Ras Al Khaima Investment Authority vs Matrix Pharma Private Limited

NATIONAL COMPANY LAW APPELLATE TRIBUNAL AT CHENNAI (APPELLATE JURISDICTION) (Company Appeal (AT) (CH) No. 46 / 2025) (IA Nos. 554, 555 & 556 / 2025) In the matter of: Ras Al Khaimah Investment Authority (``RAKIA'') P.O. Box 31291, Ras Al Khaimah, United Arab Emirates, Represented by its authorised Representative, Mr. Kalyan Chakravarthy, R/o. Hyderabad ... Appellant

V Tianish Laboratories Pvt. Ltd. Plot No.564/A/22, Road No. 92, Jubilee Hills, Film Nagar, Shaikpet, Hyderabad. Telangana, India - 500096 Represented by its director Ms. Jyothibasu Abbineni ... Respondent No. 1

Matrix Pharmacorp Private Limited (previously, Matrix Pharma Private Limited) 104, Srinivasa Towers, 6-3-1187, Green Lands, Begumpet, Secunderabad, Hyderabad, Telangana - 500016 Represented by its Director Mr. Pranav Gunupati Venkata Reddy ... Respondent No. 2

Present : For Appellant : Mr. R. Sankaranarayanan, Senior Advocate, Mr. Vivek Reddy, Senior Advocate, Mr. Arjun Suresh & Ms. Arthi Fernandes, Advocates For Respondents : Mr. PH. Arvindh Pandian, Senior Advocate, Mr. Niranjan Reddy, Senior Advocate, Mr. Jerin Asher Sojan & Mr. Naresh Kumar Sangam, Advocates for R1 & R2 WITH

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 1 of 24 (Company Appeal (AT) (CH) No. 47 / 2025) (IA No. 557/2025) In the matter of: Ras Al Khaimah Investment Authority (``RAKIA'') P.O. Box 31291, Ras Al Khaimah, United Arab Emirates, Represented by its authorised Representative, Mr. Kalyan Chakravarthy, R/o. Hyderabad ... Appellant

V Tianish Laboratories Pvt. Ltd. Plot No.564/A/22, Road No. 92, Jubilee Hills, Film Nagar, Shaikpet, Hyderabad. Telangana, India - 500096 Represented by its director Ms. Jyothibasu Abbineni ... Respondent No. 1

Matrix Pharmacorp Private Limited (previously, Matrix Pharma Private Limited) 104, Srinivasa Towers, 6-3-1187, Green Lands, Begumpet, Secunderabad, Hyderabad, Telangana - 500016 Represented by its Director Mr. Pranav Gunupati Venkata Reddy ... Respondent No. 2

Present : For Appellant : Mr. R. Sankaranarayanan, Senior Advocate, Mr. Vivek Reddy, Senior Advocate, Mr. Arjun Suresh & Ms. Arthi Fernandes, Advocates

For Respondents : Mr. PH. Arvindh Pandian, Senior Advocate, Mr. Niranjan Reddy, Senior Advocate, Mr. Jerin Asher Sojan & Mr. Naresh Kumar Sangam, Advocates for R1 & R2

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 2 of 24 JUDGMENT

(Hybrid Mode)

Per : Justice Sharad Kumar Sharma, Member (Judicial):

1. These are two Company Appeals.

2. In Company Appeal (AT) (CH) No. 46 / 2025, the Appellant challenges the

Impugned Order dated 10.03.2025 (as corrected and made available to parties on

25.03.2025, as it was passed in CP (CAA) No.34/230/HDB/2024 in CA(CAA)

No.25/230/HDB/2024. As a consequence of the Impugned Order dated

10.03.2025, passed in CP (CAA) No. 34 / 230 / HDB / 2024, the proposal of

amalgamation of the two enterprises namely Tianish Laboratories Private Limited

(Tianish) and Matrix Pharmacorp Private Limited (Matrix), have been sanctioned,

based upon the ``Scheme of Amalgamation'', which has been approved by the

Board of Directors of the respective Companies.

