9911796707
TMI Blog2008 (5) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... S. Godiawala for the Petitioner. R. M. Desai, S. N. Thakkar and Purvish J. Malkan for the Respondent. JUDGMENT K.A. Puj, J. The petitioner has filed this petition under sections 391 to 394 of the Companies Act, 1956, for sanctioning the scheme of arrangement in the nature of compromise between Shree Narmada Aluminium Industries Ltd., its secured and unsecured creditors and shareholders. 2. The company was incorporated on April 15, 1981, in the name and style of Narmada Aluminium Extrusion (P.) Ltd., under the provisions of the Companies Act, 1956. This name was subsequently changed to Shree Narmada Aluminium Industries Ltd., with effect from November 9, 1995. The company, due to reasons beyond its control was registered with the Board for Industrial and Financial Reconstruction under the Sick Industrial Companies (Special Provisions) Act, 1985. Thereafter, the board opined for winding up of the company and the Company Petition No. 256 of 2000 came to be filed with this court. The petitioner-company preferred the appeal before the appellate authority and the said authority has dismissed the appeal. Thereafter, the petitioner preferred the special civil applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that the company has also shown its bona fide and potentiality before this court. It is further stated that the projected profit and loss statement of the petitioner-company is produced before the court. The State sales tax authority has proposed to initiate the coercive action against the petitioner-company for non-payment of deferred sales tax dues to the extent of Rs. 2.50 crores. The petitioner-company is in the process of settling the said alleged dues under settlement scheme of the BIFR and the application in this regard has been made. In this view of the matter, the board of directors of the petitioner-company is of the opinion that the restructuring and revival would result in benefit to all concerns including the shareholders, creditors, employees of the petitioner-company. The employees of the petitioner-company are supporting the petitioner and as the company is situated in the remote place, the said company if given an opportunity then the workers and employees would not be deprived of their livelihood. It is further submitted that the sundry creditors/suppliers have full trust in the management of the petitioner-company and are also ready to supply the raw materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... animously resolved that the scheme of compromise and/or arrangement between the company and its equity shareholders as well as the unsecured creditors was approved. The chairman of the meeting reported the result of the meeting to this court. The meeting of the secured creditors was terminated on May 10, 2006, as none of the secured creditors had lodged with the company at least 48 hours before the time fixed for the meeting, a copy of the resolution of their respective board of directors authorising the persons present to act as their respective representative, and hence in view of the mandatory requirements of rule 70(2) of the Companies (Court) Rules, 1959, the representative of the secured creditors could not be permitted to act as representative. The meeting of the secured creditors was terminated by the chairman with the suggestion that the company should obtain suitable direction for holding a fresh meeting of the secured creditors, which suggestion was acceptable to all persons present. Thereafter, the petitioner-company has preferred separate Company Application No. 290 of 2006 in Company Application No. 39 of 2006 in Company Petition No. 256 of 2000 for convening a fresh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat Times (Gujarati language), Surat edition and The New Indian Express (English language), Baroda edition. The publication of notice in the Government Gazette was dispensed with. 7. On notice being served on the Central Government an affidavit was filed by Shri P. L. Malik, Assistant Registrar of Companies along with the letter dated December 14, 2006, issued by the Regional Director, wherein the following objections were raised : ( i )The company is a listed company and registered in different stock exchanges. However, the petitioner has not obtained NoC from such stock exchanges. ( ii )As per clause (8) of the scheme the paid-up capital of the company will be reduced to Re. 1 by cancelling Rs. 9. However, no special resolution under sections 100-105 read with rule 85 of the Companies (Court) Rules have been passed by the company. ( iii )The company was registered in the BIFR under the Sick Industrial Companies (Special Provisions) Act, 1985 and the said Board opined for winding up of the company in Company Petition No. 256 of 2000 in public interest. ( iv )There is no concrete revival scheme before this court from the board of directors of the company. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not as per the original funding amount. The say of the objector that the company has settled the dues of IDBI, IFCI and Dena Bank. As such the objector is the sole secured creditor of the company comprising 100 per cent, of the debts of the company. It is, therefore, submitted that in view of the objections of the objector bank alone, the present scheme of compromise does not have the support of the statutory majority as provided under section 391(1) of the Act. 11. It is further submitted that in the meeting held in pursuance to the order made by this court, IFCI Ltd., had submitted its objections to the scheme of comprise. The subsequent letter addressed by IFCI Ltd., cannot be cons trued to be a decision of the secured creditors which was to be taken in the meeting ordered to be held by this court in terms of section 391(1) of the Act. It is, therefore, submitted that the scheme does not have support of the secured creditors holding debt more than the statutory majority as provided in section 391(1) of the Act. 12. Pursuant to the additional affidavit dated March 4, 2008, filed by Kotak Mahindra Bank Ltd., the petitioner-company has filed counter affidavit dated March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt even as per the company which is based on the principal amount and the interest amount thereon, the extent of value of debt in favour of the objector bank is 26.36 per cent. The amount which is unsecured and/or not secured by the first charge on the fixed assets of the petitioner-company cannot be included so as to determine the outstanding amount keeping in view class of secured creditors having first charge on the fixed assets. The objector bank has produced a copy of the decision dated January 9, 2006, in Company Application No. 638 of 2006 and perusal of the decision taken in the meeting held on January 9, 2006, makes it clear that the principal outstanding amount which came to be agreed by all the secured creditors as of the same period, i.e., January, 2006 was as under : Rupees ( in lakhs ) Security %of IDBI 149 First pari passu charge on the fixed assets. 27.2% IFCI 63 -do- 11.5% Kotak Mahindra Bank Ltd. 148 -do- 27.0% Dena Bank 187 Only Rs. 22.94 lakhs is secured by a charge on the fixed assets. Balance amount is unsecured and/or secured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory of the company. It is not a secured creditor or unsecured creditor of the company. It has no locus standi to intervene in the proceedings. It is further submitted that the jurisdiction of the court in dealing with the scope of power under section 391 of the Companies Act, 1956, with regard to the arrangement or the scheme it has no power to adjudicate rights of the parties in a scheme under section 391 of the Companies Act, 1956, is to see that the scheme is fair and reasonable and made in good faith. Sections 391 and 394 make it clear that the court has to consider the pros and cons of the scheme to find out whether the scheme is fair and reasonable and it does not violate any public policy and is not contrary to the provision of law. The court has not to reject the scheme at ipse dixit of certain persons. It is further submitted that whether a particular person having a first charge or second charge is not relevant for the purpose of deciding whether the scheme is fair and reasonable. Whether the company has made proposal for settlement and such proposal is accepted by the respective classes by majority in number and in value. The majority in number and in value of secured ..... X X X X Extracts X X X X X X X X Extracts X X X X
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