Archernar Brand Technologies Private ... vs Registrar

(Arising against the impugned order dated 10.06.2025 passed by the Hon'ble National Company Law Tribunal, Chandigarh Bench (Court-II), in CA(CAA) No. 20/Chd/Hry/2025)

IN THE MATTER OF:

Archernar Brand Technologies Private Limited Having its Registered office at: Inno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon Haryana- 122001 ...Appellant No.1/ Second Transferor Company

Cephus Brand Technologies Private Limited Having its registered office at Inno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon Haryana-122001 ...Appellant No.2/ Third Transferor Company

lmplexians Eco Solutions Private Limited Having its registered office at lnno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon Haryana-122001 ...Appellant No.3/ Fourth Transferor Company

Lepus Brand Technologies Private Limited, Having its registered office at Inno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon, Haryana-122001 ...Appellant No.4/ Fifth Transferor Comapany

Villain Lifestyle Private Limited, Having its registered office at l11110 House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon, Haryana-122001 ...Appellant No.5/ Sixth Transferor Company

Pyxis Brand Technologies Private Limited, Having its registered office at Inno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon, Haryana-122001 ...Appellant No.6/ Seventh Transferor Company

Cont'd..../ -2-

Helea Technology Private Limited Having its registered office at Inno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon, Haryana-122001 ...Appellant No.7/ Eighth Transferor Company

Mensa Brand Technologies Private Limited Having its registered office at lnno House, 2nd Floor, Plot No. 9 (4 Bay), Sector 32, Sadar Bazar, Gurgaon Haryana-122001 ...Appellant No.8/ Transferee Company

Present:

For Appellant: Mr. Arun Kathpalia, Sr. Advocate, Mr. Rohan Batra, Mr. Rishabh Bhargava, Mr. Dhruv Sethi, Ms. Nidhi Chaudhary, Ms. Diksha Gupta, Mr. Aditya Dhupar, Advocates.

J U D G M EN T (4th September, 2025)

INDEVAR PANDEY, MEMBER (T)

The present Appeal has been preferred under Section 421 of the

Companies Act, 2013, (hereinafter referred to as 'Act') challenging the

impugned order dated 10.06.2025 passed by the National Company Law

Tribunal (Adjudicating Authority), Chandigarh Bench (Court-II) in CA (CAA)

No.20/CHD/HRY/2025. The said order was passed pursuant to an

application filed by the Appellant Nos. 1 to 8 under Section 230 & 232 of the

Code, in relation to the Composite Scheme of Arrangement between the

Appellant Companies and their respective shareholders and creditors.

Company Appeal (AT) No. 171 of 2025 -3-

2. The Appellants had jointly filed the First Motion in relation to the

proposed composite Scheme of Arrangement amongst Mensa Brand

Technologies Pte. Ltd., a Singapore entity, the ("Non-Applicant" or "First

Transferor Company") and the Appellants, namely, Archernar Brand

Technologies Private Limited ("Applicant No. 1" or "Second Transferor

Company"), Cephus Brand Technologies Private Limited ("Applicant No. 2" or

"Third Transferor Company"), Implexians Eco Solutions Private Limited

("Applicant No. 3 or "Fourth Transferor Company"), Lepus Brand Technologies

Private Limited ("Applicant No. 4" or "Fifth Transferor Company"), Villain

Lifestyle Private Limited ("Applicant No. 5" or "Sixth Transferor Company"),

Pyxis Brand Technologies Private Limited ("Applicant No. 6" or "Seventh

Transferor Company"), Helea Technology Private Limited ("Applicant No. 7" or

"Eighth Transferor Company") and Mensa Brand Technologies Private Limited

("Applicant Company 8" or "Transferee Company") and their respective

shareholders and creditors ("Scheme"). Applicant Nos. 1 to 7 are collectively

referred to as "Transferor Companies".

3. The Adjudicating Authority, by the impugned order, was pleased to

dispense with the requirement of convening meetings of the respective

shareholders and secured creditors of the Appellant Companies. However,

with respect to the unsecured creditors of the Appellant Transferor

Companies, the Adjudicating Authority declined to grant such dispensation

and instead directed that meeting of the remaining non-consenting unsecured

creditors be convened for seeking their approval to the proposed Composite

Scheme of Arrangement. Being aggrieved by the said refusal, the Appellants

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have preferred the present Appeal before this Hon'ble Appellate Tribunal. The

relevant extracts of the said paragraphs no. 23 to 25 are reproduced below:

"23. This Application was filed by the Applicant Companies praying for dispensing with the requirement of convening the meetings of the Equity Shareholders, preference shareholders, secured and unsecured creditors of all the Applicant Companies. Consent affidavits from equity Shareholders of all the Applicant Companies are received. Consent affidavits of preference shareholders of the Applicant Company 8 are received. The remaining Applicant Companies do not have any preference shareholders. Consent affidavits from the Secured Creditors of the Applicant Company 3, Applicant Company 5 and Applicant Company 8 are received. The remaining Applicant Companies do not have any Secured Creditors. Consent affidavits of the Unsecured Creditors of all the Applicant Companies are received. The Scheme of Arrangement has been approved by the respective Board of Directors of all the Applicant Companies. The Applicant Companies have deposed that no material inquiry, inspection or prosecution has been initiated or pending against the Applicant Companies and/or its directors and officers, which can have bearing on its going concern status. The Applicant Companies have filed the certificate, issued by statutory auditors of the respective Applicant Companies certifying that the Scheme is in compliance with the Accounting Standards under Section 133 of the Act.

24. Having considered the facts and the objects of the Scheme as stated in the application narrated hereinabove and materials available on record, we are inclined to dispose of this Company Application bearing CA(CAA) No. 20/Chd/Hry/2025 with the following directions:

a) The meeting of the Equity Shareholders of the all the Applicant Companies is dispensed herewith, keeping in view that all the Equity Shareholders have given their consents by way of affidavits.