3. During the proceedings as referred to as above, when the issue of merger

was being considered, the Appellant had filed an Intervention Application being

Intervention petition No. 4 / 2024 in CP(CAA) No. 34/230/HDB/2024, in CA

(CAA) No. 25/230/HDB/2024 which has been dismissed by the Impugned Order

dated 10.03.2025 (as corrected and made available to the parties on 18.03.2025),

which has been put to challenge in Company Appeal (AT) (CH) No. 47 / 2025.

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 3 of 24 4. Since, both these Company Appeals involve consideration of a common

question of fact and law, hence, for the purposes of brevity, they are being decided

together.

5. We will take up the Company Appeal (AT) (CH) No. 47 / 2025 first

because, understanding the logic behind the order of rejection of the Intervention

Application of the Appellant which has been challenged therein, will provide key

inputs for dealing with the issues involved in the Company Appeal (AT) (CH) No.

46 / 2025, where the Appellant puts the challenge to the Order of Sanction of the

Scheme of Amalgamation of ``Tianish'' and ``Matrix''.

6. It transpires from records that, as a consequence of the approval of the

Scheme of Amalgamation by the respective Boards of Directors and consequent

approval of the Scheme by Ld. NCLT, ``Tianish Laboratories Private Limited'',

the Respondent No. 1 herein i.e. the ``Transferor Company'' and ``Matrix

Pharmacorp Private Limited'', the Respondent No. 2 herein i.e. the ``Transferee

Company'', stood amalgamated.

7. The Respondents collectively have contended that, the ``Scheme of

Amalgamation'', has been jointly approved in the meeting which was held on

04.07.2024.

8. The Appellant has filed independent Appeals being aggrieved as against the

order of rejection of his intervention application and the order of the approval of

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 4 of 24 merger. The merged entities i.e. ``Tianish'' and ``Matrix'', have expressed

apprehension that, the proceedings in which we are going to consider the issue in

relation to the implications of the order of amalgamation, as well as, that of the

rejection of the Intervention Petition and observations made therein may result in

deprivation of their right to put a challenge independently to the order of

10.03.2025 with regards to the merger, so far it relates to certain restrictions, which

has been imposed by the Impugned Order, as that particularly contained in Para

XIX of the Impugned order dated 10.03.2025 and prayed that their rights to that

effect may be protected.

9. We make it clear that in this Appeal, since we are only touching about the

implications of the Intervention petition, any observations which are made herein,

will not be read in deprivation of the rights of the Respondents, to put a challenge

to the findings recorded in the order of 10.03.2025 in CP (CAA)

No.34/230/HDB/2024 in CA (CAA) No.25/230/HDB/2024, which they feel to be

adverse to their interest.

10. The Appellant has come up with the case in the Appeal, that one Mr.

Nimmagada Prasad, who is an Indian Citizen, directly and indirectly through his

family members, controls and owns a web of companies including the Respondent

Companies as the Respondents are affiliated with Iquest Enterprises Pvt. Ltd.

11. The Appellant i.e. ``RAKIA'' has contended that it is a Judgment Creditor

of Nimmagada Prasad and by extension he will be the Judgment Creditor of

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 5 of 24 ``Matrix'' and ``Tianish'', because he claims that they are the part of Nimmagada

Prasad's web of companies which operate as a single economic unit through

Nimmagada Prasad (or his family) in disregard to their separate corporate and

independent personalities.

12. The Appellant has contended that, it secured a decree dated 02.02.2022 from

Ras Al Khaimah Court of First Instance, Civil Plenary Circuit in Civil case No. 60

of 2020 against Mr. Nimmagada Prasad, and on 05.09.2023 it filed an Execution

Petition being CEP No. 19 of 2023 before Principal Special Court for Trial and

Disposal of Commercial Disputes, City Civil Court, Hyderabad for executions of

the said Decree. While the same was pending, in October 2023, RAKIA identified

that Mr. Nimmagada Prasad, through one of his entities i.e. Iquest Enterprises Pvt.

Ltd. is in the process of entering into a transaction involving the acquisition of an

active pharmaceutical ingredients business from Viatris Inc. with assets worth

approx. USD 1.2 Billion, without satisfying the debt of RAKIA (the ``Judgment

Creditor''). Accordingly it filed 3 commercial execution Applications to add

IQuest as a party to CEP proceedings (CEA 157/2023), to add assets of IQuest in

the schedule of assets to the commercial Execution Petition (CEP) (CEA 158/2023)

and for an injunction against assets of IQuest (CEA 156/2023).

