9911796707
TMI Blog2005 (7) TMI 720X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 10/- each. 2. The company started its operation as domestic airlines in the year 1993 after entering into technical collaboration agreement with M/s. Lufthansa of Germany and by utilizing aircrafts leased to it by Lufthansa. Thereafter Lufthansa terminated all its agreements with the company and through Court took back all its aircrafts. The result of this was that operations of the company came to a standstill. There were many creditors of the company who demanded back their money. As the company was unable to repay their debts, these creditors filed company petitions under Sections 433 and 434 of the Act for winding up of the company. In one such petition, being CP No. 68/1997, this Court passed orders dated 12th January, 1998 admitting the said petition. This Court also appointed the official liquidator as the provisional liquidator on 29th April, 1998. Thereafter pursuant to the orders passed by this Court in the said petition on different dates, the company deposited certain amounts from time-to-time and in this manner by 31st December, 1999 it had deposited ₹ 9 crores with the Registrar of this Court. With a view to restart its operations, the company obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000. The memorandum was entered into between the company and RHSL and the said memorandum as well as addendum thereto prescribed a 60 days cooling off period during which the company has to provide proof to RHSL of satisfaction of the conditions precedent set out therein. Settlement with major creditors of the company was a condition precedent for release of funds to RHSL by the escrow agent, namely, Citibank. It was mentioned that the Board of Directors of the company in their meeting held on 28th April, 2000 had unanimously approved the scheme of compromise with the creditors mentioning that the company would be having sufficient funds to meet its liability under the said scheme. Direction was sought for convening holding and conducting the meetings of the creditors. While this application was pending and the matter was heard from time-to-time, on 17th October, 2000, the company allotted 810,77,500 CRCPS to RHSL which were convertible, at the option of RHSL into equity shares. Return of allotment of these CRCPS was also filed with the Registrar of Companies. 5. In the board meeting dated 27th/28th February, 2001 these shares were converted into equity shares. In the meantime, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the company on 31st December, 2001 and this application was also filed in the name of the company by this group. In this application, after hearing the parties at length, including objections of S.K. Modi Group as well as various petitioning creditors whose winding up petitions were pending in this Court, the Court passed a detailed order opining that the updated scheme sought to be submitted by the applicant is bona fide and reasonable and prima facie feasible as well as in public interest and in the interest of all the creditors and, Therefore, it should be sent for consideration under Section 391(1) of the Act. Requirement of convening and holding meetings of Lufthansa and trade creditors was dispensed with as Lufthansa had already given its consent to the updated scheme and consent of the trade creditors representing 82% of the total value of these classes of creditors was also filed. It was directed that meetings of the Inter Corporate Depositors as well as Staff Creditors of the company be convened and necessary modalities thereof were delineated in that order. 7. Pursuant to the aforesaid orders, meetings of the Inter Corporate Depositors and Staff Creditors were h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess so specifically authorized by the Board of Directors of the company. Thereafter, the company issued a notice to convene its Annual General Meeting on 31st December, 2001. S.K. Modi Group tried to obtain an order of injunction, against holding of this Annual General Meeting, from this Court. However, it failed in its attempt to get such an order from a Single Judge or in appeal from a Division Bench. An employee of S.K. Modi Group, however, obtained an injunction from the Court of Civil Judge, Ghaziabad staying the said Annual General Meeting. However, this Court stayed the order of Civil Judge, Ghaziabad vide its order dated 31st December, 2001 observing the company is entitled to go ahead with its meeting notwithstanding any order passed by any Court subordinate to any High Court in the country . According to the petitioner, the said Annual General Meeting took place. S.K. Modi Group and two of its directors retired and were not re-appointed. They, Therefore, ceased to be the directors. Thereafter, another Annual General Meeting was held on 18th April, 2002, after obtaining orders of this Court in CA No. 396/2002 and some more decisions were taken. S.K. Modi group has filed S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minus the rent up to date at ₹ 10,000/- per month is deposited in this Court, the attachment would be liable to be lifted forthwith. While giving these directions, the Court noted about the transaction in question as under: It is clear that the convoluted transaction entered into by the Company with Agache Associates prima facie appears to be a stratagem devised to account for the allotment and call money payable for 1,15,49,272 shares valued at ₹ 33,31,80,880/- by three investment companies belonging to the S.K. Modi Group i.e. Modi Overseas Pvt. Limited, Kesha Investments Pvt. Limited and Paradise Credits Pvt. Limited. The very fact that the rental for the premises is only ₹ 10,000/ per month and the security deposit as large