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Issues:
1. Revocation of winding up order 2. Approval of revival scheme 3. Interim stay during winding up proceedings 4. Restraint on official liquidator 5. Feasibility and viability of the revival scheme 6. Bona fides of the scheme 7. Public interest considerations 8. Creditor's interests Revocation of Winding Up Order: The case involved the revocation of a winding up order issued in 1986 against a company that had faced financial difficulties. The petitioners sought approval for a revival scheme proposed by T. S. Rai and Associates, which had been accepted by the Industrial Finance Corporation of India. The court directed meetings of shareholders, secured creditors, and unsecured creditors to consider the revival scheme. Approval of Revival Scheme: Meetings were held with shareholders, secured creditors, and unsecured creditors to approve the revival scheme. Shareholders and secured creditors supported the scheme, with interest on secured loans waived. Eight out of 12 unsecured creditors approved the scheme, while four opposed it. The official liquidator reported that payments were being made as per the memorandum of understanding. Interim Stay and Restraint: During the proceedings, the court granted an interim stay on alienating or disposing of company assets and allowed the usual business operations to continue. The court also directed the official liquidator to hand back possession of assets and books of account to the company's managing director. Feasibility and Viability of Revival Scheme: The court assessed the feasibility and viability of the revival scheme, considering factors such as the solvency of the applicants, public interest, commercial morality, and the interests of creditors. The court emphasized the importance of ensuring the scheme was not a cover for misdeeds and that it was just and reasonable. Public Interest and Creditor's Interests: In evaluating the scheme, the court considered the welfare of labor, investments made by non-resident Indians, and the support of a significant number of creditors. Despite opposition from some unsecured creditors, the court found no evidence of the scheme lacking feasibility, viability, or bona fides. The court highlighted the importance of providing a chance for rehabilitation to prevent detrimental consequences for creditors and shareholders. This detailed analysis highlights the court's thorough assessment of the revival scheme, ensuring it was in the best interest of all stakeholders involved and addressing concerns related to public interest, creditor's rights, and the company's financial viability.
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