In a relatively recent order, the Chandigarh Bench of the National Company Law Tribunal had an occasion to consider whether for the purpose of Section 233 of the Companies Act, 2013 (“CA 2013”), absence of members and creditors from the meeting for approval of the scheme would constitute implied consent of the members and the creditors to the scheme, for ascertaining meeting of the threshold for approval of the scheme.
Relevant Facts:
The case pertained to a scheme of amalgamation between Satva Jewellery and Design Limited and KDDL Limited wherein the scheme was approved by all the members and creditors who physically attended the meeting convened for considering the Scheme. However, the members physically present and approving the scheme did not meet the statutory threshold specified under Section 233, which requires approval of (a) at least ninety per cent. of the total number of shares; and (b) majority representing nine-tenths in value of the creditors or class of creditors.
Accordingly, the Regional Director was of the opinion that the present scheme of amalgamation was not in the interest of creditors and members as the present scheme was not approved by the requisite majority in terms of Section 233(1) (b) and (d) of the CA 2013.
Query:
The question before the Tribunal was, whether it is possible to assume that the members and creditors who were duly served with notice of the meeting for approval of the scheme, have given their implied consent to the scheme by choosing not to be present at the meeting and raising objections to the scheme, and consider the same for ascertaining the threshold for approval of a scheme.
Findings of the Tribunal:
The Tribunal noted that as per Section 233(1)(b) of the CA 2013, the scheme is required to be approved by the respective members or class of members at a general meeting holding at least 90% (ninety per cent) of the total number of shares. Further, as per Section 233(1)(d) of the CA 2013, the scheme is required to be approved by majority representing 9/10th (nine tenths) in value of the creditors or class of creditors at a meeting convened by the company.
In view of the provisions of the CA 2013, the Tribunal held that provision did not account for any implied consent and refused to put reliance on the observations of the Hon’ble High Court of Karnataka In Re: Maharashtra Apex v. Unknown, 2005 124 CompCas 637 Kar, wherein, in the context of a scheme under the erstwhile Companies Act, 1956, it was noted that in the event the persons chose not to attend the meeting, participate in the meeting or express their view by casting vote against it, implied consent may be implied.
Interestingly, the Tribunal noted that even though a scheme may not have received approval of statutory majority under Section 233, the same scheme can be reconsidered under Section 232 of CA 2013, which contains a lesser threshold for approval of a scheme.
Please find a copy of the order here.
Contributed by Arka Majumdar (Partner) and Juhi Wadhwani (Associate).
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