as ₹ 36 crores is sufficient in my view to taint the transaction. No rational Explanation has been given in the reply for this extraordinarily high security deposit given by the company. No company acting prudently and guided by any sense of commercial acumen would pay a such a disproportionately large security deposit for a property with such low rental. The transaction is further rendered suspicious by the fact that the Agache A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are also reached with Bharat Petroleum Corporation Limited, Mahanagar Telephone Nigam Limited and the Department of Customs. As far as Department of Customs is concerned, it is mentioned that as many as 11 assessment orders were passed by it against the company which were not disclosed by S.K. Modi Group and they came to the knowledge of the present management only during the proceedings in CWP No. 6611/2000 against another assessment order. Various legal steps were taken and in the process, matter was also settled with Air UK Leasing Limited which became necessary to clear the decks insofar as assessment orders passed by the custom authorities were concerned and ultimately the Department of Customs also granted no objection certificate dated 13th August, 2003 subject to certain conditions which were complied with and thereafter the Department of Customs issued another no objection certificate on 1st September, 2003 for relaunch of the airline operations of the company. As per the petitioner, it has accordingly paid ₹ 40,95,18,433/- to 7 creditors till 15th September, 2003. Thus, according to the petitioner, while on the one hand it has taken positive steps for relaunch of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for the same. It was also submitted that by means of illegal and invalid purported Annual General Meeting and Board meetings, S.K. Modi Group was ousted and S.K. Modi Group and other two directors were treated as having ceased to be the directors and all these issues were pending in the suits filed by this group. However, in these suits also no progress was made and the petitioner was delaying the hearing of those suits and it was necessary to go into those aspects as in case S.K. Modi Group succeeds in those suits ultimately the present petition would be liable to be dismissed on this ground itself. This argument, however, is not at all convincing. Admittedly in those suits applications for interim injunction are also filed but the objector has not been able to obtain any orders so far. Dr. A.M. Singhvi, learned Senior Counsel appearing for the petitioner is right in his submission that in the present petition seeking sanction of the scheme of compromise with the creditors, the scope and encompass of the proceedings under Section 391 of the Act cannot be enlarged to decide the disputes which are outside the scope of Section 391 of the Act. At this same time this Court cannot w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emain within him in future. Consequently, if Arvind Mafatlal's suit ultimately succeeded before the Bombay High Court and the appellant lost in his counter-claim that would have no effect whatsoever on the informed decision which the equity shareholders were called upon to take while approving the scheme in question.' Para 11: The objector was present in the meeting of the shareholders and raised objection against the scheme. However, even in spite of such objection the required majority approved the scheme in the meeting of the shareholders. Section 393(1)(a) of the Companies Act does not ordain disclosure of all material facts. Clause (a) not only enumerates the categories of particulars, but if deliberately makes a departure by omitting any reference to materials facts. Informations regarding pending litigations between shareholders were not such informations which were required to be specifically mentioned in the communications issued to the shareholders and creditors. Non-mentioning of such informations, in my considered opinion, did not vitiate the scheme. No case of fraud is made out in the facts and circumstances of the present case. This Court found the scheme a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertificate and in the application the information which is to be disclosed would include the particulars of the Directors or Chairman/CEO of the firm seeking NOC for security clearance as well as ownership pattern of the applicant. It is also provided that foreign equity up to 40% and NRI/OCB investment up to 100% would be permitted in the domestic air transport services and equity from foreign airlines will not be allowed, directly or indirectly, in domestic air transport services. As per the general requirements contained in para 10 of this document, any change in the Board of Directors/Chairman/CEO has to be intimated to the Ministry of Civil Aviation and DGCA along with the details of new chairman or directors and new chairman and directors are to be appointed only after their security clearance. Another general requirement contained in para 10.7 is that prior permission of DGCA/Ministry of Civil Aviation shall be required for change in the name of the company. 