13. The Commercial Court in Hyderabad took up the matter and vide its order

of 01.05.2024, recorded the undertaking of Iquest Enterprises Pvt. Ltd. in

Execution Petition proceedings to the effect that ``Iquest, was initially interested

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 6 of 24 in acquiring the assets of `'Viatris'' and subsequently they have decided not to go

ahead with the same.''

14. Appellant has further submitted, that despite of the aforesaid undertaking as

recorded in the said order dated 01.05.2024 of the Commercial Court, Nimmagada

Prasad, Swathi (daughter of Nimmagada Prasad), IQuest and Viatris willfully

disobeyed the orders passed by the Commercial Court, by completing the

acquisition transaction on 03.06.2024, by restructuring the acquisition route from

IQuest - Matrix to Mudhra - Matrix.

15. The Appellant has come up with the case that, on 11.07.2024, they have filed

a Contempt Petition being Contempt Case No. 1378 of 2024, before the Hon'ble

Telangana High Court, as against Nimmagada Prasad, Swathi, IQuest and Viatris,

seeking reversal of the transaction already carried out and stay of further steps in

relation thereto. Looking to the inter se dispute amongst the parties, the Contempt

Court has passed an Order of Status Quo on 19.07.2024, which is extracted

below: -

"Heard Dr.Abhishek Manu Singhvi, learned Senior Counsel and Sri K.Vivek Reddy, learned Senior Counsel for Sri G.Vamshi Krishna, learned counsel for the petitioner, and perused the record.

Petitioner by drawing the attention of this Court to various documents filed and the order of the Commission of India under Section 31 of the Competition Act, 2002, contends that the 1t respondent-contemnor, having made statement to the Principal Special Court in the Cadre of District Judge for trial

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 7 of 24 and Disposal of Commercial Disputes, Hyderabad, of not proceeding with the transaction of purchase of APl business with 3d respondent/contemnor, and in contravention of the said undertaking, have entered into transaction in surreptitious manner to circumvent the undertaking / statement made to the Court, indirectly through its subsidiaries/affiliates.

It is further contended that if the respondent-contemnors are allowed to deal with or enter into further transactions, may create third party interest, in further breach of the undertaking thereby adversely affecting the interest of the petitioner.

Prima facie I find force in the aforesaid submissions. In view of the same, respondent Nos. 1, 2 and 4 are hereby directed to maintain status quo in relation to transactions in dispute existing as on today to be maintained till next date of hearing.''

16. It will not be out of context to mention that Respondents 1,2 & 4 as

mentioned in the above order are IQuest, Swathi & Nimagadda Prasad respectively

and that the Transferor and the Transferee Companies in the instant case, i.e.

Tianish Laboratories Private Limited (Tianish) and Matrix Pharmacorp Private

Limited (Matrix), do not find a place there nor they were made as a party to the

proceedings either before the Commercial Court or before the Contempt Court.

17. The cause title of the contempt proceedings of Contempt Case No. 1378 of

2024 reads as under:

``Ras Al Khaimah Investment Authority (RAKIA), P.O. Box 31291, Ras AI Khaimah, United Arab Emirates, Represented by its Authorized Representative, Mr. Kalyan Chakravarthy, R/o. Hyderabad.

Petitioner

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 8 of 24 (Petitioner in CC. No. 1378 of 2024 on the file of the High Court

1. IQuest Enterprises Private Ltd., 104, 4h Floor, F- Block, Surya Towers, S P Road, Secunderabad, Hyderabad, Telangana 500003, Represented by its Authorised Signatory Mr.Srinu Jala, S/o. Venkateshwarlu Jala Contemnor No.1

2. Ms. Swathi Gunupati Reddy, C-10, Armed Forces Officers Co-operative Housing Society, Kapra (M), Kapra, Medchal- Malkajgiri, Telangana 500094

Contemnor No.2

3. Viatris Inc., Having its office at Plot No.564/A/22, Road No 92, Jubilee Hills, Hyderabad, Telangana 500 034, India Viatris Inc. Represented by its Authorised Signatory, Robert J.

