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TMI Blog2022 (12) TMI 1554X X X X Extracts X X X X X X X X Extracts X X X X ..... ew Estate Pvt. Ltd. (Grand View) has preferred this Application under Section 466 of the Companies Act, 1956 (the Act of 1956) to permanently stay the order dated 5 September 2005 passed by this Court winding up Svadeshi Mills Company Limited (in liquidation), with further directions to the Applicant to deposit an amount of Rs. 239.13 Crores for the purpose of payment to be made to the stake holders and consequential directions to the Official Liquidator to handover the entire undertaking of the Company, to prepare the statement of accounts along with the assets and liabilities of the Company and also to address letters to the Registrar of Companies and other competent authorities that the winding up order dated 5 September, 2005 has been permanently stayed and, thereafter, discharge the Official Liquidator, save and except for the purposes of giving effect to the proposal for revival and also to appoint the persons named by the Applicant as the directors of the Company. 2. The background facts which are required to be considered for the purpose of determination of this Application can be stated in brief as under : 2.1 The Applicant is a company incorporated under the Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignment dated 1 December, 2006 and 31 August 2007 from Stress Assets Stabilization Fund (SASF) and Bank of Baroda (BOB). Proceedings were also initiated to bring about the expeditious resolution of the claims of the stake holders. 2.10 On 15 November 2010, RMMS entered into a Memorandum of Understanding with the Applicant and Respondent No. 2. Pursuant thereto, an Application bearing No. 243 of 2011 came to be filed seeking permanent stay of the winding up proceedings. 2.11 The said Application came to be rejected by the learned Company Judge by an order dated 14 October 2011. An Appeal thereagainst before the Division Bench also met the same fate. A challenge to the Division Bench order dated 23 August 2013 came to be disposed of by the Supreme Court in Special Leave Petition by an order dated 23 February 2016. 2.12 Proceedings were also instituted as regards the entitlement of the workmen upto the date of the winding up order. The learned Company Judge and the Division Bench of this Court held that workers are entitled to their dues upto the date of winding up order. SLP (Civil) Nos. 26930-31 of 2016 is pending before the Supreme Court on the question as to whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount set out under the Agreement for Settlement, whichever may be higher. Hence, this Application. INTERIM APPLICATION (L) NO.29439 OF 2021 3. RMMS has filed this Application seeking direction to Grand View - Respondent No. 2 (Applicant in IA 3663 of 2022) to place on record its proposal for reviving the company in liquidation in accordance with its obligation under the Agreement for Settlement dated 28 February 2020 and the Supplementary Agreement dated 29 June, 2021, and upon such proposal being submitted and undertakings being filed and accepted by the Court, pass an order of permanent stay of the winding up of the company in liquidation and, in the alternative, direct Respondent No. 2 - Grand View to abide by the terms of the Agreement for Settlement dated 28 February 2020 and the Supplementary Agreement dated 29 June 2021 by applying for permanent stay of the winding up of the company in liquidation. OFFICIAL LIQUIDATOR'S REPORT NO.56 OF 2022 4. The Official Liquidator, in turn, has taken out this Report seeking certain directions, in the context of the IA No. 3663 of 2022 filed by Grand View. After narrating the facts and the developments since win ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in liquidation, and they propose to keep their claims in abeyance till the company comes out of the liquidation, and the Applicant proposes to deposit the amount to meet the specified liabilities of the Company, the winding up order ought to be permanently stayed. 8. In view of the aforesaid tenor of the submissions, at this juncture, it may be appropriate to extract in extenso the contours of the proposal of the Applicant for revival of the company as set out in paragraph No. 45 of the Application : "A. SETTLEMENT OF ERSTWHILE-WORKERS: As per the terms of the AFS, the erstwhile workers shall be paid a cumulative amount of Rs. 237.22 Crores. It may be noted that even assuming the cut-off date for calculation of dues owed to them as of the date of winding up, their claims would only amount to approximately Rs. 88.44 Crores cumulatively as per the calculation made by the Applicant. On an average, the erstwhile workers are each getting Rs. 5.25,000/- more from the AFS than they may have from liquidation of the Company. It may be noted that as many as 469 badli workers and kin of deceased workers also stand to benefit from the AFS as they would not be entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsecured creditors, 70 unsecured creditors to the tune of Rs. 114.52 Crores have assigned their claims to the Applicant and to (1) Chinsa property pvt. Ltd and (2) Shachin Real Estate Pvt. Limited, which are group companies and which too are part of the Shapoorji Pallonji Group, who have agreed to give all co-operation to the Company to come out of winding up. They have agreed to defer recovery of their dues until an appropriate time when the Company is able to pay these dues, on terms mutually agreed between them and the Company, subject to the winding up proceedings being