NCLT Erred in Not Allowing Companies for Voting Through Proxy for Approval of Scheme u/s 230 | NCLAT
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Case Details: TCR Trading (P.) Ltd. v. Tridev Advisory Services (P.) Ltd. - [2023] 154 taxmann.com 296 (NCLAT-New Delhi)
Judiciary and Counsel Details
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- Anant Bijay Singh, Judicial Member & Naresh Salecha, Technical Member
- Rishabh Jain, Adv. for the Appellant.
- Nikhil Verma, Adv. for the Respondent.
Facts of the Case
In the instant case, Transferor Company No. 1, was proposed to merge with another transferor Company No. 2 into the respondent (i.e. the transferee company). All three companies proposed a scheme of amalgamation to reduce expenses, bring efficient cash management and consolidation of business.
They jointly filed an application before the Tribunal seeking the dispensation of the meeting of shareholders of transferor companies and transferee companies. Additionally, they also sought approval from both unsecured and secured creditors of the transferor companies.
The Transferee Company also sought direction for convening meetings of secured and unsecured creditors, as it did not obtain NOCs from its secured and unsecured creditors.
The Adjudicating Authority (NCLT) by the impugned order directed to convene a meeting and allowed voting on the proposed scheme by voting in person but voting through proxy was not allowed. Subsequently, an appeal was made to the National Company Law Appellate Tribunal (NCLAT) against the order passed by the NCLT.
It was noted that in view of section 230(4) of the Companies Act, 2013 and Rules 9, 10 and 13 of the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016, voting by proxy is allowed.
NCLAT Held
The NCLAT observed that an explanation to Rule 5(d) of the Companies (Compromises, Arrangements and Amalgamation) Rules, 2016 stated that the Chairman, inter alia shall, at the general meeting, at the end of discussions on resolutions on which voting is to be held, allow voting by the use of an electronic voting system for all those members who are present at a general meeting but have not cast their votes by availing remote e-voting facility.
The NCLAT held that the NCLT erred by not allowing voting in modes other than in-person at meetings of secured and unsecured creditors of the transferee company. Therefore, the impugned order was to be set aside.
List of Cases Reviewed
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- Order of NCLT – Delhi in (CAA) 116/MD/2021, dated 8-12-2021 (para 13) reversed.
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