Spark Capital Advisors (India) ... vs Unknown

[Arising out of Impugned Order dated 1st June, 2022 passed by the National Company Law Tribunal, Chennai Bench, Chennai in CA (CAA)/14/2022]

IN THE MATTER OF: 1. Spark Capital Advisors (India) Private Limited (CIN): U67190TN1998C039818) Having its Registered office at Reflections No.2Lelth Castle Center Street, Santhome High Road Santhome, Chennai, Tamil Nadu - ...Appellant No.1 600 028, India Demerged Company

2. Spark Institutional Equities Private Limited (CIN): U65999TN2022PTC149473) Having its Registered office at Reflections No.2 Lelth Castle Center Street, Santhome High Road Santhome, Chennai, Tamil Nadu - ...Appellant No.2 600 028, India Resulting Company

Present: For Appellant : Dr. K.S. Ravichandran, PCS

(Virtual Mode)

KANTHI NARAHARI, MEMBER (TECHNICAL)

Preamble:

The Present Appeal is filed under Section 421 of the Companies Act,

2013 against the order dated 01.06.2022 passed by the National Company

Law Tribunal, Chennai Bench, Chennai in CA (CAA)/14/2022, whereby the

Company Appeal (AT) (CH) No. 39 of 2022 1 of 6 NCLT directed the Appellant No.1 to convene meeting of unsecured creditors

on 20.07.2022 at 11 a.m. aggrieved by the same, the Appellants preferred the

present Appeal.

Brief Facts:

Appellant's Submissions:

2. Dr. K.S. Ravichandran, Learned PCS appeared for the Appellants

submitted that the Hon'ble Tribunal allowed the Application filed by the

Appellants in relation to the scheme of arrangement between the Appellant

No.1 being a Demerged Company and Appellant No.2 being Resultant

Company. The Learned NCLT dispensed with the convening of meeting of 49

equity shareholders and one secured creditor in respect of the Appellant No.1

Company. However, the Learned NCLT directed the Appellant No.1 Company

to convene the meeting of unsecured creditors to be held at 11 a.m. on 20th

July, 2022 at Registered Office of the Demerged Company or if not convenient

at any other suitable place for which prior approval shall be sought from the

Tribunal within a period of 7 days from the date of the order i.e. 01.06.2022.

In relation to the Appellant No.2 (Resulting Company), the Learned NCLT

dispensed with the meetings of equity shareholders since there were only two

equity shareholders and dispensed with secured and unsecured creditors

since there are nil creditors.

3. The Learned PCS submitted that the above order has been issued at the

first motion in relation to a scheme of demerger falling within the meaning of

Company Appeal (AT) (CH) No. 39 of 2022 2 of 6 Sections 230 to 232 of the Companies Act, 2013 between the Demerged

Company and the Resulting Company. The Demerged Company has been

engaged in the business of dealing in institutional equities comprising of stock

broking and equity research services, merchant banking services, depository

participants services and investment activities, since its incorporation on

02.02.1998. The demerged company is a going concern, financially sound and

solvent and the scheme does not involve any compromise with any of the

stakeholders. Both the companies are solvent and will be able to meet their

respective liabilities and other obligations. The demerged company has also

produced solvency certificate duly signed by the authorised person of the

company and the independent Chartered Accountant. The resulting company

was incorporated only on 28.01.2022 to operate as a resulting company.

4. It is submitted that there is no compromise with respect to any of its

creditors, secured or unsecured and the networth of the demerged company

is highly positive. However, the Learned NCLT did not take into consideration

the said fact for dispensing with meeting of unsecured creditors of the

Appellant No.1 Company. It is submitted that Appellant No.1 company having

49 unsecured creditors and the total value is Rs.1,09,49,683/-.

