NCLT Chandigarh Bench Approves Air India-Vistara Merger
Rajesh Kumar
12 Jun 2024 3:00 PM GMT
The National Company Law Tribunal (NCLT) Chandigarh bench of Harnam Singh Thakur (Judicial Member) and L. N. Gupta (Technical Member) has given its approval for the merger of Air India and Vistara. The merger, which was initially announced in November 2022, has received the green light from various stakeholders and regulatory bodies. With this merger, Air India Group is set to...
The National Company Law Tribunal (NCLT) Chandigarh bench of Harnam Singh Thakur (Judicial Member) and L. N. Gupta (Technical Member) has given its approval for the merger of Air India and Vistara. The merger, which was initially announced in November 2022, has received the green light from various stakeholders and regulatory bodies.
With this merger, Air India Group is set to become India's largest international carrier. The NCLT sanctioned the "Composite Scheme of Arrangement" among the petitioner companies and their respective shareholders under Sections 230 to 232 of the Companies Act, 2013.
Singapore Airlines, holding a 25.1 per cent stake in Air India, will have a significant role post-merger. The merger is expected to be finalized by the end of this year.
The approved scheme includes provisions for the dissolution of the transferor companies, Vistara, without the need for winding up, upon completion of the merger and associated formalities. All necessary approvals, including Foreign Direct Investment (FDI) approval by Singapore Airlines and security clearances mandated by relevant Civil Aviation Regulations (CARs) from DGCA/MOCA, are to be obtained within a timeframe of nine months from the date of the NCLT order.
Approximately 7,000 employees of Vistara have been assessed for their new positions in Air India, with transfers set to commence from June onwards. The integration process also involves the gradual transfer of non-flying employees between the two airlines.
The NCLT held that:
- Upon the sanction becoming effective, the transferor companies (Vistara) shall stand dissolved without undergoing the winding-up process, after completing the merger and associated formalities within nine months.
- All benefits, entitlements, incentives, and liabilities of the transferor companies shall stand transferred to the transferee company (Air India).
- All contracts of the transferor companies, as well as ongoing legal proceedings, shall be transferred to and continued by or against the transferee company without interruption.
- All employees of the transferor companies shall be deemed to become employees of the transferee company without interruption of service.
- The order emphasized that the approval of the scheme does not exempt the petitioner companies from payment of statutory dues, taxes, or other obligations, and they must comply with all statutory requirements, including stamp duty, taxes, and other dues, as per the law.
- The transferee company must ensure FDI approval by Singapore Airlines and obtain security clearances as required under relevant Civil Aviation Regulations within a timeframe of nine months from the date of the order.
