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TMI Blog2010 (7) TMI 776X X X X Extracts X X X X X X X X Extracts X X X X ..... no objection to the proposed scheme. However, three persons filed their objections, namely, S.K. Modi Group, Malanpur Steel Ltd. and Paradise Credit (P.) Ltd. 2. Matter was heard at length which resulted in passing of orders dated 15th July, 2005. Vide this order, objections of the aforesaid three objectors were rejected and scheme was sanctioned by this court. Company Application No.1130/2005 has been filed by Malanpur Steel Ltd. ('Malanpur') seeking review of orders dated 15th July, 2005. 3. Though number of objections were raised by Malanpur, what is relevant for the purposes of the present review petition is that the basic objection of the Malanpur was that it is a decree-holder and is, thus, wrongly classified as ICD and it should have been classified as a decree-holder and the decretal amount should have been treated at the principal amount. 4. It may be pointed at the outset that on the basis of this decree, it was also the contention of Malanpur that it was a secured creditor of the company and, therefore, it had right to get the entire decretal amount. This objection was, however, turned down. 5. Other objection of Malanpur, which needs to be noticed, was that as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this court, the attachment would be liable to be lifted forthwith. 8. In CA 265/2003, prayer was made that resolution dated 30th July, 1996 as per which the aforesaid shares were allotted by the Board of directors to the said three companies be declared null and void. In the order dated 15th July, 2005 while sanctioning the scheme, decision on this application was deferred and a stipulation was made in the said order that scheme was sanctioned subject to the decision in CA 265/2003. However, the occasion to decide this CA did not arise, because of the reason that the disputes between the propounders and the Modi group stood settled. CA No.634/2009 was filed by both the parties recording the terms of settlement and on that basis CA 265/2003 was dismissed as withdrawn. 9. Another development which concerns Malanpur is this. For the ICD of Rs. 5 crore given by Malanpura, Modiluft had pledged 55,60,000 shares belonging to Paradise group of company, Kesha Investment and Modi Overseas Ltd. Since ICD was not repaid. Malanpur took the stand that it had sold the shares for Rs. 1.39 crore. However, when the transferees applied for transfer of shares in their names, company had not effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt with a prayer that to that extent the accounts be attached. Orders dated 7th July, 2005 were passed by the learned Single Judge of Calcutta High Court allowing this petition and attaching the accounts of Spice Jet/Modiluft. Against this, appeal is preferred by Spice Jet/Modiluft. The Division Bench passed orders dated 11th July, 2005 directing as under - "(i) SJ and its transfer agents Karvy to register the transfer of 40,48,200 and 15,11,200 shares in the names of the respective purchasers ; (ii) restrains SJ and Karvy from returning any shares without effecting the transfer ; (iii) requires SJ and Karvy from recalling 15,11,200 shares which they had returned without effecting any transfer." Against this order, Spice Jet preferred special leave petition. This special leave petition was disposed of by the Supreme Court vide orders dated 6th July, 2009. 15. On the basis of this order, plea is raised by the learned counsel for the Modiluft that issue of forfeiture of share is to be decided by this court. 16. For the sake of clarity and convenience, the aforesaid developments/events are recapitulated below in a tabulated form : - Sl. No. Date Details of events 1. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et and its transfer agents Karvy to register the transfer of 40,48,200 and 15,11,200 shares in the name of the respective purchaser ; (ii) restrains SJ and Karvy from returning any shares without effecting the transfer ; (iii) requires SJ and Karvy from recalling 15,11,200 shares which they had returned without effecting any transfer. 13. 15th July, 2005 Delhi High Court sanctions the scheme of compromise in CP 385 of 2003 and directs that the forfeiture of the shares has been made the subject-matter CA 265/2003 which is pending. 14. 20th July, 2005 Division Bench of Calcutta High Court allows the appeal filed by Spice Jet and holds that : * Malanpur, even after obtaining the decree in its favour, is deemed to be in the same class as the unsecured creditors. * The scheme is binding on Malanpur and Malanpur must not proceed with the execution proceedings in any manner whatsoever. * Vacates the order dated 7th July, 2005 passed by the Single Judge of Calcutta High Court. 15. 