1. Amalgamation scheme — Absorption of employees — Eligibility based on employment status on effective date. (Para 1 , 2 , 3 )
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2026 Supreme(Sikk) 45
THE HIGH COURT OF SIKKIM: GANGTOK
A. Muhamed Mustaque, C.J.
Homnath Neopaney, S/o Late Shree Prasad Neopaney - Petitioner
Versus
NHPC Ltd. - Respondent
WP(C) No.30 of 2025
Decided On : 11-09-2026
Important Points
Employees seeking benefits under a corporate amalgamation scheme must be on the rolls of the transferor company on the effective date of the scheme. Those who ceased employment with the transferor company prior to the amalgamation cannot claim such benefits.
Subject
Employment Law - Corporate Amalgamation
Act Referred
Headnote
(A) Insolvency and Bankruptcy Code, 2016 - Section 7 - Companies Act, 2013 - Section 2(45) - Amalgamation of companies - Transfer of employees - Eligibility for benefits - The entitlement to benefits under a scheme of amalgamation depends on whether the claimants continued to be employees of the transferor company on the date the scheme became effective - The provision in a scheme relating to the continuation of employees of the transferor company cannot be invoked by persons who were not employees of the transferor company on the date on which the scheme became effective (Paras 4, 9).
Facts of the case:
The petitioners were initially regular employees of a company which subsequently underwent insolvency proceedings. Pursuant to a resolution plan, the said company became a subsidiary of a government company. The petitioners then accepted employment on a fixed-tenure basis with the government company, thereby ceasing to be employees of the subsidiary company. Later, a scheme of amalgamation between the subsidiary company (transferor) and the government company (transferee) was approved, stipulates that employees of the transferor company would be absorbed by the transferee company. The petitioners sought directions to be absorbed as permanent employees based on this amalgamation scheme.
Findings of Court:
The court found that the petitioners had ceased to be employees of the transferor company years prior to the amalgamation, as they had opted for fixed-tenure employment with the transferee company following the approval of a resolution plan by the National Company Law Tribunal. Since they were not on the rolls of the transferor company on the date of amalgamation, they were ineligible for the benefits of the scheme.
Issues: Whether persons who ceased to be employees of the transferor company before the effective date of an amalgamation scheme can claim employment benefits under said scheme.
Ratio Decidendi: The court ruled that the benefit of an amalgamation stipulation regarding the continuation of employment is only available to those who were employees of the transferor company on the date of amalgamation; those who ceased such employment prior to the effective date cannot invoke the scheme.
Result: Writ Petition fails and is hereby dismissed.
Facts of the case:
The petitioners were initially regular employees of a company which subsequently underwent insolvency proceedings. Pursuant to a resolution plan, the said company became a subsidiary of a government company. The petitioners then accepted employment on a fixed-tenure basis with the government company, thereby ceasing to be employees of the subsidiary company. Later, a scheme of amalgamation between the subsidiary company (transferor) and the government company (transferee) was approved, stipulates that employees of the transferor company would be absorbed by the transferee company. The petitioners sought directions to be absorbed as permanent employees based on this amalgamation scheme.
Findings of Court:
The court found that the petitioners had ceased to be employees of the transferor company years prior to the amalgamation, as they had opted for fixed-tenure employment with the transferee company following the approval of a resolution plan by the National Company Law Tribunal. Since they were not on the rolls of the transferor company on the date of amalgamation, they were ineligible for the benefits of the scheme.
Issues: Whether persons who ceased to be employees of the transferor company before the effective date of an amalgamation scheme can claim employment benefits under said scheme.
Ratio Decidendi: The court ruled that the benefit of an amalgamation stipulation regarding the continuation of employment is only available to those who were employees of the transferor company on the date of amalgamation; those who ceased such employment prior to the effective date cannot invoke the scheme.
Result: Writ Petition fails and is hereby dismissed.