18. Based on the aforesaid provisions, it was submitted that in May, 2000 when CA No. 797/2000 was filed, both the groups were in unison with the Indian group in majority and was fulfilling the requirements. However, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was specifically sought by the Ministry. The Government of India has, Therefore, granted a NOC to Royal Airways Limited after satisfying itself that its requirements regarding the said issue are fully met. 20. It may be noted that in this behalf that the Ministry of Civil Aviation had written a letter dated 11th March, 2004 to the company i.e. M/s. Royal Airways Limited, seeking certain information including on the following aspects: (i) The details of existing Board of Directors of the Company i.e. name, address, nationality, no. of shares held, etc. (ii) Whether the Chairman and two-third Members of the Board are Indians? (iii) The share-holding pattern of the Company, the number/percentage of Shares held by various individuals, financial bodies, other entities, etc. 21. Reply to this was given by the company vide letter dated 15th March, 2004. Therefore, it is clear that the developments which have taken place, including stakes of RHSL, are within the knowledge of the Government of India and repeatedly permissions are given and extended from time-to-time thereby maintaining the continuity. There is yet another reason to repel this argument. No person including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of S.K. Modi Group is that CRCPS were never converted into equity shares. Terms of conversion were changed at the Board meeting held on 17th October, 2000 and further amended at the 15th Annual General Meeting held on 24th November, 2000 by a resolution passed under Section 94 of the Act. It was further argued that the petitioner has fabricated the documents to mislead this Court in this regard. It was submitted that when S.K. Modi Group entered into arrangement with RHSL and CA No. 797/2000 was filed, RHSL was controlled by Verus Group who were NRIs and, Therefore, as far as their investment in the company is concerned, it was not to pose any problem, that too when the methodology adopted was the issue of CRCPS as per which RHSL had to remain a foreign investor. It was for this reason that in August, 1999 the Memorandum and Articles of Association of the company were amended to permit issuance of CRCPS under Section 81 of the Act and it is this amendment which was approved by FIPB which was obtained for the investment of Verus Group and the Board also approved in February, 2000 this particular scheme which became the basis of CA No. 797/2000. However, the Court had asked the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Government including of FIPB, Civil Aviation Ministry and DGCA. 23. In the Annual General Meeting held on 24th November, 2000 the shareholders allegedly amended the Articles of Association and according to the objector there was no such decision taken in the said Annual General Meeting and thereafter disputes started which led to filing of Suit No. 1829/2001 against S.K. Modi Group and Suit No. 1961/2001 by S.K. Modi Group. Therefore, it was contended by the objector that there was no proper and valid decision for conversion of CRCPS into equity shares. 24. It may be stated at the outset that for allotment of CRCPS to RHSL, special resolution was passed at the Annual General Meeting in its 14th meeting held on 27th August, 1999 under Section 81(1A) of the Act for preferential allotment. The explanatory statement given therein contained a specific assertion that post conversion RHSL would own 57.28% of shares in the company. Thus conversion was contemplated even when decision was taken at the 14th Annual General Meeting in the year 1999 for allotment of CRCPS to RHSL. The annual report for the year 1999 which was circulated for the 14th Annual General Meeting, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ference Shares of ₹ 10/- each, fully paid up, into 8,10,77,500 Equity Shares of ₹ 10/- each, fully paid, of the company. RESOLVED FURTHER THAT consequent to above conversion, 8,10,77,500 Equity Shares of ₹ 10/- each, fully paid up, be and are hereby allotted as per following details: RESOLVED FURTHER THAT the share certificates in relation to above allotment be issued under the Common Seal of the Company in the presence of any two Mr. S.K. Modi, Mr. Atul Sharma and Mr. Kishore Gupta, Directors of the Company, who shall sign the same in token of their presence and they be counter signed by Mr. A.K. Maheshwary, Company Secretary. RESOLVED FURTHER THAT Mr. A.K. Maheshwary, Company Secretary or Mr. Kishore Gupta, Director be authorised to file return of allotment with the Registrar of Companies (NCT of Delhi) within the statutory time and he further authorised to complete all formalities to get these shares listed on stock exchanges where the equity shares of the Company are listed and to sent intimation of allotment to such other agencies as may be required under applicable laws. 26. The aforesaid decision taken in the Board meeting was communicated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the meetings of other two categories of creditors. While passing this order, the Court had considered the objections of S.K. Modi Group and rejected the same. It is this scheme regarding which two creditors had stated that they had no objection and, Therefore, the meetings of the said categories of creditors was dispensed with. Other two categories of creditors in the meetings have resolved in favor of the scheme. Therefore, all the categories of creditors have approved the scheme on the basis of which CP No. 385/2003 is now filed. With Court orders dated 6th March, 2003 passed in CA No. 797/2000 and 29th July, 2003 passed in CA No. 606/2003 it is this scheme which is under consideration now and the scheme propounded in CA No. 797/2000 has to be read with these amendments. 29. I am also unable to agree with the submission of S.K. Modi Group that the scheme seeks to achieve oblique/collateral purposes to justify its purported illegal take over of the management. It is reiterated that we are examining the scheme of compromise with the creditors and not dealing with the inter se dispute of these parties about the management of the company. Once this scheme is approved the company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . A total of approximately ₹ 80 crores was to be infused by RHSL for the revival of the airlines. The present Scheme states that about ₹ 51 crores have/will be paid to meet Government liabilities. There is no Explanation regarding the balance amount. 