12th August, 2005 Malanpur files review petition CA 1130/2005 before Delhi High Court seeking review of the 15th July, 2005 order passed by Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified on the basis of "principal amount" owed to them. It may be mentioned that Deutsche Lufthansa also has a decree for an amount equivalent to US$ 5 million. However, in the scheme what is offered is US$ 1.20 million which has even been accepted by Lufthansa. Further, merely because of Malanpur has got a decree in its favour it would not become a secured creditor. 52. Even otherwise, nothing much would turn by seeking change in the categorisation. If Malanpur is to be classified in class I along with Lufthansa as contended by it and the decretal amount is to be taken into consideration, as against the decree of Rs. 5,83,96,465 in its favour the decretal amount of Lufthansa is US$ 5 million. In that case, Malanpur would have represented 18 per cent of the said class and Lufthansa 82 per cent. Lufthansa has given its consent to the proposed scheme and even if Malanpur had been included in that category and voted against the scheme, the creditors in that class with 82 per cent stakes would have the approval of the scheme and the objection of Malanpur would not have made any difference. 53. It may not be out of place to mention that as per Malanpur's own admission even this decree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances, we do not have any hesitation to held that the execution proceedings cannot be proceeded with when the court has already sanctioned the scheme in question. So far as application under section 391(3) is concerned, as Mr. Bose has tried to take a point that the said order has no effect, we cannot accept such submission since his client duly contested the proceeding and thereafter the scheme was sanctioned. At this stage his client cannot turn back and say that the said order should not be given effect to. Furthermore, the order so passed by the Delhi High Court would relate back to the date of the filing of the said application by the appellant for sanction of the scheme." 24. When the matter was proceeded on the basis that Malanpur was an unsecured creditor and was to be clubbed with other such creditors who had also given ICDs, it is a desperate and misconceived attempt on the part of Malanpur to consider it as a secured creditor. 25. It would also be of interest to note that even the suit filed by the Malanpur in Calcutta High Court proceeds on the premise that it is a unsecured creditor. In that suit, simpliciter money decree along with interest is prayed. Additiona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 138 of the NI Act. Naturally, once the amounts as per the scheme are paid, the Spice Jet shall be absolved of any liability in respect of the aforesaid ICDs given by the Malanpur to Spice Jet. In such an eventuality, it would always be permissible to Spice Jet to contend before the court, where these proceedings are pending that amount in question stands paid. The consequence flawing therefrom can always be taken into account by the court where these proceedings are pending. In this backdrop once the scheme has already been sanctioned, this ground seeking review of the order is not even available to Malanpur. 29. In Krishna Textport Industries Ltd. (supra), this court was of the opinion that company court was not empowered to stay criminal proceedings against officers of the company involved in cheating, criminal breach of trust, misappropriation, forgery and dishonour of cheques. Likewise, provisions of section 391(6) of the Act, could not be used to bring an end the prosecution arising from Income-tax Act or Foreign Exchange Control Act. Because of this reason, the court also opined that proceedings under section 138 of the NI Act instituted against the company could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt decides the matter expeditiously. Accordingly, the special leave petition stands disposed of." 33. Learned counsel for the Malanpur argued that Supreme Court permitted this court to decide only question regarding forfeiture of shares, and otherwise, this court cannot decide the validity of orders passed by the Division Bench of Calcutta High Court. This submission appears to be well founded. On the date when the Supreme Court passed the aforesaid order regarding forfeiture of shares, CA 265/2003 was pending in this company petition. It is in this context the Supreme Court observed that said issue could be decided by this court. Said issue has become infructuous because of compromise having arrived at between S.K. Modi group, RHSL, Spice Jet and B.S. Kansagra covering, inter alia, the dispute regarding shares including the pledged shares with Malanpur. Obviously, it could not be the intention of the Supreme Court to direct the Delhi High Court to decide upon the validity of orders passed by the Division Bench of Calcutta High Court. The limited issue which this court was called upon to decide no more survives in view of the said settlement. 34. The aforesaid discussion leads ..... X X X X Extracts X X X X X X X X Extracts X X X X
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