2026 Supreme(Online)(NCLT) 1329

NATIONAL COMPANY LAW TRIBUNAL
SANJIV JAIN, Member (Judicial), VENKATARAMAN SUBRAMANIAM, Member (Technical)
Tamilnadu Industrial Investment Corporation Limited – Appellant
Versus
Dipak Raj Sood – Respondent
IA(CA)/235(CHE)/2024|CP(CAA)/34(CHE)/2024|CA(CAA)/65(CHE)/2023

State disinvestment guidelines inapplicable to compulsory takeover schemes under Section 230(11) of Companies Act for unlisted companies; valuation per statutory rules mandatory with equal treatment for all minority shareholders; post-sanction recall limited to fraud/procedural errors.

Headnote:(A) Companies Act, 2013 - Sections 230(11), 230(12), 231(1)(b) - Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Rule 3(6)(a) - NCLT Rules, 2016 - Rule 11 - Scheme of arrangement for takeover offer in unlisted company - Application to recall/modify sanctioned scheme seeking higher valuation under state disinvestment guidelines (GO dated 19.06.1991) - Held, disinvestment guidelines apply only to voluntary sale initiated by government entity, not to compulsory takeover under Section 230(11) where minority shareholders squeezed out at fair value - Valuation as per statutory rules mandatory; no special status for state financial corporation - Application under Section 230(12) must be filed before sanction; post-implementation recall not permissible absent fraud or procedural error - Acceptance of consideration estops challenge - Scheme approved by overwhelming majority after due process; no merit in recall/modification. (Paras 54-68)

(B) Recall jurisdiction - Limited to procedural errors, fraud on court or non-service of necessary parties - Not for re-hearing or second chance to raise objections already available pre-sanction - Once scheme sanctioned and implemented, binding on all shareholders. (Paras 41-43)

(C) Takeover schemes - Minority shareholders entitled to fair value based on registered valuer reports considering highest recent acquisition price and standard parameters - Higher of multiple valuations offered; equal treatment to all non-promoter shareholders irrespective of status. (Paras 57, 61)

Facts of the case:
State financial corporation holding 2.39% shares in unlisted company objected to takeover scheme valuation at Rs.1156/share (higher of two valuer reports), claiming entitlement to Rs.5687/share under disinvestment guidelines. Voted against scheme at shareholder meeting but filed recall application post-sanction (31.07.2024) and implementation, alleging suppression of guidelines and fraud. Accepted consideration under protest after initial delay.

Findings of Court:
Takeover under Section 230(11) not disinvestment; guidelines inapplicable. Scheme followed due process, approved by 96.20% shareholders. Application belated, not maintainable under Sections 230(12)/231; no fraud/procedural error proved.

Issues: Whether takeover scheme constitutes disinvestment attracting state guidelines? Maintainability of post-sanction recall for higher valuation? Entitlement to differential treatment as state entity?

Ratio Decidendi: Disinvestment involves voluntary liquidation by investor; statutory takeover scheme operates independently with prescribed valuation. Equal treatment mandated; post-acceptance challenge barred by estoppel. Recall power narrow, inapplicable here.

Result: Application dismissed.

Table of Content
1. application details and parties identified. (Para 1 , 2 , 3 , 4)
2. scheme rationale and valuation details outlined. (Para 5 , 6 , 7 , 8 , 9)
3. go 448 disinvestment guidelines applicability argued. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 , 17 , 19)
4. application non-maintainable due to delay. (Para 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29)
5. acceptance of consideration bars challenge. (Para 30 , 31 , 32)
6. go inapplicable to statutory takeover scheme. (Para 33 , 34 , 35 , 36 , 37 , 38)
7. scheme implemented; no recall grounds. (Para 39 , 40 , 41 , 42 , 43)
8. applicant's go valuation contention summarized. (Para 44 , 45 , 46 , 47 , 48 , 49 , 50)
9. sections 230-231 limit post-sanction modifications. (Para 51 , 52 , 53 , 54 , 55 , 56 , 57)
10. fair valuation under scheme rules upheld. (Para 58 , 59 , 60 , 61)
11. takeover not disinvestment by government. (Para 62 , 63 , 64 , 65 , 66)
12. no special rights; application dismissed. (Para 67 , 68)

O R D E R

(Heard Through Hybrid Mode)

1. This application IA(CA)/235(CHE)/2024 has been filed seeking the following reliefs.

i) To recall/modify the Scheme of Arrangement approved vide order dated 31.07.2024 in CP(CAA)/34(CHE)/2024 IN CA(CAA)/65(CHE)/2023 in light of the Disinvestment Guidelines issued vide GO No. Ms. No. 448 dated 19.06.1991 and direct the Respondents to value the 71,179 equity shares of the Applicant in the 3rd Respondent Company as per the above said G.O. and consequently direct the Respondents to pay the difference in valuation as per the said G.O.to the Applicant.

ii) Pass such other order as this tribunal may deem fit and proper.

2. Applicant - Tamilnadu Industrial Investment Corporation Limited, (TIIC) is a Public Limited Company incorporated on 26/03/1949 having its registered office at No.692, Anna Salai, Nandanam , Chennai 600 035, Tamil Nadu. The applicant is a State Financial Corporation classified as a "State Government Company" owned and managed by the Government of Tamilnadu.

3. The 3rd Respondent Company, India Forge & Drop Stampings Limited [CIN: U28910TN1960PLC004192] is a Company which is primarily involved in the business of forge masters and drop stampers and to manufacture every type of forging and drop Stampings for all traders and industry. The 3rd Respondent Company had a paid up capital of Rs. 2,97,88,030/ which is divided into 29,78,803 Equity Shares of Rs. 10 each.

4. The 1st and 2nd Respondent are Mr. Dipak Raj Sood and Mrs. Rupa Sood respectively, both of whom are the promoters and shareholders of the 3rd Respondent Company. The 1st and 2nd Respondent being the first and second Applicants in the CP (CAA) / 34 (CHE) / 2024 IN CA(CAA) / 65 (CHE) / 2023 being a scheme of arrangement which was preferred by them under Sections 230-232 of the Companies Act, 2013 for the purpose of takeover of public shares belonging to the 3rd Respondent Company .

5. It is stated that the 1st and 2nd Respondent preferred the Scheme of Arrangement for the following reasons which they stated as the rationale which was portrayed as the benefit of the Scheme of Arrangement. The rationale is extracted below for clarity:

"The Scheme of Arrangement will have the following benefits among others:

a. The public shareholders of the Company have very limited avenues available to monetize their holding in the Company and unlock the value of their investment.

b. All the key business and commercial decisions of Company are undertaken by its board of directors and to the extent required under applicable laws, are ratified by the shareholders of Company i.e., the Promoter Group and the public shareholders (to the extent of their participation). Given that the Promoter Group is the largest shareholder in the Company, all matters requiring shareholders consent are automatically ratified, upon receipt of the standalone approval of the Promoter Group.

c. Furthermore, managing such a vast majority of public shareholders for a company, which effectively functions as a private compan

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