2. There is no Explanation in the scheme about how aircrafts will be purchased/leased, how many and then. 3. Means of finance for the first Installment proposed under the scheme seeks to utilize an amount of ₹ 9 crores lying in this Court which was deposited by the S.K. Modi Group in the scheme propounded by them and not by the new investors under this scheme. The same is, thus, the money of the S.K. Modi Group and cannot be utilized by RAL as part of the present scheme. 4. Means of finance for the second Installment proposed under the scheme is preposterous. It is premised entirely upon forfeiture of shares of the S.K. Modi Group which are subject matter of dispute in CA 265/2003. In any case, a scheme cannot be founded on finance, the receipt of which is contingent upon successful adjudication of a pending litigation. Unless CA 265/2003 is decided, means of finance (2) cannot be gone ahead with. Further, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons filed by the petitioning creditors seeking winding up of the company and proposal of the company to pay the creditors. The money was deposited pursuant to the orders passed by this Court. Therefore, money would belong to the company and if the scheme of arrangement is ultimately sanctioned by this Court, the company shall have every right to seek repayment of the creditors in terms of the scheme out of the aforesaid funds. It is untenable on the part of the objector to contend that the said money is deposited pursuant to the orders passed in CA No. 797/2000 and, Therefore, cannot be touched by the petitioner in the scheme propounded now which is alleged different from the one propounded in CA No. 797/2000. I have already noted above that this Court had given permission to update the said scheme contained in CA No. 797/2000 and pursuant thereto CA No. 606/2003 was filed in which orders dated 29th July, 2003 were passed. In this argument, the objector conveniently glosses over an important fact, namely, the money of ₹ 9 crores is deposited by none less but RHSL and it represents part of the amount which RHSL was supposed to bring in. 35. In response to objection No. 4, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Government may state that without sanction of the scheme seeking all these approvals is premature. These are niggling doubts about the scheme. Mere on surmises and uncalled for apprehensions of S.K. Modi Group that all such approvals may not be forthcoming, the consideration of the scheme cannot be delayed or postponed. 39. It is also not correct on the part of the objector that terms of scheme have been changed after it has been approved by the creditors at the meetings ordered by this Court. It may be noted that the only modification proposed in the scheme relates to issues of shares of RAL on a rights basis, which has been necessitated by a subsequent change in the policy of the Reserve Bank of India which derecognizes OCBs as an investor class and directs that OCBs shall not purchase equity of preference shares or convertible debentures offered on a rights basis by an Indian company, unless specifically permitted. The modification proposed in the scheme is that in case at the time of the rights issue, RHSL is not permitted by law to subscribe to the shares offered to it on a rights basis by RAL, RHSL will renounce its right to subscribe in favor of NRIs who control nea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... votes cast at the meeting, the salient feature that comes out to the surface is that the scheme was opposed especially by those who, apart from the merits of the scheme, are personally opposed to Gopaldas Parikh and Linubhai Banker. The feud appears to be more between the blood relations rather than between the creditors and members who have offered their best commercial judgment to the scheme on its merits. It is an inescapable conclusion that Chandulal Banker as a power of attorney holder of Shardaben, and Shantaben who is the principal contender, opposed the scheme tooth and nail not because he had the interest either of the company or creditors and members at heart but because he had to leave the active management when Gopaldas Parikh and Linubhai Banker stepped in and because of his personal vandetta against both of them. In this view of the matter it is not possible to accept the submission of Mr. Vakil that the scheme should not be imposed upon dissentient members. 42. In this very judgment, the approach to be adopted by this Court in considering such a scheme was also delineated and the discussion on this aspect makes the following reading: How should the Court appr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must treat it as cardinal that its function does not extend to usurping the view of the members or creditors. It must look at the scheme to see that it is a reasonable one and while so doing, the Court will be strongly influenced by a big majority vote and the reasons which actuated the contesting creditors in opposing the scheme. None the less it is essential that the scheme must be a fair and equitable one though it is none of the business of the Court to judge upon the commercial merits which in fact is the function of the creditors and members. 