Legal Category Hierarchy
Advocates Appeared:
For the Petitioner:Dr. (Mrs.) Doma T. Bhutia, Senior Advocate with Mr. Saurav Rai and Mr. Sonam Topden Bhutia, Advocates
For the Respondent:Mr. Jorgay Namka, Senior Advocate with Mr. Lahang Limboo, Advocate, Ms. Sangita Pradhan, Deputy Solicitor General of India with Mr. Amit Kumar Sharma, Advocate, Ms. Pema Bhutia, Assistant Government Advocate
For the Petitioner:Dr. (Mrs.) Doma T. Bhutia, Senior Advocate with Mr. Saurav Rai and Mr. Sonam Topden Bhutia, Advocates
For the Respondent:Mr. Jorgay Namka, Senior Advocate with Mr. Lahang Limboo, Advocate, Ms. Sangita Pradhan, Deputy Solicitor General of India with Mr. Amit Kumar Sharma, Advocate, Ms. Pema Bhutia, Assistant Government Advocate
Table of Contents
2. Petitioners claimed entitlement to permanent absorption; respondent disputed their status as employees on amalgamation date. (Para 1 , 4 )
3. Petitioners ceased to be employees of transferor company before amalgamation by accepting fixed tenure employment with transferee. (Para 4 , 8 , 9 , 10 )
4. Employees not on rolls of transferor company on amalgamation effective date cannot claim benefits under amalgamation scheme. (Para 4 , 8 , 9 )
6. Who is entitled to benefits under a scheme of amalgamation concerning employees?
Only those employees who are on the rolls of the transferor company on the date the scheme becomes effective. (Para 4 , 8 , 9 )
7. What is the effect of accepting fixed tenure employment with the transferee company before amalgamation?
It results in the employee ceasing to be an employee of the transferor company, losing eligibility for amalgamation benefits. (Para 6 , 8 , 10 )
JUDGMENT :
A. Muhamed Mustaque, C.J.
1. The Petitioners seek directions in the Writ Petition to absorb them as permanent employees of the M/s National Hydro Electric Power Corporation (NHPC) Limited, a Government of India undertaking, consequent upon the scheme of amalgamation, whereby M/s Lanco Teesta Hydro Power Limited (LTHPL), a public limited company, was amalgamated with the NHPC Limited, a Government company in the year 2025.
2. In the order passed by the Ministry of Corporate Affairs, Government of India dated 02.01.2025, it is specifically mentioned that upon the scheme becoming effective the employees of the LTHPL shall be deemed to have become employees of the transferee company and would be entitled to all the benefits to which they may be eligible.
3. The Petitioners were initially recruited as regular employees of the LTHPL. The appointment orders of the Petitioners and the promotions subsequently given to them would establish that they were regular employees of the LTHPL.
4. The entitlement of the Petitioners to the reliefs sought, therefore, depends upon whether they continued to be employees of the LTHPL, on the date on which the scheme of amalgamation became effective. If the Petitioners were on the rolls of the LTHPL, the transferor company, as on the date of amalgamation, they would, subject to the terms of the scheme, be entitled to claim the benefits of the amalgamation or reliefs sought in the matter. However, the records produced before this Court discloses that insolvency proceedings were initiated against LTHPL before the National Company Law Tribunal, Hyderabad, in the year 2019. The subsequent events, particularly the employment accepted by the Petitioners pursuant to the resolution plan are material for deciding the present claim.
5. On a petition filed by ICICI Bank Limited under Section 7 of the Insolvency and Bankruptcy Code, 2016, insolvency resolution proceedings were initiated against the LTHPL. Based on the resolution plan, the LTHPL became a subsidiary company of the NHPC Limited with effect from 09.10.2019. Thereafter, LTHPL became a Government company within the meaning of Section 2(45) of the Companies Act, 2013.
6. The NHPC Limited thereafter offered employment to the Petitioners on a fixed tenure basis for one year, with effect from 26.12.2019. The Petitioners accepted the fixed tenure appointment. The NHPC Limited became the parent company and the LTHPL became its subsidiary company.
7. While the Petitioners continued as employees of the NHPC Limited, a joint confirmation petition was filed before the Central Government on 09.10.2023 proposing a scheme of amalgamation between M/s LTHPL and the NHPC Limited. The same was approved. In that order, it is specifically stipulated that all the employees of the LTHPL, the transferor company, would continue to be employees of the transferee company.
8. The benefit of the aforesaid stipulation, however, is available to persons who were employees of the transferor company, namely, LTHPL, on the date of amalgamation. If the Petitioners were on the rolls of the LTHPL, the subsidiary company, as on the date of amalgamation, the Petitioners would be justified in seeking the reliefs sought before this Court. However, much before amalgamation, the Petitioners had ceased to be employees of the LTHPL, as is evident from the appointment letters appointing them as employees of NHPC on a fixed tenure basis in the year 2019. That means, immediately after the resolution plan was approved by the NCLT, the Petitioners opted to become employees of the NHPC Limited on a fixed tenure basis. They ceased to continue as employees of the subsidiary company, i.e. the LTHPL.
9. In what manner the Petitioners ceased to become employees of LTHPL is known only to them. If the Petitioners were not employees of the LTHPL as on the date of amalgamation, they cannot claim any relief based on the amalgamation order and scheme of amalgamation. The provision in the scheme relating to cont
