The National Company Law Appellate Tribunal (NCLAT) on Friday set aside the order of NCLT, which had directed RIL to get stakeholders' consent for the transfer of the Digital EPC Company on a going concern basis from RPPMSL into the company.
The NCLAT said the transfer of Digital EPC Undertaking from the wholly-owned subsidiary RPPMSL (of RIL) into the parent/transferee company RIL by way of the demerger is akin to the merger of the wholly-owned subsidiary with the parent company RIL.
"We set aside the Impugned Order dated 11.5.2023 and direct that the convening and holding of meetings of Equity Shareholders, Secured and Unsecured Creditors of the Appellant Company RIL is dispensed with and further consent affidavits of 90% of the total value of shareholders and secured creditors and all unsecured creditors will not be necessary at this stage," said NCLAT.
It further said: "The appeal is allowed and disposed of accordingly".
The Mumbai bench of the National Company Law Tribunal (NCLT) on June 6, 2023, directed RIL to obtain consent affidavits of at least 90 per cent of the value of total secured creditors and equity shareholders or to hold the meeting before the final hearing in view of huge credit exposure.
NCLT also directed RIL to serve notice to all their respective creditors with instructions that they may submit their representations before it within 30 days.
This was challenged by RIL before the appellate tribunal contending that RPPMSL is a wholly-owned subsidiary of RIL and accordingly no consideration is proposed to be paid by RIL to RPPMSL upon implementation of the Scheme.
The Scheme does not involve the issue of shares by RIL, it said.
Equity Shareholders of the RIL will not be impacted as there will be no dilution of their shareholding in RIL post-implementation of the Scheme, it said.
Both RIL and RPPMSL are solvent companies and the assets of the EPC Undertaking, which is to be demerged, exceed its liabilities.
Moreover, the rights of the secured and unsecured creditors of RIL would not be affected after the implementation of the Scheme, hence, there no was no valid ground on which the NCLT passed such direction.
Consenting to it, NCLAT citing some judgement said if a transferor company is a wholly-owned subsidiary of the transferee company and there is no reorganisation of the share capital of the transferee company and the creditors and shareholders of the transferee company are not affected by the implementation of the scheme as the assets of the transferee Company and the transferor company, the requirement for holding meetings of the shareholders, secured and unsecured may be dispensed with.
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