43. It is also trite law that the Court would not reject a scheme simply because there could have been a better scheme. In re. Sussex Brick Co. Ltd. reported as 1960 (1) ALL E.R.773, the Court brushed aside this type of criticism of the scheme in the following manner: The applicant set out certain criticisms in his affidavit which undoubtedly show that a good case could be made out for the formulation of a better scheme, of a fairer scheme of a scheme which would have been more attractive to the shareholders, if they could have understood the implications of the criticisms. I have no doubt at all that a better scheme might have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich MAUGHAM, J., used that word in re. Hoare Co. Ltd. and I decide that the application ought not to succeed. 44. Same thrust in the approach to be adopted by the Court was given by the Gujarat High Court in Navjivan Mills Co. Ltd., Karol, In re. reported as (1972) 42 Comp. Cas. 265: There are certain well recognised limitations on the Court's power to sanction the scheme. First limitation is that the Court would not sanction a scheme which would be invalid without the Court's sanction if every creditor or member concerned agreed to it. I other words, the Court has no power to sanction something which the parties could not do by agreement. The second fetter on the Court's power is that the Court cannot sanction an act being done if the law permits it only subject to conditions and the agreement seeks to dispense with those conditions such as where the scheme of compromise and arrangement also includes within its ambit reduction in share capital in respect of which special procedure provided in the Act and the rules has not been carried out. Third known fetter on the Court's power is that the Court would not ordinarily sanction a scheme which includes somet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the way a carping critic, a hairsplitting expert, a meticulous accountant or a fastidious Counsel would do it. It must be tested from the point of view of an ordinary reasonable shareholder acting in a businesslike manner taking within his comprehension and bearing in mind all the circumstances prevailing at the time when the meeting was called upon to consider the scheme in question (vide In re. Sidhpur Mills Co. Ltd., AIR1962Guj305 ). At no stage a dispute was raised that the provisions of the statute have hot been complied with by the petitioner before coming to the Court under Section 391(1) and after the meetings were convened and the scheme was approved under Section 391(2). At no stage a dispute has been raised before me, now that the scheme has been very meticulously examined by the officer of the Central Government that even by a remote chance any provision of the statue was not complied with. The next question is whether the class was fairly represented. I should like to point out that because of the radical change made by Kohinoor in the ratio of ordinary shares, the meeting of the ordinary shareholders of Navjivan had to be called twice. At the first meeting of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ues in the manner prescribed/proposed. There is no reason, Therefore, to hold that the scheme would not be workable. 47. It may be pointed out here that even learned Counsel for the objector referred to the same principles by relying upon Miheer H. Mafatlal (supra) and Hindustan Lever and Anr. v. State of Maharashtra and Anr., reported as AIR2004SC326 and the judgment of the Madras High Court in the case of N.A.P. Alagiri Raja and Co. v. N. Guruswamy and Ors., reported as (1989) 65 Comp. Cas. 758 wherein the principles laid down in Miheer H. Mafatlal (supra) were reiterated. Therefore, there was no-dispute on the proposition of law which governs consideration of such cases. He also referred to the judgment of the Punjab Haryana High Court in the case of Ram Chand Puri v. Lahore Enamelling and Stamping Co. Ltd., Reported as therein the Court observed that the Court is not mere conduit in sanctioning such schemes and motive of proposer is to be examined. 48. Learned Counsel for the Objector, in this behalf, referred to the Constitution Bench judgment of the Supreme Court in the case of State Trading Corporation of India Ltd. v. The Commercial Tax Officer and Ors., reported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors, including Malanpur. (e) The scheme involves intractable disputes of fact and law and is inherently incapable of performance and unworkable because of disputes between the two sets of creditors, namely, S.K. Modi Group and RHSL. 51. The first objection flows from the fact that there is a decree in favor of Malanpur. It is not disputed, however, that Malanpur had advanced a sum of ₹ 5 crores to the company which was treated as Inter Corporate Deposit (ICD). It wants change of categorization only on the basis of decree obtained by it. It may be significant to mention that this decree is obtained on the basis of admission by the company and the admission relied upon was the one which was mentioned as principal amount due to Malanpur in earlier scheme of compromise with the creditors propounded by the company. Decree which is passed includes ₹ 5 crores as principal amount and interest plus future interest. Principal amount of ₹ 5 crores, Therefore, remains. Other component of the decree is the interest amount. It could not be disputed by the learned Counsel for Malanpur that in the scheme propounded by the company all the creditors are classified on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explained to the Judge, the decree holders can get the scheme modified by the Court, by having such portion of scheme which affects them expunged from the scheme. In the present case, as noted above, even if the objector was to be treated as decree holder and club along with Lufthansa it would not have made any difference as the result in that eventuality would also have been to sanction the scheme by decree holder