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TMI Blog2013 (8) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... assets of the company, unless one was inclined to hold the view that utilisation of property by a businessman for profits was proscribed - No objection was taken at any time to the transfer of shares in favour of P.C. Sen, on the ground of non-existence or non-execution of the transfer deed - It was not disputed that this much shares constituted the majority. Bar of Proceedings u/s 22 - Whether the pendency of BIFR proceedings a bar on the present proceedings before the Court – Held that:- Since no proceedings had been shown to be pending under SICA before the BIFR, the argument based on section 22 of SICA need not be examined - No other papers were filed to show that the factual position was different from what was shown in the status report; it was the duty of the applicant, having raised a vehement objection on this ground, to back it up and demonstrate how section 22 of SICA would apply to the present proceedings. Concealment of Facts - Whether the propounder of the revival scheme guilty of concealment of material facts - P.C. Sen had made a public offer to purchase shares in accordance with the SEBI rules and had also received 58 written offers through which he acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to pay off a sum of approximately Rs. 13 crores; the workmen who initially claimed that they would pay off SBI and present a scheme of revival, could not make the payment. Their claim for reviving the company under liquidation (SBL) was finally rejected by this court in orders passed earlier this year (Jan., 2013). This court thereafter directed Sen to file the scheme after taking into account the report of the committee, appointed by this court earlier by order dated 21.1.2009, for scrutinising the claims of the workmen and the claim made by SBI that one loan account remained to be cleared. Finally, P.C. Sen filed Co.Appln. (M) 83/2013 the first motion joint application under sections 391-394 of the Act, for implementation of the scheme of arrangement and compromise proposed between SBL (in liquidation) and its creditors. This application was allowed by this Court by order dated 3.7.2013, over-ruling the objections raised on behalf of the workmen that P.C. Sen was not in fact and truth a shareholder of SBL, that the shares were never transferred to him, that the scheme of revival was a make-believe transaction put through by vested interests to exploit the commercial potential ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submitted to the Registrar of Companies ( ROC ) as required by the Act in which full disclosure was made. In fact, by this order he was not allowed to resign from the directorship; (b) There is no material to doubt the transfer of shares to P.C. Sen, and certainly not at this late stage, and that the transfer was shown in the website of the ROC even in the year 2000; (c) The applicant has misinterpreted and misunderstood the order passed by this Court on 3.7.2013; (d) The order of this Court passed on 9.8.2011 read with its order passed on 30.11.2011 would show that P.C. Sen was directed to deposit Rs. 4.91 crores; on these dates, no application under section 391 of the Act was pending consideration. The workmen were also given an opportunity to settle with the SBI, but they could not do so, leading to the closure of their right vide order dated 7.1.2013. It was only then that P.C. Sen was permitted to settle with the Bank. (e) In addition to P.C. Sen, his strategic partner M/s. Gitanjali Infratech Ltd. was also bringing in money in consideration of which they were allotted shares at a premium. This was one mode of infusing funds into SBL as part of the revival scheme. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus appear that P.C. Sen did act as director of SBL for some time, but the court held his appointment void and of no effect. In fact, he had himself filed the application stating that he was not an ex-director but only a major shareholder. All these facts are noted in the above-cited order of this Court. 8. It would thus appear that the matter is not free from doubt, and in fact there is even some confusion and contradictions about it. It is not clear why P.C. Sen would apply to the court stating that he was not a director of SBL when in fact he was found to have been appointed as non-executive director. This court however found that even that appointment was of no effect as it was done after the company went into liquidation. Having regard to the above and the order of this Court passed on 30.4.2009, the factual position appears to be that he was appointed as director and even functioned as such, as seen from the annual return, but the appointment was of no effect as declared by this court. But that still leaves the question why Sen himself stated in the application (even before this court declared his appointment as director as of no effect) that he was only a major shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were 2,47,50,000 in number of the face value of Rs.10/- each. The total consideration payable by P.C. Sen for the acquisition of the equity shares was Rs. 400/-, @ Rs.100/- to each of the four sellers. 