Case Law Details
RHI India Private Limited & Ors. (Appellants) Vs Union of India (NCLAT)
Fact of the case:
Appellants presented a scheme of amalgamation for approval of the Tribunal for merging 1st appellant (RHI India Private Limited) and 2nd appellant (RHI Clasil Private Limited) in 3rd appellant (Orient Refractories Limited). The rationale for the scheme is simplification of the corporate structure. The NCLT Mumbai bench, has rejected the scheme filed by the Appellants stating that the appointed date of the Scheme is January 01, 2019 whereas the Valuation Date is July 31, 2018, putting its reliance on the case of East West Pipelines (demerged Company) and Pipeline Infrastructure Pvt. Ltd. (the resultant Company), and ordered that the appointed date can be the date on which the Valuation Report was prepared and the Fairness Opinion was given by the Merchant Banker i.e. July 31, 2018. Since the Transferee Company will be allotting the shares which are listed and being regularly traded on the Stock Exchanges, on consideration, the share exchange ratio would undergo change significantly in view of the market price on which the cut-off date i.e. appointed date is considered.
Judgment:
The NCLAT observed that the Ministry of Corporate Affairs, General Circular dated August 21, 2019 has clarified that section 232(6) of Companies Act, 2013 enables the companies in question to choose and state in the scheme an ‘appointed date’. This date may be a specific calendar date or may be tied to the occurrence of an event such as grant of license by a competent authority or fulfilment of any preconditions agreed upon by the parties, or meeting any other requirement as agreed upon between the parties, etc., which are relevant to the scheme. Therefore, NCLT have wrongly relied on the abovementioned judgement. The NCLT while passing the impugned order have overreached its scope of Judicial Intervention in determination of the Scheme of Amalgamation under sections 230-232 of the Companies Act, 2013. Therefore, the present appeal was allowed.
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