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TMI Blog2005 (4) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Creditors against the applicant-company have stood withdrawn and all the interim orders passed therein have stood vacated on and from 30-10-2002 being the date of sanction of the scheme for rehabilitation of the applicant-company in case No. 104 of 2000 by Board for Industrial and Financial Reconstruction (For short BIFR ). 3. Company petition No. 263 of 2000 is filed by the petitioning Creditor, namely, M/s. S.A. Chemicals under sections 433 and 434 of the Companies Act, 1956 for winding up of the Company on the ground that the Company has failed and neglected to pay its dues of Rs. 18,08,495 to the petitioning Creditor. 4. Company petition No. 43 of 2000 is filed by the petitioning Creditor, namely, Narendra I. Patel under sections 433 and 434 of the Companies Act, 1956 for winding up of the Company on the ground that the Company has failed and neglected to pay its dues of Rs. 98,720 to the petitioning creditor. 5. Likewise, Company Petition No. 259 of 1999 is filed by the petitioning Creditor, namely, LKP Merchant Financing Limited under sections 433 and 434 of the Companies Act, 1956 for winding up of the Company on the ground that the Company has failed and neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -10-1999 observing that the directions given by this Court in the order dated 23-9-1999 shall continue to operate. Thus, in the event of sale and disposal of the property referred to in the said order, portion of the sale proceeds, as directed in the said order, shall be deposited in a Fixed Deposit Account. 11. The applicant-company made a reference to BIFR on 23-2-2000 under section 15 of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short "SICA"). Before the said reference was registered by BIFR on 21-3-2000, pursuant to the power of sale out of Court contained in the Mortgage Deed dated 30-3-1998, GTBL had entered into a contract of sale of the mortgaged property in favour of Shruti Properties (Private) Limited (for short Shruti ). The reference filed by the Company before BIFR was registered on 24-3-2000 as Case No. 104 of 2000. The GTBL, therefore, made an application to BIFR on 10-5-2000 stating that the Company had availed of a short-term loan of Rs. 30 crores from GTBL and created in favour of GTBL an English mortgage under the mortgage deed dated 30-3-1998, and GTBL had exercised its right as a mortgagee under the said deed to sell the mortgaged p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under SICA had been registered, that the sale deed was in fulfilment of the obligation created in favour of a bona fide purchaser, that GTBL had got its dues and was not entitled to receive anything more, that the personal guarantee stood discharged. 13. The rehabilitation proposal submitted by the Company before BIFR was discussed at the joint meeting held on 24-9-2001. There was broad consensus amongst the participants with the exception of a few parties to the proposal submitted by the Company. Subsequently, the State Bank of India, leading Bank conveyed in writing its acceptance to the proposal. At the hearing held on 14-12-2001, the Bench directed the Operating Agency to submit revised rehabilitation proposal after incorporating the response of the concerns shown by the Bench, the workers and the consortium of Banks. IDBI submitted its report on 28-1-2002 indicating that the operations of the Company based on the reliefs and the concessions from Banks and institutions, Central and State Government Agencies and others would be viable. The Bench vide its order dated 20-2-2002 circulated a draft rehabilitation scheme based on the status report submitted by IDBI to all c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the aforesaid provisions contained in the scheme, the applicant filed the present applications before this Court seeking an order from this Court that Company Petitions, namely, Company Petition Nos. 263 of 2000, 43 of 2000 and 259 of 1999 filed by the different petitioning Creditors against the applicant-company have stood withdrawn and all the interim orders passed therein have stood vacated on and from 30-10-2002 being the date of sanction of the scheme for rehabilitation of the applicant-company in Case No. 104 of 2000 by Board for Industrial and Financial Reconstruction. 17. Before the above application is filed before this Court by the company, the petitioning Creditor, namely, LKP Merchant Financing Ltd. has filed an application under section 18(5) of SICA for review/directions/clarification of the sanctioned scheme dated 30-10-2002, before BIFR. The LKP has raised the objections to the sanctioned scheme to the effect that LKP is not agreeable to the reduction of its dues which are Rs. 2,49,00, 532 as on 31-12-2002 to Rs. 23 lakhs as indicated in Appendix-XI at page No. 59 of the sanctioned scheme and that LKP is not agreeable to waiver of the entire interest and oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally rejected their claim. Considering the facts on record and the submissions made at the time of hearing, the Board directed that LKPMFL to make its submission in writing to the Board within 15 days with copies to the monitoring agency and the company both of whom shall submit their comments and recommendations thereon to the Board within 15 days of receipt thereof. Pursuant to the aforesaid order of BIFR, LKPMFL had filed their written submissions. However, comments and recommendations are not yet filed by the Monitoring Agency as well as by the company. 