In re Aesthetic Gold Ornaments Private Limited (NCLT Kochi)
Summary: The National Company Law Tribunal, Kochi Bench, sanctioned a composite scheme of amalgamation involving 51 transferor companies merging into Malabar Gold and Diamonds Limited, formerly known as Malabar Gold Limited, under Sections 230 to 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. The joint petition, instituted on 8 June 2026, involved 52 petitioner companies, including the transferee company, and their respective shareholders and creditors. The proposed arrangement sought to consolidate the businesses, assets, liabilities and corporate structures of the participating companies under the transferee company. After examining the statutory reports, representations, clarifications and undertakings, the Tribunal concluded that the scheme was fair and reasonable, was not prejudicial to shareholders or creditors, and was neither contrary to law nor opposed to public policy. Accordingly, the Tribunal sanctioned the amalgamation and confirmed 1 April 2025 as the appointed date, subject to compliance with applicable statutory requirements.
The petitioner companies included several entities engaged in jewellery, gold, diamonds, retail, packaging, trading and related business activities within the Malabar Group. The scheme contemplated the consolidation of these entities into Malabar Gold and Diamonds Limited, with consequential vesting of their undertakings, assets, properties, rights, obligations and liabilities in the transferee company. The Tribunal examined the corporate particulars, capital structures and shareholding relationships of the participating companies, including companies that had previously operated as limited liability partnerships. The proposed amalgamation was considered in the context of the statutory framework governing compromises and arrangements. The Tribunal’s approval was based on the material placed before it and did not dispense with compliance under other applicable enactments.
The Regional Director, South Western Region, submitted reports raising various observations concerning the petitioner companies’ statutory compliance and corporate records. These included questions regarding the existence of enabling amalgamation clauses in the memoranda of association of Ecomate Packaging Private Limited and Malabar Packaging Private Limited. The petitioners explained that Ecomate Packaging’s memorandum already contained an enabling provision, while Malabar Packaging had amended its memorandum pursuant to a special resolution passed on 17 August 2026. They further contended that the statutory powers governing amalgamation were not dependent upon the existence of a specific enabling clause in the memorandum. In support of this contention, they cited five judicial decisions, including RBR Garments Private Limited, In re, Highland Electro Appliances P. Ltd., In re, Hari Krishna Lohia v. Hoolungooree Tea Co. Ltd., United Bank of India Ltd. v. United India Credit and Development Co. Ltd. and Laurel Aromatics Private Limited, In re. These authorities were relied upon by the petitioners to explain the statutory basis for sanctioning an amalgamation.
The Regional Director also raised observations concerning the shareholding patterns and classification of certain participating companies. In the case of Fort-In Infragold Collections Private Limited, the records indicated that Malabar Gold and Diamonds Limited held approximately 27% of its shares, requiring clarification of its status as an associate company. The petitioners stated that the scheme classified the entity as an associate company and that the necessary explanation had been furnished to the Registrar of Companies. In the case of Gehana Gold Palace Private Limited, a discrepancy concerning the transfer of 100 equity shares was explained by reference to a resolution approved on 29 July 2025 and supporting shareholding records. Clarifications were also furnished concerning Malabar Cochin Arcade Private Limited and its relationship within the group. These matters formed part of the statutory scrutiny of the scheme and the petitioners’ responses to the regulatory observations.
Another material issue concerned an inquiry under Section 206(4) of the Companies Act, 2013 involving the transferee company. The Registrar of Companies reported that the inquiry had been ordered by the Ministry of Corporate Affairs following a communication originating from the National Human Rights Commission. The petitioner companies submitted that the allegations were baseless, arose from a third-party complaint and had no connection with the proposed amalgamation. They maintained that the transferee company had cooperated with the authorities and would continue to provide the necessary documents and assistance. Separately, the statutory auditor of MBMG Diamonds Private Limited, Transferor Company No. 33, had filed Form ADT-4 under Section 143(12) concerning suspected employee fraud. The petitioners stated that the matter had been detected internally, criminal proceedings had been initiated, the financial loss had been provided for in the books, and measures had been taken to strengthen internal controls.
The Tribunal examined the subsequent developments relating to these regulatory matters. The Regional Director initially submitted a report dated 5 September 2026, to which the petitioners responded on 14 September 2026. A further report dated 22 September 2026 sought additional time to examine the replies and obtain instructions from the Ministry of Corporate Affairs concerning the Section 206(4) inquiry and the Form ADT-4 matter. In the report dated 9 October 2026, the Regional Director informed the Tribunal that the Ministry, by its communication dated 1 October 2026, had examined and accepted the relevant reports and indicated that no further action was required in those two matters. However, three alleged instances of non-compliance with Section 149 of the Companies Act, 2013, attracting the penalty provisions of Section 172, remained for consideration. The Tribunal clarified that sanctioning the scheme would not absolve the companies or officers in default from liability and that the competent adjudicating authority could examine the alleged violations independently.
The Tribunal also considered the representations and objections received from the Income Tax Department and other statutory authorities. A central condition of the approval was that the amalgamation would not prejudice the lawful powers of the tax authorities to assess, determine or recover taxes. The Tribunal expressly preserved the Income Tax Department’s authority to examine the tax liabilities of the petitioner companies under the Income-tax Act, 1961. Any tax liability lawfully determined in respect of the transferor companies would be discharged by the transferee company, without prejudice to the remedies available under law. Consequently, the sanction of the scheme could not be treated as an adjudication of income-tax disputes or as an exemption from existing or future tax obligations.
