NCLT Chennai Rejects TIIC Plea to Recall Approved Scheme; Promoter Buyout Not ‘Disinvestment’ Under Companies Act

April 2, 2026 : The Chennai Bench of the National Company Law Tribunal (NCLT) has dismissed an application filed by Tamilnadu Industrial Investment Corporation Limited (TIIC) seeking recall or modification of an already sanctioned scheme of arrangement involving India Forge & Drop Stampings Limited, holding that a promoter-led acquisition of minority shareholding under Section 230(11) of the Companies Act, 2013 cannot be equated with “disinvestment.”

The application, filed under Section 230(12) read with Section 231(1)(b), challenged the Tribunal’s earlier order dated July 31, 2024 approving the scheme proposed by promoters Dipak Raj Sood and Rupa Sood for takeover of public shareholding.

Background

TIIC, a State Government company, held 71,179 equity shares (2.39%) in the respondent company. The promoters proposed a scheme to acquire minority shareholding through a takeover mechanism under Section 230(11).

Two independent valuation reports assessed the share value at ₹1,155.60 and ₹1,147 per share, and the promoters offered ₹1,156 per share—being the higher of the two valuations—for acquisition of public shares.

TIIC opposed the scheme, contending that the valuation violated the Tamil Nadu Government’s Disinvestment Guidelines (G.O. Ms. No. 448 dated June 19, 1991), which required adoption of the highest value among five prescribed valuation methods. It claimed that the fair value should have been ₹5,687 per share and alleged suppression of the Government Order during the approval process.

Despite its objections, TIIC accepted ₹8.22 crore towards consideration under protest.

Tribunal’s Findings

The Bench comprising Sanjiv Jain (Member Judicial) and Venkataraman Subramaniam (Member Technical) dismissed the application, emphasizing multiple grounds:

1. Challenge Held Belated and Not Maintainable
The Tribunal held that Section 230(12) enables objections during the pendency of a scheme. Since TIIC approached the Tribunal after the scheme had already been sanctioned and implemented, the application was not maintainable.

2. Scheme Already Implemented
It was noted that the scheme had been substantially implemented, with consideration distributed to nearly all shareholders, including TIIC. Hence, no modification could be sought under Section 231(1)(b), which is limited to ensuring proper implementation.

3. No Grounds for Recall Established
The Tribunal reiterated that recall of a sanctioned scheme is permissible only in limited circumstances such as fraud or procedural illegality. It found no such grounds established in the present case.

4. Promoter Buyout Not ‘Disinvestment’
Rejecting TIIC’s core argument, the Tribunal clarified that disinvestment refers to a voluntary act of the Government divesting its stake. In contrast, the present transaction was a statutory takeover under Section 230(11), governed by the Companies Act framework.

“In the present case… shares of non-promoter shareholders are being taken over by the promoters based on fair valuation… this process in no way can be termed as disinvestment.”

Accordingly, the Tamil Nadu Government’s disinvestment guidelines were held inapplicable.

5. No Special Rights for Government Shareholder
The Tribunal held that TIIC, despite being a government entity, stood on the same footing as other shareholders and was not entitled to differential valuation or treatment in the absence of specific rights under the Articles of Association.

6. Minority Squeeze-Out Permissible with Fair Value
The Bench reiterated that Section 230(11) enables majority shareholders to acquire minority shares, and minority shareholders cannot insist on retaining shares if fair consideration is offered in accordance with law.

Conclusion

Holding that the scheme was validly approved and implemented in compliance with statutory provisions, and that the applicant had already accepted consideration, the Tribunal found no merit in the plea and dismissed the application.

Case Title: Tamilnadu Industrial Investment Corporation Limited v. Dipak Raj Sood & Ors.
Case No.: IA(CA)/235(CHE)/2024 in CP(CAA)/34(CHE)/2024
Coram: Sanjiv Jain (Member Judicial), Venkataraman Subramaniam (Member Technical)
Decision Date: April 2, 2026