Coury Global Center, 1000 Mylan Boulevard Canonsburg, Pennsylvania - 15317 Contemnor No.3

(Leave granted to file the present CC against RRI to 3 as per the Hon'ble Court Order dtd. 19.07.2024 in IA No.5/2024 in CC No.1378 of 2024).

4. Mr. Nimmagadda Prasad, Plot No. 242- B, Road No. 76, Jubilee Hills, Hyderabad, Telangana - 500033

Contemnor No.4 Respondents (Respondents in -do-)

18. Thus, it is to be noted that in the contempt proceedings, which was drawn,

neither `Matrix' (the Transferor) nor `Tianish' (the Transferee Company) were

made a party, to the said proceedings of the contempt. Appellant has stated that,

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 9 of 24 subsequently they were sought to be impleaded as party, by filing of IA.No.11 of

2024 in Contempt Case No. 1378 of 2024.

19. On the basis of the said Interim Order, which was granted in the contempt

proceedings, directing the parties to maintain a Status Quo as on 19.07.2024, it is

being contended by the Appellant that the Scheme of Amalgamation of the

Transferor and the Transferee Company, proposed by them and approved by Ld.

NCLT, would be bad in the eyes of law being in violation of the order dated

19.07.2024, where the parties were directed to maintain a Status Quo. This

contention of the Appellant is being made on a presumption that the order of the

Status Quo, as it was granted in the contempt proceedings on 19.07.2024 will be

equally binding on ``Tianish'' and ``Matrix'' even though they are not party to the

proceedings of contempt, because they are inextricably linked to the transactions

in dispute before the Commercial Court, Hyderabad, which the Appellant attempts

to establish by referring to documents like Matrix CRISIL Report and Tianish

CRISIL Report which were on record in the proceedings of amalgamation before

Ld. NCLT, Hyderabad.

20. Thus, the question, which would emerge for consideration for us would be

that, in a proceedings, which are held before the Commercial Court, whether at all,

there could be a status quo order and an implied drawing of a contempt as against

the Transferor or the Transferee Company, when they are neither a party to the

principal proceedings before the Commercial Court, nor they are party to the

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 10 of 24 proceedings of the contempt, except for the applications filed to add them as party

at a later stage, both in the Contempt proceedings as well as in the Commercial

Execution Petition proceedings.

21. In response to the submissions of Ld. Counsel of the Appellant, the Ld.

Counsel for the Respondents, has submitted that the arguments of the Ld. Counsel

for the Appellant may not be sustainable for the reason being that, the Order of

19.07.2024, directing the Status Quo as on 19.07.2024, will apply to the

transactions referred to therein and it cannot be read in relation to the issues in

relation to the Amalgamation between 'Tianish' and 'Matrix', owing to its

independent existence and a legal bearing.

22. If the order of the Contempt dated 19.07.2024 is taken into consideration,

the same has been rendered by the Contempt Court i.e. the Hon'ble High Court of

Telangana, while exercising their powers under Order XXXIX Rule (1) & (2) and

in the context of an order which was passed by the Commercial Court, on

01.05.2024 in CEA No. 44 / 2024 in CEA No. 156 / 2024 in CEP No. 19 / 2023

and it had specifically recorded that, it finds merits in the submission of RAKIA

that the Respondent No. 1 / Contemnor, Iquest Enterprises having made a statement

before the Principal Special Court in the cadre of District Judge of 'not proceeding

with transaction of purchase of API business from ``Viatris'', ' have entered into

the said transaction indirectly through its subsidiaries and therefore, it directs R1

(IQuest), R2 (Swathi) and R4 (Nimagadda Prasad) , to maintain status quo 'as on

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 11 of 24 today'. It is apparent that, if the said contravention is taken as to be a reason for

passing a Status Quo Order, it was limited to directing the aforesaid parties to

maintain the Status Quo ``in relation to the transactions in dispute existing as on

today''.