20. The respondent company in the present proceedings has further filed reply to the Company s affidavit filed on 11-11-2004 wherein it is stated that BIFR has in the sanctioned scheme incorporated the order of this Court dated 23-9-1999 in as many words, the company is, therefore, bound to honour the said order, otherwise it shall be liable for contempt. It is further stated that there being no contradiction in the order of this Court as well as the order of BIFR and in view of the fact that the Company has also made a statement before BIFR to the same effect, if the commitment is not honoured, the Company will be liable fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to operation of the sanctioned scheme or any provision thereof, the scheme or such provision shall be binding on the Sick Industrial Company and the Transferee Company or as the case may be, the other Company and also on the shareholders, Creditors and Guarantors and employees of the said Companies. 22. Based on the aforesaid provisions, Mr. Vakil has submitted that section 18(8) specifically provides that no sooner the sanctioned scheme or any provision thereof comes into operation, the same shall be binding not only on the Sick Company but also on the shareholders, Creditors and Guarantors and employees of the said Companies. The petitioners who have filed the winding up petitions before this Court are the Creditors of the Company and, hence, the sanctioned scheme as well as the provisions made therein are equally binding on them. Para 16( e ) of the sanctioned scheme specifically states that on and from the date of sanction of the scheme, all pending legal cases against the company for recovery of dues and winding up petitions filed by various parties would stand withdrawn. Now the Scheme was sanctioned by BIFR on 30-10-2002 and, hence, on and from that date, all pending leg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dues of LKP were admitted and crystallised by the applicant Company to the tune of Rs. 1,93,42,940 as on that date, to be repaid in the manner provided in the Memorandum of Agreement. The applicant Company was to deliver 13 post-dated cheques in due discharge of the payment. The applicant has irrevocably agreed to honour the above commitments even in a situation where BIFR suspends operation of all the Lease Agreements and declares the Company as a Sick Industrial Company. The applicant Company was, therefore, under an obligation to honour the said agreement/settlement arrived at between LKP and MIL dated 27-1-2000 as regards MIL s dues towards LKP. 25. Mr. Soparkar has further submitted that in the hearing before BIFR on 25-2-2002, it was pointed out to the Bench on behalf of LKP that this Court in LKP s winding up petition being Company Petition No. 259 of 1999 on 23-9-1999 had directed the Company to set apart a sum of Rs. 1,38,47,333 which was due to LKP as on 29-4-1999 and in the said hearing, on being asked by the Bench, the counsel appearing for the Company Shri Alok Dhir submitted that they were following and honouring that undertaking. Despite this observation made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emented in its entirety, it is not open for the applicant-Company to resort to any particular provision which suits to its purpose and ignoring the other provisions of the Scheme. They have further submitted that the petitioning Creditors were not parties before BIFR and they have not been heard in the matter and, hence, the provisions of the Scheme are violative of principles of natural justice. Even on this ground, the Scheme cannot be enforced against them. In any case till the period prescribed in the Scheme for implementation and till the dues which are mentioned in the Scheme are paid to the petitioning Creditors, there is no question of dismissal of winding up petitions. At the most, the petitions should be kept pending during this period. 28. After having heard learned advocates appearing for the respective parties and after having gone through the provisions contained in the Scheme as well as the relevant statutory provisions dealing with the issue which is raised in the present applications, the Court is of the view that it is not just, proper and equitable on the part of the applicant-company to seek the dismissal of the winding up petitions on the ground that the Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said directions. As a matter of fact, the learned advocate appearing for the Company before BIFR has undertaken to comply with the directions of this Court. Hence, this being part of the Sanctioned Scheme, it is obligatory on the part of the Company to set apart a sum of Rs. 1,38,47,333. By seeking dismissal of winding up petitions, the intention of the Company is to get rid of the said directions which is not permissible and the Company is bound to comply with the said directions. There is no substance in the argument of Mr. Vakil that the applicant- Company has not sold any assets and, hence, directions given by this Court would not apply. The Company was a party in all these proceedings and hence it cannot escape from its liabilities. 30. Even otherwise, section 18(8) in terms states that on and from the date of coming into operation of the sanctioned scheme or any provision thereof, the Scheme or such provision shall be binding on the Sick Industrial Company. The provisions contained under the head reliefs and concessions are equally binding on the Company and if the Company itself commits breach of these provisions, it is not open for the Company to invoke the other prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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