2012 (12) TMI 8 - HC - Companies Law

Scheme of amalgamation - It is the case of the plaintiffs/respondents that one of the conditions of such Sanctioned Scheme was that a sum of Rs. 386 lakh was to be paid by CIL to the plaintiffs and the amount of Rs.386 lakh (subsequently reduced to Rs. 319 lakh) was to remain frozen till 2003 and only thereupon CIL (the new promoters) was to pay this amount to the plaintiffs which fact has been disputed by the appellant/defendant. It is the case of the appellant/defendants that the letter dated November 1, 1993 written by CIL to BIFR was merely a proposal and was in no way connected with either the plaintiff or the defendant and nor did it belong to the Goenka group and, therefore, without being furnished with any particulars or details of the so called claims of the erstwhile promoters it was stated that the interest of the claim of the erstwhile promoters may be reduced and this was merely on the proposal stage. Held that - the appellant/defendant having accepted the scheme are bound to implement it but nothing prevents them from disputing the claim of the plaintiffs/respondents which was found by the learned Company Judge to be a bonafide dispute. The finding of the learned Company Judge and the offer of the defendant company to secure the claims of the plaintiffs/respondents which has been finally accepted and acted upon by the defendant sufficiently protect and secure the claims of the plaintiffs/respondents and, therefore, the learned Single Judge ought to have exercised the discretion by granting leave to the defendant. We, therefore, quash and set aside the judgment and order in all the six suits and grant leave to the appellants/defendants to defend as a result of which now they will be at liberty to file their written statement before the learned Single Judge.

Issues Involved:
1. Maintainability of the summary proceedings under Chapter XIIIA of the Original Side Rules.
2. Validity and enforceability of the claims based on the BIFR and AAIFR sanctioned schemes.
3. Determination of whether the defendants have any bona fide defense to the claims.
4. Admissibility and implications of the balance sheet entries as admissions of debt.
5. Reciprocal obligations and performance under the sanctioned rehabilitation scheme.
6. Jurisdiction and authority of BIFR to adjudicate disputed claims.
7. Applicability of the principles for granting leave to defend.

Detailed Analysis:

1. Maintainability of the Summary Proceedings:
The court held that the Chapter XIIIA application is competent. The appellate court did not express any observation on the merits of the case in the context of the dismissal of the winding-up petitions by the Company Judge and relegated the appellants to their ordinary remedies permissible under the law. Therefore, the findings of the learned Company Judge while dismissing the six applications for winding up of the companies were not disturbed, allowing the plaintiffs to proceed with the summary proceedings.

2. Validity and Enforceability of the Claims Based on BIFR and AAIFR Sanctioned Schemes:
The plaintiffs based their claims on the orders passed by BIFR and AAIFR, which sanctioned a rehabilitation scheme involving the repayment of unsecured loans. The court noted that the sanctioned scheme and subsequent orders by AAIFR required the defendants to acknowledge and repay the unsecured loans to the plaintiffs. However, the defendants disputed the claims, arguing that the scheme contained reciprocal obligations that the plaintiffs had not fulfilled.

3. Determination of Whether the Defendants Have Any Bona Fide Defense to the Claims:
The court found that the defendants had raised substantial and bona fide disputes regarding the claims, including issues related to the performance of reciprocal obligations and the validity of the claims. The court emphasized that whenever the defense raises a triable issue, leave must be given, and in this case, the defendants had raised such issues, warranting leave to defend.

4. Admissibility and Implications of the Balance Sheet Entries as Admissions of Debt:
The court considered the defendants' argument that entries in the balance sheets could not be considered admissions of debt, especially when such entries were disputed. The court noted that the balance sheet entries were qualified and disputed by the defendants, and therefore, could not be taken as unequivocal admissions of liability.

5. Reciprocal Obligations and Performance Under the Sanctioned Rehabilitation Scheme:
The defendants contended that the plaintiffs had failed to perform their part of the obligations under the sanctioned scheme, such as the transfer of immovable property. The court acknowledged that the scheme contained reciprocal arrangements and that the plaintiffs' failure to fulfill their obligations could affect their entitlement to the claims.

6. Jurisdiction and Authority of BIFR to Adjudicate Disputed Claims:
The court observed that the BIFR's role was to sanction and oversee the implementation of rehabilitation schemes, but it did not have the authority to adjudicate the quantum of disputed claims. The court noted that the AAIFR had also acknowledged that disputed claims could be subject to adjudication by competent courts.

7. Applicability of the Principles for Granting Leave to Defend:
The court referred to established principles for granting leave to defend, emphasizing that leave must be granted if the defense raises a real issue. The court found that the defendants' defense was substantial and bona fide, and therefore, they were entitled to unconditional leave to defend.

Conclusion:
The court quashed and set aside the judgment and order in all six suits, granting the defendants leave to defend. The defendants were given six weeks to file their written statements, and the bank guarantees furnished were to be kept alive until the conclusion of the suits. The cross-objections filed by the plaintiffs regarding the claim of interest were allowed, and the learned Single Judge was directed to consider the claim afresh. The appeal was allowed with no order as to costs.

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