Company Appeal (AT) No. 171 of 2025 -5-

b) The meeting of the Preference Shareholders of the Applicant Company No. 8 is dispensed herewith, keeping in view that all the Preference Shareholders have given their consents by way of affidavits. c) Since, there are no Preference Shareholders in rest of the Applicant Companies, the requirement of convening the meeting of their Preference Shareholders does not arise. d) Since, there are no Secured Creditors in the Applicant Company No. 1, Applicant Company No. 2, Applicant Company No. 4, Applicant Company No. 6, Applicant Company No. 7 the requirement of convening the meeting of Secured Creditors does not arise. e) The meeting of the Secured Creditors of the Applicant Company No. 3, Applicant Company No. 5 and Applicant Company No. 8 is dispensed herewith, keeping in view that all the Secured Creditors have given their consents by way of affidavits. f) It is noted from the list of unsecured creditors of the Applicant Transferor Companies that the highest percentage of unsecured debt is of the Transferee Company itself whose consent has been pivotal in crossing necessary threshold. Therefore, it is directed that meetings of unsecured creditors of all the Applicant Transferor Companies except whose consent has already been obtained be convened. physically at the venue, date and time as decided by the Chairperson or through video conference or other Audio-Visual means at the venue, date and time as would be decided by the Chairperson for the purpose of considering and, if thought fit, approving with or without modification(s) of the scheme. g) At least one month before the date of aforesaid meetings, an advertisement about the convening of the said meetings, indicating the day, date, place, and time, as aforesaid, shall be published in English daily, i.e., Business Standard (English) and in Hindi daily i.e., Jansatta (Hindi) in all editions within the state of Haryana. The publication shall indicate the time within

Company Appeal (AT) No. 171 of 2025 -6-

which copies of the scheme shall be made available to the concerned persons free of charge from the Registered Office of the Applicant Companies. The publication shall also indicate the statement required to be furnished according to Section 102 of the Act read with Sections 230 to 232 of the Act. h) At least one month before the date of the meetings to be held as aforesaid, a notice in Form No. CAA 2 convening the said meetings, indicating the day, the date, the place and time aforesaid, together with a copy of the Scheme of Arrangement, a copy of statement required to be furnished pursuant to Sections 230 and 232 read with Section 102 of the Companies Act, 2013, and Rule 6 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and the prescribed form of proxy shall be sent by Registered Post or Speed Post or Registered Post or by Courier or E-Mail or Hand Delivery, addressed to each of the Unsecured creditors of Applicant Transferor Companies. i) Mr. Rajeshwara Rao Vittanala, Ex-Judicial Member NCLT, Mobile No. 8096419964, email ID: rajeshjudicial99@gmail.com, is appointed as the Chairperson for the meeting to be called under this order. An amount Rs. 1,50,000/- (Rupees one lac and fifty thousand Only) be paid for his services as the Chairperson. j) Mrs. Krishna Anmol Singh, Advocate, Mobile No. 9818282596, Email ID: adv.krishh@gmail.com, is appointed as the Alternate Chairperson for the meeting to be called under this order. She will discharge the function of Chairman in the absence of Mr. Rajeshwara Rao Vıttanala. An amount of Rs. 1,00,000/- (Rupees one lac only) be paid for her services as the Alternate Chairperson. k) Mr. Rohit Garg, Chartered Accountant, Mobile No. 9988901370, Email ID: gargrohitassociates@gmail.com, is appointed as the Scrutinizer for the above meeting to

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be called under this order. An amount of Rs. 75,000/- (Rupees seventy five thousand Only) be paid for his services as the Scrutinizer. l) The quorum for the meeting of unsecured creditors will be determined by the Chairman in such a manner that creditors present in the meeting represent at least 50% in value as a whole of the class of creditors respectively as the case may be. m) In case, the quorum is not present within half an hour from the time appointed for holding the meeting, then the Chairman shall adjourn the meeting to the same day in the next week at the same time and place. The intimation about the adjourned meeting should be given to each member/creditor as the case may be through e-mail or by any other mode. If the quorum is still not present on such adjournment date, then the Chairman may furnish a report to that effect to NCLT within seven days thereafter and seek further directions for modifying the quorum. n) It is further directed that the voting through a valid proxy has been dispensed by the Ministry of Corporate Affairs vide circular no. 14/2020 dated 08.04.2020, hence, meetings of members of any class of creditors shall not be conducted or counted through proxy. o) The Chairperson appointed for the aforesaid meetings shall issue the advertisements and send out the notices of the aforesaid meetings. The Chairperson is free to avail the services of the Applicant Companies or any agency for carrying out the aforesaid directions The Chairperson shall have all the powers under the Articles of Association of the Applicant Companies and also under the Rules in relation to the conduct of the meetings, including to decide any procedural questions that may arise at the meetings. p) The Applicant Transferor Companies shall furnish a copy of the Scheme free of charge within one day of any requisition for the Scheme made by any creditor entitled to attend the meeting as aforesaid.

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q) The Chairperson shall file an Affidavit not less than 7 (seven) days before the date fixed for the hearing of the meetings and report to this Tribunal that the directions regarding issuance of notices and advertisement of the meetings have been duly complied with as per Rule 12 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. r) It is further ordered that the Chairperson shall report to this Tribunal on the result of the meeting in Form No. CAA-4 along with an affidavit, as per Rule 14 of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 within 7 (seven) working days from the date of conclusion of the aforesaid meetings. The Chairperson would be fully assisted by the authorized representative/Company Secretary of the Applicant Transferor Companies and the Scrutinizer, who will assist the Chairperson and Alternate Chairperson in preparing and finalizing the report. s) The authorized representative of the Applicant Transferor Companies, shall furnish an affidavit of service of notice of meeting and publication of advertisement and compliance of all directions contained herein at least a week before the proposed date of the meetings.

25. All the aforesaid directions are to be complied with strictly in accordance with the applicable laws including forms and formats contained in the Act and rules by the Applicant Companies."

4. The appellants have impugned the directions of the Hon'ble Tribunal in

Paragraph 24 (f) to (s) above, which provides for the meeting of unsecured

creditors and lays down the procedure for the same.

Brief facts of the case

5. Brief facts of the case are given below:

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(i) The case of the Appellants was that Mensa Brand Technologies Pte.

