NCLT Mumbai Clears JM Baxi Group's Scheme to Demerge Container and Corporate Services Businesses

The National Company Law Tribunal (NCLT) at Mumbai has recently approved a second motion petition filed by JM Baxi group entities, the ports and logistics operator, clearing the scheme of arrangement to demerge and reorganise its container and corporate services businesses into separate resulting companies.

A coram of Judicial Member Lakshmi Gurung and Technical Member Hariharan Neelakanta Iyer noted that the companies had fulfilled all statutory compliances and the scheme was fair and reasonable.

It observed, “No serious observations or irregularities are found and the Scheme appears to be fair and reasonable and is not contrary to public policy.”

Under the approved scheme, the identified container business of J M Baxi Ports & Logistics Pvt Ltd will be demerged into J M Baxi Container Holdings, while the corporate services business will be demerged into J M Baxi Ports Services. Post-demerger, the demerged company will continue to operate the non-container business. The boards of the companies first approved the scheme on February 29, 2024.

At the first-motion stage, the tribunal on October 24, 2024, directed the convening of a meeting of equity shareholders of the demerged company while dispensing with meetings of secured creditors. The resulting companies had no creditors and meetings in their cases were dispensed with.

During the proceedings, notices were served on statutory authorities, including the Regional Director, Registrar of Companies, Income Tax Department, GST authorities, the Official Liquidator, and the Ministry of Ports, Shipping, and Waterways in November 2024.

The Regional Director filed a report on February 17, 2025 raising certain objections relating to accounting treatment, creditor protection, and regulatory compliance. All the objections were addressed by the companies through affidavits and undertakings.

One of the objectors relied on the pendency of criminal proceedings to oppose the scheme. He pointed to an ongoing CBI case in which a director of the demerged company was arraigned as an accused in his capacity as a partner of J M Baxi & Co.

The tribunal noted the affidavit filed by the company clarifying that the said criminal proceedings were not connected directly or indirectly with the companies or the proposed scheme. Accepting this explanation, the tribunal held that it lacked jurisdiction to try or look into matters of a criminal nature, and such charges must be looked into by the appropriate authority.

The tribunal sanctioned the scheme and directed the demerged company and the resulting companies to file certified copies of the order within thirty days with the Registrar of Companies.