NCLT Mumbai Sanctions Amalgamation Scheme for Tata Group Subsidiaries Under Sections 230-232 & 66 of Companies Act, 2013 - 2025-03-10

NCLT Mumbai Approves Amalgamation of Tata Group Subsidiaries

Mumbai, India – February 19, 2025 – The National Company Law Tribunal (NCLT), Mumbai Bench, presided over by Hon'ble Member (Judicial) Smt. Reeta Kohli and Hon'ble Member (Technical) Smt. Madhu Sinha, has sanctioned the Scheme of Amalgamation between India Emerging Companies Investment Limited and Inshaallah Investments Limited (Transferor Companies) with Niskalp Infrastructure Services Limited (Transferee Company). The order, dated February 19, 2025, marks a significant step in the corporate restructuring efforts within the Tata Group.

Background of the Amalgamation Scheme

The petition, C.A.(CAA)/116/(MB)/2024, was filed under Sections 230 to 232 read with Section 66 and other applicable provisions of the Companies Act, 2013, seeking the Tribunal’s sanction for the proposed amalgamation. India Emerging Companies Investment Limited and Inshaallah Investments Limited , both subsidiaries of Niskalp Infrastructure Services Limited and part of the Tata Group, sought to merge into the latter.

According to the petition, both Transferor Companies were primarily engaged in investment and financing activities but were currently not actively conducting any business. Niskalp Infrastructure Services Limited, the Transferee Company, is involved in infrastructure development.

Rationale for the Scheme

The Petitioner Companies, represented by Mr. Hemant Sethi and his team, argued that the amalgamation is aimed at simplifying the corporate structure within the Tata Group. Merging the subsidiary companies into the parent company would eliminate duplicate corporate procedures, reduce administrative and managerial costs, and streamline legal and regulatory compliances. The Appointed Date for the scheme was proposed as April 1, 2024.

Regulatory Scrutiny and Approvals

The Regional Director (Western Region), Ministry of Corporate Affairs, Mumbai, and the Official Liquidator submitted their reports, outlining several observations. These observations primarily revolved around compliance with accounting standards, adherence to the Companies Act, and ensuring protection of creditor interests.

The Petitioner Companies diligently addressed all concerns raised by the regulatory bodies by providing clarifications and undertakings. Notably, they clarified compliance with AS-14 (IND AS-103) and other accounting standards, affirmed adherence to Section 232(6) regarding the Appointed Date, and undertook to comply with Section 232(3)(i) concerning stamp duty and fees. They also confirmed that all observations from the Registrar of Companies and the Official Liquidator were satisfactorily addressed, including those related to pending prosecutions (which were clarified as resolved) and BEN-2 filings.

The Regional Director, after reviewing the clarifications, expressed satisfaction and raised no objections to the Scheme. Similarly, the Official Liquidator's concerns were also addressed to the Tribunal's satisfaction.

Key Features of the Scheme

• Share Exchange Ratio: Equity shareholders of India Emerging Companies Investment Limited and Inshaallah Investments Limited will receive 1 Redeemable Preference Share of Niskalp Infrastructure Services Limited for every 10,000 Equity Shares held in the Transferor Companies.
• Preference Share Capital Reduction: Preference share capital of Inshaallah Investments Limited , entirely held by Niskalp Infrastructure Services Limited, will be extinguished without consideration as part of the amalgamation. Furthermore, 5,00,000 Preference shares in Niskalp Infrastructure Services Limited held by Tata Industries Limited will be cancelled as a capital reduction, with Tata Industries Limited consenting to this reduction.

Tribunal's Order and Directions

After considering the submissions and compliance reports, the NCLT Mumbai found the Scheme to be fair, reasonable, and in compliance with all legal provisions and public policy. The Tribunal sanctioned the Scheme of Merger by Absorption, fixing the Appointed Date as April 1, 2024.

The Petitioner Companies are directed to:

• File a certified copy of the order and Scheme with the Registrar of Companies electronically within 30 days.
• Lodge a certified copy with the Superintendent of Stamps for stamp duty adjudication within 60 days.
• Ensure all regulatory authorities act on the certified order and Scheme.

This order paves the way for the seamless amalgamation of the entities, furthering the Tata Group's objective of corporate simplification and operational efficiency.