NCLT Sanctions Scheme of Amalgamation Between Encore I.T. Services and Sonata Software Limited

NCLT Sanctions Scheme of Amalgamation Between Encore I.T. Services and Sonata Software Limited​

The National Company Law Tribunal (NCLT), Chennai Bench, has sanctioned the Scheme of Arrangement and Amalgamation between Encore I.T. Services Solutions Private Limited (Transferor Company) and Sonata Software Limited (Transferee Company). The order was pronounced by the Tribunal on June 5, 2026.

The scheme, filed under Sections 230 to 232 of the Companies Act, 2013, aims to consolidate the businesses of both entities into a single resulting company. This amalgamation is intended to achieve operational efficiencies, streamline the corporate structure, reduce administrative costs, and enhance strategic focus on core business activities.

The rationale for the merger includes achieving cost savings by eliminating managerial overlaps and preventing cost duplication inherent in running multiple independent entities. The consolidated operations are expected to lead to increased operational efficiency and integrated business functions through resource optimization.

Statutory Review and Financial Status​

The petitioner companies provided necessary information and responded to statutory objections following inspections by various regulatory bodies, including the Regional Director, the Official Liquidator (OL), and the Income Tax Department.

The Income Tax Department, having filed its report on May 6, 2025, noted that while the Transferor Company is dissolved under this scheme, its liabilities will be delved upon the Transferee Company (Sonata). The review of outstanding tax demands for Encore I.T. Services Solutions Private Limited showed the following amounts:


The Official Liquidator (OL), who filed a report on August 31, 2025, confirmed that the affairs of the Transferor Company appeared not to have been conducted in a manner prejudicial to the interest of its members or to public interest.

Key Elements of the Amalgamation​

The Scheme stipulates several key aspects of the transaction. The Appointed Date for the scheme was set as April 1, 2024.

As part of the process, the entire undertaking and business of the Transferor Company (Encore) are to be transferred and vested in the Transferee Company (Sonata). Furthermore, the Board of Directors of both companies recommended this Scheme for the transfer and vesting of all undertakings and businesses of the Transferor Company into Sonata Software Limited.

Structurally, it was clarified that since the Transferor Company is a wholly-owned subsidiary of the Transferee Company, the entire Equity shares held by the Transferee Company in the Transferor Company will be cancelled or extinguished upon the scheme becoming effective, meaning no consideration for these shares issues. Additionally, the Authorized share capital of the Transferor (each equity share at Rs. 100/- face value) is to be re-classified and combined with the authorized share capital of the Transferee Company (to 100 Equity Shares of Rs. 1/- each).

The Tribunal confirmed that all properties, rights, and interests of the Transferor Companies will be transferred to the Resulting Company pursuant to Section 232(3) of the Companies Act, 2013. All pending proceedings by or against the Petitioner Companies shall continue with the Resultant Company.

SONATSOFTW Stock Price Movement​

Sonata Software Limited shares shed 2.99% on Thursday, closing at ₹254.85 after falling from the previous close. The stock traded in a total volume of 632,558 shares during the session.