NCLT New Delhi Bench Court-II held that:
(i) Both/or all the entities involved in the Amalgamation Scheme under Section 230-232 of the Companies Act 2013 have to be necessarily “Companies” as defined under Section 2(20) of the Companies Act 2013. In the instant case, the applicant has merged its “proprietorship firm” with a “company” in disregard to and without resorting to the provisions of Section 230-232 of the Companies Act 2013.
(ii) However, keeping all this analysis aside, when we re-visit the Amalgamation Agreement placed on record, we find that though the heading of the Agreement starts with the word Amalgamation, but no characteristics of Amalgamation are found present/followed in executing said document. Merely what ought to have been an “assignment deed” is executed and named as an “Amalgamation Agreement”. Therefore, in the interest of justice, we would not like to reject the Application and still examine the “debt” of the Applicant on its merits.
(iii) It is the settled law that no pecuniary liability in regard to a claim for damages arises till a competent court adjudicates upon the claim for damages and holds that the defaulting party has committed a breach and incurred a liability to compensate the non-defaulting party for the loss. An alleged default or breach gives rise only to a right to sue for damages and not to claim any debt.
(iv) Even otherwise, once agreeing to purchase the goods and subsequently, denying the purchase will not constitute an “Operational Debt” since there is neither any flow of goods/services nor any payment of consideration from one party to another in this chain.