The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi has upheld the approval by National Company Law Tribunal (NCLT) Mumbai and Ahmedabad benches for delisting of ICICI Securities.
In its order, the NCLAT has dismissed all six appeals filed by Quantum MF and Manu Rishi Gupta who had challenged the NCLT nod.
As per the approved scheme, ICICI Securities will become a wholly owned subsidiary of ICICI Bank and shareholders of ICICI Securities will receive 67 shares of ICICI Bank for every 100 shares they held.
In the order Justice Yogesh Khanna, Member (Judicial) and Ajai Das Mehrotra Member (Technical), NCLAT said, “ Not only is the Appellant not entitled in terms of the proviso to Section 230(4) to object to the Scheme, but the Appellant has also failed to demonstrate any illegality in either the process followed for sanctioning of the Scheme or in the terms of the Scheme itself.”
“The Impugned Order is a detailed, well-reasoned order which has effectively dealt with all the contentions raised by the Appellant whilst noting that the Appellant is not entitled to object to the Scheme,” they said in the order.
“Lastly we may note, the Appellant does not meet the 10% threshold under Section 230(4) of the Companies Act, 2013 (Act) to object to the Scheme,” they added.
As per the order as of 20 March 2024, Manu Rishi Gupta, the appellant, held 0.002% of ICICI Securities’ shares. “Section 230(4) is a mandatory provision, introduced pursuant to the recommendations contained in the 2005 Expert Report on Company Law to prevent frivolous objections by shareholders with miniscule shareholdings.”
“It is settled law that ‘what cannot be done directly cannot be done indirectly’—since the Appellants have no right to object, they cannot maintain the Appeals as “aggrieved persons,” in terms of Section 421 of the Act,” the order said.
“In this regard, it may be noted that 93.82% of equity shareholders and 71.89% of public shareholders have approved the Scheme way back in March 2024,” it said.
“However, it is only at the instance of the Appellant, who holds a miniscule 0.002% shares, the implementation of the Scheme is being delayed and the majority shareholders are being deprived of the benefits of the Scheme. This militates against the basic principle of shareholder’ democracy, which permeates through all corporate actions,” the NCLAT said.
“Further it is pertinent to point out despite his so-called objections to the Scheme, on the ground it devalues the shares of ICICI Securities, the Appellant has continued to indulge in buying and selling of shares of ICIC Securities, including as recently as August 2024,” the court observed.
“That the Appellant has purchased shares of ICICI Securities even after the Scheme was announced and the swap ratio was in public domain it makes it obvious the Appellant is not acting bona fide in raising objections to the Scheme but is indulging in speculative litigation,” it stated.
“Thus the contentions raised does not inspire us to set aside a reasoned order, hence all appeals are dismissed. Pending applications are also disposed of. No order as to cost,” it added.
Published – March 10, 2025 09:18 pm IST