23. Thus, the said observation of the Order of the Status Quo dated 19.07.2024

will relate to the transactions between IQuest and Viatris and would be bound to

be confined to be read, limited to the alleged transaction of acquisition of API

business and to the parties involved therein i.e. Viatris and IQuest, and its scope

for the purposes of contempt cannot be widened, to be read to make applicable in

relation to the Transferor Company and Transferee Company i.e Tianish

Laboratories Private Limited and Matrix Pharmacorp Private Limited who were

party only to the amalgamation proceedings before Ld. NCLT which is an

independent proceedings and who were not parties to CEP proceedings and

corresponding Contempt proceedings and were only proposed to be made parties

by filing of impleadment applications on which no orders are seem to have been

passed till the passing of the impugned order.

24. In our view, the scope of the contempt cannot be widened beyond the ambit

and purview of the principal proceedings, which were held before the Principal

Special Court and beyond the orders passed on it. In view of the observation made

in the Status Quo Order of 19.07.2024, it has to be confined to be read in

relation to the use of the word ``transactions'', which has had to be read in the

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 12 of 24 context and in correlation of the execution proceedings, and it cannot be made to

be extended in a distorted manner to be read as if the Order of Status Quo of

19.07.2024 created an absolute bar to the effect, that no proceedings of

Amalgamation as contemplated under Section 230 of the Companies Act could at

all be carried forward or if carried, it has to be treated to be in violation of the Status

Quo Order, as it has been rendered in contempt proceedings arising out of the

execution proceedings arising out of the Principal Special Court.

25. The Ld. Counsel for the Appellant has further referred to the provisions

contained under Section 230 (2) (a) of the Companies Act, and has contended that

the Respondents have indulged in suppression of information and this will render

the amalgamation proceedings bad in law. Section 230(2)(a) of Companies Act

stipulates that the Company or any other person, by whom an Application for

compromise / arrangement is made under sub-section (1), shall disclose to the

Tribunal by way of an Affidavit ``all material facts relating to the Company, such

as latest financial position of the Company, latest Auditor's Report on the accounts

of the Company and the pendency of any investigation or proceedings against the

Company''. Ld. Counsel for the Appellant argues that, it was the duty of the

Respondents to disclose the fact of Execution Petition proceedings, the contempt

proceedings and the status quo order, in the proceedings of amalgamation which

was being carried by way of CP(CAA) No.34/230/HDB/2024 to be read with CA

(CAA) No.25/230/HDB/2024 which they did not do, thus vitiating the

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 13 of 24 proceedings. However, Ld. Counsel for the Respondents argues to the contrary

that, in the light of the provisions contained under Sub Clause (a) of sub-section

(2) of Section 230 of the Companies Act, the responsibility cast upon the

Transferor or the Transferee Company, to disclose all material facts will be limited

to those material facts, only in relation to the ambit and areas covered by Sub

Clause (a) of sub-section (2) of Section 230.

26. Section 230 (2) (a) is extracted hereunder:

``(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 pendency of any investigation or proceedings against the company; ''

27. On a simpliciter reading of the aforesaid provision, it nowhere prescribes for

that being the Applicants to the proceedings under Section 230 of the Companies

Act, Respondents herein were required to disclose anything much more that what

was contemplated under Section 230 of the Companies Act itself.

28. The Respondents further contends that, since the law has not contemplated

any compulsion upon the parties to the proceedings under Section 230 of the

Companies Act, to disclose the factum of the Status Quo Order passed in an

execution proceeding, that too, when the Execution Petition was emanating from

the proceedings and the orders passed by Ras-Al-Khaimah Court to which they are

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 14 of 24 not parties and when the Status Quo Order in a Contempt proceedings was confined

to be related and to be read in relation to the transactions, specifically covered

under execution proceedings which cannot be widened to be read, to be applied to

the proceedings of amalgamation under Section 230 of the Companies Act, under

any set of circumstances.

29. They have further submitted that in addition, since, in the proceedings under

Section 31 of the Competition Act or in the execution proceedings or even in the

contempt proceedings, the Transferor or Transferee have not been arrayed as a

party till the passing of the order of sanction of scheme of Amalgamation, they

cannot be expected to carry any mandatory obligation of making a disclosure of

these proceedings as contemplated under Sub Clause (a) of sub-section 2 of Section

230 of the Companies Act, because grant of an Interim Order in a contempt

proceedings will not amount to be an investigation or a proceedings, which would

be relevant for the purposes of carrying out the proceedings under Section 230 of

the Companies Act.

