1980 (12) TMI 153 - HC - Companies Law

Issues Involved:
1. Winding-up of Telesound (India) Ltd.
2. Appointment of a receiver for mortgaged assets.
3. Amalgamation with Dalmia Cement (Bharat) Ltd.
4. Scheme of compromise with creditors.
5. Validity of proceedings and schemes.
6. Rights and obligations of the landlord.
7. Rights of the secured and unsecured creditors.
8. Impact of amalgamation on tenancy rights.
9. Public interest and reasonableness of the schemes.
10. Modifications and directions to implement the schemes.

Detailed Analysis:

1. Winding-up of Telesound (India) Ltd.:
Telesound (India) Ltd. faced severe financial difficulties, leading M. L. Sondhi to file a petition for its winding-up in December 1976, claiming the company was unable to pay its debts. The petition was admitted, and an official liquidator was appointed as the provisional liquidator by an order on May 4, 1977.

2. Appointment of a Receiver for Mortgaged Assets:
The Industrial Finance Corporation of India, a secured creditor, sought the court's intervention for the sale of mortgaged assets to realize its outstanding dues. A receiver was appointed on March 28, 1977, to take possession of the company's mortgaged assets, including commercial premises in South Extension Part I, New Delhi.

3. Amalgamation with Dalmia Cement (Bharat) Ltd.:
Efforts for amalgamation were initiated to take advantage of Section 72A of the Income Tax Act, which allows tax benefits for amalgamated companies. Dalmia Cement (Bharat) Ltd. agreed to the amalgamation, and a scheme was proposed for the amalgamation of Telesound with Dalmia Cement and a compromise with creditors.

4. Scheme of Compromise with Creditors:
The proposed scheme of compromise envisaged full payment to secured creditors and partial payment to unsecured creditors. Unsecured creditors would receive 55% of the principal amount, and depositors with interest-bearing deposits would receive full interest up to June 30, 1976. The scheme included provisions for payment from tax benefits received under Section 72A of the Income Tax Act.

5. Validity of Proceedings and Schemes:
The court found no challenge to the validity of the proceedings leading to the approval of the schemes. The schemes were approved by the shareholders, secured creditors, and unsecured creditors, with modifications proposed by the Industrial Finance Corporation.

6. Rights and Obligations of the Landlord:
The landlord of the commercial premises objected to the scheme, fearing the transfer of tenancy rights to the transferee-company. The court held that the tenancy rights were transferable under Section 394(4)(a) of the Companies Act and that the transfer was by operation of law, not an assignment requiring the landlord's consent.

7. Rights of the Secured and Unsecured Creditors:
Secured creditors were to be paid in full, while unsecured creditors were to receive 55% of their claims. The court modified the scheme to ensure full payment to depositors with interest-bearing deposits and provided a schedule for payment if the tax benefits under Section 72A were not received.

8. Impact of Amalgamation on Tenancy Rights:
The court held that the amalgamation and transfer of assets, including tenancy rights, were by operation of law and did not require the landlord's consent. The landlord could initiate proceedings under the Rent Control Act if the transfer constituted an assignment.

9. Public Interest and Reasonableness of the Schemes:
The court found the schemes to be in public interest and reasonable, given the financial state of Telesound and the benefits of amalgamation with a financially sound company like Dalmia Cement. The schemes were consistent with the policy underlying Section 72A of the Income Tax Act and had the approval of financial institutions and the Central Government.

10. Modifications and Directions to Implement the Schemes:
The court made several modifications and directions to ensure the effective implementation of the schemes:
- Unsecured creditors with interest-bearing deposits were to be paid in full.
- An Implementation Committee was established to supervise the implementation of the schemes and protect the interests of unsecured creditors.
- The assets of Telesound were transferred to Dalmia Cement, with restrictions on alienation without court permission.
- Sondhi was given liberty to initiate proceedings for adjudication of his claims.
- The landlord was given liberty to initiate proceedings under the Rent Control Act if necessary.
- The transferor-company was dissolved without winding-up, effective January 1, 1980.

By these modifications and directions, the court aimed to balance the interests of all parties involved and ensure the successful implementation of the amalgamation and compromise schemes.

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