ABC Ltd. and PQR Ltd. both are registered under the Companies Act, 2013. ABC Ltd. is a wholly owned subsidiary of PQR Ltd. ABC Ltd. and PQR Ltd. both are engaged in the business of manufacturing of steel. The Board of Di

In the matter of Mohit Agro Commodities & Ors, the NCLAT has observed that section 232(1) of the Companies Act, 2013 uses the word 'may' which introduces an element of discretion to the Tribunal to be exercised in the interest of justice in appropriate situations. Section 232 is a specific provision carved out by the Legislature when both conditions maintained in clauses (a) and (b) of the sub section (I) of section 232 are met. In the given case the merger sought for is between a wholly owned subsidiary and the holding company. The points which need to be noted is: Whether such amalgamation/merger alters the rights of the stakeholders of the company? Whether such an amalgamation/merger has any bearing internally on Creditors/ Members of both the companies? Whether not holding the subject meeting would amount to violation of any of the provisions of the Companies Act, 2013 Whether the Tribunal can exercise their discretion when the "Transferor Company" is wholly owned subsidiary of the "Transferee Company" and financial position of the Transferee Company is positive and the merger is not affecting the rights of the Shareholders or Creditors? Therefore, it is held that the rights and liabilities of Secured and Unsecured Creditors were not getting affected in any manner by way of the proposed scheme as no new shares are being issued by the 'Transferor Company' and no compromise is offered to any Secured and Unsecured Creditors of the 'Transferee Company'. Hence, when the 'Transferor and Transferee Company' involve a Parent Company and a Wholly Owned Subsidiary the meeting of Equity Shareholders, Secured Creditors and Unsecured Creditors can be dispensed with as the rights of the Equity Shareholders of the 'Transferee Company' are not being affected. With reference to above case law and provisions, the Tribunal may in the interest of justice direct dispensing with the meeting of Equity shareholders, Secured and Unsecured Creditors as the rights of the Equity Shareholders of the company are not being affected, Hence, it is clear that the objection of the Company Secretary is not correct. BOD of PQR Ltd., may dispense with the meeting of Equity shareholders, Secured and Unsecured Creditors as the rights of the Equity Shareholders of the "Transferee Company" are not being affected.