Dispensation of the meetings: Judicial discretion for family companies

[2021] 129 taxmann.com 395 (Article)

In the case of Mergers and Amalgamation of Parent-Subsidiary Companies under the Companies Act, 2013 law provides for discretion to NCLT for dispensation of meetings. However, the settled law under the Pre-NCLT era was dispensing the meetings when the relationship of Holding-Subsidiary Company existed but the contradictory views led to a culmination of appeals. This article attempts to discuss the issue and the law now settled by the NCLAT.

An application under section 230-232 of the Companies Act 2013 is to be made to the Hon’ble NCLT. Section 232(1) provides that on an application made to the Tribunal in case of compromise or arrangement, the Tribunal may order a meeting of creditors or class of creditors or of members or class of members as the case may be, which is to be called, held and conducted in such a manner as the Tribunal directs.

Further Section 230(9) of the Companies Act 2013 provides that the Tribunal may dispense with the meeting of creditor or class of creditors where such creditors or class of creditors having at least 90% value agree and confirm by way of affidavit to the scheme of compromise or arrangement.

Hence as per the above provisions, the Tribunal may dispense with the meeting of creditors where such creditors or class of creditors having 90% value agree and confirm to the same.

Section 230(9) specifically provides in relation to the dispensation of the meeting of Creditors and nowhere mentions any criterion in respect of dispensation of the meeting of members of the Company.

Now the question arises as to the following:

• • Can the meeting of the shareholders be dispensed even when no specific provision in respect of the same is provided under the Act?
  • Can the meetings of the shareholders or creditors be dispensed even when no consent is taken from shareholders or creditors?

To discuss the above issues we shall discuss the recent Judgments of Hon’ble NCLAT in the matter of Ambuja Cements Ltd., In re CA(AT) No. 19 of 2021, dated 6-4-2021 and “Mohit Agro Commodities Processing (P.) Ltd. & Gujarat Ambuja Exports Ltd” [CA(AT ) No. 59 of 2021, dated 28-6-2021]

The above appeals were made to the Hon’ble NCLAT out of the order made by the Hon’ble NCLT, Ahmedabad wherein the Transferor Company and the Transferee Company filed Applications before the Tribunal under section 230 to 232 of the Act seeking dispensation of the meeting of the equity shareholders, secured creditors and unsecured creditors in respect of the scheme of Amalgamation of the “Transferor” with the “Transferee Company”.

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