NCLT Chennai Approves Amalgamation Scheme for Noble International Group Under Sections 230-232 of Companies Act, 2013 - 2025-03-11

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NCLT Chennai Sanctions Amalgamation of Noble International and Group Companies

Chennai, February 14, 2025 - The National Company Law Tribunal (NCLT), Division Bench-I, Chennai, presided over by Hon'ble Members Shri. Sanjiv Jain (Judicial) and Shri. Venkataraman Subramaniam (Technical), has approved the Scheme of Arrangement (Amalgamation) for Noble International Private Limited and its group companies. This decision, pronounced on February 14, 2025, paves the way for the merger of three transferor companies – Noble International Private Limited, Shelter (India) Holdings Private Limited, and GSM Projects Pvt. Ltd. – into Navabharat Marketing & Trade Limited, the transferee company.

Case Overview and Background

The application, CA(CAA)/11(CHE)/2024 in CP(CAA)/41(CHE)/2024, was filed under Sections 230 to 232 of the Companies Act, 2013, seeking the Tribunal's sanction for the proposed amalgamation. The scheme aimed to simplify the group structure, enhance operational efficiencies, and maximize shareholder value.

The process began with a first motion application, leading to directions for shareholder meetings and dispensations for certain creditor and shareholder meetings. Subsequently, a second motion petition was filed for the final sanction of the scheme. Notices were issued to statutory authorities including the Regional Director (RD), Registrar of Companies (ROC), Official Liquidator (OL), and Income Tax Department, and public notifications were also made.

Rationale for the Scheme

The petitioner companies articulated several key benefits expected from the amalgamation:

• Simplified Management Structure: Streamlining operations for better administration and reduced costs by eliminating redundancies.
• Enhanced Financial Strength: Greater integration leading to improved financial stability and overall shareholder value.
• Efficient Resource Utilization: Optimized use of infrastructure and resources, resulting in substantial reduction in statutory compliances.
• Group Structure Simplification: Eliminating multiple companies with similar business objectives.
• Consolidation of Shareholding: Restructuring inter-company shareholding to benefit shareholders through the value of the combined entity.

The Board of Directors of both transferor and transferee companies believed that the amalgamation would be advantageous, aligning with the provisions of the Companies Act, 2013 and the Income Tax Act, 1961.

Statutory Authorities' Reports and Observations

Regional Director (RD): The RD, Southern Region, Chennai, filed a report with no objections to the scheme, except for a procedural point regarding authorized capital fees, which the petitioner companies addressed by undertaking to pay any differential fees and file amended MOA/AOA with the ROC.

Official Liquidator (OL): The OL submitted a report based on the review conducted by M/s. K.S. Jagannathan & Co., Chartered Accountants. The report highlighted observations related to valuation methodology, particularly concerning the use of provisional financial statements and valuation of immovable properties and investments. Clarifications were sought from the petitioner companies, who provided detailed responses justifying their approach, particularly emphasizing the 'Pooling of Interest' method of accounting and compliance with Section 2(1B) of the Income Tax Act. The OL ultimately concluded that the affairs of the transferor companies were not conducted in a manner prejudicial to creditors or the public.

Income Tax Department: Despite notices, the Income Tax Department did not present any objections. The Tribunal, referencing Section 230(5) of the Companies Act, 2013, presumed no objection from the department and cited a precedent (Company Petition CAA-284/ND/2018) and the Vodafone Essar case, reinforcing the tax authorities' right to recover dues even post-amalgamation.

Tribunal's Decision

After considering the reports from statutory authorities, the valuation report, auditor's certificates on accounting treatment, and the submissions made by the petitioner companies, the NCLT Chennai sanctioned the Scheme of Amalgamation.

The Tribunal noted,

> "After analyzing the Scheme in detail, this Tribunal is of the considered view that the scheme as contemplated amongst the Petitioner Companies seems to be prima facie beneficial to the Company and will not be in any way detrimental to the interest of the shareholders of the Company. In the absence of any other objections having been placed on record before this Tribunal and since all the requisite statutory compliances having been fulfilled, this Tribunal sanctions the Scheme of Amalgamation (Arrangement) appended as “Annexure – 25” with the Company Petition as well as the prayer made therein."

The order explicitly clarified that the sanction does not grant exemption from stamp duty, taxes, or any other legal requirements.

Key Terms of the Order

The Tribunal's order mandated several actions:

• Transfer of all business and undertaking of the transferor companies to the transferee company under Sections 230-232 of the Companies Act, 2013.
• Vesting of all assets and liabilities of the transferor companies with the transferee company.
• Appointed date for the scheme is April 1, 2024.
• Continuation of pending legal proceedings by or against the transferee company.
• Employees of transferor companies to become employees of the transferee company without service interruption.
• Filing of revised Memorandum and Articles of Association and payment of differential fees for increased authorized capital by the transferee company.
• Dissolution of transferor companies without winding up upon filing the certified order with the ROC.

Conclusion

The NCLT Chennai's approval marks a significant step for Noble International Group, facilitating a streamlined corporate structure and paving the way for enhanced operational and financial synergies. The judgment underscores the Tribunal's role in overseeing corporate amalgamations, ensuring compliance, and protecting stakeholder interests while promoting business efficiency.

Case Citation: CP(CAA)/41(CHE)/2024 in CA(CAA)/11/CHE/2024, National Company Law Tribunal, Division Bench-I, Chennai

Bench: Hon’ble Shri. Sanjiv Jain, Member (Judicial) and Hon’ble Shri. Venkataraman Subramaniam, Member (Technical)

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