Spark Capital Advisors (India) Private Limited & Anr.

KANTHI NARAHARI, MEMBER (TECHNICAL)

The Present Appeal is filed under Section 421 of the Companies Act, 2013 against the order dated 01.06.2022 passed by the National Company Law Tribunal, Chennai Bench, Chennai in CA (CAA)/14/2022, whereby the NCLT directed the Appellant No.1 to convene meeting of unsecured creditors on 20.07.2022 at 11 a.m. aggrieved by the same, the Appellants preferred the present Appeal.

Dr. K.S. Ravichandran, Learned PCS appeared for the Appellants submitted that the Hon’ble Tribunal allowed the Application filed by the Appellants in relation to the scheme of arrangement between the Appellant No.1 being a Demerged Company and Appellant No.2 being Resultant Company. The Learned NCLT dispensed with the convening of meeting of 49 equity shareholders and one secured creditor in respect of the Appellant No.1 Company. However, the Learned NCLT directed the Appellant No.1 Company to convene the meeting of unsecured creditors to be held at 11 a.m. on 20^th July, 2022 at Registered Office of the Demerged Company or if not convenient at any other suitable place for which prior approval shall be sought from the Tribunal within a period of 7 days from the date of the order i.e. 01.06.2022. In relation to the Appellant No.2 (Resulting Company), the Learned NCLT dispensed with the meetings of equity shareholders since there were only two equity shareholders and dispensed with secured and unsecured creditors since there are nil creditors.

The Learned PCS submitted that the above order has been issued at the first motion in relation to a scheme of demerger falling within the meaning of Sections 230 to 232 of the Companies Act, 2013 between the Demerged Company and the Resulting Company. The Demerged Company has been engaged in the business of dealing in institutional equities comprising of stock broking and equity research services, merchant banking services, depository participants services and investment activities, since its incorporation on 02.02.1998. The demerged company is a going concern, financially sound and solvent and the scheme does not involve any compromise with any of the stakeholders. Both the companies are solvent and will be able to meet their respective liabilities and other obligations. The demerged company has also produced solvency certificate duly signed by the authorised person of the company and the independent Chartered Accountant. The resulting company was incorporated only on 28.01.2022 to operate as a resulting company.

It is submitted that there is no compromise with respect to any of its creditors, secured or unsecured and the networth of the demerged company is highly positive. However, the Learned NCLT did not take into consideration the said fact for dispensing with meeting of unsecured creditors of the Appellant No.1 Company. It is submitted that Appellant No.1 company having 49 unsecured creditors and the total value is Rs.1,09,49,683/-.

The Learned PCS relied upon judgment of this Tribunal in re Ambuja Cement passed in Company Appeal (AT) No.19 of 2021 dated 06.04.2021 whereby this Tribunal after considering the several judgments dispensed with the meetings of equity shareholders, secured and unsecured creditors of the Appellant Company therein. He submitted that the present case is also squarely covered by the above judgment and also judgment of Hon’ble High Court of Bombay and other decisions of this Tribunal.

In view of the reasons as stated above the Learned PCS prayed this Bench to allow the Appeal by setting aside the impugned order dated 01.06.2022 and sought a direction to dispense with the convening of the meeting of unsecured creditors of the demerged company as ordered by Learned Tribunal vide impugned order dated 01.06.2022.

Heard the Learned PCS appeared for the Appellant and perused the pleadings, documents and citations relied upon by him. It is apt to note that the Learned NCLT vide impugned order dated 01.06.2022 directed to convene a meeting of unsecured creditors of the Appellant No.1 Company (Demerged). However, the contention of the Learned PCS is that the Appellant No.1 Company is a solvent company and financially sound and the scheme does not involve any compromise with any of the stakeholders. It is also stated that both the Companies are commercially solvent and will be able to meet their respective liabilities and other obligations. At page 321 of Volume-II a certificate issued by the Chartered Accountant is enclosed wherefrom it is seen that the total value of the only secured creditor i.e. ICICI Bank Limited is Rs.31,39,28,547.83 and the total value of unsecured creditors is Rs.1,09,49,683/- as on 31.12.2021. At page 323 Volume-II the list of unsecured creditors is enclosed and wherefrom it is seen that there are total 49 unsecured creditors and the value is Rs. 1,09,49,683/-. The Learned NCLT dispensed with the convening of meeting of secured creditor stating that the consent by way of an affidavit has been obtained and the same is placed on record, hence, the meeting is dispensed with.

The Learned PCS submitted that the outstanding dues of the unsecured creditors as on 31.12.2022, have been settled as of 06.06.2022 i.e. after passing the impugned order dated 01.06.2022. The said list has been enclosed at page 608 and 609 of volume-III wherefrom it shows that there are no dues to be payable to the unsecured creditors.

After, conclusion of hearing of this Appeal, the Learned PCS with the permission of this Tribunal filed Notes on Submission dated 16.06.2022, which was received on 17.06.2022 by the registry of NCLAT, Chennai. At para 18 of Page 3, it is stated that all the unsecured creditors (49) have been fully paid. From the list as enclosed and from the Notes of Submission, it is unequivocal that the unsecured creditors have been paid fully

Without delving into the merits of the case, since the unsecured creditors have been fully paid and no other issue involved in this Appeal, therefore, this Tribunal comes to a resultant conclusion that no meeting of unsecured creditors is warranted. Hence, this Tribunal pass the following order:

Accordingly, the Appeal is allowed. No orders as to cost. Applications if any, pending stand closed.