The question as to whether requirement of quorum specified by the NCLT, not found in statutory regulations, is mandatory, was examined by the NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI, by a bench consisting of Justice Anant Bijay Singh, Member (Judicial), and Ms. Shreesha Merla, Member (Technical), in the matter of In Re Minda I Connect Pvt. Ltd. & Minda Industries Limited [COMPANY APPEAL (AT) NO. 134 of 2021], on 23.12.21.
Aggrieved by the Order in dated 31.08.2021 passed by NCLT (National Company Law Tribunal, New Delhi Bench, CourtII), the Appellants namely Minda I Connect Pvt. Ltd. and Minda Industries Limited, preferred this Appeal under Section 421 of the Companies Act, 2013. On 02.06.2021, an Application under Section 230-232 of the Companies Act, 2013 was filed for seeking exemptions from and seeking directions for convening or holding of the meetings of Shareholders and Creditors of the appellants’ companies, to consider and approve the Scheme of Amalgamation. On 31.08.2021, NCLT dispensed with the meetings of Shareholders, Secured Creditors and Unsecured Creditors of the Appellants Company, however directed that at least 440 Shareholders and at least 50 Unsecured Creditors of the Second Appellant Company were required to conduct the respective meetings which would approve the Scheme of Amalgamation.
The Learned Counsel for the Appellants submitted that NCLT went beyond the provisions of Section 103(3) of the Companies Act, 2013 by directing that at least 440 shareholders shall constitute the Quorum in case of Shareholders Meeting and at least 50 Unsecured Creditors shall constitute the Quorum in case of Unsecured Creditors Meeting. It is the case of the appellants that Section 230(6) of the Companies Act, 2013 provides for a majority of persons representing 3/4th in value of the Creditors or Shareholders, as the case may be, voting is required to ratify in comprise or arrangements. It was also submitted that Section 230(6) of the Companies Act, 2013 does not determinate the number of Equity Shareholders or the number of Unsecured Creditors who should constitute a ‘Quorum’. Learned Counsel argued that consent for the Scheme of Amalgamation and participating in the Meeting are two separate things and participation of less than 440 equity shareholders or 50 Unsecured Creditors in the adjourned Virtual Meeting cannot be deemed to constitute a lack of consent of Shareholders or Creditors for the Amalgamation. The number of Creditors present at the meeting can always give consent and approval of the Scheme of Amalgamation and if the approval satisfies the conditions of Section 230(6) of the Companies Act, 2013, it is sufficient compliance of the provisions of the Companies Act, 2013. It was also strenuously argued that NCLT failed to appreciate that a determinate number of Equity Shareholders or Unsecured Creditors is not required to constitute a Quorum of Virtual Meeting of Equity Shareholders or Unsecured Creditors for the purpose of Amalgamation of two companies under Section 230-232 of the Companies Act, 2013.
The National Company Law Appellate Tribunal, Principal Bench, New Delhi, took into account the facts and circumstances involved as well as the appellants’ contentions, and analysed Section 103 of the Companies Act, 2013. Further, the tribunal observed that the 10% of the Shareholders determined by NCLT, to constitute the Quorum, is not to be found in the impugned order, and is not provided for under Section 230-232 of the Act or under the Companies (Compromises, Arrangements and Amalgamation), Rules, 2016. In the absence of such specification, specified number of shareholders or specified number of unsecured creditors cannot be mandated to constitute a revised Quorum. Keeping in view the provisions of Section 230-232 of the Act and the Rules thereof, that voting on the Scheme of Amalgamation can happen either in the Virtual Meeting or by Postal Ballet or by E-Voting and therefore the number of Shareholders or Creditors present at the Virtual Meeting is not determinative of their consent or lack thereof. The number of Creditors present at the meeting can always give consent and approval of the Scheme of Amalgamation and if the approvals satisfies the conditions of Section 230 (6) of the Act, if is sufficient compliance of the provisions of Companies Act, 2013. The three-fourths majority required for the purpose of amalgamation of two companies would come in via e-voting because the Transferee Company is a listed company and has to mandatorily provide e-voting facility to all its shareholders in terms of Regulation 44 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the appeal was allowed, and the impugned order was set aside. It was directed that meetings may be conducted within 8 weeks of the present order.
Judgement reviewed by Bhargavi