Authority: National Company Law Tribunal (NCLT), Ahmedabad Bench (Court - II)

Order Date: 17 June 2026

Case Overview

This proceeding, CA(CAA)/64(AHM)2025, was a joint application filed by five privately-held companies from Surat, Gujarat: Andromeda Textiles and Trading Private Limited (Transferee Company), Porus Textiles and Trading Private Limited, Introscope Properties Private Limited, Bijlee Textiles Private Limited, and Rosekamal Textiles Private Limited. The application was filed under Sections 280, 233(6) & (7) of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 and Rule 11 of the NCLT Rules, 2016. The applicants sought confirmation of a composite scheme of amalgamation.

The scheme was structured in two sequential parts: Part II-A provided for the amalgamation of Porus Textiles (Applicant No. 2, the holding company) with its 100% wholly-owned subsidiary, Andromeda Textiles (Applicant No. 1). Upon completion, Part II-B would take effect, providing for the amalgamation of the three remaining small companies (Applicants No. 3, 4, and 5) with the transferee company. The applicants stated that all companies had common promoters and that the shareholding of Applicants No. 2 and 3 was collectively held by Mr. Praful Shah, Mrs. Shilpa Shah, and their two sons, with Applicants No. 4 and 5 also being predominantly held by the same family.

The principal dispute arose from the rejection of this scheme by the Regional Director (RD), North Western Region, Ministry of Corporate Affairs. The applicants had submitted the requisite Form CAA-11 to the RD on 13 September 2025. The RD, vide a letter dated 7 November 2025, marked the application as "Not to be Taken on Record" (NTBR). The RD's primary objection was that a composite scheme involving both a merger between a holding company and its wholly-owned subsidiary and a merger between two or more small companies was not permissible or admissible under the fast-track merger provisions of Section 233 of the Companies Act, 2013. The RD argued that Section 233 is designed for straightforward transactions and that the proposed composite scheme, by its very nature, went beyond its scope and ambit.

The applicants challenged this rejection before the NCLT, arguing that the RD's proper course of action, if he deemed the scheme inadmissible, was to refer the matter to the Tribunal under Section 233(5) of the Act within 60 days (by 12 November 2025) rather than outrightly rejecting it. They contended that the Tribunal had jurisdiction under Section 280(c) of the Act for matters arising under Section 233. The RD, in his affidavit-in-reply, maintained that Section 233(6) is triggered only when a scheme is duly filed and examined, not when it is rejected on grounds of maintainability. He further argued that Section 280 grants jurisdiction to the NCLT only in matters arising out of winding up and that the applicants were incorrectly using it as a de-facto appeal mechanism.

Final Outcome

The Coram, consisting of Mrs. Chitra Hankare (Member Judicial) and Dr. Velamur G. Venkata Chalapathy (Member Technical), heard the arguments and perused the submissions. The Tribunal agreed with the reasoning of the Regional Director. It observed that the proposed scheme was complex and involved multiple interconnected restructuring steps. The Tribunal concluded that such a composite scheme did not satisfy the statutory conditions for a fast-track merger under Section 233 of the Companies Act, 2013. Consequently, the application (CA (CAA) No. 64 of 2025) was rejected and disposed of. The Tribunal clarified that its order did not deny the applicants the liberty to pursue the scheme through the regular merger process under Sections 230 to 232 of the Act before the NCLT.

Topics: Corporate Restructuring, Legal Jurisdiction, Fast-Track Merger