Ltd., the Non-Applicant/ First Transferor Company, is a Singapore-

incorporated investment holding entity. Appellant Nos. 1 to 8 here,

including the Transferee Company (Appellant No. 8/ Mensa Brand

Technologies Pvt. Ltd.), are subsidiaries of the First Transferor

Company and are engaged in diverse business activities, primarily

involving the manufacture and/or trading of products in the domains

of fashion, home and other décor, food and beauty, kitchenware, and

gardening. These companies operate under the parent brand

"Brnd.Me," along with a number of sub-brands tailored to different

product lines and markets. The scheme of arrangement proposed

among the Appellant Companies and their respective shareholders and

creditors is aimed at rationalizing the corporate structure, streamlining

operations, and achieving efficiency in management, while safeguarding

the interests of all stakeholders, including creditors, employees, and

shareholders.

(ii) On 28.03.2025, the Composite Scheme of Arrangement ("Scheme")

proposing the merger of the Transferor Companies into the Transferee

Company was approved by the Board of Directors of Mensa Brand

Technologies Pte. Ltd. Singapore.

(iii) The Boards of Directors of the Appellant Companies, on 01.04.2025, in

their respective meetings, considered and approved the proposed

Composite Scheme of Arrangement, subject to the sanction of the

Tribunal.

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(iv) Upon implementation of the Scheme of Arrangement, the net worth of

the Transferee Company is projected to increase significantly, with

assets exceeding liabilities, rising from INR 551.29 crores as of

31.12.2024 to INR 913.37 crores.

(v) The Appellants filed an application on 16.04.2025 before the Ld. NCLT

under Sections 230 to 232 read with Section 234 of the Companies Act,

2013 seeking dispensation from convening meetings of their respective

shareholders; secured creditors; and unsecured creditors for the

purpose of obtaining approval of the Scheme in accordance with the Act

and the applicable rules.

(vi) The NCLT passed the impugned order on 10.06.2025, granting the

reliefs sought to dispense with convening meetings of the shareholders

and secured creditors of the Appellants, but declined to grant

dispensation for holding meetings of the unsecured creditors of the

Appellant Transferor Companies.

(vii) Appellant Nos. 1 to 7 filed a modification application on 30.06.2025

before the NCLT, which was subsequently withdrawn by the Appellants,

while expressly reserving their right to file the present Appeal before

this Tribunal.

(viii) The Appellants have filed the present Appeal before this Appellate

Tribunal on 22.07.2025, contending that the NCLT exceeded its

jurisdiction by refusing to grant dispensation from convening meetings

of unsecured creditors under Section 230(9), despite acknowledging

that consent affidavits representing at least 90% in value of the

unsecured creditors of each Transferor Company had been obtained.

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Submissions of the Appellant

6. The Ld. Senior Counsel for the Appellants submitted that the impugned

order suffers from jurisdictional overreach and is devoid of any cogent

reasoning, rendering it ex facie unsustainable. It was further submitted that

the order contravenes the statutory scheme under Section 230 of the

Companies Act by arbitrarily disregarding valid consent affidavits, imposing

impractical and legally unworkable quorum requirements, and directing

meetings solely of the remaining non-consenting unsecured creditors.

7. The Ld. Sr. Counsel further submitted that the NCLT erred in refusing

to dispense with the meetings of unsecured creditors, despite the Appellants

having complied with the threshold under Section 230(9) of the Companies

Act, 2013, by filing consent affidavits from unsecured creditors representing

over 90% in value. It was further submitted by him that the Scheme does not

entail any compromise or arrangement with the creditors, nor does it affect

their rights or the financial capacity of the companies. Courts have

consistently dispensed with creditor meetings under such circumstances;

therefore, convening meetings of the remaining unsecured creditors is

unnecessary and without any meaningful purpose for the approval of the

Scheme.

8. It is the submission of Ld. Counsel that the remaining unsecured

creditors are minor vendors with negligible claims, most of which were already

settled as of 30.06.2025. Imposing a 50% quorum on a group representing

less than 10% of credit in value is impractical and unworkable. The Scheme

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does not alter creditor rights and the Appellants had already obtained consent

affidavits from unsecured creditors representing over 90% in value.

9. The Ld. Counsel argued that the NCLT's direction to hold meetings of

the remaining unsecured creditors, each holding less than 5% of the debt, is

arbitrary and unreasonable, as it empowers insignificant creditors to obstruct

and delay the Scheme, in clear contravention of the proviso to Section 230(4)

of the Companies Act, which prohibits such interference.

10. The Ld. Counsel submitted that as of 30.06.2025, the entire debt owed

by the Transferor Companies to the remaining unsecured creditors, whose

consents were not obtained, had been fully discharged, except for certain

disputed amounts relating to Appellant Nos. 5 and 6, namely INR 8,07,315.00

and INR 5,44,043.89. It was further submitted that, in these circumstances,

directing meetings of such creditors is infructuous, and the Impugned Order,

to that extent, is arbitrary, unduly burdensome, and liable to be set aside.

11. The Ld. Counsel further submitted that the Hon'ble NCLT failed to

consider Section 230(6) of the Companies Act, which provides that approval

by creditors representing three-fourths in value is sufficient to bind the entire

class. In the present case, the Appellant Transferor Companies had already

obtained consent affidavits from over 90% in value of their unsecured

creditors. Accordingly, convening meetings of the remaining unsecured

creditors, who collectively represent less than 10% in value, is unnecessary,

contrary to the statutory scheme, and wholly redundant.

12. The Ld. Counsel contended that the NCLT erred in denying

dispensation for unsecured creditors based solely on the Transferee Company

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holding the largest portion of debt. Section 230(9) does not distinguish

between related and unrelated creditors, nor permit disregarding valid

consents based on the creditor's identity. The Tribunal also failed to provide

any rationale or justification for ignoring these valid consents, contrary to the

statutory scheme.

13. It is the submission of Ld. Counsel that the NCLT failed to recognize,

that the proposed Scheme does not involve any compromise or arrangement

with the creditors. The Scheme is an arrangement solely between the

Applicants and their shareholders under Section 230(1)(b) of the Companies

Act, and not under Section 230(1)(a). It does not affect the rights or interests

of the unsecured creditors, and no liability of such creditors is diminished, as

all dues will be settled in the ordinary course of business.

