In the case of, Lasa Supergenerics Limited v. Harishree Aromatics & Chemicals Private Limited, vide order dated November 28, 2022, the National Company Law Appellate Tribunal, New Delhi (“NCLAT”) has observed that, where secured creditors are not affected by the scheme of amalgamation and where no compromise/ arrangement with any creditor of a company is involved, then the consent of the secured creditors is not required.
Facts in brief:
On December 9, 2020, a joint application was filed by the applicant companies viz. Harishree Aromatics and Chemicals Private Limited, (“the Transferor Company”) and Lasa Supergenerics Limited (“the Transferee Company/ the Appellant”), inter-alia, seeking appropriate directions before the National Company Law Tribunal (Mumbai Bench-IV) (“NCLT”) for sanctioning a scheme of amalgamation under Section 230-232 of the Companies Act, 2013 (“the Act”). The promoter of the Transferee Company/ the Appellant is a major shareholder, holding 96.21 % of the issued, subscribed and paid-up equity share capital of the Transferor Company. The Appellant in its application before the NCLT had prayed for dispensation of meeting of its secured creditor, on the ground that the secured creditor will, in no way, be affected by the proposed scheme of amalgamation as the assets of the Appellant after the proposed amalgamation will be far more than its liabilities. The Appellant also stated that the secured creditor is not affected in any manner by the scheme nor is there any compromise or arrangement envisaged in the scheme under Section 230(l)(a) of the Act and that the scheme does not contemplate any variation in the rights of the secured creditor in any manner whatsoever inasmuch as upon the scheme becoming effective, the Appellant shall continue with its existence and shall accordingly, continue to meet the liabilities of its creditors as they arise in the normal course of business. By an order dated February 17, 2021 passed by the NCLT, the Transferee Company/ the Appellant, was directed to obtain consent from its sole secured creditor before the final date of hearing. Being aggrieved by the said order, an appeal was preferred by Transferee Company/ the Appellant before the NCLAT.
Whether consent of secured creditors is required for sanctioning the scheme of amalgamation?
Findings of the NCLAT:
had observed that the NCLT ought to exercise its discretion in dispensing with the requirement of convening the meeting of equity shareholders, secured creditors and unsecured creditors, which would facilitate ease of doing business and save time and resources. The said judgement had set aside the direction in respect of the Transferee Company issued by the NCLT to convene the meetings of the equity shareholders, secured creditors and unsecured creditors.
Please find attached a copy of the order.
This update has been contributed by Abeezar Faizullabhoy (Senior Partner) and S. M. Algaus (Senior Associate)
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