The National Company Law Tribunal, Chandigarh Bench, in CA (CAA) No. 31/Chd/Hry/2024 (First Motion), decided on 23.04.2025, allowed the first motion petition for the proposed demerger of the Business Correspondent and Technology Service Provider undertaking of FreeCharge Payment Technologies Pvt Ltd (FPTPL) into FreeCharge Business and Technology Services Ltd (FBTSL). Both companies are subsidiaries of Axis Bank Limited. The Tribunal dispensed with meetings of equity shareholders, secured creditors, and unsecured creditors, and imposed conditions stipulated by the Reserve Bank of India.
The Scheme
The proposed scheme envisages the demerger of the Business Correspondent (BC) and Technology Service Provider activities of FPTPL into FBTSL. FPTPL is a wholly owned subsidiary of Axis Bank and holds a valid certificate of authorisation from the RBI to operate as a Payment Aggregator (PA) and Payment Gateway (PG). After the demerger, the PA/PG business would remain with FPTPL while the BC and technology services undertaking would vest in FBTSL. The appointed date under the scheme is 01.07.2024. The share exchange ratio was fixed at 100 equity shares of FBTSL for every 283 equity shares of FPTPL.
Procedural Compliance
The Tribunal noted that the Petitioner Companies had complied with the procedural requirements under Sections 230 to 232 of the Companies Act, 2013, read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016. Notices were served on the Regional Director, the Registrar of Companies, and the Official Liquidator. All 16 unsecured creditors of the demerged company had been duly paid. No objections were received from the statutory authorities. The Tribunal was satisfied that dispensation of meetings was justified given that the scheme involved wholly owned subsidiaries of the same parent bank and no creditor interest was prejudiced.
RBI Conditions
The Reserve Bank of India, in its observations, imposed certain conditions on the demerger. These included restrictions on the PA/PG business remaining with FPTPL and conditions governing the operations of the BC subsidiary (FBTSL) post-demerger. The Tribunal incorporated these conditions into its order, directing the Petitioner Companies to comply with all RBI requirements.
The Order
The first motion petition was allowed. The Tribunal dispensed with the meetings of equity shareholders, secured creditors, and unsecured creditors. Liberty was granted to the Petitioner Companies to file the second motion petition for final sanction of the scheme.
Significance
The order is of interest for entities in the financial services sector undertaking corporate restructuring involving RBI-regulated businesses. It illustrates the interplay between the NCLT’s jurisdiction under the Companies Act and the regulatory oversight of the RBI, particularly in demergers involving payment aggregator and business correspondent licences.
Mrs. Munisha Gandhi, Senior Advocate, assisted by Ms. Salina Chalana, Advocate, appeared for the Applicant Companies, i.e., M/s FreeCharge Payment Technologies Pvt Ltd and M/s FreeCharge Business and Technology Services Ltd.