14. The Ld. Sr. Counsel, in view of the foregoing facts and contentions,

prayed for the following reliefs:

(i) Allow the present Appeal;

(ii) Set aside the directions contained in Paragraphs 24(f) to 24(s) of the

Impugned Order dated 10.06.2025 passed by the Hon'ble NCLT in

CA(CAA) No. 20/Chd/Hry/2025, insofar as they pertain to convening

and holding meetings of the unsecured creditors of the Appellant

Transferor Companies;

(iii)Issue necessary directions for dispensation of the meetings of the

unsecured creditors of the Appellant Transferor Companies;

(iv) Pass such other order(s) as this Hon'ble Appellate Tribunal may deem

fit and proper in the facts and circumstances of the present case.

Company Appeal (AT) No. 171 of 2025 -14-

Analysis and findings

15. We have gone through the documents on record and heard the Ld. Sr.

Counsel for the Appellant companies at great length.

16. Upon perusal of the record and hearing of the submission of the Ld. Sr.

Counsel, it is evident that the grievance of the Appellants pertain to (i) the

refusal of the NCLT to grant dispensation from convening meeting of the

unsecured creditors of the Transferor Companies under Section 230(9) of the

Act; and (ii) ordering the meeting of remaining unsecured creditors of

Applicant Transferor companies, except those whose consent has already

been obtained, is in violation of Section 230(6) of the Act. They have also

placed emphasis on the fact that the scheme of Arrangement does not affects

the rights of the unsecured creditors, and their debt obligations would be

taken over by the Transferee Company. The proposed Scheme of Arrangement

is under Section 230(1)(b) of the Act, which relates to the Members of the

Company.

17. The Appellants have demonstrated that they had obtained valid consent

affidavits from unsecured creditors representing over 90% in value in each

Transferor Company, which exceeds the statutory threshold prescribed under

Sections 230(6) and 230(9) of the Act. In their view, the refusal to grant

dispensation from convening meetings of the unsecured creditors was

contrary to the provisions of the Act. Similarly, the meetings of Creditors or

class of Creditors as prescribed in Section 230(6) of the Act would mandatorily

involve all such creditors, whereas the NCLT has ordered the meeting of only

Company Appeal (AT) No. 171 of 2025 -15-

those creditors who have not filed their consent. Such an order clearly falls

foul of the scheme of Section 230(6) of the Act.

18. We first examine the Section 230 of the Companies Act 2013 which is

extracted below:

Section 230: Power to compromise or make arrangements with creditors and members

(1) Where a compromise or arrangement is proposed--

(a) between a company and its creditors or any class of them; or

(b) between a company and its members or any class of them,

the Tribunal may, on the application of the company or of any creditor or member of the company, or in the case of a company which is being wound up, of the liquidator, 1[appointed under this Act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Tribunal directs.

Explanation. -- For the purposes of this sub-section, arrangement includes a reorganisation of the company's share capital by the consolidation of shares of different classes or by the division of shares into shares of different classes, or by both of those methods.

(2) The company or any other person, by whom an application is made under subsection (1), shall disclose to the Tribunal by affidavit--

(a) all material facts relating to the company, such as the latest financial position of the company, the latest auditors report on the accounts of the company and the

Company Appeal (AT) No. 171 of 2025 -16-

pendency of any investigation or proceedings against the company;

(b) reduction of share capital of the company, if any, included in the compromise or arrangement;

(c) any scheme of corporate debt restructuring consented to by not less than seventy-five per cent. of the secured creditors in value, including--

(i) a creditors responsibility statement in the prescribed form;

(ii) safeguards for the protection of other secured and unsecured creditors;

(iii) report by the auditor that the fund requirements of the company after the corporate debt restructuring as approved shall conform to the liquidity test based upon the estimates provided to them by the Board;

(iv) where the company proposes to adopt the corporate debt restructuring guidelines specified by the Reserve Bank of India, a statement to that effect; and

(v) a valuation report in respect of the shares and the property and all assets, tangible and intangible, movable and immovable, of the company by a registered valuer.

(3) Where a meeting is proposed to be called in pursuance of an order of the Tribunal under subsection (1), a notice of such meeting shall be sent to all the creditors or class of creditors and to all the members or class of members and the debenture-holders of the company, individually at the address registered with the company which shall be accompanied by a statement disclosing the details of the compromise or arrangement, a copy of the valuation report, if any, and explaining their effect on creditors, key managerial personnel, promoters and non-promoter members, and the debenture-holders and the effect of the compromise or arrangement on any material interests of the

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directors of the company or the debenture trustees, and such other matters as may be prescribed:

Provided that such notice and other documents shall also be placed on the website of the company, if any, and in case of a listed company, these documents shall be sent to the Securities and Exchange Board and stock exchange where the securities of the companies are listed, for placing on their website and shall also be published in newspapers in such manner as may be prescribed:

Provided further that where the notice for the meeting is also issued by way of an advertisement, it shall indicate the time within which copies of the compromise or arrangement shall be made available to the concerned persons free of charge from the registered office of the company.

(4) A notice under sub-section (3) shall provide that the persons to whom the notice is sent may vote in the meeting either themselves or through proxies or by postal ballot to the adoption of the compromise or arrangement within one month from the date of receipt of such notice:

Provided that any objection to the compromise or arrangement shall be made only by persons holding not less than ten per cent. of the shareholding or having outstanding debt amounting to not less than five per cent. of the total outstanding debt as per the latest audited financial statement.

(5) A notice under sub-section (3) along with all the documents in such form as may be prescribed shall also be sent to the Central Government, the income-tax authorities, the Reserve Bank of India, the Securities and Exchange Board, the Registrar, the respective stock exchanges, the Official Liquidator, the Competition Commission of India established under sub-section (1) of section 7 of the Competition Act, 2002 (12 of 2003), if necessary, and such other sectoral regulators or authorities which are likely to be affected by the compromise or arrangement and shall

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require that representations, if any, to be made by them shall be made within a period of thirty days from the date of receipt of such notice, failing which, it shall be presumed that they have no representations to make on the proposals.

