCLT, Mumbai while modifying the appointed date has not assigned any reason for modification and has failed to consider the fact that it had already been approved and therefore, condone the delay and extend the time for compliance.

 Reliance was placed on Miheer H. Mafatlal v. Mafatlal Industries Ltd. (1997) 1 SCC 579 which was later approved in Hindustan Lever v. State of Maharashtra, (2004) 9 SCC 438. Even the Court considered it useful to refer to the same. The following paragraphs were quoted while placing heavy consideration:

“…11. While exercising its power in sanctioning a scheme of arrangement, the Court has to examine as to whether the provisions of the statute have been complied with. Once the Court finds that the parameters set out in Section 394 of the Companies Act have been met then the Court would have no further jurisdiction to sit in appeal over the commercial wisdom of the class of persons who with their eyes open give their approval, even if, in the view of the Court better scheme could have been framed…” The subsequent paragraphs laid down the broad contours of the jurisdiction of the company court in granting sanction to the scheme. Further quoted, “…the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed…”.

Therefore, considering the facts, it was clear that the appellant fulfilled all the requisite statutory compliances. The impugned order so far as the modification of appointed date was concerned was set aside, and the date which was approved by the shareholder of the appellant company was fixed.[Accelyst Solutions Pvt Ltd v. Freecharge Payment Technologies Pvt Ltd, Company Appeal (at) No.15/2021, decided on 24-03-2021]

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