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Issues Involved:
1. Whether the proceedings for seeking directions to convene the meeting are ex parte and whether other parties have any right of audience in the said proceedings. 2. Whether the Court can examine the scheme at the stage of seeking direction to convene the meeting or reject the scheme without issuing direction to convene the meeting. 3. Whether the facts of the present case warrant dismissal of the Summons for directions at the threshold. Issue-Wise Analysis: 1. Ex Parte Proceedings and Right of Audience: The applicant-company sought directions for convening meetings of its creditors and shareholders to consider a scheme of arrangement and compromise. The Court examined whether these proceedings are ex parte and if other parties have the right to be heard. According to Rule 67 of the Company (Court) Rules, 1959, such applications are generally moved ex parte unless the company is not the applicant or is being wound up (Rule 68). However, Rule 69, which deals with directions at the hearing of the summons, implies that the Court can hear interested parties. The Court referred to the Allahabad High Court's decision in Hind Auto Industries Ltd. and the Bombay High Court's decision in Vasant Investment Corpn. Ltd., which support the view that interested parties can be heard even in ex parte proceedings. Consequently, the Court allowed the objector, UTI Bank, to make submissions. 2. Examination of Scheme at the Stage of Direction to Convene Meeting: The Court considered whether it could reject the scheme at the stage of issuing directions to convene the meeting. The Court referred to its previous decision in Gujarat Kamdar Sahakari Mandal and the Supreme Court's decision in Rainbow Denim Ltd., which suggest that the Court should not reject the scheme at the threshold but allow the meeting to take place for further discussion and potential modification. The Court noted that the appropriate time to consider the scheme's merits is after it has been approved by the requisite majority at the meeting. Therefore, the Court held that it should issue directions for convening the meetings and not delve into the scheme's merits at this stage. 3. Dismissal of Summons for Directions at the Threshold: The Court examined whether the objections raised by UTI Bank warranted dismissal of the Summons for directions at the initial stage. The objections included issues with the scheme's merits and claims that prior consultation had already taken place. However, the Court found that the alleged meeting by ARCIL did not result in unanimous agreement among creditors, and different modifications were suggested. The Court emphasized that prior consultation does not prevent the company from seeking directions to convene a meeting. The Court concluded that objections regarding the scheme's merits should be discussed at the meeting, and if the scheme is rejected, there would be no need for Court sanction. Therefore, the Court decided to issue directions for convening the meetings. Directions Issued by the Court: 1. Four separate meetings of the secured creditors with first charge, secured creditors with second charge, other creditors, and shareholders of the applicant-company were scheduled to be held on specified dates and venues. 2. Notices convening the meetings, along with copies of the scheme, explanatory statement, and proxy form, were to be sent to creditors and shareholders at least 21 days before the meetings. 3. Notices were to be published in specified newspapers, indicating that copies of the scheme and related documents could be obtained from the company's registered office or its advocates' office. 4. Mr. S. Khasnobis or Mr. R.S. Patel was appointed as the Chairman of the meetings, with specific instructions regarding the conduct of the meetings and reporting the results to the Court. 5. The quorum for the meetings was set, and voting by proxy was permitted under specified conditions. 6. The value of votes was to be determined based on the amount of debt or capital subscribed, with the Chairman having the authority to resolve disputes regarding voting value. 7. The Chairman was required to report the meeting results to the Court within 14 days of the meetings' conclusion. Rejection of Stay Request: The objector's request for a stay against the implementation, operation, and execution of the order was rejected, as the Court found no need for a stay given the scheduled meeting date.
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