(6) Where, at a meeting held in pursuance of sub-section (1), majority of persons representing threefourths in value of the creditors, or class of creditors or members or class of members, as the case may be, voting in person or by proxy or by postal ballot, agree to any compromise or arrangement and if such compromise or arrangement is sanctioned by the Tribunal by an order, the same shall be binding on the company, all the creditors, or class of creditors or members or class of members, as the case may be, or, in case of a company being wound up, on the liquidator 2[appointed under this act or under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), as the case may be,] and the contributories of the company

(7) An order made by the Tribunal under sub-section (6) shall provide for all or any of the following matters, namely:--

(a) where the compromise or arrangement provides for conversion of preference shares into equity shares, such preference shareholders shall be given an option to either obtain arrears of dividend in cash or accept equity shares equal to the value of the dividend payable;

(b) the protection of any class of creditors;

(c) if the compromise or arrangement results in the variation of the shareholders rights, it shall be given effect to under the provisions of section 48;

(d) if the compromise or arrangement is agreed to by the creditors under sub-section (6), any proceedings pending before the Board for Industrial and Financial Reconstruction established under section 4 of the Sick

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Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) shall abate;

(e) such other matters including exit offer to dissenting shareholders, if any, as are in the opinion of the Tribunal necessary to effectively implement the terms of the compromise or arrangement:

Provided that no compromise or arrangement shall be sanctioned by the Tribunal unless a certificate by the company's auditor has been filed with the Tribunal to the effect that the accounting treatment, if any, proposed in the scheme of compromise or arrangement is in conformity with the accounting standards prescribed under section 133.

(8) The order of the Tribunal shall be filed with the Registrar by the company within a period of thirty days of the receipt of the order.

(9) The Tribunal may dispense with calling of a meeting of creditor or class of creditors where such creditors or class of creditors, having at least ninety per cent. value, agree and confirm, by way of affidavit, to the scheme of compromise or arrangement.

(Emphasis Supplied)

19. The Section 230 of the Companies Act deals with matters related to

power to compromise or make arrangements with creditors and Members The

three important subsections here are Section 230 (1)(b); 230(6); and 230(9).

20. The first contention of the Appellants is that the arrangement proposed

herein is under Section 230(1)(b) which relates to arrangement with members

of the company. There is no arrangement vis a vis the creditors as envisaged

under Section 230(1)(a) of the Act. The interests of the creditors are not

affected adversely in any manner by the said agreement. The rights and

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liabilities of all unsecured creditors remain entirely unaffected by way of the

Scheme, who shall be or have already been paid in the ordinary course of

business. The assets of the Transferee Company post-merger will be more

than sufficient to discharge their obligations as and when they arise.

21. Appellants have further submitted that the remaining unsecured

creditors primarily comprise small-value trade creditors, who are routinely

paid in the ordinary course of business. Accordingly, the purported debt owed

to them is operational and revolving in nature, and not long-term or financial

in character. Furthermore, as stated above, upon implementation of the

proposed Scheme, the Transferor Companies will merge into the Transferee

Company and all the creditors of Transferor Companies will become creditors

of the Transferee Company. Therefore, no prejudice is caused to the

'remaining unsecured creditors' for protecting whose interest the NCLT

passed the direction to hold meetings of such remaining unsecured creditors.

22. We note from the records that the net worth of the Transferee Company

as on 31-03-2024 would increase to Rs 913.37 Cr from Rs 551.29 Cr upon

implementation of the Scheme. The outstanding debt of unsecured creditors

on that date is approximately Rs 5.35 Cr, which is a very insignificant portion

of the Net Worth. We further note that the Appellants have made substantial

payments since then and by 30.06.2025 the outstanding unsecured debt has

shrunk to negligible amount.

23. We further take note that the First Transferor Company is a Singapore

entity, and an investment holding company. The Appellant companies

including the Transferee Company are subsidiaries of the First Transferor

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Company. This is a scheme of arrangement wherein a parent company along

with its 7 other subsidiaries is merging in one of the subsidiaries and creating

one single entity post-merger .

24. In regard to the compliance with Sections 230(9) and 230(6) of the Act,

the contention of the Appellants is that the Impugned Order is non-speaking

and devoid of any reasoning as no rationale has been provided by the Hon'ble

NCLT for directing convening of meetings of the remaining unsecured

creditors, despite its express observation that the "necessary threshold" of

consent by 90% of unsecured creditors by value is met. The only reason cited

by the NCLT is that "the highest percentage of unsecured debt is of the

Transferee Company itself whose consent has been pivotal in crossing the

necessary threshold." This purported rationale is ex facie untenable and

directly contrary to the express mandate of Section 230(9) of the Companies

Act, which does not draw any distinction among creditors or classes of

creditors for the purpose of computing the 90% threshold.

25. It is further submitted that the order requiring the convening of a

meeting of only the 'remaining' unsecured creditors of the Transferor

Companies, whose consent to the Scheme have not been obtained, is contrary

to the plain language and object of Section 230(9) and Section 230(6) of the

Companies Act 2013. Section 230(6) expressly states that, where a meeting of

creditors is held, approval of "majority of persons representing three-fourths

in value of the creditors" is adequate to bind the entire class of creditors.

26. Further Section 230(9) does not contemplate that the consent of

creditors or a class of creditors, holding at least 90% in value, can be excluded

Company Appeal (AT) No. 171 of 2025 -22-

or disregarded, while computing the threshold for dispensing with meetings

of creditors or a class of creditors under Section 230(9), merely because they

are also a party to the scheme of arrangement. In other words, the provision

does not stipulate that the 90% value must be composed of "third-party"

creditors, nor does it exclude intra-group creditors or the Transferee Company

(as in the present case) acting in its capacity as a creditor. Such an artificially

invented limitation is contrary to the clear wording of Section 230(9) and

defeats the commercial purpose and procedural efficiency that Section 230(9)

seeks to promote.

27. We find merit in the contentions of the Appellant. Section 230(9) of the

Act does not provide any such artificial distinction between the unsecured

creditors. If 90% by value of unsecured creditors by way of affidavit agree to

the scheme of arrangement, then the Tribunal has the powers to dispense the

meeting of creditors or class of creditors. Any further subdivision would not

be in accordance with the law.

