In re K M Sugar Mills Limited (NCLT Allahabad)
Summary: The National Company Law Tribunal, Allahabad Bench, Prayagraj considered a joint second motion petition under Sections 230 and 232 of the Companies Act, 2013 read with Rule 15 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 for sanction of a Scheme of Arrangement involving demerger of the Distillery Division of K M Sugar Mills Limited into KM Spirits and Allied Industries Limited.
The first motion order dated 24.03.2026 had permitted the relevant meetings; the subsequent voting record showed approval by the concerned stakeholders, including unanimous approval by the unsecured creditors of the Resulting Company present and voting. Notices were served on the Regional Director, Registrar of Companies, stock exchanges and Income Tax Department. The RoC reported statutory filings and no pending prosecution, while the Regional Director noted compliance up to 31.03.2025.
The Income Tax Department initially reported outstanding demands and appellate proceedings and emphasised compliance with the conditions of a tax-neutral demerger under Section 2(19AA) of the Income-tax Act, 1961, preservation of assessment, reassessment, recovery and penalty proceedings, continuing liability under Sections 170A and 72A, compliance with Section 72A(4), and possible application of GAAR under Chapter X-A. The Demerged Company responded that its remaining business would continue as a going concern, that liabilities attributable to the Demerged Undertaking would be assumed by the Resulting Company under the Scheme, and that the Revenue’s rights would remain unaffected.