as separate category by majority of 82%. This very argument was negatived by the Court in re. Maneckchowk (supra) in the following words: It was very vehemently contended that preferential creditors and unsecured creditors were grouped together in one class and, Therefore, the votes cast at such an illegal meeting approving the scheme cannot be taken into consideration by the Court. As stated earlier, the workers of the company would be preferential creditors; so also, the Employees' State Insurance Corporation would be a preferential creditor of the company and they should not have been grouped together with the other unsecured creditors. For the reasons stated hereinabove, the creditors of the company would fall broadly into three distinct classes, namely, secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heme is approved by statutory majority. It is very easy from the report of the Chairman to find out the total number of workers present and the value of their votes. It is equally easy to find out the value of the vote of Employees' State Insurance Corporation. The composite value of the affirmative votes cast in favor of the scheme at the meeting according to the report was ₹ 94,94,502. This is inclusive of the claim of workers as preferential creditors which was to the tune of ₹ 36,33,400. If the votes of the workmen representing in value the claim to the tune of ₹ 38,33,400 is deducted from the votes representing the debt of other unsecured creditors to the tune of ₹ 94,94,502 the balance would be ₹ 58,61,202 out of which vote representing the value of the claim of the Employees' State Insurance Corporation to the tune of ₹ 6,27,346 should be deducted which would leave a balance of ₹ 52,33,756. The unsecured creditors being suppliers of stores and cotton and depositors and excluding preferential creditors who attended the meeting and voted in favor of the scheme represented the debt in the value of ₹ 52,33,756. The value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are the third parties and there is an overwhelming support from these creditors in favor of the scheme. 56. Insofar as objection of Malanpur to this two conditions attached to making payment of first Installment are concerned, there may not be of any cause of worry inasmuch as it can be directed that the suits or other proceedings under Section 138 of the Negotiable Instruments Act shall be withdrawn only after the complete payment is made as per the scheme. Till that time, the complainant a well as the company may apply for adjourning of the pending matters. On the final payment being made a joint compromise application can be filed for disposing of the said pending proceedings. It has been pointed out by the petitioner that in the creditors' meetings, this term had been changed and it was decided that the withdrawal of such complaints would be simultaneously with the payment of second Installment amount. Therefore, this objection is rendered negatory. 57. Objection regarding discriminatory treatment is untenable. If some of the creditors were settled earlier in a particular manner, that does not mean that the scheme propounded afterwards has to be on the same pattern. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 433(e) read with Section 434 of the Act. That apart, no such creditor has come forward alleging that he is not included in the scheme although he is a creditor but is not acknowledged as a creditor on the purported ground that his debt has become time barred. 60. The inveigh of the objector is hollow. I do not find any merit in any of these objections which are shellacked by the petitioner convincingly. These objections are, Therefore, rejected. 61. I may take up, at this stage, prayer made in CA No. 306/2005 for consideration. Five applicants in this application are the registered shareholders of 12375400 shares of the company. Out of this, they had pledged 5140600 shares with various creditors of the company in the year 1996 to secured repayments of ICD taken by the company from those creditors, namely, DCM Daewoo Motors Limited, Taj Trade and Transport Limited and Reliance Capital Limited. In this application they have offered sale of their shares pledged with ICD creditors as may be required to satisfy the second Installment being 40% of the agreed amount due under the scheme for payment to the said ICD creditors. It is also prayed that balance shares be directed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mely, S.K. Modi group and RHSL which are pending in different suits shall be adjudicated on their own merits without being influenced by the outcome of this petition. (III) Payment of first Installment to the creditors would not be subject to the withdrawal of the proceedings under Section 138 of the Negotiable Instruments Act. Instead the parties may apply to the Courts where such proceedings are pending, for adjourning the matters till the payment as per the scheme to these creditors is made. (IV) Insofar as different approvals from the Government, including Ministry of Civil Aviation are concerned which may still be required for relaunching of the airline, or any other foreign exchange approvals are yet to be given by the regulatory authorities, the said authorities shall consider the case in accordance with law. 64. Subject to aforesaid observations and aforesaid circumstances and having regard to the averments made in this petition and the materials placed on record and the affidavits filed by the Regional Director, Department of Company Affairs, Kanpur, and the Official Liquidator, I am satisfied that the prayers made in the petition deserve to be allowed. I also do ..... X X X X Extracts X X X X X X X X Extracts X X X X
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