stayed and Company being revived. With respect to the dues of the remaining 76 unsecured creditors to the tune of Rs. 5.45 Crores, including some of the other Shapoorji Pallonji group Companies the amount owed to them is as set out in the chart, hereto annexed and marked as EXHIBIT "M". Some of the claims have been adjudicated by the Respondent No. 1 subject to their seeking condonation of the delay in submitting their claims before Hon'ble High Court u/ s 446 of the Companies Act, 1956. Since the Applicant are ready and willing to clear all the outstanding dues of all the remaining unsecured cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs. 1.99 Crores and Rs. 0.70 Crores, respectively. The Applicant is therefore entitled to receive this money from the Company. However, in the event this Hon'ble Court orders permanent stay of winding up of the Company the Applicant in its capacity as a secured creditor is agreeable to give all co-operation to the Company to come out of winding up and also agrees to defer recovery of these dues until an appropriate time when the Company is able to pay these dues, as per the mutual terms and conditions between the Company and the Applicant as agreed in future. The Official Liquidator has already paid the entire adjudicated dues of the Provident Fund Department. G. INTERESTS OF THE SHAREHOLDERS: The Applicant and the Respondent No. 2 hold around 52% of the total shareholding of the Company. If the Company is brought out of liquidation, then the remaining shareholders too would benefit as they would be shareholders of a going concern and not of a company undergoing liquidation process. Thus, this would be far more beneficial to the public shareholders of the Company. H. OTHER CLAIMS : The Applicant has also incurred ans spent a sum of Rs. 4.54 Crores as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while workers and their dependents would also be entitled to preference in admission to this institution. This would also be in the larger public interest. It may also be noted that the redevelopment of the immovable property of the Company would lead to a development of the overall locale where they are located. This area is presently under develped and is bereft of any improvements or amenities. The redevelopment of those lands expeditiously would improve the overall area and would be in the public interest. K. FUTURE BUSINESS: As has been stated above the Applicant proposes to revive the Company by bringing it out of liquidation and thereafter diversifying its business activities into other fields including real estate development. The Company owns certain immovable property which is presently not in a position to be sold or redeveloped for various reasons. However, the Company, in collaboration with the Applicant, will be in a position to generate revenues by diversifying into real estate development to the extent permissible under law. As mentioned earlier, the Applicant has commissioned as report on the viability and feasibility of establishing an Educational Institutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and many of them have passed away, RMMS reiterates that the Agreement for Settlement dated 28 February 2020 read with the Supplementary Agreement dated 29 June, 2021 is in the best interest of ex-workers of the company in liquidation. 13. The situation which, thus, obtains is that the Company in liquidation is under winding up since 5 September 2005. The Applicant - Grand View and the Respondent No. 2 - Forbes and Co. Ltd., are the only two secured creditors of the Company in liquidation; together they own about 52% of the total equity shares of the Company in liquidation. They are thus both the creditors and contributories. The Official Liquidator reckons, there has not been substantial progress in the sale of the immovable assets of the company in liquidation. The Official Liquidator apprehends that on account of the attendant circumstances in the nature of many ex-workers still occupying the residential quarters and encroachments, there may be difficulties in selling the immovable properties of the company in liquidation. Therein lies the crux of the matter. 14. The Company in liquidation holds more than 45 acres of land in the heart of the city. The land is situate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irect the Official Liquidator to publish a notice inviting the attention of all the stake holders to the proposal to permanently stay the winding up order and revive the Company. 17. Hence, the following order : ORDER (i) The Applicant in IA No. 3663 of 2022 - Grand View, shall deposit an amount of Rs. 240 Crores with the Official Liquidator within a period of six weeks from the date of uploading of this order. (ii) The Applicant shall file undertakings to the effect : (a) that in case the amount of Rs. 240 Crores, to be deposited by the Applicant with the Official Liquidator, falls short to satisfy the liabilities of the Company in liquidation, the Applicant will deposit such further amount as may be necessary to discharge those liabilities; (b) that it will pay to any individual ex-worker who is not willing to accept the amount in accordance with the Agreement for Settlement, higher of the amount that may be adjudicated by the Official Liquidator in accordance with the order of the Division Bench dated 22 December 2015 and the amount which is payable under the Agreement for Settlement; (c) that it will make necessary provision for rehabilitation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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