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2025 Supreme(Online)(NCLT) 5092
NATIONAL COMPANY LAW TRIBUNAL
Shri Praveen Gupta, Member (Judicial), Shri Ashish Verma, Member (Technical)
MIRZA INTERNATIONAL LIMITED VS
CA (CAA) No. 20/ALD/2025
For the Applicant Companies:Mr Rajeev K Goel, Advocate, Mr. Ankit Singh, PCS
The amalgamation of a wholly owned subsidiary with its parent does not necessitate consent from shareholders or creditors if their rights remain unaffected, ensuring corporate efficiency and compliance with relevant laws.
Headnote:(A) Companies Act, 2013 - Sections 230, 232, and 234 - Scheme of Amalgamation - First motion application for amalgamation of a wholly owned subsidiary with its parent company was allowed - Dispensation of meetings of shareholders and creditors granted considering the scheme did not propose any compromise or arrangement - The amalgamation aims at consolidation of resources, streamlining operations, and maximizing shareholder value. (Paras 1, 2, 9, 29, 31)
(B) Cross-Border Merger - The provisions of cross-border mergers as per the Companies Act and Foreign Exchange Management Regulations apply, allowing for a foreign company to amalgamate with an Indian company without necessitating the consent of shareholders, as the transferor is wholly owned. (Paras 22, 33)
Facts of the case:
The scheme proposes the amalgamation of RTS Fashion Limited (Transferor) and Mirza UK Limited (Non-Applicant) with Mirza International Limited (Transferee). The Transferor is a foreign company while the Transferee is an Indian public limited company. The proposed amalgamation aims for efficiency and consolidation of resources across entities, ensuring no adverse impact on creditors or stakeholders. (Paras 1-8)
Findings of Court:
The Tribunal allowed the first motion application and dispensed with the requirement for convening meetings of equity shareholders, secured creditors, and unsecured creditors, observing the entailed benefits of amalgamation while highlighting that rights of creditors remain unaffected. (Paras 30-31)
Issues: Whether the scheme proposes any compromise or arrangement with shareholders and creditors, and if the meetings of shareholders and creditors can be dispensed with? (Paras 30-31)
Ratio Decidendi: Amalgamation between a wholly owned subsidiary and its parent company does not require separate meetings of equity shareholders, secured creditors, and unsecured creditors, as prescribed by judicial precedents when their rights remain unaffected. (Para 30)
Result: First Motion Application allowed and meetings dispensed with.
| Table of Content |
|---|
| 1. first motion application for amalgamation. (Para 1 , 4 , 5) |
| 2. dispensation of shareholder and creditor meetings. (Para 2 , 9) |
| 3. business structure and operational effects. (Para 3 , 8 , 10) |
| 4. compliance with cross-border merger regulations. (Para 19 , 21 , 22) |
| 5. directions regarding the proposed scheme. (Para 30 , 31 , 37) |
_ORDER
1. This is a first motion Application filed by the Applicant Company namely Mirza International Limited (Transferee Company/Applicant Company) under Sections 230 & 232 and Section 234 of the Companies Act, 2013 (the Act) read with Rules 3 and 25A of the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 , the Foreign Exchange Management (Cross Border Merger) Regulations, 2018, and other applicable provisions, if any, in relation to the Scheme of Amalgamation of RTS Fashion Limited (Non-Applicant / Transferor Company), Mirza U.K. Limited (Non-Applicant / Proforma Party) with Mirza International Limited (Applicant / Transferee Company). The said Scheme is attached as Annexure-A-3 of the Application.
2. The Applicant Transferee Company, Mirza International Limited has prayed for dispensation of the requirement of the convening meetings of its Equity Shareholders, Secured Creditors and Un-Secured Creditors.
3. The Applicant Transferee Company, is engaged in design, development, manufacturing, marketing, trading, export, e-commerce and retailing of leather footwear, leather goods and accessories, and other related activities. Mirza International Limited also owns and operates one of the most modern tanneries in India which is engaged in procuring and processing of leather.
4. The Applicant Transferee Company has the following major business activities:
a. Private Label/White Label Business: The Company is engaged in design, development, manufacturing, export and sale of leather footwear to various Private Labels in United Kingdom, United States of America (USA), European and Non-European Countries. Private Label Business is pre- dominantly export wholesale made-to-order (MTO) business.
b. E-commerce/Retail Business: The Company has started e-commerce and retailing of men’s footwear under the brand - ‘Thomas Crick’ in the domestic as well as select overseas markets, and ladies’ footwear under the brand - ‘Off the Hook’in the United Kingdom.
c. Leather Tannery Business: The Company owns and operates one of the most modern tanneries in India which is engaged in procuring and processing of leather. Tannery is backward integration for captive consumption and acts as the backbone for the Private Label Business.
5. The Applicant Transferee Company is an Indian Company having its registered office in the State of Uttar Pradesh and hence is under the jurisdiction of this Tribunal. Whereas the Transferor Company is a foreign company formed and registered as a ‘Free Zone Offshore Company’ with Jebel Ali Free Zone Authority (JAFZA), the United Arab Emirates. The Transferor Company has its registered office in Dubai, the United Arab Emirates and hence is outside the jurisdiction of this Tribunal.
6. The Transferor Company, RTS Fashion Limited is formed and registered as a ‘Free Zone Offshore Company’ on 05.09.2019, under Registration No. 219423 issued by Jebel Ali Free Authority (JAFZA), the United Arab Emirates. RTS Fashion Limited through its wholly owned subsidiary - Mirza U.K. Limited (Non-Applicant / Proforma Party), is engaged in design, development, marketing and distribution of leather footwear, leather goods and accessories in U.K., U.S.A and other European Markets.
7. The Non-Applicant / Proforma Party, is an England based company formed under the laws of United Kingdom. It is a wholly owned subsidiary of the Transferor Company, and a step down subsidiary of Transferee Company. Pursuant to the Scheme of Amalgamation, all the assets and liabilities of the Transferor Company (including shareholding of Mirza UK Limited) will be transferred to and vested in the Transferee Company.As a res
