MANU/NL/0101/2021

Equivalent/Neutral Citation: II(2021)BC 71

IN THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI

Company Appeal (AT) No. 15/2021
Decided On: 24.03.2021
Accelyst Solutions Pvt. Ltd. Vs. Freecharge Payment Technologies Pvt. Ltd.
Hon'ble Judges/Coram:
Jarat Kumar Jain, J. (Member (J)) and Kanthi Narahari, Member (T)
Counsels:
For Appellant/Petitioner/Plaintiff: Jayant Mehta, Arjun Krishan and Kaustav Som,
Advocates
JUDGMENT
Jarat Kumar Jain, J. Member (J)
1. The Appellant 'Accelyst Solutions Pvt. Ltd.' filed this Appeal against the Order dated
28.02.2020 passed by National Company Law Tribunal, Mumbai (NCLT) in CSP No.
280/C-II/2019 connected with CSA No. 517/C-II/2019 whereby allowed the scheme of
amalgamation of Freecharge Payment Technologies Pvt. Ltd. and Accelyst Solutions Pvt.
Ltd. under Sections 230 to 232 of the Companies Act, 2013. However, modified, the
Appointed date from 07.10.2017 to 01.04.2018.
2 . Brief facts for deciding this Appeal, are that Accelyst Solutions Pvt. Ltd.
(Petitioner/Transferor Company) and Freecharge Payment Technologies Pvt. Ltd. (Non-
Petitioner/Transferee Company) under Sections 230 to 232 of the Companies Act, 2013
submitted a scheme for amalgamation of the Transferor Company into Transferee
Company. NCLT, Delhi has approved the scheme of amalgamation with Appointed date
07.10.2017 vide order dated 22.10.2019 passed in CP No. CAA-144/ND/2018. NCLT,
Mumbai has also approved the scheme vide impugned order but modified the Appointed
date from 07.10.2017 to 01.04.2018 on the ground that considerable time has lapsed
from the Appointed date as mentioned in scheme and the Board Resolution of the
Scheme is dated 27.03.2018 and Valuation Report is dated 22.03.2018.
3. Being aggrieved with this order, the Appellant has filed this Appeal.
4 . Learned Counsel for the Appellant submits that the appointed date fixed as per the
scheme of amalgamation was 07.10.2017. The said scheme was approved by the NCLT,
Delhi vide order dated 22.10.2019 in respect of Transferee Company with the same
Appointed date 07.10.2017. However, by the impugned order NCLT, Mumbai modified
the Appointed date 01.04.2018 such order is erroneous. The Tribunal would not sit in
Appeal over the commercial wisdom of the parties who proposed and approved the
scheme if the scheme is otherwise in accordance with statutory requirements. For this
proposition, he placed reliance on the Judgment of Hon'ble Supreme Court in the case
of Miheer H. Mafatlal Vs. Mafatlal Industries Ltd. MANU/SC/2143/1996 : (1997) 1 SCC
579. This Judgment has been approved by the Hon'ble Supreme Court in the Case of
Hindustan Lever & Anr. Vs. State of Maharashtra & Anr. MANU/SC/0934/2003 : (2004) 9
SCC 438. The Court laid down the broad contours of the Jurisdiction of the Company

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Court in granting sanction to the scheme.
5. It is submitted that the Company Court/Tribunal ought not to modify the Appointed
date without justification as held by Hon'ble Gujrat High Court in Re. Shree Balaji
Cinevision (India) Pvt. Ltd. in O.J. Appeal No. 65 of 2009 decided on 23.09.2009 and
the Hon'ble Punjab and Haryana High Court in Re. Highway Cycle Industries Ltd. & Anr.
(2003) 115 Comp. Cas. 260.
6. Learned Counsel for the Appellant further submitted that in regard to Appointed date
the impugned order had mis-quoted the report dated 15.01.2019 of Regional Director
Western Region. For this purpose, he drew our attention towards the RD report at Page
864.
7. It is also submitted that NCLT, Mumbai while modifying the Appointed date has not
assigned any reason for modification and has failed to consider this fact that such
Appointed date in respect of Transferee Company has already been approved by the
NCLT, Delhi vide order dated 22.10.2019. Therefore, the modification of the Appointed
date is liable to set aside and fixed the Appointed date as per scheme i.e. 07.10.2017
and condone the delay and extend the time for compliance
8 . After hearing Learned Counsel for the Appellant, we have perused the record and
considered the submissions.
9 . It is admitted fact that amalgamation scheme of Transferee Company 'Freecharge
Payment Technologies Pvt. Ltd.' with the Appointed date 07.10.2017 is approved by
NCLT, Delhi vide order dated 22.10.2019 passed in CP No. CAA-144/ND/2018.
10. Now, we have considered, whether in regard to Appointed date the impugned order
had mis-quoted the RD report dated 15.01.2019.
As quoted in Para 10(e) of the T h e Observations of the
impugned order at pg. 36-37 Regional Director on proposed
scheme at Page. 864.
(e) As per clause 3.2 of the "(e) as per clause 3.2 of the
Scheme, the Appointed datescheme, the Appointed date
means October, 7, 2017 (Or means October, 7, 2017 (or
s u c h other date as may be s u c h other date as may be
mutually determined by the mutually determined by the
Board of Directors of theboard of Directors of the
Transferor Company and the transferor company and the
Transferee Company). In this transferee company) and
regard. It is submitted that impact of the
Section 232(6) of the amalgamation will be given
Companies Act, 2013 statesas per the requirements of
that the Scheme under this the applicable Indian
Section shall clearly indicate accounting standards from
an appointed date from which this date (or such other
it shall be effective and the date as may be mutually
scheme shall be deemed to be determined by the Board of
effective from such date and Directors of the Transferor
not at a date subsequent to Company and the
the appointed date. However, Transferee Company). In
this aspect may be decided by this regard, it is submitted that

