TMI Blog2018 (7) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... . Ranjana Roy Gawai, Ms. Rishika Rana and Ms. Vasudha sen, Advs. for the applicant IDBI Trusteeship Services ltd. in C.A.1734/2017. Mr. Shivansh Gupta, Mr. Vishal Bhardwaj and Mr. Mukesh Sharma, Advs. for Ms. Usha Rani Rohilla, Ms. Shweta Bhargav, Alankar Infra, secured creditors. Mr. Manish Shukla, Adv. for Assotech the Nest resident Welfare Association in CA 2045/2017 Mr. Vikas Singh, Sr. Adv. with Mr. Keshav Mohan, Mr. Rishi K. Awasthi, Ms. Ritu Arora, Mr. Piyush Chaoudhary and Mr. Kabir Ghosh, Advs. for respondent ex-management. Mr. Nishant Kumar Srivastava, Adv. for Manoj Srivastava, Ex-Director. Ms. Sangeeta Chandra, Adv. for OL. Mr. Ajit Kr.Sinha, Sr. Adv. with Mr. Ashwarya Sinha and Ms. Ameya Vikram Thanvi, Advs. in CA 238/2018 JAYANT NATH, J. CA No.714/2017 in Co.Pet. No.357/2015 1. This application is filed by Ex-Management of the respondent company Assotech Ltd. under Section 391 of the Companies Act, 1956 (hereinafter referred to as the Act ) seeking approval of a Scheme of Compromise and Arrangement between the applicant and a class of its creditors. 2. On 08.02.2016, this court had admitted the main petition, and the OL attac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanism of the scheme proposed by the respondent company. It is urged by the learned senior counsel that as per the scheme, a sum of ₹ 5 crores will be infused from personal resources by the applicant/Ex-Management. Once construction starts, the flat buyers will pay their dues and this will help to revive the functioning of the company. It was pleaded that as far as the secured creditors are concerned, they will be taken care of by future cash flow. The respondent company will put the secured creditors Essel Finance, Religare and ICICI Bank under an arrangement whereby 60% of the amount received from future cash flow basis from the Nest Phase-3 (existing project) will be kept towards the cost of construction and the balance amount shall be paid to the three secured creditors in the proportion of ₹ 17.5 % each for Religare and Essel Finance and 5% for ICIC Bank. It is also pointed out that as far as ICICI Bank is concerned, they have already a property bearing No.A-12 in Sector 24, Noida, admeasuring 1200 sq.mtrs. which is a fully developed five floors, commercial property having estimated realisable value of approximately ₹ 20 crores. The dues of ICICI Bank are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of Miheer H. Mafatlal v. Mafatlal Industries Ltd., 1997 1 SCC 579 to contend that the scheme is contrary to law. It was also urged that the scheme is being pushed through without any order of meeting of the creditors or a class of creditors to be called and conducted in the manner as prescribed in the Company (Court) Rules, 1959. It is further urged that the secured creditors have also filed an application being CA No.1734/2017 whereby it has been pointed out that they have been opposing the proposed scheme made under Section 391 of the Act. It is claimed that outstanding dues of the secured creditors is ₹ 34 crores in terms of the documents executed between the parties. The land of the respondent at Sector 78, Noida being Windsor land is pledged as security to the applicant and no scheme can be enforced which includes the said land. However, she withdrew her opposition when it was clarified by the respondent/ Ex.Management that the scheme deals only with unsecured creditors. 13. The learned counsel appearing for Mr.Manoj Srivastava, who claims to be a minority shareholder of the respondent company states that the entire scheme is misplaced as there are large st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose claim is filed/pending. There are stated to be 31 such creditors having total claims of ₹ 37.45 crores. Schedule B to the scheme states the source of generation of funds for the debtors/allottees. The three pending projects of the respondent company, namely, Assotech. The Nest Ghaziabad; Celeste, Sector-44, Noida and Windsor Court, Noida; are proposed to be completed by 31.3.2020. In all on completion of the project a sum of approximately 124 crores is expected to be generated. 16. Schedule C shows that a total payment of about ₹ 50 crores is to be made to those persons who are listed in Schedule A by either making payment or handing over properties. The Scheme does not deal with the secured creditors. 17. It has also been stated that on 14.05.2017 and 15.05.2017, the ex-management of the Company issued notices for convening a meeting of the admitted creditors of the Company on 17.05.2017. The meeting was held and 37 creditors were present and 34 gave their consent meaning thereby that 90%of the creditors in terms of the value of the meeting have given their consent. 