2008 (9) TMI 569 - HC - Companies Law

Compromise and arrangement - application under Rule 9 of the Company (Court) Rules, 1959 for issue of directions to convene separate meetings of members, secured and unsecured creditors to consider revised scheme of compromise and arrangement - Held that - Having heard the learned counsel for the applicants and on perusal of the entire application, it is ordered that the meetings of secured creditors, unsecured creditors and members i.e. shareholders of the applicant-company for the purpose of considering and if thought fit, approving with or without modifications, the scheme of arrangement aforesaid shall be convened as per the following decided schedule and directions.

Summary

Issues:
Convening separate meetings of members, secured creditors, and unsecured creditors to consider a revised scheme of compromise and arrangement of a company under liquidation.

Analysis:
The applicants filed an application under Rule 9 of the Company (Court) Rules, 1959, seeking directions to convene separate meetings of members, secured creditors, and unsecured creditors to consider a revised scheme of compromise and arrangement of the company under liquidation. The company in question, Shree Shiva Spinners Ltd., was declared a Sick Industrial Company as of March 31, 1993, and the matter was referred to the Rajasthan High Court for winding up. The applicants, who were promoters and directors of the company, aimed to settle outstanding dues with the help of Bharti Syntex Ltd. The scheme of compromise and arrangement was enclosed with the application. The court, after hearing the counsel for the applicants, ordered the meetings of secured creditors, unsecured creditors, and members to be convened on specific dates and times at the registered office of the company.

The court directed that advertisements be published in specified newspapers at least 21 days before the meetings, providing details of the scheme of arrangement and the forms of proxy. Notices convening the meetings were to be sent to the secured and unsecured creditors at least 21 days in advance. The advocates for the applicants were instructed to file necessary documents in court within a specified time frame. The court appointed a Chairman, Shri Virendra Dangi, to preside over the meetings and set the remuneration amount to be paid by the applicants. The Chairman was tasked with issuing advertisements and sending out meeting notices.

Proxy voting was permitted, subject to the filing of the prescribed form within a specified timeframe. The value of each creditor and member was to be determined according to the company's books, with the Chairman resolving any disputes. The Chairman was required to report the meeting results to the court within seven days, with verification by affidavit. The court disposed of the application with these directions, ensuring a structured process for considering the scheme of compromise and arrangement.