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Judgment
(Hybrid Mode)
The present appeal has been filed against an impugned order dated 09.04.2025 passed by the Ld. National Company Law Tribunal, Chandigarh in CP(CAA)43/Chd/Hry/2024. Before coming to the impugned order let us narrate brief facts:
“i)The Appellant, Pine Labs Private Limited, is a company incorporated in India and engaged in the business of providing payment solutions and/or merchant services. The Non-Applicant, Pine Labs Limited, is a company incorporated in Singapore and the holding company of the Appellant, with 99.89% shareholding.
ii) The Appellant and the Non-Applicant had proposed a scheme of amalgamation under Sections 230-232 read with Section 234 of the Companies Act, 2013, whereby the Non-Applicant would cease to exist as a separate legal entity and shall be deemed to be dissolved without winding up. The Scheme was approved by the board of directors of the Appellant vide board resolution passed on 08.02.2024, and that of the Non-Applicant/ Transferor Company was passed on 13.12.2023, read with the Directors Resolution in Writing dated 07.02.2024. On 09.05.2024, the High Court of Singapore approved and sanctioned the Scheme.
iii) The Appellant, filed the first motion application bearing CA(CAA) No. 6/Chd/Hry/2024 before the Ld National Company Law Tribunal, Chandigarh Bench. The Ld. NCLT on 12.08.2024, disposed of the First Motion Application with directions to issue notices to the statutory and regulatory authorities along with directions for convening the meetings of the equity shareholders and the unsecured creditors of the Appellant.
iv) The Appellant, on 10.10.2024, after complying with the directions of the Ld. NCLT filed the second motion petition bearing CP (CAA) No. 43/Chd/Hry/2024, seeking sanction of the Scheme. The Ld NCLT directed the Appellant to again serve notices to the statutory and regulatory authorities in terms of Section 230(5) of the Companies Act, 2013 directing the authorities to file their observations/ objections, if any, to the Scheme.
v)The Ld. NCLT, after considering the observations of the authorities and the affidavits and undertakings of the Appellant, reserved the order on 19.02.2025 and thereafter, the Impugned Order was passed on 09.04.2025, sanctioning the Scheme with certain directions.”
It is argued the Ld. NCLT despite noting the definition of “Appointed Date” as identified in the Scheme was the same as the "Effective Date" in paragraph 8 of the Impugned Order, has without any rationale or justification, deviated from the terms of the Scheme, had modified the definition of the 'Appointed Date' of the Scheme. The Scheme had defined the 'Appointed Date' as the same as the 'effective date', which was the last of the dates on which all the conditions and matters referred to in the Scheme were fulfilled. It is further argued Ld. NCLT, however, changed the 'Appointed Date' to the date of the impugned order i.e., 09.04.2025, in paragraphs 14(i), 14(iv)(e) and 14(iv)(f) of the Impugned Order.
The Appellant has filed the present appeal under Section 421 of the Companies Act, 2013, challenging the modification of the 'Appointed Date' in the Impugned Order by the Ld. NCLT without providing any reasons or opportunity to the Appellant and without any objections raised by any authority. It is argued the Impugned Order is inconsistent with the requirements of both Indian and Singapore laws in as much as it pertains to the 'Appointed Date' wrongly recorded in paras 14(i), 14(iv)(e) and 14(iv)(f) of the Impugned Order. Further, there is no illegality or infirmity in the definition of' appointed date' provided under the Scheme which would warrant any interference by the Ld. NCLT and that the definition of' Appointed Date' in the Scheme is in accordance with the General Circular No. 09/2019 dated 21.08.2019, issued by Ministry of Corporate Affairs, Government of India. It is argued if the Impugned Order is not clarified to this extent, it wrongly records 'Appointed Date' as date of the Impugned Order in paragraphs 14(i), 14(iv)(e) and 14(iv)(f) of the Impugned Order, it will severely prejudice the interest of the Appellant herein as it will impede the implementation of the Scheme.
The Appellant prays before this Tribunal the definition of the 'Appointed Date' as provided in the Impugned Order may be set aside and it be directed that the 'Appointed Date' of the Scheme shall have the meaning as ascribed to it as in the Scheme.
The Ld. Counsel appearing on behalf of the respondent viz. Regional Director, North Zone states he relies upon the documents filed before the Ld. NCLT. He drew our attention to para 5.1.4 of the impugned order dated 09.04.2025 wherein it is noted the Ld. Counsel appearing for Regional Director has no objection against the Scheme. He further drew attention to an order dated 19.02.2025 passed by the Ld. NCLT, Chandigarh wherein the following is recorded:
“Mr. Vineet Khatri, Public Prosecutor has appeared on behalf of the RD and submitted that they have no objections against the Scheme.”
