2025 (5) TMI 2008 - AT - Companies Law

Sanction of scheme of amalgamation - Sections 230 to 232 of the Companies Act. 2013 read with Rule 3 of the Companies (Compromises Arrangements and Amalgamations) Rules 2016 - HELD THAT - The appellant has requested that he may be allowed to withdraw this appeal and may be permitted to file an application before the Ld. Tribunal for recalling of the impugned order on the basis of the order passed in CA (AT) (Ins) No. 2282 of 2024 because the impugned order has been held to be per incuriam. Permission is granted. Appeal disposed off.

Summary

Issues Presented and Considered

1. Whether the substitution of the appellant's name from Aditya Birla Finance Ltd. to Aditya Birla Capital Ltd. should be allowed following the amalgamation of the former into the latter under Sections 230 to 232 of the Companies Act, 2013 and Rule 3 of the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016.

2. Whether the impugned order dated 20.12.2024 dismissing the application filed under Section 95 of the Insolvency and Bankruptcy Code (IBC) was correctly passed, particularly in light of subsequent rulings holding that the order was per incuriam.

3. Whether the National Company Law Tribunal (NCLT) has jurisdiction to entertain an application under Section 95 of the IBC filed by a financial creditor against a personal guarantor even when no insolvency resolution or liquidation proceedings are pending against the corporate debtor.

Issue-wise Detailed Analysis

Issue 1: Substitution of Appellant's Name Post-Amalgamation

Legal Framework and Precedents: The amalgamation was carried out under Sections 230 to 232 of the Companies Act, 2013, which provide for compromises, arrangements, and amalgamations of companies. Rule 3 of the Companies (Compromises, Arrangements, and Amalgamations) Rules, 2016 governs procedural aspects. The relevant precedent is the order dated 24.03.2025 by the NCLT Special Bench, Ahmedabad, which sanctioned the amalgamation.

Court's Interpretation and Reasoning: The Court referred to paragraph 17(x) of the NCLT order which explicitly states that "All proceedings now pending by or against the amalgamating company shall be continued by or against the amalgamated company." This provision authorizes substitution of the party name in ongoing proceedings.

Key Evidence and Findings: The appellant submitted the certified copy of the amalgamation order and the amended memo of parties reflecting the name change.

Application of Law to Facts: Since the amalgamation is sanctioned by the competent authority and the law mandates continuation of proceedings against the amalgamated entity, substitution of the appellant's name was appropriate and necessary.

Treatment of Competing Arguments: The respondent raised no objection to the substitution application, indicating no dispute on this procedural aspect.

Conclusions: The Court allowed the substitution of the appellant's name to Aditya Birla Capital Ltd. and took the amended memo of parties on record.

Issue 2 & 3: Jurisdiction of NCLT under Section 95 of the IBC and Validity of the Impugned Order

Legal Framework and Precedents: Section 95 of the IBC empowers a financial creditor to initiate insolvency proceedings against a personal guarantor. The issue revolves around whether NCLT has jurisdiction to entertain such applications in the absence of pending insolvency resolution or liquidation proceedings against the corporate debtor. Binding precedents include judgments by this Tribunal in State Bank of India vs. Mahendra Kumar Jajodia and Mahendra Kumar Agarwal vs. PTC India Financial Services, which held that applications under Section 95 are maintainable even if no insolvency proceedings are pending against the corporate debtor. These judgments were affirmed by the Supreme Court by order dated 06.05.2022.

Court's Interpretation and Reasoning: The Court reproduced paragraph 42 from a recent judgment, which criticized two NCLT Kolkata Bench judgments (Aditya Birla Finance Ltd. vs. Sarita Mishra and Tata Capital Financial Services Ltd. vs. Arjun Agarwal) that dismissed Section 95 applications on the ground that NCLT lacks jurisdiction absent pending proceedings against the corporate debtor. The Tribunal held these NCLT judgments to be per incuriam, as they disregarded binding precedents without valid distinction.

Key Evidence and Findings: The appellant relied on the above precedents and the Tribunal's recent pronouncement holding the impugned order per incuriam. The NCLT Kolkata Bench decisions were found to be contrary to binding authority and thus invalid.

Application of Law to Facts: Since the impugned order dismissing the Section 95 application was based on the flawed reasoning of the NCLT Kolkata Bench, it was held to be per incuriam. The appellant was permitted to withdraw the appeal and file an application for recalling the impugned order before the learned Tribunal, invoking the clarified legal position.

Treatment of Competing Arguments: The Court did not record any opposition to the appellant's request for withdrawal or to the underlying legal position. The Tribunal accepted the appellant's submission that the impugned order was rendered per incuriam and allowed liberty to seek recall.

Conclusions: The appeal was disposed of as infructuous with liberty granted to the appellant to seek recall of the impugned order based on the clarified legal position that NCLT has jurisdiction under Section 95 even without pending insolvency proceedings against the corporate debtor.

Significant Holdings

"All proceedings now pending by or against the amalgamating company shall be continued by or against the amalgamated company."

"The judgments of NCLT Kolkata Bench in Aditya Birla Finance Ltd. vs. Sarita Mishra and Tata Capital Financial Services Ltd. vs. Arjun Agarwal are in teeth of binding judgments of this Tribunal and are per incuriam."

"The NCLT has jurisdiction to entertain an application under Section 95 of the Insolvency and Bankruptcy Code filed by a financial creditor against a personal guarantor even when no insolvency resolution or liquidation proceedings are pending against the corporate debtor."

"The impugned order dated 20.12.2024 dismissing the Section 95 application is held to be per incuriam and liable to be recalled."

"The appellant is permitted to withdraw the present appeal and file an application for recall of the impugned order before the learned Tribunal."