2018 (12) TMI 673 - HC - Companies Law

Convening of the meetings to consider the proposed scheme of compromise and arrangement - whether there was any justification to not convene the meeting of the allottees of Blocks B, C & D of the Spire Edge Project for the purpose of considering the proposed scheme of compromise and arrangement ? - Held that - Considering that the Appellants have listed out what their grievances against the Respondent No.1 company are and they have in fact filed Company Petition 704/2014, they cannot be considered to be persons who stand outside the winding up proceedings, particularly since their grievances have still not been satisfactorily addressed by the Company. They do have monetary claims against the company. If a scheme of compromise and arrangement is finalised without taking into account their claims against the Respondent No.1 company, their rights would definitely be prejudiced. Therefore, it is incorrect on the part of the Respondent No.1 company to contend that the proposed scheme of compromise and arrangement does not alter or affect the rights of the allottees of Blocks B,C and D who are the Appellants here. The Court is of the view that the complete and correct facts concerning the allottees of Blocks B, C & D were perhaps not placed before the learned Company Judge. The Court modifies the impugned order dated 16th October 2018 of the learned Single Judge (as further modified by order dated 14th November, 2018) to the extent of holding a meeting shall be held also of the allottees of Blocks B, C & D of the Spire Edge Project.

Summary

Issues:
1. Exclusion of allottees of Blocks B, C & D from the proposed scheme of 'compromise and arrangement'.
2. Legitimacy of grievances raised by the Appellants against the Respondent No.1 company.
3. Justification for not convening a meeting of the allottees of Blocks B, C & D.
4. Interpretation of the Supreme Court decision in Miheer H. Mafatlal v. Mafatlal Industries Ltd.
5. Modification of the impugned order to include a meeting of allottees of Blocks B, C & D.

Analysis:

1. The appeal involved a challenge against the exclusion of allottees of Blocks B, C & D from a proposed scheme of 'compromise and arrangement'. The Appellants, who purchased IT enabled space in the Spire Edge Projects, contended that the company misled them into investing based on false assurances regarding possession and lease terms. The learned Single Judge had excluded these allottees from meetings due to possession handover and completion certificates, but the Appellants argued their grievances were not adequately addressed.

2. The Appellants raised grievances against the Respondent No.1 company, including non-payment of returns, forced possession, and lease discrepancies. They argued that their claims should be treated as creditors for meeting purposes and disputed the company's stance that their rights were unaffected by the proposed scheme. The Court acknowledged the Appellants' monetary claims and the need for their grievances to be considered in the 'compromise and arrangement' process.

3. The Respondent No.1 company resisted convening a meeting for Blocks B, C & D allottees, asserting that the proposed scheme did not impact the Appellants' rights. However, the Court found that the Appellants, as claimants against the company, should have their grievances addressed within the scheme to prevent prejudice to their rights. The Court modified the impugned order to include a meeting for the excluded allottees, emphasizing the importance of considering their claims.

4. The Respondent's counsel cited the Supreme Court decision in Miheer H. Mafatlal v. Mafatlal Industries Ltd. to argue against a separate meeting for the Appellants, claiming their claims were not legitimate. However, the Court noted that different groups within a class must be treated separately if their interests diverge. The Court found that the Appellants' grievances warranted consideration within the scheme, highlighting the need to address their claims distinctively.

5. The Court modified the impugned order to include a meeting for the allottees of Blocks B, C & D, appointing Chairpersons and detailing procedures for the meeting. It directed the Appellants to inform other allottees and emphasized the importance of a fair and just conduct of the meeting. The Court disposed of the appeal while leaving other issues raised by the Appellants for consideration by the learned Company Judge in pending applications.

This detailed analysis covers the issues raised in the judgment, providing a comprehensive overview of the legal arguments and decisions made by the Court.