Authority: National Company Law Tribunal, Ahmedabad Bench - Court 2

Order Date: 17 April 2026 (Original Order), 10 June 2026 (Corrigendum Order)

Case Overview

The National Company Law Tribunal (NCLT) Ahmedabad heard a joint company petition filed under Sections 230-232 of the Companies Act, 2013 by Tradex Polymers Private Limited (Demerged Company) and Trend Plastpouchpack Private Limited (Resulting Company) seeking approval for a Scheme of Arrangement involving demerger of the polymer business undertaking from Tradex Polymers to Trend Plastpouchpack. The appointed date for the demerger was set as 1 April 2025.

The Regional Director (North-Western Region) filed a representation dated 24 March 2026 with several observations regarding compliance requirements, including that shares must be issued in demat form (though the Resulting company qualified as a 'small company' and was exempt), proper accounting treatment of assets and liabilities, and compliance with income tax provisions. The Registrar of Companies report dated 30 December 2025 noted both companies were compliant with filing requirements and had no pending investigations.

The Income Tax Department raised significant concerns through letters dated 16 March 2026, noting an outstanding tax demand of ₹74,052 against the Demerged Company and pending penalty proceedings under section 270A for AY 2017-18. For the Resulting Company, they noted carried forward business losses of ₹6,50,42,576 and unabsorbed depreciation of ₹11,80,02,815 as per ITR for AY 2025-26. The Department expressed concerns about qualification under section 2(19AA) of the Income Tax Act, valuation and share exchange ratio, and recommended conditional approval with safeguards.

The petitioner companies responded that the scheme satisfied all requirements of section 2(19AA), provided undertakings to comply with all statutory requirements, and stated that any outstanding demands against the Demerged Company would not abate and would continue against it.

Final Outcome

The NCLT sanctioned the demerger scheme but subsequently issued a corrigendum order on 10 June 2026 to correct inadvertent clerical/typographical errors in the original order dated 17 April 2026. Key modifications included:

  • Para 23(IV) clarified that sanction of the scheme does not absolve either company from regulatory action
  • Para 23(V) specifically stated that the Resulting company must ensure all tax liabilities of the demerged undertaking are taken over, including potential violations under the Income Tax Act
  • Para 23(VI) deleted the declaration that the Demerged Company would be dissolved without winding up
  • Paras 23(VII)-23(X) detailed the transfer of property, rights, powers, liabilities, duties, employees, and pending proceedings to the Resulting Company
  • Paras 23(XI)-23(XIV) outlined compliance requirements including filing with Registrar of Companies within 30 days and stamp duty adjudication within 60 days

The Tribunal quantified legal fees and expenses of the Regional Director's office at ₹25,000 each for both petitioner companies, payable by the Resulting Company. The scheme was declared binding on both companies, their shareholders, and creditors.

Topics: Corporate Demerger, Tax Liability, NCLT Approval