Case Note & Summary
The appeal was filed against an order dated 28.11.2025 by the National Company Law Tribunal (NCLT), Mumbai, which approved a scheme of arrangement proposed by the National Spot Exchange Limited (NSEL). The appellants, Nirtex Exports & Investment Pvt Ltd and others, objected to certain clauses in the scheme that required them to withdraw civil suits against third parties, arguing that the scheme was illegal and void. They contended that the scheme compelled creditors to accept a settlement amount significantly lower than the value of their claims and reclassified protected deposits under the Maharashtra Protection of Interest of Depositors (MPID) Act as ordinary creditors, thereby diluting statutory safeguards. The NCLT had approved a capped settlement of Rs. 1950 crores, which the appellants claimed was prejudicial to public interest. The Tribunal noted that the scheme had been previously upheld by the NCLT and affirmed by the Supreme Court, which dismissed related civil appeals on merits. The Tribunal found that the scheme was binding on all specified creditors, including the appellants, who were receiving approximately 42% of their claims. The court reasoned that the appellants could not pursue claims against brokers as the claims were already included in the scheme. The appeal was ultimately dismissed, and all pending applications were disposed of.
Headnote
A) Company Law - Scheme of Arrangement - Legality of Scheme - Companies Act, 2013, Section 230 - The scheme was challenged on grounds of being illegal and contrary to public policy as it mandated withdrawal of civil suits against third parties. The Tribunal upheld the NCLT's approval of the scheme, stating it was binding on all creditors and did not violate any legal provisions. Held that the objections raised lacked merit (Paras 1-14).
Issue of Consideration
Whether the scheme approved by NCLT is illegal and prejudicial to creditors' rights.
Final Decision
The appeal was dismissed, affirming the NCLT's approval of the scheme and rejecting the objections raised by the appellants.
Law Points
- Company law
- scheme of arrangement
- creditor rights
- public policy
- judicial review
