Authority: National Company Law Tribunal, New Delhi Bench Court-IV

Order Date: 08.06.2026

Case Overview

The National Company Law Tribunal (NCLT) dismissed Company Petition CP(CAA)92/ND/2021, which was connected with Company Application No CAA (CA)/183 (ND)/2019. The petition was filed by SKN Haryana City Gas Distribution Private Limited (the demerged/transferor company) along with Chopra Electricals LLP (Resulting LLP no.1) and SKN City Gas LLP (Resulting LLP no.2). The applicants sought sanction for a Scheme of Arrangement (demerger) under Sections 230 and 232 of the Companies Act, 2013, and Sections 60 and 62 of the Limited Liability Partnership Act, 2008.

The scheme proposed the demerger of SKN Haryana City Gas Distribution Private Limited and the transfer of its movable and immovable assets. Assets totaling ₹42,10,00,000 (Rupees Forty-two Crores and Ten lakhs) were to be transferred to Chopra Electricals LLP, and assets totaling ₹1,79,21,09,446 (Rupees One hundred and seventy nine crores twenty one lacs nine thousand four hundred and forty six) were to be transferred to SKN City Gas LLP on a going concern basis. The appointed date for the scheme was set as 01.04.2018.

The stated reasons for the demerger included enabling the demerged company to focus on its core business of gas storage and supply, allowing the resulting entities to focus on their respective businesses (electrical equipment and gas distribution), achieving optimal growth, better utilization of manpower, and unlocking value.

The Regional Director (Northern Region) raised several objections in a report dated 26.04.2023. A key objection relied on an NCLAT ruling in the matter of Regional Director, Southern Region vs. Real Image LLP & Ors., which held that a petition for merger/demerger between a company and an LLP is not maintainable under the Companies Act. Other observations concerned the significant ante-dating of the appointed date (01.04.2018) versus the petition filing date (04.06.2020), the lack of a valuation report, and the handling of creditor meetings.

The tribunal's analysis focused on the legal question of maintainability. It extensively referenced the NCLAT's reasoning in the Real Image case, which interpreted Section 232 of the Companies Act, 2013. The NCLAT had concluded that the Act only provides for the merger or amalgamation of companies into other companies. While the Act allows for the conversion of an LLP into a company (and vice versa under the LLP Act), a direct scheme of arrangement between a company and an LLP is not permitted. The NCLAT had also rejected the application of the principle of casus omissus (supplying a omission in the statute) to allow such schemes, a view supported by Supreme Court precedents cited in the order.

The NCLT concurred with this interpretation, finding that for a scheme of arrangement under Sections 230-232 of the Companies Act, both the transferor and transferee entities must be companies incorporated under the Companies Act. Since petitioners 2 and 3 (Chopra Electricals LLP and SKN City Gas LLP) were LLPs and not companies, the petition was not maintainable.

Final Outcome

The NCLT dismissed Company Petition CP(CAA)92/ND/2021. The proposed Scheme of Arrangement (demerger) of SKN Haryana City Gas Distribution Private Limited into Chopra Electricals LLP and SKN City Gas LLP was not sanctioned. The dismissal was solely on the grounds of maintainability, as the tribunal found it lacked the jurisdiction to approve a demerger from a company to LLPs under the current legal framework.

Topics: Corporate Demerger, NCLT Jurisdiction, Legal Interpretation