The National Company Law Tribunal (NCLT), Bengaluru, on 30 October held that it cannot grant ex-post facto approval to a Scheme of Arrangement under Section 230 of the Companies Act, 2013, after the company has already implemented the proposed arrangement.
A Bench of Judicial Member Sunil Kumar Aggarwal and Technical Member Radhakrishna Sreepada dismissed Crossdomain Solutions Private Limited's petition seeking sanction of a Scheme of Arrangement with its unsecured deposit holders, imposing costs of Rs. 50,000. It stated:
“Without delving into the applicability or non-applicability of the invoked provisions, it is made clear that the Petitioner has attempted to seek ex-post facto validation, which NCLT abhors and refrains from indulging in.”
The scheme proposed to settle outstanding deposits of Rs. 13.74 crore by paying Rs. 83.62 lakh, writing back approximately Rs. 11.90 crore and repaying the remaining Rs. 1 crore within one year of the scheme becoming effective.
Earlier, the Tribunal had dispensed with meetings of the company's equity shareholders, preference shareholders and unsecured deposit holders.
The Regional Director opposed the scheme, pointing out that the company's audited financial statements for the financial year 2024-25 reflected outstanding deposits of only Rs. 1.83 crore. They submitted that the company had already written back approximately Rs. 11.90 crore in deposits owed to its promoters and shareholders and recognised the amount as other income.
Further, the Regional Director alleged that the company was seeking ex-post facto approval for an arrangement already implemented. They also alleged that the company had incorrectly reported the written-back amount as deposits repaid in its Form DPT-3 filing, potentially violating the provisions governing the acceptance of deposits under the Companies Act.
Crossdomain Solutions denied the allegations, submitting that its Board had approved the scheme on 28 March 2025 and that the write-back was supported by the consent of all affected deposit holders. It contended that the scheme was not an afterthought and did not seek retrospective approval for an accounting adjustment already made.
The Tribunal noted that the company's Board had approved the write-back on 28 March 2025 and that the company had implemented the decision within three days and recorded it in its books of accounts. It observed that the company appeared to be seeking a “stamp of NCLT” to avoid potential issues with statutory authorities in the future.
Moreover, the Bench took note of the company's description of the written-back amount as deposits “paid”, calling the nomenclature “over-reach and preposterous”. It further observed:
“There is no point in dealing with an already implemented scheme of arrangement, about maintainability of which the Petitioner and its advisors themselves are unsure.”
Accordingly, the NCLT dismissed the petition with costs of Rs. 50,000.
For Petitioner: Rahul Aggarwal, PCS
For ROC: Teju and Hemanth Rao
For IT Dept: Ganesh R Ghale