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TMI Blog2005 (5) TMI 325X X X X Extracts X X X X X X X X Extracts X X X X ..... arrangement. However, none of those schemes were found feasible because of paucity of funds and in the absence of workable scheme of arrangement/restructuring. 2. Present petitioner, Sh. Ajay Sharda, who claims that he is the substantial shareholder, filed CA 887/2001 proposing scheme of arrangement and restructuring. Prayer was made in the said application for convening the meetings of shareholders and creditors. In that application order was passed on 31st May, 2001 directing that meeting of shareholders, and creditors (secured as well as unsecured) be convened at the registered office of the company. The meeting of the secured creditors was held under the chairmanship of Mr. Rajiv Bahl on 4th August, 2001 at 10 a.m. at 878, East Park Road, Karol Bagh, Delhi. There were only two secured creditors of the company, viz. UPFC and Allahabad Bank. However, on the said date the meeting could not be convened as certain disputes regarding the amount of the credit payable arose and the meeting was adjourned to 1st September, 2001. The meeting of the unsecured creditors as ordered by this court was duly convened on 4th August, 2001 at 10.30 a.m., East Park Road, Karol Bagh, Delhi. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-company afloat and saving the company from ultimate winding up and complete liquidation. The efforts of the applicant did not succeed in the past in view of the financial crises and liquidity crunch faced by applicant. However, recently, the applicant has been approached by Sachdeva Associates who are ready and willing to act as co-promoters and shareholders in the company and have brought in substantial funds so as to discharge the legal/valid debts of the company. It is, therefore, now financially possible for the applicant to work out the scheme between the company and its creditors by which all the eligible creditors of the company can be paid off and pursuant thereto the debts of the secured creditors, namely, Allahabad Bank and UPFC to the tune of Rs. 3.5 crores have been paid off. 6. Notice of this petition was issued to the Central Government through the Regional Director, Department of Company Affairs, Kanpur as well as the official liquidator attached to this court. It was also directed that citations be published in the Statesman (English) and Jansatta (Hindi) for 26th February, 2004. These citations are duly published. The Regional Director has filed aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l General Mills (P.) Ltd. drawn on Punjab and Sind Bank, Ghaziabad. ( c )Cheque No. 400855 dated 7th July, 1995 for Rs. 50 lakhs in favour of Allahabad Bank-Account National Steel General Mills (P.) Ltd. drawn on Punjab and Sind Bank, Ghaziabad. 8. Agreement further provided that the objector shall be entitled to remove the entire stocks, plant and machinery, scraps, etc., on payment of the said sum of Rs. 1 crore and possession of the factory was handed over to the objector who provided his security guards in the factory premises. Another agreement dated 9th April, 1996 was entered into between the company acting through Mr. Ajay Sharda and the objector, wherein it was stated that earlier agreement dated 29th June, 1995 pertaining to sale of plant and machinery, including shed was valid, genuine and binding on each other. According to the objector, necessity for execution of this agreement has arisen because Allahabad Bank subsequently refused to accept the payment on the plea that it was not in time and further interest was demanded from 1st June, 1996 till 31st December, 1996. 9. According to the objector, in view of dispute between the company and Allahabad Bank/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpany and, thus, he cannot raise any claim against the company nor is he entitled to file such objection. It is also stated that the claim of the objector, in any case, is time-barred as the drafts are dated 29th November, 1995 and the application has been filed in the year 2004, i.e., after a gap of nine years. It is also stated that claim of the objector that he paid a sum of Rs. 50 lakhs is clearly false as while purchasing the plant and machinery of the company in auction the objector did not mention having paid Rs. 50 lakhs already and did not see adjustment thereof. It is stated that objections are filed with oblique motives to delay the process of rehabilitation as the factory premises are in the occupation of the objection who wants to continue to occupy the same. It is alleged that he has even caused substantial damage to the property and other material of the company. 