NCLT Kochi Allows First Motion in Kalyan Silks Demerger, Orders Meeting of 2,134 Unsecured Creditors

The National Company Law Tribunal, Kochi Bench, has allowed a first motion joint company application in a proposed demerger between Kalyan Silks Trichur Private Limited and Kalyan Silks Private Limited, while directing that a meeting of unsecured creditors of the demerged entity be convened.

The order was passed in CA(CAA)/03/KOB/2026 by a Bench comprising Vinay Goel (Member Judicial) on March 9, 2026.

The application was filed under Sections 230–233 of the Companies Act, 2013, seeking directions for a composite scheme of arrangement in the nature of demerger. The Tribunal noted that both companies have their registered offices in Thrissur, Kerala, within its territorial jurisdiction.

At the first motion stage, the Tribunal examined corporate records, financial statements, valuation reports, and statutory compliances. It found that the scheme clearly identifies the undertaking proposed to be demerged along with the transfer of assets and liabilities on a going concern basis. The scheme had been approved by the respective Boards of Directors on December 27 and December 31, 2025, with April 1, 2026 fixed as the appointed date.

Importantly, the Tribunal accepted that:

• The demerged company has five equity shareholders and five secured creditors, all of whom submitted consent affidavits approving the scheme.
• The resulting company has five equity shareholders and no creditors.
• The classification of stakeholders and valuation exercise satisfied statutory requirements at this stage.

Accordingly, exercising powers under Section 230(9), the Tribunal dispensed with meetings of equity shareholders and secured creditors of the demerged company and equity shareholders of the resulting company.

However, the Tribunal noted that the demerged company has 2,134 unsecured creditors, making it mandatory to convene their meeting for consideration of the scheme.

Directions for Creditors’ Meeting

The Bench issued detailed procedural directions:

• The meeting of unsecured creditors must be convened within 45 days, with at least 30 days’ notice.
• It will be conducted in hybrid mode, including video conferencing.
• Advocate Krishna Dayama was appointed as Chairperson, and CS Sreepriya Kalarikkal as Scrutinizer.
• Quorum requires creditors representing 30% in number and 50% in value.

The Tribunal also mandated wide publication of notices in The Hindu, Malayala Manorama, and Nav Bharat Times, considering that creditors are spread across India. Individual notices must also be served along with explanatory statements under Section 230(3).

Appointed Date Upheld

Addressing the appointed date, the Tribunal accepted April 1, 2026, noting that aligning it with the beginning of the financial year ensures smoother accounting, taxation, and regulatory compliance. It held that such fixation is consistent with Section 232(6) of the Act and the relevant MCA circular permitting flexibility in determining appointed dates.

Next Stage

The Tribunal clarified that the scheme will undergo further scrutiny at the second motion stage after stakeholder approvals and statutory reports. The applicant companies have been granted liberty to file a petition for sanction upon compliance with the directions.