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TMI Blog2013 (5) TMI 657X X X X Extracts X X X X X X X X Extracts X X X X ..... ; order dated 31.03.2006 has alone been challenged. The order dated 31.03.2006 had merged with the order dated 26.04.2006 and the said order not being the subject matter of this appeal, the appeal is liable to be rejected on this ground alone. 3. Record shows that the Company-M/s Lakshmiji Sugar Mills Company Ltd. was incorporated on 27.01.1936. The Company was registered as a sick company before the Board of Industrial Financial Reconstruction (BIFR); winding up of the Company was recommended. During the pendency of the winding up petition, the management/promoters of the Company promulgated a Scheme for its revival. 4. Accordingly C.A. (M) 109/2005 under Section 391 read with Section 394 of the Companies Act, 1956 (hereinafter referred to as the said Act) was filed seeking a sanction of the proposed compromise/arrangement. In this application in para 17, the list of the secured creditors and the amounts due to each of them were described as under:- Name Amount (in Rs. Lacs) Sl No. Secured Creditor Principle Amount Interest Settled (a) Industrial Development Bank of India (IDBI) 455.00 853.57 182.00 (b) Industrial Investment Bank of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have a clear authority letter to cast his vote and as such SDF had not cast its vote. The other two creditors i.e. the IDBI and IIBI had suggested a modification in the Scheme which having been accepted by the promoters, they had voted in favour of the Scheme. The correspondence exchanged between the Central Government and the advocates of the promoters of the Scheme is relevant. In its letter dated 18.10.2005, IFCI (Nodal Agency for SDF) had expressly written to the advocate of the promoter informing him that as per the extant rules this re-structuring/settlement of dues was not applicable to SDF loans and the said loans should be kept out of the purview of the Scheme and its existing re-payment schedule should not be altered. It was specifically requested that this stand of the SDF should be kept taken on record. This letter dated was admittedly prior in time to the date of the convening of the meeting of the secured creditors which was held on 16.07.2005. For reasons best known, this letter was not brought to the notice of the Court and it was not filed by the promoters although it was admittedly addressed to the advocate of the promoters. 8. Impugned order had in fact noted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the SDF to be excluded from the purview of the sanctioned scheme has committed an illegality. The whole purpose of propounding a scheme would be negated if the SDF was permitted to stay outside the Scheme; the propounders, in these circumstances, may well have allowed the Company to remain in liquidation; no benefit would have accrued to the propounders in case the SDF was not made bound by the Scheme. All these parameters have been ignored in the impugned order. 10. Arguments have been refuted. It is pointed out that the impugned order suffers from no infirmity; the correspondence exchanged between the SDF and the promoters was clear and categorical which was to the effect that the SDF in terms of its extant rules could not restructure its debts; it was legally not permissible; the SDF is also a government company and in fact, a clear and categorical statement had been recorded in the order dated 31.03.2006 which was to the effect that the government companies which included the SDF would not be a part of the Scheme. The further submission being that this order is even otherwise not the subject matter of challenge what has been challenged before this court is only the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oposed to reduce the loan of Rs. 561.10 lacs to nil and the loan of Rs 728.60 lacs to 25%. Admittedly, the settlement with the other two secured creditors i.e. the IDBI and the IIBI was a settlement of 40% of their total dues. In this context, the submission of the learned counsel for the respondent that there was no justification or reason as to why the SDF would have accorded consent to a reduced figure of 25% is a submission not without force. Even otherwise within the same class all creditors had to be treated at parity and within the said class, there could not be any discrimination. All the secured creditors have been classified as a single class. Payment of 40% of the dues to IDBI and IIBI with a reduced payment of 25% to the SDF and a nil payment for the custodian loan to government was prima facie an unfair proposal. 15. In Maheer H. Mafatlala (supra), the Apex Court had an occasion to consider this aspect. In that case one branch of the equity shareholders of the Company had sought separate rights qua the Company because of a special interest created in their favour because of a family arrangement; submission being that they represented a class within a class of equity s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as accepted by a competent majority; (iv) that the majority was acting in good faith and for common advantage of the whole class; 18. It is in fact the duty of the court to go through the proposed Scheme carefully and find out whether all the provisions of law and directions of the court as to the conduct of meetings have been complied with and whether Scheme is in the interest of the Company as well that of its creditors and only then it should be given effect to. The court is not a mere rubber stamp or a post office. It is incumbent upon the Court to be satisfied prima facie that the Scheme is genuine, bona fide and in the interests of the creditors and the Company. The Court may refuse to put its seal of approval if the purpose of the Scheme is not bona fide. 19. The order dated 31.03.2006 had noted that the promoters of the Scheme had in fact pointed out that the loans of the Central Government should be kept outside the scope of the Scheme and their claim could be apportioned. While expressing its reservation to the proposed Scheme, the Single Judge had however noted that it could in no manner be presumed that the Central Government had agreed to en ..... X X X X Extracts X X X X X X X X Extracts X X X X
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