Heard and record perused.
Before proceeding further, we refer to the relevant clauses of the Scheme which are as under:-
“1.Definitions and Interpretation
1.1In the Scheme, unless repugnant to the meaning or context thereof, the following expressions shall have the following meanings:
1.1.2"Appointed Date" means the Effective Date;
1.1.3"Effective Date" means the last of the dates on which all the conditions and matters referred to in Clause 35.1 of the Scheme have occurred or have been fulfilled or waived (as the case may be) in accordance with this Scheme. References in this Scheme to date of 'coming into effect of the Scheme' or 'effectiveness of the Scheme' or the 'Scheme coming into effect' shall be construed as references to the Effective Date;
……………….
35.Scheme conditional on
35.1The Scheme is conditional upon and subject to:
(a)the approval of the Scheme by the requisite majorities of the various, classes of shareholders and/or creditors (where applicable) of the Transferee Company as required under the Indian Companies Act, or dispensation having been received from the NCLT in relation to conducting meeting(s) fur obtaining such approval from the shareholders and/or creditors (where applicable) of the Transferee Company, and the requisite order of the NCLT being obtained in this regard;
(b)the approval of the Scheme by the PLS Shareholders at the meeting of the PLS Shareholders to be convened by the Singapore Court to approve the Scheme and any adjournment thereof in compliance with Section 210{3AB) of the Singapore Companies Act;
(c)the grant of the Singapore Court Order by the Singapore Court and such Singapore Court Order having become final;
(d)the lodgement of the Singapore Court Order with the Accounting and Corporate Regulatory Authorlty of Singapore pursuant to Section 210(5) and Section 212(3) of the Singapore Companies Act;
(e)the grant of the order sanctioning the Scheme in accordance with the Indian Companies Act by the NCLT and such order having become final;
(f)a certified copy of the order of the NCLT sanctioning the Scheme being filed with the Registrar of Companies; and
(g)the receipt of all authorisations, consents, clearances, permissions and approvals as are necessary Or required by either or both the Transferor Company and the Transferee Company or their respective shareholders under any and all applicable laws, from all Governmental Authorities (including from the Reserve Bank of India, as applicable), for or in respect of or in connection with the Amalgamation or the implementation of the Scheme.”
As per the submission of the learned senior counsel for the appellant the conditions as enumerated in Clause 35.1 from (a) to (g) were concluded on the following dates:-
“Condition (a) qua approval of the scheme by the requisite majority of various classes was complete by 28.09.2024; Condition (b) qua approval of the scheme by PLS shareholders was approved on 22.04.2024; Condition (c) was completed on 09.05.2024 when the Singapore Court granted an order for approval which became final; Condition (e) viz. the impugned order was passed on 09.05.2024; Clause (g) all authorization, consents, clearances, permissions and approval as are necessary or required by both the companies have been obtained and now only lodgement of the Singapore Court order as well as filing the certified copy of the Ld. NCLT sanctioning the scheme with ROC is only pending i.e. sub-clauses (d) and (f) of Clause 35.1 (supra).”
Admittedly the Scheme shall come into operation only upon completion of the conditions given under Clause 35.1, of which conditions under (d) and (f) are yet to be completed. The impugned order though allowed the Scheme but changed the appointed date as to the date of passing of the impugned order. The following paras of the impugned order are relevant:-
“8.The appointed date as mentioned in the Scheme of Amalgamation in Clause 1 sub-clause 1.1.2. provides that the "Appointed Date" means the Effective Date. Further, the definition of the Effective Date as mentioned in the Clause 1 sub-clause 1.1.3 provides that "Effective Date" means the last of the dates on which all the conditions and matters referred to in Clause 35.1 of the Scheme have occurred or have been fulfilled or waived (as the case may be) in accordance with this Scheme. References in this Scheme to date of 'coming into effect of the Scheme' or 'effectiveness of the Scheme' or the 'Scheme coming into effect' shall be construed as references to the Effective Date (scheme attached as Annexure P1 of the petition).
10.Subject to the Petitioner Companies complying with the requirement of various laws including the Foreign Exchange Management Act, 1999 and the Reserve Bank of India Act, 1934 along with the respective rules and regulations, the permission is hereby granted to the Scheme of Amalgamation proposed by the Petitioner Company under Section 230 to 232 read with Section 234 of the Companies Act, 2013. The sanctioned Scheme of Amalgamation shall be binding on the Petitioner Company and their Shareholders and Creditors. The Petitioner Company shall remain to comply with all the statutory requirements in accordance with law. The sanction is, however, subject to the approval of merger of the Transferor Companies, which are situated in Singapore, in accordance with the Singapore Companies Act and other relevant laws of Singapore.
