NCLAT Ruling: Section 231 of Companies Act and Scheme Modifications (2024)

Case Law: November 06, 2024 CMS Info Systems Ltd (Appellant)
Vs Bharatiya Kamgar Karamchari Mahasangh & Ors (Respondents)

National Company Law Appellate Tribunal Principal Bench, New Delhi Company Appeal (AT) No.27/2024

Section 231 of the Companies Act, 2013 does not permit the Tribunal to make substantial modifications to a Scheme which has been approved by its Members.

Judgement
Hon’ble NCLAT observed that Section 231 of the Companies Act, 2013 does not permit the Tribunal to make substantial modifications to a Scheme which has been approved by its Members. The Ld. NCLT could not have interpreted the Scheme contrary to the intention of the Transferor and Appellant. The intention of the Transferor and the Appellant was clear from the unambiguous wording of the Scheme under Clause 7.1 and also coupled with the fact the workmen not so identified by the Board continued in the service of the transferor company, none of such persons were abandoned/retrenched when the said Scheme was put into operation.

Rather the Transferor company and the Transferee company executed Manpower Supply Agreements whereunder the Transferee company utilised the services provided by the workmen of the Transferor company. The purpose of the Scheme was not to retrench any of the staff, employees of the Transferor company and the record would show such persons continued to be in service of the Transferor company on terms which were not in any manner less favourable to those available to the employees of the Appellant.

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