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Issues: Application under section 391 of the Companies Act, 1956 for directions to convene a meeting of secured creditors of a company for considering a scheme of compromise.
Analysis: 1. The application was filed under section 391 of the Companies Act, 1956, seeking directions to convene a meeting of the secured creditors of the applicant company to consider a proposed scheme of compromise. The applicant company, Modern Syntex (India) Limited, faced significant losses since 1997-98, leading to erosion of its net worth and difficulties in servicing debts. 2. The Board of Directors of the applicant company approved the proposed scheme of compromise to restructure its debts, aiming to prevent insolvency and enhance opportunities for revival. The scheme of compromise and the list of secured creditors with whom the company intended to enter into the scheme were detailed in the application. 3. The application highlighted the necessity to reconstruct debts in the best interest of the company and its creditors to avoid liquidation. It also mentioned that the company was declared a relief undertaking by the State of Rajasthan under the Rajasthan Relief Undertaking Act, 1961, indicating the financial challenges faced by the company. 4. The court, after hearing the counsel for the applicant company and reviewing the application, found it to be a fit case for granting the relief sought. Consequently, the court ordered the convening of a meeting of secured creditors at a specified date, time, and venue to consider and approve the proposed scheme of compromise. 5. Detailed instructions were provided regarding the advertisement of the meeting, sending notices to creditors, appointment of a Chairman for the meeting, deposit of remuneration for the Chairman, permission for voting by proxy, determination of creditor values, and reporting the meeting's outcome to the court within a specified timeframe. 6. The court directed the Chairman to issue the advertisement and notices for the meeting, ensure compliance with quorum requirements, and report the meeting's result verified by affidavit within seven days of its conclusion. The application was disposed of in accordance with the provided directions.
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