2018 (8) TMI 1614 - HC - Companies Law

Seeking sanction of the Scheme of Revival - main object of the revival scheme is to commence manufacture wooden furniture and allied handicraft articles in the first phase of the business in which the propounders/contributories are said to have experience. It is also proposed to take up manufacturing of machine made woven carpets in the second phase - Held that - As far as the contention that the scheme has become stale with the passage of time is concerned, in my opinion, the argument appears to be misconceived. The matter has been pending in court. Under the scheme, the entire secured creditors dues already stand paid. The Scheme of the respondent Company envisages that on revival it will pay all the dues of the unsecured creditors. Hence, I do not see, how the projection, in case it has become out dated would in any manner effect the revival scheme. It is manifest from the reading of the above that presently there are no secured creditors. The unsecured creditors have unanimously in the meeting held agreed to abide by the scheme. The shareholders in the meeting have also unanimously agreed to abide by the revival scheme. In court two share holders having a share of 3% are objecting pleading essentially that Bharat Kala Kendra Ltd. be treated at par with all other unsecured creditors. There is no impediment to passing of the scheme as proposed. It clears all prescribed parameters. The only issue that survives is the payment of the dues by the respondent Company after revival of Bharat Kala Kendra Pvt. Ltd., if any. In opinion, in view of the order of this court dated 05.07.2011 as also clarified by the Division Bench, these are issues which the OL has to raise in the winding up proceedings pertaining to Bharat Kala Kendra Pvt. Ltd., namely, CP No. 160/1985. The issues regarding the payment of interest, etc. are kept open and passing of the scheme will not in any manner dilute the said contentions that are raised by Mr. Akhilesh Gupta and learned counsel appearing on behalf of Mr. R.N. Gupta. These aspects would be adjudicated upon in the winding up petition which is dealing with Bharat Kala Kendra Pvt. Ltd. The present application is allowed. The revival scheme as proposed is sanctioned. The OL will hand over possession of all the existing properties and assets of the respondent Company and the statutory records, books of accounts, etc. to the proposed management of the respondent Company. The winding up order is recalled.

Summary

Issues:
1. Scheme of Revival under Sections 391 to 394 of the Companies Act, 1956.
2. Validity of the Revival Scheme.
3. Treatment of Bharat Kala Kendra Pvt. Ltd. as a creditor.
4. Compliance with legal requirements for sanctioning the scheme.
5. Payment of dues after revival of Bharat Kala Kendra Pvt. Ltd.

Analysis:
1. The judgment pertains to an application filed under Sections 391 to 394 of the Companies Act, 1956 seeking sanction of a Scheme of Revival for a company against which a winding-up order was passed in the past. The scheme aims to revive the company's operations focusing on manufacturing wooden furniture and woven carpets.

2. The court reviewed the history of the company's revival efforts, including agreements with shareholders and settlements with secured creditors. The scheme received approval from unsecured creditors and shareholders in meetings, with the Official Liquidator confirming that it is not prejudicial to members or public interest. The court rejected objections claiming staleness of the scheme, emphasizing that it addresses payment of all dues.

3. Objectors raised concerns regarding the treatment of Bharat Kala Kendra Pvt. Ltd. as a creditor, seeking equal treatment with other unsecured creditors. The court noted past orders directing payment to Bharat Kala Kendra and clarified that issues related to dues and interest would be addressed in separate winding-up proceedings.

4. Citing the Supreme Court's guidelines on sanctioning schemes, the court ensured that all statutory procedures were followed, requisite meetings held, and necessary information provided to voters. It found the scheme just, fair, and compliant with legal requirements, emphasizing the court's limited role in challenging commercial decisions approved by the majority.

5. The judgment concluded by allowing the application, sanctioning the proposed revival scheme, recalling the winding-up order, and directing the Official Liquidator to transfer assets to the new management. It kept issues regarding payment of dues post-revival open for adjudication in the relevant winding-up petition.