18. In the course of hearing, a note was submitted by the ex-management which requests f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be paid by allotting properties in Noida and Gurgaon. 12. A perusal of the Schedule A list (i) (ii) and (iii) of the scheme shows that this contains a list of only those creditors who have initiated some legal cases against the respondent company. In fact list (iii) makes the picture quite clear. The list contains 31 names. 17 of the persons are those who have initiated proceedings under section 138 of the N.I. Act against the respondent company. Balance are those persons who have initiated proceedings before this court but details are not given. As already noted above, pursuant to orders of this court dated 6.12.2017 the Ex.Management had filed a list titled as Summary and Particulars of admitted unsecured creditors. This list contained 92 persons. Other than one or two persons all the other persons are stated to have commenced some litigation against the respondent company. It follows from the above that though not specifically said so, the Scheme that has been filed in court essentially pertains to unsecured creditors who have filed litigations in court. All other creditors do not find any mention in the lists. The question that would arise is as to whether such a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pendency of any investigation proceedings in relation to the company and the like. 15. What would constitute a Class of creditors has already been dealt with by a Division Bench of this Court. Reference may be had to the judgment of this court in Spice Jet Ltd. Ors. vs. Malanpur Steel Ltd. Anr., 2013 (134) DRJ 467 where the Division Bench held as follows:- 11. A class consists of creditors or members who form a homogenous group with commonality of interest. A class must be confined to members or creditors whose rights are similar. Their rights should not be dissimilar so as to make it impossible for them to consult together keeping in view their common interest. As defined by Bowen, L.J. it seems plain that we must give such a meaning to Class as will prevent the section being so worked as to result in confiscation and injustice, and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest. (Sovereign Life Assurance Co. Ltd. v. Dodd 1892 (2) Q.B. 573 CA). 12. Creditors can normally be divided into three categories (which may themselves overla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cure a march over those similarly situated. Provision for the winding-up of companies are meant for just and equitable distribution of the assets of the company amongst various persons interested in it. Consequently, once a company is ordered to be wound up, a scramble for taking away its assets must be avoided. All the assets of the company must be available for just and equitable distribution amongst the various interests having claims against the company. If by some action of creditor this basic concept of just and equitable distribution amongst the various interests having claims against the company is sought to be defeated, the liquidator has to step in and resist such benefit going to some to the exclusion of rest similarly situated. To repeat the words of Lindley J., In re Oak Pits Colliery Co., the object of the winding-up provisions of the Companies Act is to pay all unsecured creditors upon equality and pay them pari passu. This principle has secured statutory recognition in section 511 of the Companies Act, which provides as under: Subject to the provisions of this Act as to preferential payments, the assets of a company shall, on its winding-up, be applied in satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... class on the ground that it has a court decree in its favour. Clearly, in view of the above aforesaid judgment unsecured creditors would be considered as a class of creditors. However, unsecured creditors who have filed suits or obtained favourable orders cannot be deemed to be a different class from the other unsecured creditors. 16. In the present case as noted above, the Scheme is sought to be enforced against primarily a sub-class of creditors, namely, unsecured creditors who have filed cases against the respondent company in this court or under section 138 of the N.I. Act. Such a classification cannot be termed to be a class in terms of section 391 of the Act. The term class would normally mean all those persons who are in the same category and level of rights. The proposed sub-class created by the Ex.Management i.e. unsecured creditors who have filed litigation against the respondent in this court or under Section 138 of the NI Act if allowed would cause grave injustice to other unsecured creditors who may not have initiated legal cases against the respondent company. 