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TMI Blog2023 (12) TMI 1220X X X X Extracts X X X X X X X X Extracts X X X X ..... eme of Amalgamation among the Appellants and M/s. SESA Mining Corporation Limited (hereinafter referred to as the 'Transferee Company'). By the impugned order, the NCLT while sanctioning the Scheme, modified the Appointed Date to 01.10.2022 as against the Appointed Date of 01.10.2020, as stated in the Scheme approved by NCLT, Mumbai. 2. The NCLT while fixing the Appointed Date as 01.10.2020, reasoned as follows: "7.1.9. Due to such an interpretation being given to Section 232(6) of the Companies Act, 2013, the Ministry of Corporate Affairs (MCA) received several queries which it has addressed by way of the circular. It has relied on the rulings of the Hon'ble Apex Court in Marshall Sons & Co. India Limited (supra) and the Hon'ble Madras High Court in Equitas Housing Finance Limited and Equitas Micro Finance Limited with Equitas Finance Limited in C.P. Nos. 119 to 121 of 2016 as the basis for its clarification. On a perusal of the clarification issued by the MCA vide its General Circular No.09/2019 on 21.08.2019, posits the following facts; The 'Appointed Date' can be a specific calendar date or be tied to the occurrence of an event e.g., grant or transfer of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fective with effect from the Appointed date. 7.1.12. Thus, a perusal of the definition clause in the Scheme would posit the fact that a discretion has been conferred upon NCLT to fix an Appointed Date. In the absence of a specific justification in relation to the Appointed Date as given by the Petitioner Company, this Tribunal in terms of Clause 1.2 of Part I of the Scheme hereby fix the Appointed Date as 01.10.2022." 3. The Learned Senior Counsel Mr. Krishnendu Datta submitted that NCLT has failed to consider that the Chennai First Motion Application was filed on 29.09.2021 by the Appellants and therefore the Appointed Date, mentioned in the Scheme was not antedated, beyond a year from the date of filing of the First Motion Application. 4. It is submitted that as per the MCA General Circular No. 09 / 2019, F.No. 7 / 12 / 2019 / CL - I, dated 21.08.2019 (hereinafter referred to as the 'MCA Circular'), no reasons were required to be provided for the said Appointed Date, since it was not ante-dated, beyond a year from the date of filing of the Chennai First Motion Application. It is argued that since NCLT, Mumbai, had by way of an Order dated 06.06.2022, already sanctioned the Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he date of filing of the application for scheme of merger / amalgamation in NCLT. However, if the 'appointed date' is significantly ante-dated beyond a year from the date of filing, the justification for the same would have to be specifically brought out in the scheme and it should not be against public interest." 11. Clause 1.2 of the Scheme provides that "Appointed Date" means, October 1, 2020, or such other date as may be fixed or approved by the National Company Law Tribunal or any other appropriate authority." 12. It is not in dispute that the NCLT, Mumbai had already sanctioned the Scheme with the Appointed Date of 01.10.2020, vide Order dated 06.06.2022. In the IA filed on 31.03.2023, the Appellants had sought for rectification of the Appointed Date to 01.10.2020, which was dismissed on the ground that NCLT did not have the power to review its own order. It is seen from the record that the Appointed Date as per the Scheme is 01.10.2020 'and the same is within a period of one year from the date of filing of the Application for Approval of the Scheme with NCLT i.e., 29.09.2021'. 13. At this juncture, it is relevant to rely on the Judgment of this Tribunal, reported in 2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he class represented by them for whom the scheme is meant. 9. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. It is the commercial wisdom of the parties to the scheme who have taken an informed decision about the usefulness and propriety of the scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. Consequently the Company Court& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n complied with'. The Courts / Tribunal would have no further jurisdiction to sit in Appeal over the 'Commercial Wisdom of the Shareholders of the Company'.
15. In the instant case, apart from the fact that NCLT - Mumbai, had already fixed the Appointed Date of the Scheme as 01.10.2020, the date of filing of the Application for Approval of the Scheme with NCLT - Chennai is 29.09.2021 and therefore is within a period of one year, and hence, attracts Clause 6(c) of the MCA General Circular No. 09/2019 dated 21.08.2019.
16. Additionally, NCLT has the discretion to fix the Appointed Date which could be beneficial to the interests of the Company, which in the instant case ought to have been fixed at 01.10.2020 as having two different Appointed Dates, would render the Scheme unworkable. The NCLT has powers under Rule 11 of the NCLT Rules, 2016, to fix the Appointed Date, which would be beneficial to the Scheme of Amalgamation.
17. For all the foregoing reasons, this Company Appeal (AT) (CH) No. 99 of 2023 is allowed and the Orders of the National Company Law Tribunal, Chennai, dated 22.03.2023 and 09.10.2023 are set aside. The connected pending IA No. 1262 of 2023 is Closed. X X X X Extracts X X X X X X X X Extracts X X X X
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