9911796707
TMI Blog1998 (12) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... s preferred before the appellate authority for Industrial Finance Reconstruction, New Delhi (referred to as the AAIFR). The AAIFR dismissed the appeal and forwarded its recommendation to the Calcutta High Court by the order dated 4th February, 1994 confirming the order of the BIFR. The special leave petition filed was dismissed by the Supreme Court on 21st April, 1994 but leave was given to the parties to raise all Issues as were available to them before the High Court. 2. A writ application was also filed by the company challenging the order of the AAIFR. No order of stay was obtained. The writ application is pending. When the winding up matter came up before the High Court, the court by an order dated 4th January, 1995 directed windi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in any event the scheme was unfeasible. 6. The learned Judge, however, rejected the submissions of the appellant and Sanchaita Investment and modified certain clauses in the scheme which pertained to the secured creditors and Sanchaita Investment. For example, the scheme as proposed provided for payment of the bank's dues by instalments with simple Interest at the rate of 6% per annum. The learned Judge by the order dated 13th November, 1997 granted simple interest at the rate of 12% per annum. The scheme was sanctioned by the learned single Judge on the ground that if the company was sold there was little likelihood of the creditors both secured and unsecured, statutory creditors and workmen, receiving more than a small portio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrangement will be binding on these creditors or class of creditors provided that the scheme is sanctioned by the court. 10. It would follow that the scheme will be binding only on those creditors in respect of whom a meeting was directed to be held. A meeting was held and the scheme approved by creditors whose claims were 3/4 in value of the total indebtedness amongst them. The insistence on the value of the debt, Indicates that the view of those with the highest stakes would prevail. 11. In this case it is not clear whether the court directed a meeting of the secured creditors. But it is not in dispute that no meeting of the secured creditors of the company interims of section 391(2) was held, nor was any notice given to the secure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Investigation proceedings in relation to the company under section 235 to 251, and the like. 14. No such finding is recorded in the Judgment and order under appeal. 15. The court must also Independently assess the validity of the scheme. The law in our view has been correctly stated by a learned single judge in the case of M.P. Agarwalla v. A. Chatter Singh : 85 CWN 557 when after referring extensively to the authorities the learned Judge said : The discretion for stay under section 466 can only be exercised by the court (1) if the court is satisfied on the materials before it that the application is bonafide (2) the court would be guided by the principles and definitely come to the finding that the principles are applicable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose served in keeping the appeal alive which is accordingly treated as on the days list and the stay application and the appeal disposed of by setting aside the order under appeal. This however would not preclude the trial court from reconsidering the scheme as far as the unsecured creditors are concerned or also ascertaining the wishes of the other classes of creditors of the company if the prayer is duly made before him. 18. In view of out finding that the scheme could not validly include clauses affecting the right of classes of creditors in respect of whom no notice was given and no meeting was held, the cross objection filed by the respondent No. 2 cannot survive and accordingly his cross objection is dismissed. The appeal Itse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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