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2019 (5) TMI 483 - HC - Companies LawScheme of arrangement to improve net worth through partnership - Convention of the meeting of secured and unsecured creditors of the applicant company - approval and implementation of proposed scheme of arrangement to pay to the creditors - HELD THAT:- There is a clear approval of the scheme in the meeting of the statutory creditors and the employees. There is however some confusion in the meeting regarding unsecured creditors and secured creditors. Coming to the meeting of the unsecured creditors, it is clear from the report of the Chairman that what was put to vote in the meeting was a scheme envisaging that 50% of the debt of the unsecured creditors would be paid over a period of 24 months. Orally, in the middle of the voting procedure, the scheme was modified based on an oral offer of the petitioner Company that the petitioner Company would try and pay 100 % payment to the unsecured creditors of their outstanding dues. This aspect was reiterated in court when the hearing took place. Taking into account the error in the report, the votes cast in the meeting for the modified scheme i.e. payment of 100% debt and no objections given by some of the creditors in court, the new scheme appears to have got the support of more than 70% of the value of unsecured creditors but still falls short of three-fourth of the value of the creditors. Secured Creditors - HELD THAT:- It is stated by the learned senior counsel for the petitioner that there are only two secured creditors. Both were present in the meeting but could not vote as their representatives were not duly authorized. The net result is that the Chairman had no option but to invalidate the proceedings and hold that the meeting could not reach at a conclusion. Essentially the meeting lacked quorum. However, as rightly pointed by the learned senior counsel for the petitioner, none of the two secured creditors has filed any objections in court against the scheme. It be appropriate for this court to completely outrightly reject the scheme and to scuttle the initiative sought to be taken by the petitioner company to try and revive itself. In equity it would be in the interest of justice that a fresh meeting is called of the unsecured creditors to vote freshly for the newly propounded scheme of the petitioner Company for the unsecured creditors, namely, repayment of 100% dues within a period of 24 months. A similar direction, in the interest of justice, may also be given for a fresh meeting of secured creditors. The petitioner company may convene a meeting of the unsecured creditors to consider and if appropriate, to approve the modified scheme of the petitioner for repayment of 100% of the outstanding debt and a meeting of the secured creditors for both class of creditors. List on 23.04.2019 for further consideration.
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