Case Law Details
Ahemdabad Bench of National Company Law Tribunal (“NCLT”), in a recent case Kediya Ceramics [IA No. 254/NCLT/AHM/2017 in CA(CAA) No. 95/NCLT/AHM/2017] vide order dated 22.09.2017 has held that a partnership firm cannot participate in amalgamation proceedings under section 230-232 of the Companies Act, 2013 (“Act”). The brief facts of the said case are as follows:
Kediya Ceramics, a registered partnership firm entered into amalgamation proceedings as a transferor company. During the course of proceedings, a question arose for consideration of NCLT:
“Whether a registered partnership firm, being a body corporate, can be treated as a company for the purpose of section 230-232 of the Companies Act, 2013?”
Kediya Ceramics placed reliance on definition of body corporate or corporation given under section 2(11) of the Act. As per the said provision, an entity which is a registered co-operative society or a other body corporates notified by Central Government is not a body corporate. The Central Government has not notified anything in this regard yet; section 2(95) of the Act which provides for reference of meaning of words not defined under Act to the words or expressions defined under SEBI Act, 1992, Securities Contract (Regulation) Act, 1992 and Depositories Act, 1996 and accordingly relied on definition of “company” given under the said laws as a company means any body corporate and includes a firm or other association of individuals; section 366 ( Part I of Chapter XXI) of the Act (companies authorized to registered under the Act) according to which company for the purposes of Part I includes partnership firms, cooperative societies, society or any other business entity; explanation (b) to section 375(4) of the Act – wherein the expression “unregistered company” includes any partnership firm consisting of more than 7 members; and explanation to section 234(2) of the Act wherein the expression “foreign company” means any company or body corporate incorporated outside India whether having a place of business in India or not.
NCLT observed that applicant cannot rely of definition of company given under other laws when the same has been specifically defined under section 2(20) of the Act. A company has been defined under the Act as:
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well written artcile Deepali. You mentioned that NCLT has started permitting merger of firm and companies. any reported matter ?
if a partnership firm merge with a private limited company then whether the incentive getting by the firm situated in special economic zone like north east will continue of post merge.
I really appreciate the efforts behind writing this article.
I have a question after going through the article, As takeover and M&A are different from view point of companies but when we speak with regard to Partnership firm, is it possible that a Company can takeover a partnership firm ? OR Even that is restricted as specified above in the article.
Very knowledgeable article. A must read.