Net Worth Of Transferor & Transferee Company Being Highly Positive, Consent Of Secured Creditors Not Required For Amalgamation: NCLAT Delhi
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal filed in Lasa Supergenerics Limited v Harishree Aromatics & Chemicals Pvt. Ltd., has held that in cases where the net worth of the Transferor and Transferee Companies...
The National Company Law Appellate Tribunal ("NCLAT"), Principal Bench, comprising of Justice Anant Bijay Singh (Judicial Member) and Ms. Shreesha Merla (Technical Member), while adjudicating an appeal filed in Lasa Supergenerics Limited v Harishree Aromatics & Chemicals Pvt. Ltd., has held that in cases where the net worth of the Transferor and Transferee Companies are highly positive, it is not required to seek consent of secured creditor for amalgamation. In place of seeking a No Objection Certificate from Secured Creditor, the Bench has directed the Secured Creditor to file an objection to the Scheme of Amalgamation, if any, within 30 days.
Background Facts
On 09.12.2020, Harishree Aromatics and Chemicals Private Limited ("Transferor Company") and Lasa Supergenerics Limited ("Transferee Company") had proposed their amalgamation and had jointly filed an application before the National Company Law Tribunal ("NCLT") for sanctioning of the Amalgamation Scheme. The Parties had prayed in their application for dispensation of meeting of its Secured Creditor. The reason for the request was such that the secured creditor will not be affected by the Amalgamation, as the assets of the Transferor Company after the proposed amalgamation will be far more than its liabilities.
The NCLT vide its Order dated 17.02.2021 dispensed with the meeting of Secured Creditor. However, the NCLT further directed the Transferor Company to obtain No Objection Certificate (NOC) from the Secured Creditor before the final date of hearing. The Transferor Company filed an appeal before the NCLAT, challenging the Order dated 17.02.2021.
Contentions Of The Appellant
The Transferor Company placed reliance on the NCLAT judgment in Mohit Agro Commodities Processing Pvt. Ltd, Company Appeal (AT) No. 59 of 2021, wherein it has been held that dispensation as well as the requirement of a consent/NOC is granted in the case of amalgamation where:
(i) Net-worth of both companies is highly positive;
(ii) Unsecured creditors are paid-off in the ordinary course of business;
(iii) Scheme is not prejudicial to their interests as their liability is not proposed to be reduced or extinguished, and no sacrifice is called for because of which they are not parties to the scheme.
The Transferor Company and Transferee Company, both have sufficient and positive net-worth as on January 31, 2021. This indicates that there are sufficient assets to meet the respective liabilities of the Transferor and the Transferee Companies. Further, the post-amalgamation net worth of Transferor Company is highly positive and sufficient to meet the liabilities of both companies.
Decision Of NCLAT
The Bench also placed reliance on its earlier judgment in Mohit Agro Commodities Processing Pvt. Ltd, Company Appeal (AT) No. 59 of 2021, and accordingly allowed the appeal.
The Bench modified the Order of NCLT dated 17.02.2022 to the extent that the secured creditor was directed to raise objection, if any, to the Amalgamation Scheme within 30 days of the Notice of amalgamation before the NCLT. Failing which, it shall be presumed that the said secured creditor has No Objection to the amalgamation.
Case Title: Lasa Supergenerics Limited v Harishree Aromatics & Chemicals Private Limited
Case No.: Company Appeal (AT) No. 82 of 2021
Counsel For Appellant: Mr. Krishnendu Datta, Sr. Advocate with Ms. Versha Himmat Singh, Mr. Gaurav Gadodia, Advocates. CS Ashish O. Lalpuria.
Counsel For Respondent: Mr. Nitin Kumar, Mr. Gagan Gulati, Advocates.