11. Insofar as the agreement dated 29th June, 1995 is concerned, it is denied that the said agreement is entered into by Mr. Ajay Sharda on behalf of the company. Averment made is that no such agreement could have been entered into by Mr. Ajay Sharda on behalf of the company as he was no more director ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hinery was purchased by none else but Empire Trading Co. itself, i.e., the objector, when its bid being the highest for a sum of Rs. 1.77 crore was accepted. What was auctioned was plant and machinery. Land and building has not been disposed of so far. The objector was allowed to remove the plant and machinery. It was alleged that while removing the same the objector/purchaser had caused damage to the property and in view of this, vide order dated 16th May, 2000, a local commissioner was appointed, who furnished his report affirming this allegation. What is required to be stressed, on the basis of aforesaid facts, is that after the first scheme propounded in 1988 was rejected, the plant and machinery was sold to the objector in the year 1999. Thereafter, second scheme was pro-pounded vide CA No. 887/2001 on 31st May, 2001 and the events which took place after directing the convening of meetings of shareholders, secured creditors and unsecured creditors have already been noted above. From these facts it is clear that although the shareholders and unsecured creditors had sanctioned the scheme, impediment was created due to non-settlement with Allahabad Bank and UPFC, who were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29th June, 1995). This amount was also paid to the official liquidator. Till that stage there was no whisper by the objector that he had paid Rs. 50 lakhs to the company. He has also not stated that Mr. Ajay Sharda should pay Rs. 50 lakhs, out of Rs. 1.77 crore, as this amount was already paid to him. As on 20th December, 1999 when the plant and machinery was auctioned, there was no Scheme before the court. On the contrary, the official liquidator was allowed to proceed with the liquidation of the company and in the process allowed to sell the assets of the company. The objector should have known that, in these circumstances, if it had paid any amount to Mr. Ajay Sharda, he should take steps for recovery of the amount as he could not anticipate at that time that there would be any further Scheme which may be propounded by Mr. Ajay Sharda in May 2001. However, he maintained stoic silence and did not act either, for recovery of this amount. Only when the present petition (second motion) was filed for sanctioning of the scheme that the objector has come forward and has stated that he had made the payment of Rs. 50 lakhs in the year 1995. The objections are filed in July 2004, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ession of the factory premises and had not vacated the same, specially after removing the plant and machinery purchased by him in the auction. Even if it is presumed that the objector was ignorant of these proceedings and acquired knowledge only when citations were published in the present petition, there is no explanation as to why the objector did not press for his claim all these years. If his claim was against Mr. Ajay Sharda, he would have taken steps for recovery of this amount against Mr. Ajay Sharda. If his claim was against the company (as the objector now contends), the objector could take such a claim in December 1999 itself claiming adjustment of this amount from Rs. 1.77 crore, which was his bid for plant and machinery. He did not act in either direction. Thus, when there is a serious dispute about the objector being a creditor and the objector is not in a position to substantiate his claim as a creditor, it would be difficult for me to treat him as a creditor for the purpose of these proceedings. I may at this stage refer to the following observations made by this court in the case of Wearwell Cycle Co. (I) Ltd. (In Liquidation), In re. [1998] 94 Comp. Cas. 723 (Del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany was under liquidation by the official liquidator attached to this court, the petitioner was paid his dues by the promoters of the company, who are in the process of rehabilitation of the company. On 28th May, 2001, Mr. Ajay Sharda, majority shareholder along with new promoters, Shachdeva Co. filed CA No. 887/2001 seeking directions of this court to convene meetings of shareholders, secured and unsecured creditors to consider scheme. The meeting of the shareholders was held on 4th August, 2001 at 11.45 AM at 878, East Park Road, Karol Bagh, New Delhi. Notices to the shareholders were given by registered A/D post along with proxy forms and statement under section 393 of the Act. Notices were published on 7th July, 2001 in The Pioneer in English and Jansatta in Hindi. Affidavit of compliances was filed by Mr. Rajiv Bahl, Chairman of the meeting. As per the chairman s report the shareholders unanimously approved the scheme. A copy of the report of chairman along with minutes of the meeting of shareholders held on 4th August, 2001 is placed on record. 21. Similarly meeting of unsecured creditors was also held on 4th August, 2001 at 10.30 AM at 878, East Park Road, K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment : "1. The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by section 391(1)( a ) have been held. 2. That the scheme put up for sanction of the court is backed up by the requisite majority vote as required by section 391(2). 3. That the concerned meetings of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. 4. That all necessary material indicated by section 393(1)( a ) is placed before the voters at the concerned meetings as contemplated by section 391(1). 5. That all the requisite material contemplated by the proviso to sub-section (2) of section 391 of the Act is placed before the court by the concerned applicant seeking sanction for such a scheme and the court gets satisfied about the same. 6. That the proposed scheme of compromise and arrangement is not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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