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 the Hon'ble Tribunal taking S e c t i o n 232(6) of the
into account its inherent Companies Act, 2013 states
powers" (underlining added) that the Scheme under this
S ecti on shall clearly indicate
an Appointed date from which
it shall be effective and the
scheme shall be deemed to be
effective from such date and
not at a date subsequent to the
Appointed date" (emphasis
added)
1 1 . With the above chart, it is clear that para 10(e) of the impugned order had
erroneously mis-quoted the observations of the RD report pertaining to Appointed date.
12. Now, we have considered the scope and ambit of the jurisdiction of the Tribunal
while exercising its power in sanctioning the scheme of amalgamation. It is useful to
refer the Judgment of Hon'ble Supreme Court in the Case of Miheer H. Mafatlal (Supra).
This Judgment has been approved by the Hon'ble Supreme Court in the case of
Hindustan Lever (Supra) and at para 11 & 12 held that:
"11. While exercising its power in sanctioning a scheme of arrangement, the
Court has to examine as to whether the provisions of the statute have been
complied with. Once the Court finds that the parameters set out in Section 394
of the Companies Act have been met then the Court would have no further
jurisdiction to sit in appeal over the commercial wisdom of the class of persons
who with their eyes open give their approval, even if, in the view of the Court
better scheme could have been framed. This aspect was examined in detail by
this Court in Miheer H. Mafatlal Vs. Mafatlal Industries Ltd.,
MANU/SC/2143/1996 : 1997 (1) SCC 579. The Court laid down the following
broad contours of the jurisdiction of the company court in granting sanction to
the scheme as follows:-
1. The sanctioning court has to see to it that all the requisite statutory
procedure for supporting such a scheme has been complied with and
that the requisite meetings as contemplated by Section 391(1)(a) have
been held.
2. That the scheme put up for sanction of the Court is backed up by the
requisite majority vote as required by Section 391 sub-section (2).
3 . That the meetings concerned of the creditors or members or any
class of them had the relevant material to enable the voters to arrive at
an informed decision for approving the scheme in question. That the
majority decision of the concerned class of voters is just and fair to the
class as a whole so as to legitimately bind even the dissenting
members of that class.
4. That all necessary material indicated by Section 393(1)(a) is placed
before the voters at the meetings concerned as contemplated by
Section 391 sub-section (1).
5 . That all the requisite material contemplated by the proviso of sub-
section (2) of Section 391 of the Act is placed before the Court by the

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 applicant concerned seeking sanction for such a scheme and the Court
gets satisfied about the same.
6 . That the proposed scheme of compromise and arrangement is not
found to be violative of any provision of law and is not unconscionable,
nor contrary to public policy. For ascertaining the real purpose
underlying the scheme with a view to be satisfied on this aspect, the
Court, if necessary, can pierce the veil of apparent corporate purpose
underlying the scheme and can judiciously X-ray the same.
7 . That the Company Court has also to satisfy itself that members or
class of members or creditors or class of creditors, as the case may be,
were acting bona fide and in good faith and were not coercing the
minority in order to promote any interest adverse to that of the latter
comprising the same class whom they purported to represent.
8 . That the scheme as a whole is also found to be just, fair and
reasonable from the point of view of prudent men of business taking a
commercial decision beneficial to the class represented by them for
whom the scheme is meant.
9. Once the aforesaid broad parameters about the requirements of a
scheme for getting sanction of the Court are found to have been met,
the Court will have no further jurisdiction to sit in appeal over the
commercial wisdom of the majority of the class of persons who with
their open eyes have given their approval to the scheme even if in the
view of the Court there would be a better scheme for the company and
its members or creditors for whom the scheme is framed. The Court
cannot refuse to sanction such a scheme on that ground as it would
otherwise amount to the Court exercising appellate jurisdiction over the
scheme rather than its supervisory jurisdiction. It is the commercial
wisdom of the parties to the scheme who have taken an informed
decision about the usefulness and propriety of the scheme by
supporting it by the requisite majority vote that has to be kept in view
by the Court. The Court has neither the expertise nor the jurisdiction to
delve deep into the commercial wisdom exercised by the creditors and
members of the company who have ratified the scheme by the requisite
majority. Consequently the Company Court's jurisdiction to that extent
is peripheral and supervisory and not appellate. The Court acts like an
umpire in a game of cricket who has to see that both the teams play
their game according to the rules and do not overstep the limits. But
subject to that how best the game is to be played is left to the players
and not to the umpire. The supervisory jurisdiction of the Company
Court can also be culled out from the provisions of Section 392. Of
course this section deals with post-sanction supervision. But the said
provision itself clearly earmarks the field in which the sanction of the
Court operates. The supervisor cannot ever be treated as the author or
a policy-maker. Consequently the propriety and the merits of the
compromise or arrangement have to be judged by the parties who as
sui juris with their open eyes and fully informed about the pros and
cons of the scheme arrive at their own reasoned judgment and agree to
be bound by such compromise or arrangement.

