Narayana Hrudayalaya approval preserves tax liabilities

Narayana Hrudayalaya’s tribunal-approved Scheme of Arrangement, with an appointed date of 1 April 2025, does not waive tax, stamp-duty or regulatory liabilities. The Resulting Company has undertaken to contest and settle, under applicable law, income-tax demands that crystallise in relation to the transferred clinical services undertaking.

What did the tribunal approve for Narayana Hrudayalaya?

The National Company Law Tribunal, or NCLT, approved Narayana Hrudayalaya’s Scheme of Arrangement with 1 April 2025 as its appointed date, making it binding on the directors, shareholders and creditors of both petitioner companies. The order describes the transaction as a demerger and records that the Demerged Company has two undertakings: the transferred Demerged Undertaking and the Remaining Undertaking that continues with the Demerged Company.

The transferred business is identified in the filings as the clinical services undertaking. The petitioner companies told the NCLT that Petitioner Company No. 2’s existing objects clause already covered medical treatment, healthcare facilities, hospitals, clinics, poly-clinics, dispensaries and nursing homes, meaning no objects-clause amendment was required for it to operate the transferred undertaking after sanction.

Approval followed meetings held through video conference on 2 April 2026, convened under an NCLT order dated 13 February 2026. The requisite majority approved the scheme at meetings of Petitioner Company No. 2’s equity shareholders, secured creditors and unsecured creditors, and at secured and unsecured creditor meetings of Petitioner Company No. 1.

Does Narayana Hrudayalaya’s approval remove tax or stamp-duty duties?

No, Narayana Hrudayalaya’s approval expressly does not exempt the petitioner companies from stamp duty, taxes, charges, civil liability or criminal liability payable or arising under law. The NCLT said its sanction must not be construed as an order granting an exemption from any required permission, compliance, payment or other legal action.

The order separately states that sanction is not an exemption from the Income-tax Act, 2025, formerly the Income-tax Act, 1961, the Companies Act, 2013, or any other applicable statute. Authorities retain the freedom to take appropriate action under law, so the approval validates the corporate arrangement without settling potential statutory claims.

The petitioner companies undertook to settle statutory dues owed to the Income Tax Department immediately after those dues attain finality or crystallise, if not already settled. They also sent the NCLT notice, petition and annexures to the jurisdictional income-tax assessing officers, with delivery recorded on 8 May 2026.

Which income-tax responsibilities follow the clinical services transfer?

The Resulting Company will continue and contest any ongoing income-tax proceedings relating to the transferred clinical services undertaking, according to an undertaking affidavit filed on 29 September 2026. It also undertook to discharge and settle income-tax demands arising from that undertaking when those demands crystallise, in accordance with law.

The Income Tax Department, in a report filed on 6 October 2026, asked that the assessee be directed to strictly comply with Section 170A of the erstwhile Income-tax Act, 1961. The NCLT directed compliance with Section 314 of the Income-tax Act, 2025, identified in the order as the successor provision to Section 170A, within the stipulated period.

This allocation differs from the treatment of the Remaining Undertaking. The transferred Demerged Undertaking moves to the Resulting Company, while the assets and liabilities of the Demerged Company other than that undertaking remain with the Demerged Company. The filings refer to annexed pre- and post-demerger asset and liability details as of 1 April 2025, but the supplied order does not disclose their values.

What regulatory and record-keeping obligations remain?

Narayana Hrudayalaya’s Resulting Company undertook to comply with applicable Reserve Bank of India, or RBI, rules, regulations and guidelines, as well as the Foreign Exchange Management Act, 1999, or FEMA. That undertaking was made in an affidavit filed on 29 April 2026 in response to the RBI’s letter dated 22 May 2026.

The RBI did not provide an individual clearance of the transaction or preclude future enforcement. Its letter said companies undertaking a compromise, arrangement or amalgamation remain responsible for meeting applicable legal and regulatory requirements, and that individual vetting could limit the regulator’s ability to act on future contraventions.

The petitioner companies also said they had no objection to notices being issued to the RBI, Securities and Exchange Board of India, National Stock Exchange of India Limited, BSE Limited, the Income Tax Department and any other authority the NCLT considered necessary. They undertook to comply with any directions issued by the tribunal, while the NCLT accepted the undertakings given in response to statutory-authority observations.

What filings must Narayana Hrudayalaya complete after the order?

Narayana Hrudayalaya must deliver a certified copy of the NCLT order to the Registrar of Companies, Karnataka within 30 days of receiving it. The direction is a post-order filing requirement and is separate from the 1 April 2025 appointed date used for the Scheme of Arrangement.

The records of both petitioner companies must be preserved in the manner and for the duration prescribed under Section 239 of the Companies Act, 2013. Petitioner Company No. 2 specifically undertook to preserve Petitioner Company No. 1’s books and papers concerning the transferred undertaking, while Petitioner Company No. 1 undertook to comply with Section 240 to the extent applicable.

The registry will issue the formal order in Form CAA-7 under the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 after the Transferee Company files affidavits containing schedules of the Transferor Company’s freehold and leasehold properties. The order also allows any interested person to apply to the NCLT for directions that may be necessary.

Conclusion

The approval permits the clinical services undertaking to be transferred under the 1 April 2025 scheme, but it does not place Narayana Hrudayalaya outside tax, corporate, stamp-duty or foreign-exchange requirements. The principal allocation disclosed is that the Resulting Company will handle ongoing income-tax proceedings and crystallised demands connected with the transferred undertaking, while the Remaining Undertaking stays with the Demerged Company.

Next, Narayana Hrudayalaya must complete the Registrar of Companies filing within 30 days of receiving the order, meet the stipulated Section 314 compliance deadline and preserve records under Section 239. Matters to watch are any income-tax demand that becomes final, the outcome of any continuing proceeding involving the transferred undertaking, and any action or direction issued by a regulator under applicable law.