The GST-related representations received particular consideration. These included scrutiny proceedings involving an ASMT-10 notice relating to FY 2022-23 and an amount of Rs. 14,38,55,822. The petitioners submitted that the relevant reply had been filed and that the proceedings had subsequently been dropped. The Tribunal nevertheless directed the transferee company to ensure that all statutory dues, taxes, duties, interest, penalties and other liabilities relating to the transferor companies were duly discharged in accordance with law. This obligation extended to liabilities already disclosed as well as demands subsequently raised or determined by GST authorities or other competent statutory authorities. The Tribunal specifically clarified that the sanction would not prejudice the authorities’ rights to initiate or continue proceedings or recover amounts lawfully due, including liabilities attributable to periods preceding the effective date of the scheme.
Regarding the wider consequences of amalgamation, the Tribunal directed that liabilities relating to advance tax, GST, VAT, sales tax, customs duty, excise duty and other direct and indirect taxes would stand transferred to the transferee company upon the scheme becoming effective. This direction ensured that the corporate restructuring would not extinguish the statutory obligations of the transferor companies merely because their undertakings were being consolidated. The transferee company would remain responsible for lawful claims, assessments, proceedings and recoveries arising under the relevant tax laws. The order therefore distinguished between approval of the corporate amalgamation and the independent statutory jurisdiction of revenue authorities. Tax claims would remain subject to the applicable law, and the transferee company would retain the right to pursue lawful remedies against disputed demands.
The Tribunal separately addressed pending litigation and the rights of secured creditors. It recorded that open charges existed against 46 transferor companies and the transferee company. The petitioner companies were directed to ensure that all existing charges, mortgages, securities, encumbrances and corresponding liabilities were recognised and dealt with in accordance with law and the scheme. The sanction would not prejudice the rights of secured creditors or charge holders. Similarly, suits, appeals and other legal proceedings pending by or against the transferor companies would continue by or against the transferee company upon the scheme becoming effective. The transferee company would be entitled to prosecute or defend those proceedings and would remain responsible for the resulting liabilities and consequences. The amalgamation would therefore not impair the rights of parties involved in existing legal proceedings.
The Regional Director also sought clarification concerning investments made by Non-Resident Indian shareholders in certain petitioner companies. The petitioners submitted that these investments had been made on a non-repatriation basis and that separate approval under the Foreign Exchange Management Act, 1999 was not required. The Tribunal did not grant a blanket exemption from foreign exchange compliance. Instead, it directed the petitioner companies, particularly the transferee company, to ensure that the investments and the transfer or vesting of shares pursuant to the scheme complied with applicable FEMA provisions, rules, regulations and Reserve Bank of India directions. All requisite reporting and statutory filings were required to be completed. The order thereby preserved the applicability of foreign exchange regulations notwithstanding the approval of the amalgamation.
The Tribunal imposed additional safeguards concerning corporate records, statutory filings and liability for earlier offences. The transferee company was directed to preserve and maintain the books, records and papers of the transferor companies in accordance with Section 239 of the Companies Act, 2013 and not to destroy or dispose of them except in accordance with law. Amendments to memoranda and articles of association, alterations of authorised share capital, object clauses and other corporate changes were required to be supported by necessary approvals and filings. The Tribunal further clarified that, under Section 240, officers in default would not be absolved of liability for offences committed before amalgamation. The scheme also provided for the continuation of employees of the transferor companies in the transferee company without interruption of service and on terms no less favourable than those previously applicable. Thus, the amalgamation was sanctioned without extinguishing existing regulatory obligations, employee protections or personal liabilities arising under the law.
After considering the complete material on record, the Tribunal held that the scheme was not prejudicial to the interests of the equity shareholders and creditors of the transferor and transferee companies. It accordingly made CP(CAA)/03/KOB/2026 absolute in terms of the prayers and sanctioned the amalgamation with 1 April 2025 as the appointed date. The petitioner companies were required to file the certified copy of the order and scheme with the Registrar of Companies in e-Form INC-28 within 30 days of receiving the order and to lodge the authenticated documents with the Superintendent of Stamps within 60 days for determination of applicable stamp duty. The Tribunal expressly clarified that its sanction did not confer exemption from stamp duty, taxes, statutory charges, permissions or other legal requirements. It further preserved the authority of regulators to proceed against statutory violations and officers responsible for earlier defaults. The petition was accordingly allowed and disposed of, with the amalgamation approved subject to the continuing rights of creditors, employees, tax authorities and other statutory regulators.
Cases Discussed
1. In Re: RBR Garments Private Limited (Madras High Court) Citation: (2007) 138 Comp Cas 176 (Mad); (2008) 82 SCL 147. Case Number: Company Petition Nos. 171 to 173 of 2006. Decision Date: 01/12/2006.
2. In Re: Highland Electro Appliances Private Limited (Delhi High Court) Citation: (2003) 66 DRJ 593; (2003) 42 SCL 516 (Delhi). Case Number: Company Petition Nos. 286 to 289 of 2002. Decision Date: 05/12/2002.
3. Hari Krishna Lohia v. Hoolungooree Tea Co. Ltd. and Another (Calcutta High Court) Citation: AIR 1969 Cal 312; (1970) 40 Comp Cas 458 (Cal). Case Number: A.F.O.O. No. 135 of 1968. Decision Date: 16/08/1968..
4. United Bank of India Ltd. v. United India Credit and Development Co. Ltd. (Calcutta High Court) Citation: (1977) 47 Comp Cas 689 (Cal). Decision Date: 18/06/1973.
5. In Re: Laurel Aromatics Private Limited and Contract Point Impex (India) Private Limited (Madras High Court) Case Number: Company Petition Nos. 85 and 86 of 2010. Decision Date: 05/08/2010.