30. The Ld. Counsel for the Respondent has further elaborated his argument, by

submitting that if the corresponding provision is taken into consideration, as

contained under sub-section (2) of Section 391, as it existed in the Companies Act

of 1956, and particularly, in the proviso to it, it did cast a responsibility of a

disclosure of any fact relating to investigation or of proceedings in relation to the

Company under Section 235 to Section 251, ``and the like proceedings''. After

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 15 of 24 the enactment of the Companies Act of 2013, there is no such provision, which is

reserved to be applied under Section 230 of the Companies Act, which has the same

implications, as that of the phrase ``and the like proceedings'', as contained under

Section 391 of the Companies Act, 1956.

31. In other words, use of the word 'like proceedings' in the proviso section 391

(2) of the Companies Act of 1956, specifically meant to address aspect of

disclosure of the investigation proceedings in relation to the Companies, opting for

merger/amalgamation. Since, no such expression has been protected to be applied

under Section 230 of the Companies Act of 2013, nor has it been incorporated,

there is no legal obligation which stands created on part of the Respondents to have

disclosed about the proceedings under Section 31 of the Competition Act (Mudhra-

Matrix-Tianish combination) and the Execution Proceedings, because, these

proceedings are independent altogether in their legislative intent and will not have

any bearing to the proceedings of amalgamation, as it has been permitted to be

carried under Section 230 of the Companies Act.

32. The Ld. Counsel for the Respondent has further submitted that, so far as the

Intervention Application No. 4 / 2024, is concerned, that would not be tenable at

the behest of the Appellant for the reason being that, the Appellant does not satisfy

the conditions of the proviso to sub-section (4) of Section 230 of the Companies

Act.

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 16 of 24

33. The proviso to sub-section (4) of Section 230 of the Companies Act reads

as under:

``(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.''

34. What is intended under the aforesaid provisions is that in a Scheme of

Arrangement or a Compromise as principally contemplated under Section 230 of

the Companies Act, a person who is holding a right of less than 10% of the

shareholding or having outstanding debts amounting to less than 5% of the total

outstanding debt, as per the latest audited Financial statement may not be a

necessary person who is required to be impleaded in the proceedings of

Amalgamation or Merger as contemplated under Section 230 of the Companies

Act.

35. The Respondent have contended that, so far as the Intervention Application

IA No. 4 / 2024 is concerned, since the Appellant did not satisfy the basic

ingredients provided under the proviso to sub-section (4) of Section 230 of the

Companies Act, that is, holding atleast 10% of the Shares of either of the Transferor

or the Transferee Company, or having outstanding debts amounting to not less than

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 17 of 24 5% of the total outstanding debt, it will not be necessary party to the proceedings

may not be necessary party to the proceedings.

36. They have further submitted that if the findings which had been recorded in

the Impugned Order are taken into consideration, at no stage the Appellant had

taken a stand that they have more than 10% of the Shareholding of either in the

Transferor or the Transferee Company, nor have 5% of the total outstanding debts,

so as to make them as a necessary party to be impleaded in the proceedings under

Section 230 of the Companies Act and that merely the fact that there was a Status

Quo Order, against certain parties who have interest in the Respondent companies

will not make them the necessary party to the instant proceedings of amalgamation.

37. After having giving a thoughtful consideration to the argument extended by

the Ld. Counsels, we are of the view that, the principal proceedings being the

proceedings between the RAKIA (Judgment Creditor) vs. Nimmagadda

Prasad/Iquest (Judgment Debtor), the consequential execution proceedings will

take the shape of the decree, to be executed, for which an execution proceedings

was filed before the Commercial Court, Hyderabad and for certain contraventions,

a status quo order was obtained from Hon'ble High Court of Telangana, and

therefore, the orders in these proceedings will only be binding inter se qua the

parties to the proceedings and it will not bind a party who is not a party to the

principal proceedings or to the proceedings of the contempt itself. Since

admittedly, the Transferor and the Transferee, under the proceedings under Section

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 18 of 24 230 of the Companies Act are not a party to the proceedings before Ras-al-

Khaimah Court, to the proceedings before Competition Commission of India,

under Section 31 of the Competition Act and to the Execution Proceedings before

Commercial Court, Hyderabad, any Status Quo Order passed in a contempt

proceedings arising out of an order of Execution will not bind them.

