No Requirement of Consent of Secured Creditors for Amalgamation when Net Worth of Transferor and Transferee is highly positive: NCLAT [Read Order]

The New Delhi Bench of the National Company Law Appellate Tribunal (NCLAT), ruled that No requirement of consent of secured creditors for Amalgamation when Net Worth of transferor and transferee is highly positive. The appellant in the present appeal is Lasa Supergenerics Limited.

Harishree Aromatics and Chemicals Private Limited (Transferor Company) and Lasa Supergenerics Limited (Transferee Company) proposed amalgamation and jointly filed an application before the National Company Law Tribunal (NCLT), for approving the Amalgamation Scheme. The Tribunal while dispensing with the meeting of the secured creditor, directed the Appellant to obtain No Objection Certificate (NOC) from the Secured Creditor before the final date of hearing which is the subject matter of challenge in the present Appeal.

The Counsel for the appellant submitted that the Tribunal ignored the settled legal position in the judicial precedents relied by the Appellant Company, that dispensation as well as the requirement of a consent or NOC is granted in the case of amalgamation where: (i) Net-worth of both companies is highly positive; (ii) Unsecured creditors are paid-off in the ordinary course of business; (iii) Scheme is not prejudicial to their interests as their liability is not proposed to be reduced or extinguished, and no sacrifice is called for because of which they are not parties to the scheme.

A Bench comprising Justice Anant Bijay Singh Member (Judicial) and Shreesha Merla Member (Technical) relied on the judgment in Mohit Agro Commodities Processing Pvt. Ltd wherein it was observed 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

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