28. In this regard we have a look at the Section 232(1) of the companies act

2013 which deals with Mergers and Amalgamations of the companies

Section 232. Merger and amalgamation of companies. -(1)

Where an application is made to the Tribunal under section

230 for the sanctioning of a compromise or an arrangement

proposed between a company and any such persons as are

mentioned in that section, and it is shown to the Tribunal-

(a) that the compromise or arrangement has been proposed

for the purposes of, or in connection with, a scheme for the

reconstruction of the company or companies involving

Company Appeal (AT) No. 171 of 2025 -23-

merger or the amalgamation of any two or more companies;

and

(b) that under the scheme, the whole or any part of the

undertaking, property or liabilities of any company

(hereinafter referred to as the transferor company) is

required to be transferred to another company (hereinafter

referred to as the transferee company), or is proposed to be

divided among and transferred to two or more companies,

the Tribunal may on such application, order a meeting of

the creditors or class of creditors or the members or class of

members, as the case may be, to be called, held and

conducted in such manner as the Tribunal may direct and

the provisions of sub-sections (3) to (6) of section 230 shall

apply mutatis mutandis.

(Emphasis Supplied)

29. It can be seen from the language of the section that when an application

is made before the tribunal under section 230 relating to arrangement for

merger or amalgamation of companies, the Tribunal may order a meeting of

the creditors or class of creditors etc to be called and such meeting shall be

conducted in the manner laid down by the sub sections (3) to (6) of section

230. It is clear from the language of the section that Tribunal has powers to

call the meeting of creditors, but such a meeting has to be conducted in

accordance with Section 230(6) in this case.

30. We further note that under Section 230(6) of the Companies Act, even

in a scenario, where the meeting of unsecured creditors is held; approval of

creditors representing only 75% in value is required and such decision is

Company Appeal (AT) No. 171 of 2025 -24-

binding on the company, all creditors or class of creditors. In this case, if

such meeting would have been held in accordance with Section 230(6), the

result of the of such meeting would have been the same, as more than 90%

of unsecured creditors by value had already submitted their consent affidavit

to the scheme of arrangement. In essence such a meeting would have been

infructuous, leading only to delays in approval and unnecessary and

infructuous expenditure. The object and purpose of the section 230(9) is to

simplify the procedure of restructuring of companies by mergers,

amalgamations etc., where consent of 90% creditors is available. Contrary to

the objectives in this case NCLT has made it extremely complex going beyond

the scope of section 230(6).

31. We also note that by excluding unsecured creditors who have

consented to the proposed Scheme from attending such meeting, the NCLT

has, in effect, denied them their statutory right to participate in the

consideration and approval of the proposed Scheme at a duly convened

meeting in terms of Section 230(6) of the Companies Act. The Impugned Order

renders the consent obtained from the unsecured creditors of the Transferor

Companies, whose debt constitutes over 90% in value, meaningless. In true

sense, the order provides for veto power to less than 10% creditors, against

the consent given by more than 90% creditors by value in approval of scheme

of arrangement. Such an order is clearly and patently in violation of the

section 230(6) of the act.

Company Appeal (AT) No. 171 of 2025 -25-

32. The appellants have cited a number of cases in support of their

contentions. These cases along with their applicability in the present matter

have been discussed in subsequent paragraphs.

33. Hon'ble Delhi High Court in Vodafone Spacetel Ltd. and Anr. [2013

SCC Online Del 6566] in a first motion joint application under Sections 391

and 394 of the Companies Act, 1956 in connection with a Scheme of

Amalgamation of Vodafone Spacetel Ltd. ('Applicant/Transferor Company

No.1'); Vodafone West Ltd. (Transferor Company No.2) and Vodafone Mobile

Services Ltd. (Applicant Transferee) Company) and their respective

shareholder in their Judgement in paragraphs no. 7, 11 and 13 held as

follows:

"7. The status of the equity shareholders, secured and unsecured creditors of the Applicant companies and their consents to the proposed Scheme are set out in a tabular form as given below:

Name of Nos. of Conse No. of Consent No. of Consent the Equity nt Secured given Unsecured given company Shareh given Creditors Creditors olders Applicant/ 07 All 1 Dispens 3732 Dispens Transferor ation is ation is Company being being No.1 sought sought for for Applicant/ 07 All 3 Dispens 1601 Dispens Transferor ation is ation is Company being being sought sought for for

11. As regards the requirement of convening the meeting of the unsecured creditors of the Applicant companies is concerned, it is submitted that the unsecured trade/sundry creditors of the Applicant companies are cyclic in nature and the Applicant companies are meeting such obligations in the ordinary course of business. It is further submitted that in

Company Appeal (AT) No. 171 of 2025 -26-

terms of the Scheme, there is no variation in the rights of the unsecured trade/sundry creditors and there is no variation in the amounts owed to such unsecured trade/sundry creditors. The Applicant/Transferee company in terms of the Scheme shall be taking over all the liabilities of the Applicant/Transferor company No. 1 and undertakes to meet and discharge the same in terms of Clause 3.2.2 (iii) of the Scheme. The Applicant companies also undertake that upon notice being issued by this Court on the second motion petition for sanction of the Scheme, the Applicant companies shall issue individual notice to all its unsecured creditors as per list annexed at Annexure M and Annexure-P seeking their objections if any to the Scheme."

13. In view of the aforesaid facts, the terms of the Scheme, and the judgments as referred to by the learned Senior counsel for the Applicant companies, the requirement of convening the meeting of the secured and unsecured creditors of the Applicant companies is dispensed with. The Applicant companies shall issue notice of the second motion petition to their respective secured creditors as per list annexed at Annexure-L and Annexure-O to the company application and to their respective unsecured creditors as per list annexed at Annexure-M and Annexure-P to the company application.

(Emphasis supplied)

34. It is seen from the Vodafone (supra) that Hon'ble Delhi High Court has

considered the identical matter relating to unsecured trade/sundry creditors

whose dues are cyclic in nature and the Applicant companies are meeting

such obligations in the ordinary course of business. In terms of the scheme

also there is no variation in the rights of the unsecured creditors and there

is no variation in the amounts owed to such unsecured creditors. Hon'ble

Court dispensed with the requirement of convening the meeting of the

secured and unsecured creditors of the Appellant companies. The present

Company Appeal (AT) No. 171 of 2025 -27-

case is squarely covered by the Judgment of Hon'ble Delhi HC in Vodafone

(supra) with the additional compliance that more than 90% of the unsecured

creditors have given their consent to the scheme.

