NCLT Chandigarh Allows First Motion In Jindaljyoti–Kingspan Jindal Amalgamation, Orders Creditor Meetings

The National Company Law Tribunal (NCLT), Chandigarh Bench, has cleared the first step in the proposed scheme of arrangement between Jindaljyoti Prefab Private Limited and Kingspan Jindal Private Limited, waiving the need to hold meetings of equity shareholders of both companies and the unsecured creditor of the transferor company, while directing that meetings of the secured and unsecured creditors of the transferee company be convened.

The order was passed by a Bench comprising Judicial Member Khetrabasi Biswal and Technical Member Kaushalendra Kumar Singh.

The joint application was filed under Sections 230 to 232 read with Section 66 of the Companies Act, 2013 and the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016.

The scheme proposes amalgamation of Jindaljyoti Prefab Private Limited (transferor company) into Kingspan Jindal Private Limited (transferee company). The stated object of the scheme is to simplify the group structure and consolidate shareholding of the transferee company.

Jindaljyoti Prefab Private Limited is engaged in the manufacturing, trading, import and export of prefabricated panels and pre-engineered buildings. Kingspan Jindal Private Limited is primarily engaged in manufacturing and trading of prefabricated panels and related building solutions and is part of the Kingspan-Jindal joint venture, with Kingspan Group holding a majority stake pursuant to a shareholder agreement executed in 2018.

The scheme also provides for reduction of share capital through cancellation of cross-holdings between the companies, without any diminution of liability or payout to shareholders.

The Tribunal noted that consent affidavits had been filed by all equity shareholders of both applicant companies and by the unsecured creditor of the transferor company. It was also noted that the transferor company does not have any secured creditors.

In view of the consents placed on record, the Tribunal dispensed with the meetings of equity shareholders and unsecured creditors of the transferor company, observing that “the consents by way of affidavits have been received.”

The Tribunal further dispensed with the meeting of equity shareholders of the transferee company, noting that written consents had been furnished by all equity shareholders.

However, since no consent affidavits were filed by the secured and unsecured creditors of the transferee company, the Tribunal directed that meetings of these creditors be convened in accordance with law.

The Tribunal directed that meetings of secured and unsecured creditors of the transferee company be held through video conferencing or other audio-visual means within 45 days of publication of notice. An advocate was appointed as Chairperson and a Practising Company Secretary as Scrutiniser for conducting the meetings and submitting the report to the Tribunal.

With these directions, the first motion application was allowed, granting liberty to the applicant companies to file the second motion petition.

For Petitioners: Advocate Nahush Jain