NCLT Delhi Clears First Stage of Haryana Distillery's Plan to Acquire 10 Companies

The National Company Law Tribunal (NCLT), New Delhi, has cleared the first motion of a composite scheme under which Delhi based-Haryana Distillery Limited proposes to acquire and merge 10 privately held group companies into itself. The tribunal however directed that shareholder meetings must be held even though more than 90% of shareholders had consented to the scheme.

A bench of Judicial Member Ashok Kumar Bhardwaj and Technical Member Reena Sinha Puri held that while the Companies Act, 2013 permits waiver of meetings of unsecured creditors where creditors holding at least 90% in value have given their consent, there is no similar provision allowing shareholder meetings to be dispensed with in amalgamation cases.

The scheme involves the amalgamation of Apollo Breweries Private Limited, First Alert Fire Systems Private Limited, Skyrise Constructions Company Private Limited, Vikee Commercial Private Limited, Dhiraj Commercial Private Limited, Rahul Commercial Private Limited, Setwell Cement Private Limited, Photonics Private Limited, Photonics Fire Protection Systems Private Limited, and Jewel Electro Impex Private Limited into Haryana Distillery Limited, a public company engaged in the distillery business.

It also provides for the demerger of Haryana Distillery's real estate division into Circle Trade Overseas Private Limited, with April 1, 2022 as the appointed date

Haryana Distillery Limited was incorporated in March 2001 under the Companies Act, 1956, and has its registered office in New Delhi. It has 7,430 equity shareholders, an authorised share capital of Rs. 20 crore, and a paid-up share capital of Rs. 18.03 crore

The boards of directors of all applicant companies approved the scheme on February 7, 2023. The companies sought exemption from holding shareholder meetings, stating that between 91.50% and 100% of shareholders across the entities had filed consent affidavits supporting the scheme

The tribunal accepted the request to dispense with meetings of unsecured creditors in cases where the statutory threshold under Section 230(9) was met, but declined to waive shareholder meetings.

Referring to earlier rulings in Ambuja Cements Limited and Patel Hydro Power Private Limited, it noted that those cases involved wholly owned subsidiary structures, unlike the present case where the 10 transferor companies are not subsidiaries of Haryana Distillery.

Holding that shareholder meetings serve a statutory purpose and are necessary to safeguard minority shareholder interests, the tribunal directed that meetings of equity shareholders be convened for all 12 applicant companies. It also ordered meetings of unsecured creditors of Setwell Cement Private Limited, Photonics Private Limited, and Haryana Distillery Limited to be held through video conferencing with remote e-voting facilities, subject to the prescribed quorum requirements

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