38. The Appellant has argued, that the Order of Status Quo, as passed in the

contempt proceedings would be an ``Order in Rem'' and any person who even

gets a knowledge of it, would be bound by it.

39. This contention of the Appellant is not acceptable by this Tribunal, for the

reason being that, the proceedings of the contempt were drawn under Section 10

of the Contempt Act by the Hon'ble High Court of Telangana, by drawing a

contempt proceedings arising out of an order passed by the Court subordinate to it.

If that be the situation, the interim order passed by the Hon'ble High Court of

Telangana, while exercising its contempt powers under Section 10 of the Contempt

of Courts Act, will only bind the parties who are the Judgment Debtors and it will

not bind the party who is not a party to the proceedings either before the Hon'ble

High Court or before the Court whose decree or order is sought to be executed.

40. By way of a repetition, we feel it apt to observe that knowledge of the

contempt proceedings and orders passed in it, would only be limited to the extent

which the Status Quo Order was made effective, which was in relation to the

transactions in dispute, The transaction in dispute herein will always have a

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 19 of 24 relativity to the principal proceedings under Section 31 of Competition Act

(Mudhra-Matrix-Tianish structure), and it will have no nexus with the proceedings

which are drawn under Section 230 of the Companies Act of the Amalgamation

(Tianish and Matrix), which has been carried by the Transferor and the Transferee

Company in a proceedings independent to the proceedings under Section 31 of the

Competition Act. Further, knowledge cannot be presumed to be with the

Respondents, when they are not party to the proceedings and more particularly,

when admittedly the Appellant had filed impleadment Applications, seeking to

implead the Respondents herein (the Transferor and Transferee Company of the

amalgamation proceedings under Section 230 of the Companies Act), in the

contempt proceedings, and in the execution proceeding too and the said

applications, though preferred much prior in time were still pending consideration

as on the date of passing of the Impugned Order without an order having been

rendered on them.

41. In these eventualities, when the Tribunal, fully conscious of the fact that, an

impleadment application in the Contempt Proceedings in respect of `Matrix' and

`Tianish', was pending consideration before the Honourable High Court, much

prior to passing of the Impugned Order, did not pass any orders on the application

for intervention separately and proceeded to pass the final order on both the

Intervention Applications i.e. IA No. 4 / 2024 and the Amalgamation Petition CP

(CAA) No. 34 / 230 / HDB / 2024, rejecting the Intervention Application and

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 20 of 24 approving the Scheme of Amalgamation, it will mean the Tribunal has quite

consciously considered the necessity of the appellant to be impleaded as a party to

the proceedings. Hence, no short comings can be attached to the order of approval

of the Scheme, because of the non-disclosure of the fact of the Status Quo Order.

Further, no mala fide motive can be attributed to the Transferor or the Transferee

Company that they deliberately bring this fact to the knowledge of Ld. NCLT,

especially when they were yet to be made as party to the proceedings.

42. In fact, the Ld. Tribunal in Para 2.7 to 2.11 of its Order passed in IA No. 04

/ 2024 has recorded the fact of operation of the Interim Order of 19.07.2024 of

Hon'ble High Court and the averment of the Appellant that the proposed merger is

a premeditated step of the `transactions in dispute' and that applications have been

filed to implead the Respondents herein in the said Contempt Petition. After

considering the submission of both Appellant and the Respondents, it has

concluded in Para 11 of its Order that the proposed merger will not result in any

apparent breach of the Status Quo Order of 19.07.2024, because there will be no

alienation of assets. Further, holding the view that in a Scheme of Amalgamation,

third party intervention is not provided as per the provisions of Section 230 of

Companies Act and that the Appellants herein do not establish themselves to be

the necessary party, it has proceeded to dismiss the Intervention Application.

43. The Ld. Counsel for the Appellant before the Tribunal and even before this

Appellate Tribunal has made reference to various Judgments, which he intends to

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 21 of 24 rely upon to support his contention as to why they would be the necessary party to

the proceedings, and would be needed to be impleaded in the proceedings, the Ld.

