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TMI Blog2010 (8) TMI 186X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies Act, 1956 (for short 'the Act'). One of the objects of the petitioner-company is to take over the assets and liabilities of the respondent-company. 3. One of the objectors - M/s. Karnataka Food and Civil Supplies Corporation Limited filed Co. P. No. 82/1989 against the respondent-company for winding up under section 433(e) and (f) of the Act. During the pendency of Co. P. No. 82/1989, the Board for Industrial and Financial Reconstruction (for short 'the BIFR'), in case No. 127/1988, by its order dated 2-1-1996 under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 recommended winding up of respondent-company. Consequently this Court vide order dated 31-10-1996 allowed Co. P. No. 82/1989 and ordered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se or arrangement can be proposed between a company and its creditors or any class of them, or between a company and its members or any class of them. Such a compromise would also take in its sweep any scheme of amalgamation/merger of one company with another. When such a scheme is put forward by a company for the sanction of the Court in the first instance, the Court has to direct holding of meetings of creditors or class of creditors, or members or class of members who are concerned with such a scheme and once the majority in number representing three-fourths in value of creditors or class of creditors, or members or class of members, as the case may be, present or voting either in person or by proxy at such a meeting accord their approva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ho might have voted in favour of the scheme by requisite majority but the Court has to consider the pros and cons of the scheme with a view to finding out whether the scheme is fair, just and reasonable and is not contrary to any provisions of law and it does not violate any public policy. This is implicit in the very concept of compromise or arrangement which is required to receive the imprimatur of a Court of law. No Court of law would ever countenance any scheme of compromise or arrangement arrived at between the parties and which might be supported by the requisite majority if the Court finds that it is an unconscionable or an illegal scheme or is otherwise unfair or unjust to the class of shareholders or creditors for whom it is meant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... val and which has been approved by such class of persons with requisite majority vote. 28A. However, further question remains whether the Court has jurisdiction like an appellate authority to minutely scrutinise the scheme and to arrive at an independent conclusion whether the scheme should be permitted to go through or not when the majority of the creditors or members of their respective classes have approved the scheme as required by section 391(2). On this aspect, the nature of compromise or arrangement between the company and the creditors and members has to be kept in view. It is the commercial wisdom of the parties to the scheme who have taken an informed decision about the usefulness and propriety of the scheme by supporting it by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot held. On the other hand, a joint meeting of the secured creditor - State Bank of Mysore and the preferential creditors, that is, the workmen was held on 15-12-2003. In this meeting the secured creditor - the State Bank of Mysore participated and objected for the proposed revival scheme. Firstly, the meeting was in contravention of the directions issued by this Court in C.A. No. 1357/2000; secondly, the sole secured creditor - State Bank of Mysore opposed the revival scheme. This amounts to 100 per cent opposition to the revival scheme by the class of secured creditor. Therefore, the scheme of amalgamation proposed by the petitioner-company cannot be sanctioned by this Court. 8. As per the report of the Chairman, the workmen of the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivate Limited and Candy Holdings Private Company would extend financial support to clear the claims of creditors. But the balance sheets and the present financial position of these associated companies are not placed before the Court. 11. In the proposed scheme, it is specified that the petitioner require Rs. 10,100 crores for revival of the respondent-company-in-liquidation. Further the scheme specifies that a sum of Rs. 500 crores will be mobilised from promoters equity, Rs. 8,000 crores from sugar development fund loan and Rs. 1,600 crores by way of subsidy. Learned counsel for the petitioner fairly submitted that as on now the sugar development fund loan to an extent of Rs. 8,000 crores is not available. No material is placed as to how ..... X X X X Extracts X X X X X X X X Extracts X X X X
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