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2014 (1) TMI 1640 - HC - Companies LawApplication for Scheme of Arrangement and Reconstruction of the company in Liquidation to revive under Section 391 to 394 of the Companies Act - Regional Director's & Official Liquidator's observation duly addressed - Application for stay of winding up of the Company under section 466 of the Companies Act - Held that - In view of the analysis of the objections which have been raised by the Regional Director in his report dated 17.7.2013, do not survive. Apart from the objections analysed, the Regional Director has no other objection and it has been stated in the report that the Registrar of Companies of the State of Madhya Pradesh and Chhattisgarh had submitted his report to the Regional Director, vide letter dated 27.5.2013 and 14.6.2013 and as per the said report, there is no complaint against the Company including any complaint/representation against the proposed Scheme of Arrangement and Reconstruction, and the Regional Director has no other objection, and it is stated that the Scheme of Arrangement may be considered by this Court. The Regional Director had submitted the second report in the form of affidavit dated 27.9.2013, but it is not disputed by the counsel for the respective parties that the second affidavit is mere reiteration of the objections raised in the earlier report-affidavit dated 17.7.2013. The report of the Official Liquidator discloses that the petitioner in compliance of the order of this Court dated 27.2.2013, has deposited a sum of ₹ 37,87,550/- on 12.3.2013. It has further been stated by the Official Liquidator that no claim has been received from any unsecured creditors of the Company and that the Official Liquidator has not received any complaint against the proposed Scheme of Arrangement and Reconstruction from any person or party interested in the Scheme in any manner. It has further been expressed by the O.L. that except for the above objections, the affairs of the Company have not been conducted in a manner prejudicial to the interest of its members, creditors or to public interest. In the present case, it is not disputed by any of the secured creditors or the official liquidator that the applicant has cleared the outstanding dues of the secured creditors and that the scheme of reconstruction/revival has been approved by the unsecured creditor and shareholders. Having heard the learned counsel for the parties on the issue of the pending claims of the ex workers of the Company in liquidation, it is found that the workers' claim can not be ignored and it is the bounded duty of the promoter/contributory before this court to satisfy the claim of the workers but at the same time it is to be kept in mind that the revival of the Company in liquidation is in the interest of the ex workers, since there is an offer of re-employment to all the willing workers. Since the Company is situated in the interiors, therefore, revival of the Company will also give an opportunity of employment to the other eligible workers in the neighbouring areas. Thus, I am of the opinion that the interest of the workers would be adequately protected if a Claim Committee is appointed and the claim of the workers is adjudicated. In view of the above analysis, in Company Petition No.21/2013 following directions are issued - Having considered the Scheme and on perusal of the record and report, the Scheme appears to be fair and reasonable and not opposed to public interest. Accordingly the Scheme of Arrangement and Reconstruction filed as Annexure P/5 to the petition is hereby approved. So far as Company Petition No.17/2002 is concerned, In view of the above in terms of Section 466 of the Companies Act, the following directions are issued - Further proceedings of liquidation shall remain permanently stayed.The official liquidator shall handover the assets of the Company in liquidation to the applicant promoter/contributory.The applicant-promoter will submit six monthly report to the O.L. till the time the Company becomes fully operational. - In net Scheme of Arrangement and Reconstruction of the company in Liquidation to revive approved and winding up petition permanently stayed.
Issues Involved:
1. Permanent stay of winding-up proceedings. 2. Sanction of the Scheme of Arrangement and Reconstruction. 3. Settlement of dues to ex-workers. 4. Settlement of dues to M.P. Paschim Kshetra Vidyut Vitran Company Limited (MPPKVVCL). 5. Objections raised by the Regional Director. 6. Objections raised by the Official Liquidator. Issue-wise Detailed Analysis: 1. Permanent Stay of Winding-Up Proceedings: The court addressed the application for a permanent stay of the winding-up proceedings under Section 466 of the Companies Act, 1956. The court noted that the scheme of revival genuinely contemplates the revival of the company's business and is not a ruse to dispose of its assets. It satisfies the elements of public interest and commercial morality, warranting the stay of winding-up proceedings. 2. Sanction of the Scheme of Arrangement and Reconstruction: The court considered the Scheme of Arrangement and Reconstruction under Sections 391 to 394 of the Companies Act, 1956. The scheme proposed the revival of Dhar Cement Limited, settlement of dues to secured and unsecured creditors, and re-employment of past employees. The court emphasized the principle that the revival of a company is generally preferred over its winding up. The scheme was found to be fair, reasonable, and not opposed to public interest. 3. Settlement of Dues to Ex-Workers: The court constituted a Claim Committee headed by Hon. Mr. Justice S.P. Khare (Retired Judge of the M.P. High Court) to adjudicate the claims of ex-workers. The promoter/contributory undertook to settle the claims as adjudicated by the committee and to offer re-employment to willing ex-workers. The court directed the official liquidator to invite claims from ex-workers through advertisements and to place the claims before the committee. 4. Settlement of Dues to M.P. Paschim Kshetra Vidyut Vitran Company Limited (MPPKVVCL): The court acknowledged the application filed by MPPKVVCL for the settlement of dues. The promoter/contributory agreed to pay the arrears of electricity charges in accordance with the law. The court disposed of the application, allowing MPPKVVCL to recover the dues from the company. 5. Objections Raised by the Regional Director: The Regional Director raised several objections, including accounting treatment, submission of the Chairman's report, settlement with secured creditors, procedural compliance for mining licenses, certification of project report, and reduction of capital. The court addressed each objection, noting that the petitioner had undertaken to comply with applicable accounting standards, provided necessary documentation, and agreed to follow prescribed procedures for obtaining approvals. The court found no special reasons to direct the company to add "and reduced" to its name and noted that the petitioner had already settled dues with secured creditors and provided a certified project report. 6. Objections Raised by the Official Liquidator: The Official Liquidator raised objections regarding the number of directors, unsettled dues of ex-workers, and preferential dues. The petitioner undertook to increase the number of directors, settle the dues of ex-workers through the Claim Committee, and pay government dues in accordance with applicable provisions. The court directed the official liquidator to hand over the company's assets to the promoter/contributory and to prepare an inventory of the assets. The promoter/contributory was prohibited from transferring or alienating the assets without the court's leave and was required to submit six-monthly reports until the company became fully operational. Conclusion: The court approved the Scheme of Arrangement and Reconstruction, permanently stayed the winding-up proceedings, and issued detailed directions for the settlement of dues to ex-workers and other creditors. The court emphasized the preference for the revival of the company and found the scheme to be fair, reasonable, and in public interest.
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