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TMI Blog2007 (2) TMI 331X X X X Extracts X X X X X X X X Extracts X X X X ..... in para No. 4 of the petition. 5. The petitioner company incurred heavy losses resulting into large deficit in cash flow and adversely affected the liquidity position. Due to various difficulties faced by the petitioner company a necessity was felt for settlement of the dues with the secured creditors. For this purpose an elaborate Scheme of compromise arrangement has been prepared in order to enter into a compromise with the secured creditors of the petitioner company. The Board of Directors of the petitioner company in its meeting dated 10-5-2005 approved the proposed scheme of compromise/arrangement unanimously passing a resolution. The resolution is enclosed as Annexure C with the petition. 6. The petitioner company filed company application before this Court for direction as to the method of convening, holding and conducting the meetings of the secured creditors of the petitioner company. The said application was registered as S.B. Company Application No. 20 of 2006. This Court on 26-5-2006 allowed the said application and a direction was issued for calling the meetings of the secured creditors on 5-7-2006. On a request by the nominee of the HUDCO the meeting of the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner company also taken a loan of Rs. 4.77 crores from State Bank of India, Jaipur for undertaking the project for the construction of Pali Bye-pass in Rajasthan. IDBI, HUDCO and SBI are the three principal creditors of the petitioner company. Out of these three principal creditors, the petitioner company pre-paid the amount of the State Bank of India and one Bhoruka Investment Ltd. was inducted before the date of launching of scheme. 11. The objector company HUDCO raised following objections ( a )Non-disclosure of important and relevant and material facts. It was obligatory on the part of the petitioner company to have disclosed in the explanatory statement about the status of all the secured creditors of the company which may have enabled the other secured creditors to arrive at an informed decision about the scheme. The petitioner company was also liable to disclose the materially important fact as to why a special favour had been accorded by the petitioner company to one of the secured creditor, the State Bank of India, Jaipur which had been pre-paid in full their entire outstanding separately and prematurely on 28-3-2006 by the petitioner company against their loan o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme. Thus in fact, IDBI (SASF) stands paid more amount than HUDCO which is grossly discriminatory as between the same class of creditors. ( c )Unfair means adopted by the petitioner company for obtaining 3/4th majority vote. The Company BIL M/s. Bhoruka Investment Ltd. had ostensibly been inducted as a secured creditor by the petitioner company TCIFL to secure/obtain a three-fourth majority vote required for approval of the proposed scheme. This is evident from the fact that loan amount of Rs. 210.75 lakhs has been taken by the petitioner company from the said M/s. BIL on 31-3-2006 under the agreement dated 31-3-2006 which is the cut off date in the proposed scheme and also the charge is shown to have been registered with the ROC on the same date i.e., 31-3-2006. This induction of M/s. Bhoruka Investment Ltd. as a secured creditor of the petitioner company was thus evidently with an underlying purpose to obtain the three-fourths majority vote of the secured creditors along with the vote of SAFS (IDBI) to oust the vote of HUDCO which was not in favour of the proposed scheme. Since out of the combined outstanding of IDBI and HUDCO the value of vote of IDBI was amount to on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en laid down for sanctioning the scheme : (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( a ) have been held. (2)The scheme put up for sanction of the Court is backed up by the requisite majority vote as required by section 391 sub-section (2). (3)The meetings concerned 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 is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. (4)All necessary material indicated by section 393(1)( a ) is placed before the voters at the meetings concerned as contemplated by section 391, sub-section (1). (5)All the requisite material contemplated by the proviso of sub-section (2) of section 391 of the Act is placed before the Court by the applicant concerned seeking sanction for such a scheme and the Court gets satisfied about the same. (6)The proposed scheme of compromis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pire. The supervisory jurisdiction of the Company Court can also be culled out from the provisions of section 392. Of course this section deals with post-sanction supervision. But the said provision itself clearly earmarks the field in which the sanction of the Court operate. The supervisor cannot ever be treated as the author or a policy-maker. Consequently, the propriety and the merits of the compromise or arrangement have to be judged by the parties who as sui juris with their open eye and fully informed about the pros and cons of the scheme arrive at their own reasoned judgment and agree to be bound by such compromise or arrangement. 15. In Hindustan Lever v. State of Maharashtra [2003] 48 SCL 630, the Apex Court indicated that the jurisdiction of the Company Court while sanctioning the scheme is supervisory only. While exercising its power in sanctioning the scheme of amalgamation the court is to satisfy itself that the provisions of statute have been complied with, that the class was fairly represented by those who attended the meeting, that the statutory majority was acting bona fide and not in an oppressive manner and that the arrangement is such as which a pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also the charge is shown to have been registered with the Registrar of Companies on the same date i.e., 31-3-2006. 18. I also noticed that the scheme seeks to compel the Secured Creditors to make sacrifice 51.50 per cent of the outstanding Principal amount as well as the interest, costs and expenses. 19. Learned counsel for the petitioner company took me through the balance sheet of the petitioner company and canvassed that the petitioner company was running into losses and is not able to repay the debts due to the secured creditors. The amount proposed to be paid under the scheme in one time settlement shall be arranged by the promoters from their relatives and friends. It was also contended that since the majority of creditors had voted in favour of the scheme the court would have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of creditors who voted in favour of the scheme. 20. It is difficult to subscribe the view canvassed by the learned counsel for the petitioner company. In Miheer H. Mafatlal s case ( supra ) the Supreme Court propounded that the Company Court which is called upon to sanction a scheme has not merely to go b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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