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 1 2 . Two broad principles underlying a scheme of amalgamation which have
been brought out in this judgment are:
1 . That the order passed by the Court amalgamating the company is
based on a compromise or arrangement arrived at between the parties;
and
2. That the jurisdiction of the company court while sanctioning the
scheme is supervisory only, i.e., to observe that the procedure set out
in the Act is met and complied with and that the proposed scheme of
compromise or arrangement is not violative of any provision of law,
unconscionable or contrary to public policy. The Court is not to
exercise the appellate jurisdiction and examine the commercial wisdom
of the compromise or arrangement arrived at between the parties. The
role of the court is that of an umpire in a game to see that the teams
play their role as per rules and do not overstep the limits. Subject to
that how best the game is to be played is left to the players and not to
the umpire.
Both these principles indicate that there is no adjudication by the court on the
merits as such."
(Emphasis added)
13. With the aforesaid, it is settled legal position that while exercising its power in
sanctioning a scheme of amalgamation, the Court/Tribunal has to examine as to
whether the provision of statute have been complied with. The Court/Tribunal would
have no further jurisdiction to sit in Appeal over the commercial wisdom of
shareholders of the Company.
14. In the light of the aforesaid proposition, we have examined the impugned order,
Ld. NCLT in Para 20 & 21 held that:
"20. As per this scheme, the Appointed date is fixed as 07.10.2017 since
considerable time has lapsed from the Appointed date as mentioned in the
scheme and the Board Resolution of the Scheme of amalgamation is dated
27.03.2018 and the valuation report is dated 22.03.2018 the Bench considers
that the Appointed date be modified suitably and fixed as 01.04.2018.
2 1 . Since all the requisite statutory compliances have been fulfilled, the
Company Scheme Petition No. 280 of 2019 filed by the Petitioner/Transferor
Company made absolute in terms of prayer clauses at 49(i) of the said Petition.
1 5 . With the aforesaid, it is clear that the Appellant Company has fulfilled all the
requisite statutory compliances. However, Ld. NCLT modified the Appointed date
considering the valuation report which is subsequent to the Appointed date. While
modifying the Appointed date Ld. NCLT has not considered that the Appointed date
07.10.2017 is approved by the NCLT, Delhi vide order dated 22.10.2019 passed in CP
No. CAA/144/ND/2018 in respect of Transferee Company. The alteration of the
Appointed date would render all calculations awry, none of the shareholder opposed the
Appointed date proposed in the scheme of amalgamation. In identical facts Hon'ble High
Court of Gujrat in the Case of O.J. Appeal No. 65 of 2009 in CP No. 100 of 2009 in Re.
Shree Balaji Cinevision India Pvt. Ltd. decided on 23.09.2009 held that:

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 "We have perused the Judgment of the Ld. Company Judge. We do agree with
the Ld. Company Judge that the Company Court has discretion to make
modification in the proposed scheme of compromise, arrangement etc.
However, such discretion is required to be exercised for cogent reasons. We do
agree with Mr. Soparkar that the Ld. Company Judge had no reason to modify
the Appointed date proposed in the scheme of amalgamation. We also agree
that the alteration in the appointed date would affect the calculations and would
have financial implications.
For the aforesaid reasons, we allow these appeals. The modification made by
the Ld. Company Judge in respect of the Appointed date proposed in the
scheme of amalgamation is set aside. The scheme of the amalgamation as
proposed is sanctioned.
16. With the aforesaid, we are of the considered view that the exercising jurisdiction by
the NCLT Mumbai to modify the Appointed date from 07.10.2017 to 01.04.2018 in the
facts of this case was unwarranted. Thus, the impugned order so far as the modification
of Appointed date is concerned is set aside and the Appointed date as per the scheme is
fixed 07.10.2017, which is approved by the shareholder of the Appellant Company.
17. For Compliance of the directions in Paras 22 and 23 of the impugned order, we
extend the period now thirty and sixty days respectively calculated from the receipt of
the certified copy of this order. It is also made clear that in Para 24 of the impugned
order, effective date of the scheme shall be the date on which the certified copy of this
order alongwith sanctioning scheme order are filed with both Registrar of Companies,
Mumbai and New Delhi remaining conditions of the impugned order stated in Para 24
will be the same.
Thus, The Appeal is allowed as indicated above, However, no order as to costs.
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