NCLT withholds merger of Embassy group firms with Indiabulls Real Estate

The National Company Law Tribunal, Chandigarh bench, has withheld the merger of realty firm Embassy Group's certain residential and commercial projects with Indiabulls Real Estate. Mumbai-based Indiabulls Real Estate (IBREL) said it will decide on the next course of action after reading the full judgement and will explore all options, including filing an appeal against the order of the National Company Law Tribunal (NCLT) before the appellate tribunal.

In August 2020, Bengaluru-based realty firm Embassy Group entered into a definitive agreement to merge its certain residential and commercial projects with IBREL through a cashless scheme of amalgamation. Embassy Group will become the promoter of the merged entity.

Through a regulatory filing, IBREL informed that "the sanction to the merger of NAM Estates Pvt Ltd (NAM Estates) and Embassy One Commercial Property Developments Pvt Ltd (Embassy One) into IBREL has been withheld by the National Company Law Tribunal, Chandigarh Bench".

IBREL said the merger scheme has already been sanctioned by the NCLT, Bengaluru Bench, which has jurisdiction over NAM Estates and Embassy One, on April 22, 2022.

"However, the NCLT, Chandigarh Bench, which has jurisdiction over IBREL, had earlier raised certain concerns based on the objections cited by the Income Tax department to the merger.

"IBREL strongly believes that these objections and concerns were unfounded, unjustified and do not impact the merger in a significant manner and had accordingly addressed the same before the NCLT," the company said in the filing.

IBREL said it will await the detailed order to further evaluate the next steps and shall explore all options, including filing an appeal against the order of the NCLT, Chandigarh Bench, before the National Company Law Appellate Tribunal (NCLAT) at the earliest.

The merger has already received overwhelming support from 99.9987 per cent of its shareholders who voted on the same and has also received approval from other regulators, it added.

"IBREL's board shall be meeting over the next day to chalk out its plan and strategy to move forward and shall communicate the same to all its stakeholders," the filing said.

In February 2021, the Competition Commission of India (CCI) approved the proposed merger of Embassy Group firms -- NAM Estates Pvt Ltd and Embassy One Commercial Property Developments Pvt Ltd -- with IBREL.

At present, Embassy Group has around 14 per cent stake in IBREL and the same will increase to 45 per cent after the merger of assets of these two companies.

Post-merger, the combined entity will have 80.8 million square feet of launched and planned development potential. The merged entity will have about 30 projects.

Under the terms of the agreement, IBREL's shares are valued at Rs 92.5 per share.

IBREL has a land bank of 3,280 acre, near major metropolitan cities. It has a presence in six cities -- Delhi-NCR, Mumbai Metropolitan Region (MMR), Jodhpur, Vadodara, Vizag and Indore.

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