Counsel for the Respondent has sought to distinguish the cited Judgments, stating

that facts and circumstances in those cited cases will be altogether from the instant

case under consideration.

44. The Ld. Counsel for the Respondent, referring to Para 59 & 60 of the

Judgment reported in 2011 SCC Online Mad 611, Essar Telecommunications Pvt.

Ltd., has submitted that the proceedings in the matters of Essar

Telecommunications Pvt. Ltd., clearly lays down that objection can only be raised

with respect to the legality of the Scheme or being in violation of law in the light

of the observations made in Para 59 to 61 which is extracted hereunder:

``59. By way of the scheme of amalgamation, by merger, the liabilities are taken over by the transferee company, therefore it cannot be said that a right of party would be affected. The only objection which may raised by any person in response to notice can be with respect to the legality of the scheme or it being in violation of any law.

60. In the absence of violation of substantial law, merely because certain rights of third party are going to be affected, cannot be a ground to permit third party to file objection to the scheme, once the scheme is as per statutory provisions of sections 391 to 394 of the Companies Act and approved by majority.

61. In case the provisions of section 391 are interpreted as suggested by learned senior counsel for the petitioner, it will go against the very object of section 391, which makes a compromise or arrangement if approved to be binding even against unwilling member or creditor. Section 391 is a complete code by itself. Once a scheme of compromise and arrangement squarely falls within the four corners of the section, it can be sanctioned.''

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 22 of 24

45. The Ld. Tribunal has rightly observed, that in the light of the provisions

contained under the proviso to sub-section (4) of Section 230 and also since no

substantial violation of law was involved, there was no locus standi for the

Appellant to file an Application for Intervention, because, they were not satisfying

the ingredients which are contemplated, which was mandatory under law as

provided under Section 230 of the Companies Act and hence, they do not become

a necessary party to the proceedings requiring to be impleaded in the proceedings.

46. The Ld. Counsel for the Appellant has very heavily relied upon the

observation made in Para 10 of the Impugned Order which is extracted hereunder:

``10. Thus, it is clear from the contentions put forth by the Learned Sr. Counsel for the Intervention Petitioner that Scheme of Amalgamation is initiated by suppressing the information relating to ongoing legal proceedings and Court orders and in order to circumvent the status quo order granted by the Hon'ble High Court of Telangana.''

47. In fact if the entire contents of the said paragraph is taken into consideration,

it is only the recording of the pleading of the Appellant relating to the suppression

of fact and information. This has been quite elaborately dealt by us in preceding

paragraphs, that, non-disclosure of a Status Quo Order in a proceedings, where a

Transferor or Transferee, are not a party will not amount to be a suppression of a

material fact and that too, when the suppression of the fact has no gravamen effect,

as it has been contemplated either under Section 391 of the Companies Act, 1956

or even under Section 230 (2) (a) of the Companies Act, which casts on the parties

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 23 of 24 to the amalgamation proceedings, the responsibility of disclosure of material fact

which was limited to the investigation of proceedings. More importantly, so far as

the Intervention Application is concerned, since the Appellant had failed to

establish that amalgamation would be having bearing on their rights and since they

are not falling within the domain of the proviso to sub-section (4) of Section 230,

the Intervention Application has been rightly rejected, which does not call for any

interference by this Tribunal.

48. Since, we have already held that the Appellant is not at all a necessary party

to the proceedings under Section 230 of the Company Act or to the Company

Petition i.e. CP (CAA) No.34/230/HDB/2024, the principal challenge given to the

Order of Amalgamation / Merger as passed on 10.03.2025 / 25.03.2025, which is

the subject matter of Company Appeal (AT) (CH) No. 46 / 2025, stands answered

in the light of the observations already made in the above paragraphs.

49. Subject to the aforesaid exception, the instant Company Appeal (AT) (CH)

No. 46 / 2025 and Company Appeal (AT) (CH) No. 47 / 2025, lack merit and the

same are dismissed.

[Justice Sharad Kumar Sharma] Member (Judicial)

[Jatindranath Swain] Member (Technical) 06/08/2025

SR/MS/RS

CA (AT) (CH) Nos. 46 & 47 / 2025 Page 24 of 24