2006 (8) TMI 649 - Board - Companies Law

Summary

Issues Involved:
1. Entitlement to raise credit facilities in the name of the company.
2. Entitlement to exercise other options provided in Lot 2.
3. Direction to the Estate Officer, Chandigarh, regarding the plots of land.
4. Entitlement to share the bank balance of the company.
5. Implementation of the proposal dated 7.3.2000.
6. Claim for release of Rs. 24 crores to Group A.

Detailed Analysis:

1. Entitlement to raise credit facilities in the name of the company:
Group B contended that they availed the credit facility in the company's name based on the Board's order dated 17.5.2004. However, since the High Court set aside this order, the entire settlement must be in terms of the proposal dated 7.3.2000. According to Clause (xxiii) of the proposal, the company and four other firms were to be wound up after discharging all liabilities. Therefore, Group B could not borrow money in the company's name. The credit facility availed should be transferred to a new company registered by Group B, and Hind Samachar Ltd should be wound up as per the proposal.

2. Entitlement to exercise other options provided in Lot 2:
Group B argued that Group A, having opted for Rs. 24 crores, could not exercise other options in Lot 2. The High Court order stated that Group A is entitled to Lot-2 and the Rs. 24 crores option. Thus, Group A can exercise all options in Lot-2. Group B must honor the options exercised by Group A in their letter dated 11.11.2005.

3. Direction to the Estate Officer, Chandigarh, regarding the plots of land:
Group B sought a direction to the Estate Officer to hand over plots without penalty. The Board held that granting such a prayer against a third party is beyond its mandate. The Estate Officer is at liberty to proceed according to the law.

4. Entitlement to share the bank balance of the company:
The effective date to determine the assets and liabilities is crucial. According to Clause XXV(o) of the proposal, the effective date is when the CLB takes the formal agreement on record. The Board decided that the effective date should be 31st March 2000. Group A can claim a share in the bank/cash balance as of this date.

5. Implementation of the proposal dated 7.3.2000:
The time schedule for implementing the division between the two groups shall commence from 1st August 2006. The statutory auditors must complete the audit of the company and firms up to 31st March 2000 by 30th November 2006. All subsequent transactions related to pre-31.3.2000 must be considered to determine the surplus/deficit.

6. Claim for release of Rs. 24 crores to Group A:
The Board directed the State Bank of Patiala to release the deposited amount of Rs. 24 crores, along with accrued interest, to Group A on or after 16th August 2006. Group A should provide the bank with a copy of the order and the account details for the transfer.

Conclusion:
All applications were disposed of in the above terms, ensuring the implementation of the High Court's settlement and the proposal dated 7.3.2000. If an independent person is required to oversee the implementation, the parties may file an application for appointing a retired High Court Judge.