12. Mr. Sinha s submission is that the consideration paid by P.C. Sen was so illusory that the transaction has to be held to be a sham. This line of argument is taken at a very late stage and was never put forth earlier before this court. This court had proceeded on the basis that Sen was applying for revival of SBL in his own right as member and at no point of time such an objection, questioning the very fact of his shareholding, was taken. Right from the initial stages of these proceedings, the workmen have been appearing. On 9-8-2011, this court made it clear in its order passed in Co.Appl.Nos. 181/2011 48/2008 that in case the ex-management was not able to deposit with the Registry the sum of Rs. 4.91 crores, offered as full and final settlement of the dues of the SBI to prove its bona fides, within four weeks, the Scheme propounded by the ex-management would be deemed to have been withdrawn . The matter was listed for 30-11-2011. In the proceedings which took place before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made in the application filed by the ex-management. ii) In view of the fact that the dues to the secured creditors as well as the preference shareholders have been paid by the ex-management, the scheme presented to the court by the workers does not survive. Their right would arise only if the ex-management failed to present a viable revival scheme. The Co.Appln. No. 181/2011 filed by the workmen was therefore rendered infructuous and is disposed of as such 14. On 18-4-2013, this court passed an order on receipt of the report of the Committee appointed to examine the claims of the workmen, directing a copy of the same to be provided to the workmen. This order was also passed in the presence of the counsel for the workmen. 15. It is only then that the ex-management filed Co.Appln.(M) No. 83/2013 which was a first motion joint application filed under sections 391-394 of the Act. It was at this stage that objections were taken by the workmen, including a preliminary objection to the very maintainability of the application for revival on the ground that the revival scheme is prompted by ulterior motives and that the transfer of preference shares to P.C. Sen on 14-3-2012 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... obligation of the buyer (P.C. Sen) to comply with SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 which he has fulfilled by making a public offer to buy shares by an announcement made on 30.9.1999, followed by offer letters sent to the shareholders of the company on 20.10.1999; it also refers to the fact that 58 acceptance letters were received by him for sale of 25,237 equity shares which were got registered in his name . These shares, together with the equity shares acquired under the agreement, came to 10,40,090 shares of Rs. 10/- each. It is not disputed that this much shares constituted the majority. 19. A question was posed by Mr. Sinha as to how so many shares could have been acquired for a paltry sum of R.400/-. Apart from the fact that it is too late in the day to pose the question, there is no material or evidence brought on record by the workmen to show that the agreement for sale of shares was entered into with any fraudulent intention either to jeopardise the rights of the workers or to exploit the commercial potential of the land owned by SBL in Ranchi. The ex-management had always offered to settle the claims of the workmen. Moreover, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AGM, SBI, Shakespeare Sarani, Calcutta, seeking a one-time settlement (OTS). It was pointed out that P.C. Sen has stated therein that in view of the liquidation proceedings pending since 2006 it would be difficult for me/my associates to utilize this property , the contention being that the quoted words show the true intention of Sen, which (according to Mr. Sinha) is to exploit the property. All that which can be inferred from the quoted words are the anxiety expressed by him about the delay in the liquidation proceedings, which can be shortened if an OTS is entered into. The words utilize this property are not capable of conveying any sinister motive. In any case, since P.C. Sen is the sponsor of the scheme, there is nothing wrong if he wants to utilise this property , by which was meant a profitable use of the assets of the company, unless one is inclined to hold the view that utilisation of property by a businessman for profits is proscribed. 22. I am therefore unable to hold that the transaction of transfer of shares to P.C. Sen was sham and was made with a view to benefit him at the cost of the workmen and the creditors of SBL or was a fraudulent transaction with ul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of SBL which were duly registered in his name. As regards the question about his holding the position of a director, I have already discussed this aspect; there is no need to repeat it here. As regards the non-filing of the directors report with the balance sheet, at worst it may amount to an irregularity inviting some action by the ROC. It has no impact beyond that on the present proceedings. 28. Two decisions of this court were cited by Mr. Sinha: (i) Shyam S. Rastogi v. Nona Sona Exports P. Ltd. (1986) 59 Comp. Cas. 832 and (ii) Bhagwan Singh and Sons P. Ltd. v. Kalawati and others (1986) 60 Comp. Cas. 94. Both the judgments are by D.R. Khanna, J., sitting singly. In Shyam S. Rastogi (supra), it was held that it is the duty of the company court to look at the motivation of the propounder and the merits of the revival scheme. In that case, no positive scheme of revival was put forth and there were only general averments; no balance sheets were produced at all, nor any profit and loss accounts were even prepared; no details with regard to the creditors and the amount of debts due by the company were forthcoming; there was no information to show the progress of the business, c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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