12.While approving the Scheme as above, it is clarified that this order should not be construed as approval by any Statutory Authorities viz. RBI, SEBI, CCI, RERAs etc. or any sectoral regulator; or construed as an order in any way granting exemption from payment of stamp duty, taxes or any other charges or payment of feel penalty etc., if any, due or required in accordance with law or in respect to any permission/ compliance with any other requirement, which may be specifically required under any law.
14.This Tribunal do further order:
i.Upon the sanction becoming effective from the appointed date of amalgamation i.e. from the date of this order in the present case, the Transferor Company shall follow the necessary procedure as laid down under the laws of the Singapore and this Order would be effective only after the amalgamation of Transferor Company with the Transferee Company is approved under the laws of Singapore by following the due procedure under the Companies Act and other relevant laws of Singapore;”
The appellant is aggrieved of the fact while the Ld. NCLT granted permission to the scheme of amalgamation as proposed by the petitioner company and held the scheme of amalgamation shall be binding by the petitioner company its shareholders and creditors yet changed the appointed date in para 14(i) of the impugned order whereas it had no authority to do so.
At the outset, we note that Regional Director, North Zone of Ministry of Corporate Affairs has given his “no objection” to the Scheme. We also note no reasons have been assigned by the Ld. NCLT while changing the effective date in para 14(i) of the impugned order.
In Oriental Carbon & Chemicals Ltd Vs OCCL Ltd, Company Appeal (AT) No.144 of 2024, under similar circumstances, this Tribunal has held as under:-
“7.Thus the crux of the impugned order would show the Ld. NCLT has found the scheme prima facie beneficial to the company and not in any way detrimental to the interest of the shareholders of the company. The Ld. NCLT also notes all requisite statutory compliances have been fulfilled and accordingly the Ld. Tribunal had sanctioned the Scheme of Demerger after finding that no investigation/proceedings are pending against the demerged or resulting company and no winding up petition is pending against the petitioner companies under the provisions of Companies Act.
8 to 10 x x x
11.Further in Shree Balaji Cinevision (India) Pvt Ltd V 2009 SCC Online Guj 12183 the Court held as follows:-
“5.We have perused the judgement of the learned Company Judge. We do agree with the learned company judge that the Company Court has discretion to make modification in the proposed scheme of compromise, arrangement etc. However, such discretion is required to be exercised for cogent reasons. We do agree with Mr. Soparkar that the learned company judge had no reason to modify the appointed Date proposed in the scheme of amalgamation. We also agree that the alteration in the appointed Date would affect the calculations and would have financial implications.”
12.A bare perusal of the aforesaid judgements would show while sanctioning the scheme of arrangement if the Court comes to a conclusion that the provisions of statute have been complied with; and that there is no violation of any provision of law, or the proposed scheme of compromise or arrangement is not unquestionable, unconscionable or contrary to public policy, then the NCLT has no further jurisdiction to sit in appeal over the commercial wisdom of the class of person who with their eyes open have given their approval, even if, the Court is of the view that better scheme could have been framed. Further we also agree the alterations in the appointed date would affect the calculation and would have a serious financial implication. Hence if the parameters for sanctioning the scheme are complete, then the Tribunal would only have a supervisory jurisdiction.
13.Considering the above we thus hold there was no reason to change the appointed date as was given in the scheme of merger and even the reliance on Sterlite Port (Supra) was incorrect since in the said case the definition of the term “Appointed Date” itself gave an authority to the Ld. NCLT to fix a date other than the date fixed by the Scheme but though the NCLT had fixed another date than the Appointed Date yet in the cited case this Tribunal retained the Appointed Date to be the one as fixed under the Scheme.
14.Thus in the circumstances the appeal is allowed holding the Appointed Date be the date as fixed by the scheme per para 5 above and it shall not be the date of pronouncement as is held by the Ld. NCLT.”
Considering the above and on perusal of Clauses of the Scheme, more specifically, its Clauses 1.1.2 viz Appointed date; 1.1.3 viz the Effective Date it means the last of the dates on which all the conditions and matters referred to in Clause 35.1 of the Scheme have occurred or have been fulfilled or waived in accordance with this Scheme and that as submitted Clause 35.1 (d) and (f) shall soon be fulfilled and thus any change of the appointed date of amalgamation at this stage would certainly affect calculations made by the companies and would have serious financial implications. Thus we allow the appeal holding the appointed date shall be date as fixed by the Scheme per Clause 1.1.2 and 1.1.3 read with Clause 35.1 above and it shall not be “from the date of the impugned order” as is mentioned in para 14 of the impugned order by the Ld. NCLT. The impugned order to such an extent is modified.
The appeal is disposed off in terms of the above.
Pending applications, if any, are closed.