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National Company Law Tribunal refuses to recall order sanctioning scheme of arrangement stating that Section 230(12) cannot be invoked in a case of demerger
In the recent decision of Shri Shreans Daga vs. IBM India Private Limited, the Hon'ble National Company Law Tribunal ("NCLT"), Bengaluru refused to recall an order by which it had sanctioned a scheme of arrangement between IBM India Private Limited ("Demerged Company") and Kyndryl Solutions Private Limited. The NCLT held that the application for recall was liable to be dismissed at the threshold, as it had been filed under Section 230(12) of the Companies Act, 2013, which applies only in cases of takeovers and not in cases of demergers. On merits, the NCLT held that the applicants failed to prove their status as creditors of the Demerged Company entitling them to raise objections to the scheme of arrangement.
For a detailed analysis, please refer to the JSA Prism of July 4, 2024.
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