9911796707
TMI Blog2004 (7) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India (RBI) imposed stringent policies and conditions of NBFC. The Banks and financial institutions developed negative attitude towards NBFC industry. All these factors led to reduced availability of long-term funds to NBFCs and they had to depend on high cost short-term funds. Over and above this, Banks and Multi-National Companies started lending aggressively in retail sector and as a result thereof, the return on funds dropped from typically 22-24 per cent to 16-17 per cent while cost of funds continued to be in the range of 15-16 per cent. This has adversely affected to all NBFCs in general and the petitioner-company to a great extent in particular. The Company s financial position deteriorated considerably in 1997-98 and the rating agencies downgraded the rating of the petitioner-company to below the investment grade. Moreover, a large number of its lease and hire purchase debtors defaulted on payment and this has adversely affected the availability of funds to the Company and in the absence of sufficient funds, the Company conducted negligible business from September, 1997 onwards. The Company has incurred a substantial loss of Rs. 39 crores in the year 1997 and since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same were accepted by the Company, which was that "Against the total amount payable to them as on Appointed date a total amount of 65 per cent (including the amount paid after the Appointed date and up to the effective date) shall be paid in full and final payment of the amount payable to them". The petition for the sanction of this Court to this revised scheme with the G series debenture holders was filed and vide order dated 5-12-2003 passed by this Court (Coram :- K.M. Mehta, J.) the said scheme was sanctioned and pursuant to the said order, the Company has already paid off the dues of the G series debenture holders. 5. The Board of Directors of the petitioner-Company has thought it appropriate to present a revised proposal of compromise for the Consortium of Banks and accordingly, the Company took the decision to propose a scheme of compromise between the Company and the Consortium of Banks on the broad basis referred to in the original Scheme of Compromise and the Company has proposed to meet the liability as full and final payment of the creditors being the Consortium of 16 Banks in the following proportion and in the following manner :- "Against the total am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said meeting, the meeting was further adjourned to 20-2-2004. Since the approval were not received by the members of the Consortium of Banks from their Head Offices, the meeting was again adjourned to 6-3-2004 and thereafter on 22-3-2004. On 22-3-2004, it was decided that the Company, Bank of India and Central Bank of India may jointly move this Court to allow the appropriation of amount lying in Escrow account to the member Banks equitably and the said appropriation was approved by all the members. In absence of the approvals from the Head Office, the meeting was adjourned to 10-4-2002. This Court passed an order on 31-3-2004 permitting the Company to pay Rs. 664.54 lakhs to member Banks and accordingly, the Company has paid the said amount. On 10-4-2002, the meeting was again adjourned to 8-5-2004. However, in the said meeting, it was recorded that based on Company s application having been allowed the appropriation of the amount lying in Escrow account was effected in favour of the member Bankers equitably. On 8-5-2004, an amended proposal was put forward by the Company before the members of the Consortium Banks and it was unanimously decided to put the amended scheme to vote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or arrangement being adopted and carried and two members having value of debt of Rs. 2,230.63 lakhs voted against the proposed modified scheme. One affidavit, namely, Vijaya Bank, entitled to Rs. 808.50 lakhs being the total value of its debts, was held to be invalid as the ballot paper did not indicate whether the Bank was in favour or against the proposed resolution. The Chairman of the meeting has, therefore, reported that the Resolution proposed at the said meeting was carried by 86.67 per cent in number and by 86.44 per cent in value of the members present at the said meeting and hence, the proposed scheme of compromise with the Consortium of Banks stands approved in its modified mode. 8. The petitioner, thereafter, filed this petition on 14-6-2004 and this Court has admitted the petition on 15-6-2004 and admission of the petition was ordered to be advertised in Indian Express - English Daily and Jansatta-Loksatta Gujarati Daily, both Ahmedabad editions. Publication in Government Gazette was dispensed with and notice of admission was also issued to the Central Government. The petition was ordered to be heard on 1-7-2004. 9. After admission of the petition, the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sets, receivables, stock on hire/lease, current assets, loans and advances in respect of assets charged to Banks along with rights arising from the pending litigations initiated by the petitioner-Company against its various debtors including the decrees obtained for the benefit of the Consortium of Bankers and the G series debenture holders. However, details of these assigned assets are not before the Court. On the pointed query raised by the Court, Mrs. Soparkar has submitted that the members of the Consortium Banks are informed that necessary formalities required for the purpose of effectuating such transfer would be decided as a part of the Scheme or subsequent to its sanction and for this purpose, "Special Purpose Vehicle" will be setting up where all the beneficiaries shall be the beneficiaries on pro rata basis. Even in case of failure in setting up such SPV, necessary modality has been thought of and discussed. Though it is the wisdom of the members of the Consortium Banks to agree to the scheme of the Compromise in question, the hard reality cannot be lost sight of that the debts are frozen on 31-3-1999 and that too 65 per cent thereof were to be received after almost a p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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