9911796707
TMI Blog2001 (10) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... he issued, subscribed and paid up capital of the transferee-company is Rs. 1 lakh consisting of 10,000 shares of Rs. 10 each fully paid up. 3. The transferor-company is carrying on business of manufacturing and selling of Sodium Dichromate and certain other Barium chemicals. It has two manufacturing units - one at Khajipally, Warangal District and the other at Srikalahasthi, Chittoor District. It is stated in the company petitions that the transferee-company is incorporated with an object of transferring the Barium Chemicals Division at Srikalahasthi of the transferor-company to the transferee-company, as it is believed by the managements of both the companies that such an arrangement would be beneficial to all the concerned. In the circumstances, the boards of directors of the above mentioned two companies in their separate meetings held on 1-6-2001 unanimously approved the proposed scheme of arrangement. Thereafter both the companies approached this Court by way of Company Application Nos. 362 and 363 of 2001 praying appropriate directions as required under section 391. 4. This Court by an order dated 5-7-2001 as modified by the order dated 23-7-2001 dispensed with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt benefits to which they may be eligible in VCPL, upto the Effective Date. VBCPL further agrees that for the purpose of payment of any retrenchment compen-sation, gratuity and other terminal benefits, such past services and agrees and undertakes to pay the same as and when payable." 9. On behalf of the Government of India, the Registrar of Companies filed an affidavit wherein it is pointed out that the transferee-company has not submitted its latest financial position as required under proviso to section 391(2). In response to the submission of the Registrar of Companies, the learned counsel for the petitioners - Sri C. Kodandaram stated that the transferee-company has incorporated only on 29-5-2001, and therefore no financial statement can be produced in this regard. The only relevant information available as regards the subscribed and paid up share capitals is already provided in the company petitions and a further statement is also made at paragraph 14 of the petition of the transferee-company (Company Petition No. 136 of 2001) to the effect that there are no creditors either secured or unsecured. So far as the secured creditors of the transferor-company are concerned, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed (under the rules made under section 643), by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the company, or in the case of company which is being wound up, on the liquidator and contributories of the company;" 12. In the present case the value of the secured debt due to the two secured creditors i.e., APIDC and APSFC is far less than the three-fourths of the amount due to the secured creditors. 13. The learned counsel for the petitioners argued that having regard to the language of section 391(2) it is the majority in number representing the three-fourths in value of the creditors, who were present and voting that is required to be taken into consideration while applying section 391(2), but not three-fourths value of the total debt due to the creditors falling under that class. I do not propose to go into the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the remaining members of that class of persons have not so agreed for such a variation. When the entire class of creditors agree for such a variation of the terms of the contract between them and the debtor, it is a voluntary act of the creditors and the court would not normally object for such a variation unless compelled by the grounds of general public interest or the interest of some other class of persons connected with such contracts - like the shareholders etc. But where a set of the class of the creditors does not agree for the proposed scheme of arrangement, it is the duty of the court to examine whether the consent is unreasonably withheld or in the alternative whether the sanction of the scheme would prejudicially affect that set of creditors who have withheld the consent. 16. Applying the abovementioned test, the nature of the interest which these two creditors viz., the IDBI and SBH have interest in the transferor-company, is described at page 24 of the annexure B i.e., the 12th annual report pertaining to the 2000-2001 of the transferor-company. Certain term loans from the IDBI are obtained by joint equitable mortgage on fixed assets at the Barium Chem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , will continue to be in full force and effect and shall remain binding on the said successor-company for the amount of the loan liabilities and obligations mentioned in para 1 above towards the respective institution(s). Provided, if for any reason, VCPL has not been able to create security either of movables or immovable properties or of both, in favour of the institution(s) on or before the effective date, the successor-company shall create the security of the movable or immovable or both movable and immovable assets of the unit in favour of the institution(s) to secure the debt or liabilities allocated to that unit, in terms of para 1 above of the scheme, and the loans allocated unitwise, and the creation of security there for shall continue to be the obligation of the successor-company." 19. Paragraph 2 of the abovementioned Part IV purports to say that the securities created by the transferor-company will continue to be in full force and effect and shall remain binding on the successor-company for the amount of the loan liabilities and obligations mentioned in para 1 above towards the respective institution. Para I of the above only deals with term loan and does not deal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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