Perun Ltd submitted a scheme of demerger before Hon'ble NCLT, demerging its two divisions as two separate resulting companies. The Company in its application had mentioned that certain proceedings in relation to some oth

The contention of the company is certainly tenable in view of the fact that the pending investigations/proceedings (which have already been stayed by the Hon'ble High Court) relates to some other business of the demerged company, i.e., different from the two business divisions of the Company sought to be demerged through the subject petition. The facts given in the question are similar to case decided by NCLAT in Mel Windmills Pvt. Ltd. v. Mineral Enterprises Limited & Anr. , wherein in the original proceedings before the Tribunal, the Appellants sought an order for sanctioning the scheme of demerger in terms whereof the wind energy generation business of 'Mineral Enterprises Ltd.' (the Demerged Company) was sought to be separated and given to 'MEL Windmills Pvt. Ltd.' (Resulting Company No. 1) whereas the real estate, shares and security investments of 'Mineral Enterprises Ltd.' were sought to be given to 'MEL Properties Pvt. Ltd.' (Resulting Company No.2). In that case the Appellants had also disclosed before the Tribunal, the fact about pendency of certain proceedings in relation to the mining business of the Demerged Company which on clarification turned out to be investigations arising out of charge sheet lodged by Special Investigation Team, State Lokayukta Police before Additional City Civil & Sessions Court and even those proceedings were already stayed by Hon'ble High Court. It was noticed in this judgment that the Tribunal declined to sanction the proposed scheme of demerger, albeit on account of several issues pending finalization, without either considering prayer for dispensation of meeting of creditors and members of the three Appellant or in the alternative directing convening of a meeting of the creditors and members of these companies for considering the proposed scheme of demerger. The Appellate Tribunal in the above case observed that the mandate of law engrafted under Section 230(1) of the Companies Act, 2013 requiring the Tribunal to order calling of meeting of the creditors/ members of the concerned companies not being complied with and the mandatory provisions being observed in breach, the impugned order cannot be supported. The Tribunal, at the very threshold stage, was not required to venture into the merits of the proposed scheme of demerger which had to be examined only after obtaining the consent of creditors/members with requisite majority. The NCLAT further observed that the Tribunal failed to adhere to the mandate of law which was mandatory and imperative in nature. This goes to the root of the impugned order which cannot be sustained. Besides NCLAT also observed that the pending issues could not be construed as an impediment in sanctioning the proposed scheme of demerger, in view of the fact already known to the Tribunal, that the demerger scheme proposed by the Appellants was not with regard to business of Mining which would continue with the Demerged Company and the pending investigation would continue unhindered against the Director of the Demerged Company without having any impact on the proposed scheme of demerger. Second, because pendency of investigation would not stand as a legal impediment in sanctioning the proposed scheme of demerger for any civil action or criminal proceedings in respect of past events/ transactions. In identical circumstances, the Hon'ble Gujarat High Court sanctioned the modified composite scheme of arrangement in terms of its judgment dated 1st March, 2007 rendered in Core Health Care Limited v. Nirma Ltd reported in 2007 SCC Online Guj 235. For the foregoing reasons the NCLAT held that the impugned order cannot be supported. The Tribunal seriously erred in dismissing the application on merit when the stage of consideration of the proposed scheme of demerger was yet to arrive and that accordingly the impugned order suffers from serious legal infirmity and the same is set aside. Based on the above judicial precedent, it can be concluded that the contention of Perun Ltd is tenable.