35. The second case cited by Ld. Sr. Counsel relates of scheme of

amalgamation of : M/s Almondz Re-Insurance Brokers Pvt. Ltd.... Applicant

/Transferor Company with M/s Almondz Insurance Brokers Pvt. Ltd...

Applicant /Transferee Company in Company Application (Main) No. 27/2015

decided by Hon'ble Delhi High Court [2015 SCC OnLine Del 8401]. The

Hon'ble HC in paras 13, 15, 16 & 17 of the Judgment held as follows:

"13. As on 15th December, 2014, the transferor company has 28 unsecured creditors holding unsecured debt of Rs. 18,73,56,949/-. The applicants have placed on record a certificate issued by M/s. Pawan Shubham & Co., Chartered Accountants certifying that out of 28 unsecured creditors, 17 unsecured creditors holding unsecured debt of Rs. 17,62,64,545/- have been paid off fully/partly by the company, as on 30th January, 2015. Learned counsel for the applicants has submitted that the transferor company is a wholly owned subsidiary of the transferee company and since it is an amalgamation of the wholly owned subsidiary company with its holding company, therefore, rights of unsecured creditors of the applicant companies will not be affected adversely. He further submitted that the Scheme does not contemplate any variation of the rights of the unsecured creditors, nor does it contemplate extinction or reduction of liability to any creditor. Learned counsel has also submitted that on amalgamation of the transferor company with the transferee company, the post amalgamation net worth of the transferee company will be Rs. 22,19,15,399/- as compared to its pre-amalgamation net worth of Rs. 11,31,05,228/-. He has placed on record a

Company Appeal (AT) No. 171 of 2025 -28-

certificate issued by M/s. Pawan Shubham & Co., Chartered Accountants, showing the pre and post amalgamation net worth of the transferor and transferee companies. He, therefore, prays that the requirement of convening and holding the meeting of the unsecured creditors of the transferor company may kindly be dispensed with.

15. The unsecured creditors of the transferor company are running creditors who are paid-off in the normal course of the business of the company. A perusal of the audited balance sheet of the transferor company, as on 31st March, 2014, reveals that the company has reserves and surplus of Rs. 10,88,10,171/-. As per the certificate issued by M/s. Pawan Shubham & Co., Chartered Accountants, the post- amalgamation net worth of the transferee company will enhance to Rs. 22,19,15,399/- as compared to its pre- amalgamation net worth of Rs. 11,31,05,228/-. In addition, the applicants have placed on record the certificate issued by M/s. Pawan Shubham & Co., Chartered Accountant, determining the liquidity position of the companies, which shows that the liquid assets (including cash and bank balance) of the transferor company, pre-amalgamation, are to the tune of Rs. 37,18,61,504/-whereas the liquid assets (including cash and bank balance) of the , are no transferee company, post-amalgamation, are to the tune of Rs. 41,31,76,317/-. Therefore, the rights of the unsecured creditors of the transferor company are not likely to be affected and the transferee company will be in a position to discharge all its liabilities, upon sanction of the Scheme of Amalgamation. In view of the above and the settled law on the subject, the requirement of convening and holding the meeting of the unsecured creditors of the transferor company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with."

16. The transferee company has 08 equity shareholders and 03. unsecured creditors. All the equity shareholders and all

Company Appeal (AT) No. 171 of 2025 -29-

the unsecured creditors have given their consents/no objections in writing to the proposed Scheme of Amalgamation. Their consents/no objections have been placed on record. They have been examined and found in order. In view thereof, the requirement of convening the meetings of the equity shareholders and unsecured creditors of the transferee company to consider and, if thought fit, approve, with or without modification, the proposed Scheme of Amalgamation is dispensed with. There is no secured creditor of the transferee company, as on 15th December, 2014.

17. The application stands allowed in the aforesaid terms."

(Emphasis supplied)

36. We find from the Judgment in M/s Almondz Re-Insurance Brokers Pvt.

Ltd. (supra) that in this case also there were unsecured creditors in the

transferor company. The assets of the transferee company post scheme of

merger are substantially enhanced. The rights of the unsecured creditors of

the transferor company were not being adversely affected, as the transferee

company would be better placed to discharge all its liabilities upon the

sanction of the scheme of amalgamation. Keeping this in mind the Hon'ble

High Court dispensed with the requirement of convening the meeting of

unsecured creditors. The ratio laid down in the Almondz Re-Insurance

Brokers (supra) would squarely cover the present case.

37. We also take note of Judgment of this Appellate Tribunal in the matter

of 'Mohit Agro Commodities Processing Pvt. Ltd. and Anr... Appellant/

Transferor [2021 SCC OnLine NCLAT 1139]'. In its Judgement in paragraph

18 to 21 the Tribunal held the following:

Company Appeal (AT) No. 171 of 2025 -30-

"18. The material on record establishes that the 'Transferee Company' is a Wholly Owned Subsidiary of the 'Transferor Company' and there is no issuance of any new shares and therefore there is no reorganization of share capital and consequently no arrangement wherein Shareholders have to compromise with Creditors ''Transferor Company'. The documentary evidence substantiates that the net worth of the 'Transferee Company' is definitely positive.'

19. We find force in the contention of the Learned Counsel appearing for the Appellants that there are no Creditors in the subsidiary Companies and that the 'Transferee Company' is the only Shareholder of the 'Transferor Company'.

