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Before the NCLAT, it was argued that the NCLT had the requisite jurisdiction to modify the scheme and that the modification was minuscule, with all relevant approvals duly obtained
The National Company Law Appellate Tribunal (NCLAT) has recently observed that the National Company Law Tribunal (NCLT) can permit minor amendments in a scheme of amalgamation.
A bench comprising Judicial Member Yogesh Khanna and Technical Member Ajay Das Mehrotra of the NCLAT was hearing an appeal against an order of the NCLT, which had rejected the scheme of amalgamation between FIM Holdco Ltd. and Ariston Investment Sub A Ltd..
The transferor company initially filed a first motion petition, which was allowed by the NCLT, and the necessary approvals were obtained.
Subsequently, there was a minor change in the share capital of the transferor company, leading to a slight adjustment in the swap ratio of shares.
As a result, the transferor company filed an application to amend the scheme of amalgamation, incorporating the necessary changes and adding an addendum to the valuation report.
The NCLT required the transferor company to obtain permission from the shareholders for the amendment. However, even after the permission was obtained, the NCLT rejected the application.
Before the NCLAT, it was argued that the NCLT had the requisite jurisdiction to modify the scheme and that the modification was minuscule, with all relevant approvals duly obtained.
It was further argued that the amendment had no impact on the creditors, as the only modification involved a minor change in the swap ratio, affecting only the shareholders.
The NCLAT while allowing the appeal noted that, "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 laws. The Ld. NCLT while dismissing the said CA has completely ignored a string of precedents wherein amendments of much greater significance were proposed to the original Scheme, which were subsequently amended and sanctioned in the modified Scheme. We also note that notices will be issued to statutory authorities and they will get opportunity to file their objections, if any, during proceedings for Second Motion and final approval of the scheme," the order reads.
For Appellant:Mr Arun Kathpalia, Sr Advocate with Mr. Hemant Sethi, Mr Gaurav H Sethi, Mr. Deepanshu Chandra and Mr. Rahul H Pawar, Advocates.
Case title: One World Center Private Ltd vs FIM Hold Co Ltd & Anr
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