2018 (11) TMI 197 - HC - Companies Law

Scheme of compromise compromise and arrangement between the respondent Company and its members and creditors - meeting with the stakeholders - quorum of meeting - what would be the best interest of the respondent Company and its creditors and allottees - Held that - For the purpose of computing the quorum, the valid proxies received from the total applicants herein shall also be considered, if the proxy in the prescribed form duly signed by the person entitled to attend and vote at the respective meetings is filed. The Chairpersons and Alternate Chairpersons shall ensure that the proxy registers are properly maintained. The Chairpersons and Alternate Chairpersons shall ensure that notices for convening the aforesaid meetings, along with copies of the proposed Scheme and the statement under Section 393 of the Act along with the proxy form, shall be sent to all the applicants herein by speed post at their registered or last known addresses at least 21 (twenty one) days before the date appointed for the respective meetings, in their presence or in the presence of their authorized representatives. Notice of the meetings shall also be published in Delhi and Haryana editions of the newspaper, namely, Business Standard‟, (both in English and Hindi) in terms of the Companies (Court) Rules, 1959, at least 21 (twenty one) days before the date appointed for the respective meetings. The Chairpersons and Alternate Chairpersons will be at liberty to issue suitable directions to the applicant in order to ensure that the aforesaid respective meetings are conducted in a just, free and fair manner. The fee of the Chairpersons and the Alternate Chairpersons for all the meetings shall be ₹ 1,00,000/- each, in addition to meeting their incidental expenses, to be borne by the applicants in advance. The Chairpersons shall file their reports within 2 (two) weeks from the date of holding of the aforesaid respective meetings.

Summary

Issues Involved:
1. Approval of the proposed scheme of compromise and arrangement.
2. Convening meetings of various stakeholders.
3. Financial viability and completion of projects.
4. Objections from flat buyers and potential investors.
5. Legal precedents and framework for scheme approval.

Detailed Analysis:

1. Approval of the Proposed Scheme of Compromise and Arrangement:
The application was filed under Sections 391 to 393 of the Companies Act, 1956, seeking approval for a scheme of compromise and arrangement between the respondent Company and its members and creditors. The scheme involves two real estate projects: Spire Edge Project and Spire Woods Project. The scheme proposes the completion of the Spire Edge Project within 24 months and the Spire Woods Project within 27 months from the effective date. An escrow account will be used to manage the funds for the Spire Woods Project.

2. Convening Meetings of Various Stakeholders:
The applicants sought directions to convene meetings of allottees, secured creditors, unsecured creditors, and shareholders. Specific meetings were proposed for different blocks and categories of stakeholders, including allottees of Block A, E, and furnished offices of Spire Edge Project, and allottees of Spire Woods Project. The court directed that these meetings be held on specified dates with appointed chairpersons and alternate chairpersons to ensure proper conduct.

3. Financial Viability and Completion of Projects:
The applicants proposed a financial infusion of ?24 crores for the revival of the respondent Company, with a bank guarantee of ?6 crores already furnished. The scheme also involved potential investment from Alpha Corp. Development Pvt. Ltd., which expressed willingness to invest up to ?20 crores under certain conditions. The court noted the importance of moving forward with the scheme to protect the interests of allottees and prevent the projects from remaining incomplete.

4. Objections from Flat Buyers and Potential Investors:
Objections were raised by some flat buyers, questioning the credibility of the applicant and the financial feasibility of the scheme. The court also considered objections from Spire Edge Maintenance and Lease & Facilitation Ltd., which sought bifurcation of Blocks B, C, and D from the respondent Company. The court decided to retain the power to supervise the implementation of the arrangement under Section 392 of the Companies Act, 1956.

5. Legal Precedents and Framework for Scheme Approval:
The court referred to several Supreme Court judgments to outline the legal framework for approving schemes of compromise and arrangement. The judgments emphasized the court's role in ensuring compliance with statutory provisions, fair representation of classes, and the commercial wisdom of the parties involved. The court highlighted that at the stage of issuing directions to convene meetings, the primary task is to verify the genuineness of the scheme.

Conclusion:
The court directed the convening of meetings for various stakeholders to consider the proposed scheme. Specific dates, chairpersons, and quorum requirements were set for these meetings. The court also provided for the publication of notices and the filing of reports by the chairpersons. The objections raised by certain parties would be heard separately, and the court retained supervisory jurisdiction over the implementation of the scheme. The application was disposed of with detailed directions for conducting the meetings and ensuring a fair process.