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TMI Blog2012 (6) TMI 613X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure-C) and approached this Court in CA. No, 1074/2008 for a direction to the respondent company to convene the meeting of the shareholders as also the secured and unsecured creditors, to appoint a Chairman for the meeting and fix the schedule for the same. This Court by the order dated 03.08.2009 allowed the application and the meeting of the shareholders and the unsecured creditors was ordered to be held on 15.04.2009 at 10.30 a.m. and 11.30 a.m. respectively. Sri Sanjay Nair, Advocate was named the Chairman. Accordingly, the meeting had been convened. The creditors have consented to the scheme while the shareholders have voted against the scheme. Subsequent thereto, the instant petition has been tiled. During the pendency of the petition an amendment has been introduced only to the petition and the propounder of the scheme (Sri Varan a Venkatesh) who was the second petitioner has been deleted and the present petitioner Nos. 2 to 5 have been brought on record. 3. The filing of the petition had been advertised and was also notified to the Regional Director. Ministry of Corporate Affairs, and the Official Liquidator, who have filed their response indicating deficiency in the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o in law. Secondly, the legal requirement is that even if such a scheme is proposed and is approved by a majority of the shareholders or creditors or their respective classes who may have voted in favour of the scheme by the requisite majority, the Court has to consider the pros and cons of the scheme. This position of law has been elaborately stated by the Hon'ble Supreme Court in the case of Miheer H. Mafatlal v. Mafatlal Industries Ltd. [1997] 1 SCC 579. 8. In the above backdrop, the facts in the instant case would reveal that the Chairman of the Meeting held on 15.4.2009 has reported that the creditors who were present and voted have approved the scheme of arrangement. On the other hand, the two shareholders Sri C.R. Nagaraja Shetty and Smt. Navaneetha Nagaraj Shetty have voted against the scheme. Insofar as the shareholders, it is to be noticed that the paid up share capital of the Company in liquidation is Rs. 10,00,000/- and each of the two shareholders hold shares of Rs. 5,00,000/- each. Therefore, the vote against the scheme by the shareholders is 100%. The said shareholders have further appeared before this Court and opposed the scheme by referring to the balance sheets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore approached and initiated the scheme for One Time Settlement with the creditors who are the persons who had paid for flats which had not been allotted by the Company-in-liquidation. The first applicant therein is stated to have agreed for the proposal and as such has consented to the scheme. In that regard, Sri Varaha Venkatesh had agreed to bring in Rs. 1,53,00,000/- in stages. Since majority of the investors/allottees/creditors have expressed their willingness for One Time Settlement at 1.5 times their dues, the second applicant (Sri Varaha Venkatesh) is interested in revival of the company and proposed scheme of arrangement. The said averments without any doubt would indicate that Sri Varaha Venkatesh is the propounder of the scheme and the first applicant has only consented to the same and has no role to play in the process of revival. 11. In that backdrop, a perusal of the scheme of arrangement (Annexure C) which is very brief would indicate that the said pleading is also reflected in the scheme so as to state the Sri Varaha Venkatesh is the main propounder though the name of Sri S. Krishnamurthy i.e., the first applicant representing the investors in the flats is also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e second objection seems to be that the first petitioner has not demonstrated before this Court that on his own how he would revive the company in liquidation and therefore, the arrangement is not a real arrangement for revival of the company in liquidation and it only a ruse to sell the assets of the company to the second petitioner for a price. Therefore, requests this Court not to grant the relief claimed in the petition." 13. The Court on taking note of the above contention in the background of the law, with reference to the scheme has answered as hereunder: "17. Petitioners have produced a copy of the scheme of arrangement, which they want it to be sanctioned by this Court. In that, it is stated that one of the shareholders of the company as on the date of winding up order, namely, one Sri Kashinath Dikshit has identified Sri N.J. Patel with a view to revive the company, and the said person is willing to settle the claims of the creditors of the company with a view to revive the company provided the entire share capital of the company is transferred to him and to his nominees in consideration of his settling the claims of the creditors of the company. 18. One of the shareho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. The Court was further pleased to observe: "Section 391(1) itself by a specific and positive provision prescribes, who can move an application under it. Only the creditor or member of that company or a liquidator in the case of company being wound up is entitled to move an application proposing compromise or arrangement. By necessary implication any one other than those specified in the section would not be entitled to move such an application." 20. The second petitioner, who is the propounder for the sanction of scheme of arrangement is neither a member nor a creditor of the company. He has no interest in the affairs of the company. He has only come forward to purchase the assets and liabilities of the company in liquidation by filing an application styled one under section 391 of the Act. The first petitioner though a member of the company in liquidation, is not the propounder under the scheme. He is only an intermediary in assisting the second petitioner to purchase the assets of the company in liquidation. Therefore, in my opinion, the petition filed for sanction of scheme of arrangement is not maintainable under section 391 of the Act," 14. The above decision, in my opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring the course of the proceedings, in order to establish their bona fides to organise the funds, a sum of Rs. 1,80,00,000/- (Rupees One crore eight lakhs only) has been deposited before the Official Liquidator as permitted by this Court. It would be rather difficult for this Court to accept that it is the funds belonging to the petitioners themselves keeping in perspective the manner in which the scheme has been propounded. 17. As noticed, the petitioners herein are themselves the creditors who have agreed to receive 1.5 times of their dues as One Time Settlement by way of refund of the amount which was subscribed by them for allotment of flats to be built by the company. It would be abnormal to accept that they themselves would invest the money to revive the company so as to clear their own dues and that of the others and that too by refunding more than what was paid by them. Further, on the deposited amount being disbursed, there is no other indication as to how the company would be revived and the manner in which the activities of the company would be carried on by the petitioners. That apart, the scheme propounded indicates that the entire share capital of the company held by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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