20. This Tribunal has placed reliance in 'DLF Phase IV, Commercial Developers Limited and Ors.' in Company Appeal (AT) No. 180 of 2019 and observed that the scheme would not prejudicially affect the Creditors or Shareholders of the Appellant Company when an Application is filed by the 'Transferor Company' or 'Transferee Company', a separate Application is not necessary and dispensed with the meeting of the equity Shareholders and Creditors of the Appellant Company. At the cost of repetition, keeping in view that the financial position of the 'Transferee Company' is highly positive, the merger does not involve any compromise/arrangement with any Creditor of the Company, that there would be a positive net worth and Creditors would not be compromised, the Tribunal ought to have exercised the discretion in dispensing with the requirement of convening the meeting which would facilitate ease of doing business and save time and resources. To reiterate, we observe that the rights and liabilities of Secured and Unsecured Creditors were not getting affected in any manner by way of the proposed scheme as no new shares are being issued by the 'Transferor Company' and no compromise is offered to any Secured and Unsecured Creditors of the 'Transferee Company'. Therefore, we are of

Company Appeal (AT) No. 171 of 2025 -31-

the considered view that when the 'Transferor and Transferee Company' involve a parent Company and a Wholly Owned Subsidiary the meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors can be dispensed with as the facts of this case substantiate that the rights of the Equity Shareholders of the 'Transferee Company' are not being affected.

21. For all the aforenoted reasons, we allow this Application and set aside the direction in respect of the Transferee Company issued by the NCLT, to convene the meetings of the Equity Shareholders, Secured Creditors and Unsecured Creditors on 22.04.2021."

38. In the case of Mohit Agro (supra) the Appellant company was the

Transferor and Gujarat Ambuja Exports Ltd. was the 'Transferee Company'.

This was a case of scheme of amalgamation of a 'Transferor Company' with

the 'Transferee Company' w.e.f appointed date on the agreed terms and

conditions set out in the scheme in accordance with Sections 230 to 232 of

the Companies Act, 2013. The 'Transferor Company' was wholly owned

subsidiary of the 'Transferee Company' and both the companies were

incorporated in similar nature of activities. There were no Creditors in

subsidiary company in this case but there were creditors in 'Transferee

Company'. This Tribunal vide the Judgment supra held that the merger does

not involve any compromise/ arrangement with any creditor of the company

and that there would be a positive net worth and creditors would not be

compromised. In such a case the Tribunal ought to have exercise its

discretion in dispensing with the requirement of convening the meeting

which would have facilitated the ease of doing business and save time and

resources. The Tribunal further observed that the right and liabilities of

Company Appeal (AT) No. 171 of 2025 -32-

secured and unsecured creditors were not getting effected in any manner by

the proposed scheme as no compromise was being offered to any secured or

unsecured creditor. In such a situation this Appellate Tribunal set aside the

directions of the NCLT to convene the meetings of Equity Shareholders,

Secured Creditors and Unsecured Creditors. We note that the ratio of the

Mohit Agro supra is squarely applicable to the facts of the present case.

39. In the case of 'Reliance Industries Ltd. Through Signatory vs. Registrar

of Companies [2023 SCC OnLine NCLAT 2082]. This Tribunal in paras 23-25

held the following:

"23. We note that in Section 232(1) of the Companies Act it is left to the discretion of the Tribunal, as the word used is "may", regarding the holding of meeting of the creditors or class of creditors or members or class of members in the manner directed by the Tribunal.

24. This discretion given in section 232(1) to the Tribunal has been interpreted by Hon'ble Bombay High Court in the matter of Mahaamba Investments Limited (supra) and Eurokids India Pvt. Ltd. (supra) and also by this Tribunal in the matter of Patel Hydro Power Private Limited (supra) that if the Transferor Company is wholly owned subsidiary of the Transferee Company and there is no reorganization of the share capital of Transferee Company and the creditors and shareholders of the Transferee Company are not affected by the implementation of the Scheme as the assets of the Transferee Company and the Transferor Company far exceed their liabilities, the requirement for holding meetings of the shareholders, secured and unsecured may be dispensed with.

25. In the light of the detailed aforenoted discussion, and the facts of this case wherein the transfer of EPC Undertaking

Company Appeal (AT) No. 171 of 2025 -33-

from the wholly-owned subsidiary RPMSL (of RIL) into the parent/transferee company RIL by way of demerger is akin to merger of wholly owned subsidiary with the parent company RIL, and noting the judgments of Hon'ble Bombay High Court in Mahaamba Private Limited (supra) and this Tribunal in the matter of Patel Hydro Power Private Limited [CA (AT) No. 137 of 2021], we set aside the Impugned Order dated 11.5.2023 and direct that the convening and holding of meetings of Equity Shareholders, Secured and Unsecured Creditors of the Appellant Company RIL is dispensed with and further consent affidavits of 90% of the total value of shareholders and secured creditors and all unsecured creditors will not be necessary at this stage."

40. The case of Reliance Industries (supra) was also related to merger

between wholly owned subsidiary and the parent company and the net worth

of the Transferee Company after the implementation of the scheme would far

exceed the liabilities in such a case the requirement of holding meetings of

shareholders, secured and unsecured creditors may be dispensed with. Vide

the aforesaid Judgment this Tribunal even dispensed with the consent

affidavits of 90% of the total value of shareholders, secured creditors and

unsecured creditors. In the present case the holding company and its 7

subsidiary company are merging in the 8th subsidiary company. The case is

similar to the Reliance Industries (supra) except that it's a case reverse

merger, where holding company is merging in subsidiary. The aforesaid ratio

is squarely applicable in the present care also.

41. It is seen from the above Judgments that where a proposed scheme of

arrangement or merger does not entail any compromise or arrangement with

the creditors of the company or otherwise affect their rights and liabilities,

Company Appeal (AT) No. 171 of 2025 -34-

and the company possesses sufficient assets and net worth to fully discharge

its liabilities, the requirement of convening a meeting of creditors ought to be

dispensed with.

42. We have also noted that subsequent to the decision of Ld. NCLT the

Appellant Transferor Companies, which had total unsecured debt of Rs. 5.35

crores as on 31.03.2024 have made further settlements with almost all of the

unsecured creditors and at the time of the filing of the appeal the total

outstanding unsecured debt was only Rs. 13.52 lacs in two companies.

43. In view of the findings above; the terms of the scheme; and the

Judgments cited by the Appellant Companies, we allow the appeal. The

directions contained in Paragraphs 24(f) to 24(s) of the Impugned Order dated

10.06.2025

are set aside. The requirement of holding the meeting of

unsecured creditors of Appellant Transferor Company is dispensed with.

[Justice Mohd. Faiz Alam Khan] Member (Judicial)

[Mr. Indevar Pandey] Member (Technical)

SA

Company Appeal (AT) No. 171 of 2025