17. It is manifest from a reading of the above legal position that the scheme as proposed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rectors claim that from sale of the said property a surplus of ₹ 14 crores would be available to the respondent company as the property is worth ₹ 20 crores. I may note there is nothing on record to show that the property is worth ₹ 20 crores. In any case, there is nothing available on record to show the steps taken by ICICI Bank Ltd. with the regard to the said property. 22. I cannot help concluding that the scheme is only an attempt to persuade this court to revoke the order appointing the OL as the provisional liquidator by infusing ₹ 5 crores in the company. The whole scheme clearly lacks bona fide. 23. In the course of arguments, some of the investors who were present in court had repeatedly pointed out that the Scheme has been filed by the ex-management only to mislead the courts which are hearing the criminal proceedings against the ex-directors of the respondent. The ex-directors had been pressing for bail or anticipatory bail and one of the defences raised by them is that they are proposing a scheme of revival before this court. I cannot help but come to the conclusion that the said submissions appear to be correct. 24. In my opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... creditors on preferential basis, for if the assets fall short it would mean a large number of unsecured creditors being left high and dry. xxx 19. The facts which we have noted, which emanate from the statement of affairs filed by the directors of the appellant do not warrant any of the impugned order to be set aside in appeal. The debts owned by the appellant are much. The rosy picture painted in the balance sheet, is not so rosy. The situs of the assets of the appellant is not known. The persons who have to pay money to the appellant are unknown as of today. The persons with whom deposits have been made are unknown today. [emphasis added] 27. Similarly, this court on 08.11.2016 in a report filed by the OL being OLR 286/2016 had made the following observations while appointing SFIO to enquire into the accounts of the respondent company:- 5. Mr. Mayank Goel, learned counsel appearing on behalf of the Official Liquidator would strenuously urge that, in gross violation of the order dated 08.02.2016 passed by this Court, inter alia, large sums of money have been transferred by the Ex-Management to M/s Lindex Impex Private Limited. In addition to cash transactions, Ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company in liquidation by the ExManagement. Furthermore, from the material on record, the Official Liquidator has been able to demonstrate the sale of immovable assets belonging to the company in liquidation, in violation of the order passed by this Court on 08.02.2016 and mis-appropriation of the proceeds from the sale thereof. 28. A perusal of the aforesaid orders of the Division Bench and of this court dated 08.11.2016 shows that there are serious doubts about the manner in which the ex-directors have conducted their business. There are grave allegations about the ex-directors having sold immovable properties and received proceeds in their own accounts. They have also failed to hand over possession of all the flats/properties, vehicles, plant machinery and cash in hand belonging to the company in liquidation to the OL. 29. In this context, reference may be had to the judgment of the Supreme Court in Miheer H.Mafatlal vs. Mafatlal Industries Ltd., (supra) wherein the Supreme Court held as follows:- In view of the aforesaid settled legal position, therefore, the scope and ambit of the jurisdiction of the Company Court has clearly got earmarked. The following broa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction. The aforesaid parameters of the scope and ambit of the jurisdiction of the Company Court which is called upon to sanction a scheme of compromise and arrangement are not exhaustive but only broadly illustrative of the contours of the Court's jurisdiction. 30. Clearly, the scheme lacks bona fide. It cannot be termed to be just, fair and reasonable. There is no cogent mechanism on record to show how the dues of the unsecured creditors is to be paid off. In fact the scheme cannot be even said to be a scheme as it fails to define a proper class of creditors. I accordingly dismiss the present application. CA 696/2017 31. This application is also dismissed. The enquiry by SFIO as directed on 8.11.2016 shall be carried out exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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