5. The Learned PCS relied upon judgment of this Tribunal in re Ambuja

Cement passed in Company Appeal (AT) No.19 of 2021 dated 06.04.2021

whereby this Tribunal after considering the several judgments dispensed with

the meetings of equity shareholders, secured and unsecured creditors of the

Company Appeal (AT) (CH) No. 39 of 2022 3 of 6 Appellant Company therein. He submitted that the present case is also

squarely covered by the above judgment and also judgment of Hon'ble High

Court of Bombay and other decisions of this Tribunal.

6. In view of the reasons as stated above the Learned PCS prayed this

Bench to allow the Appeal by setting aside the impugned order dated

01.06.2022 and sought a direction to dispense with the convening of the

meeting of unsecured creditors of the demerged company as ordered by

Learned Tribunal vide impugned order dated 01.06.2022.

Analysis / Appraisal:

7. Heard the Learned PCS appeared for the Appellant and perused the

pleadings, documents and citations relied upon by him. It is apt to note that

the Learned NCLT vide impugned order dated 01.06.2022 directed to convene

a meeting of unsecured creditors of the Appellant No.1 Company (Demerged).

However, the contention of the Learned PCS is that the Appellant No.1

Company is a solvent company and financially sound and the scheme does

not involve any compromise with any of the stakeholders. It is also stated that

both the Companies are commercially solvent and will be able to meet their

respective liabilities and other obligations. At page 321 of Volume-II a

certificate issued by the Chartered Accountant is enclosed wherefrom it is

seen that the total value of the only secured creditor i.e. ICICI Bank Limited

is Rs.31,39,28,547.83 and the total value of unsecured creditors is

Rs.1,09,49,683/- as on 31.12.2021. At page 323 Volume-II the list of

Company Appeal (AT) (CH) No. 39 of 2022 4 of 6 unsecured creditors is enclosed and wherefrom it is seen that there are total

49 unsecured creditors and the value is Rs. 1,09,49,683/-. The Learned

NCLT dispensed with the convening of meeting of secured creditor stating that

the consent by way of an affidavit has been obtained and the same is placed

on record, hence, the meeting is dispensed with.

8. The Learned PCS submitted that the outstanding dues of the unsecured

creditors as on 31.12.2022, have been settled as of 06.06.2022 i.e. after

passing the impugned order dated 01.06.2022. The said list has been

enclosed at page 608 and 609 of volume-III wherefrom it shows that there are

no dues to be payable to the unsecured creditors.

9. After, conclusion of hearing of this Appeal, the Learned PCS with the

permission of this Tribunal filed Notes on Submission dated 16.06.2022,

which was received on 17.06.2022 by the registry of NCLAT, Chennai. At para

18 of Page 3, it is stated that all the unsecured creditors (49) have been fully

paid. From the list as enclosed and from the Notes of Submission, it is

unequivocal that the unsecured creditors have been paid fully

10. Without delving into the merits of the case, since the unsecured

creditors have been fully paid and no other issue involved in this Appeal,

therefore, this Tribunal comes to a resultant conclusion that no meeting of

unsecured creditors is warranted. Hence, this Tribunal pass the following

order:

Company Appeal (AT) (CH) No. 39 of 2022 5 of 6 i) The direction passed by the NCLT dated 01.06.2022 with regard

to convening the meeting of unsecured creditors of Appellant No.1

(Demerged Company) is dispensed with.

ii) Consequently, the impugned order dated 01.06.2022 whereby it

directed the Appellant company to convene the meeting of

unsecured creditors on 20.07.2022 at 11 a.m. at the registered

office of the demerged company is hereby set aside.

iii) The Appellants are liberty to proceed with filing of petition for

sanctioning the scheme in accordance with law.

11. Accordingly, the Appeal is allowed. No orders as to cost. Applications if

any, pending stand closed.

[Justice M. Venugopal] Member (Judicial)

[Kanthi Narahari] Member (Technical) 2nd August, 2022

pks

Company Appeal (AT) (CH) No. 39 of 2022 6 of 6