TMI Blog2020 (3) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... d single Judge did not erred in not granting the prayers. The Court is of the view that the present findings recorded in this judgment and the judgment of the learned single Judge may not be treated as impediment in the way of the petitioner in seeking fresh mandate from the stakeholders for floating appropriate scheme hereafter and in such eventuality it goes without saying that the same would be brought to its logical conclusion in accordance with law - appeal dismissed. - R/O.J.APPEAL NO. 42 of 2015 R/COMPANY PETITION NO. 247 of 2008 F/COMPANY APPLICATION NO. 1805 of 2017 O.J.APPEAL NO. 42 of 2015 - - - Dated:- 20-2-2020 - HONOURABLE MR.JUSTICE S.R.BRAHMBHATT And HONOURABLE MR.JUSTICE A.G.URAIZEE MR. S.N. SOPARKAR SENIOR ADVOCATE WITH MRS SWATI SOPARKAR, ADVOCATE FOR THE APPELLANT MR DEVANG VYAS FOR THE OPPONENT MR MAULIN RVAL ADVOCTE FOR M/S R.J.RAWAL ASSOC., ADVOCATE FOR THE RESPONDENT JUDGMENT ( PER : HONOURABLE MR. JUSTICE S. R. BRAHMBHATT ) 1. Heard learned counsels appearing for the parties. 2. The present O.J. Appeal has been preferred being aggrieved and dissatisfied with the order dated 15.07.2015 passed by this Court in Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are provided in paragraph 9 of the petition. 3.3. Earlier a scheme of compromise with the creditors was proposed by the petitioner company and a petition being Company Petition No.111 of 2005 was submitted to this Court in the month of June 2005, however, since the scenario had changed and the terms offered vide the said scheme in collaboration with the investors were different, the said scheme was withdrawn. Thereafter, new scheme was filed being Company Petition No.403 of 2007 and the same was also withdrawn on 11.04.2008. Thereafter, the new scheme was placed before lenders and shareholders for their consideration. 3.4. The petitioner-company has also pointed out in the company petition that this Court passed an order on 16.07.2008 directing the petitioner company to convene separate meetings of equity shareholders, preference shareholders, class `A lenders, class `B lenders of the company for the purpose of considering and if thought fit, approving with or without modification the said composite scheme of compromise and arrangement. In pursuance to the said order passed by this Court, notice of meetings were sent individually to all the equity shareholders, preferen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said application. Nirma Industries thereafter preferred an appeal before the Security Appellate Tribunal ( SAT for short) which also confirmed the order of SEBI. Nirma Industries and Nirma Chemical Works Limited are legally not entitled to vote. The petitioner company had on two occasions filed similar scheme of arrangement before this Court and the same has not been approved. The petitioner-company had withdrawn the said two objections. There is no change in the circumstances after withdrawal of the said scheme and hence, the principle of res-judicata would be applicable. The petitioner-company has not complied with the mandatory requirement of Section 391 of Companies Act of 1956, as public notice has been issued only in Ahmedabad Edition of English daily, whereas, as per records of the petitioner-company, several persons holding substantial shares in the capital of the petitioner are located and/or residing at many places within India. Nirma Industries has not completed the requirements of takeover code and hence as per Regulation 10 of the SEBI (Substantial Acquisition of Shares and Takeover) Regulation, 1997, Nirma Industries Limited and its sister concern which hold more tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce before the BIFR had come to an end. It is stated that vide order dated 16.07.2014, the BIFR passed an order deregistering the reference filed by the appellant company on the ground that the company is no more a sick industrial unit. Hence, no proceedings were pending before the BIFR when the matter was considered. Under the circumstance jurisdiction of this Hon'ble Court was not barred at the time of consideration of petition for sanctioning the scheme of arrangement in the nature of compromise. 6. Learned counsel for the petitioner further submitted that the learned single Judge has wrongly applied the ratio laid down in judgment of Tata Motors Limited vs. Pharmaceutical Products of India, reported in AIR 2008 SC 2805, NGEF Ltd. vs. Chandra Developer Pvt. Ltd., reported in (2005) 68 CLA 324 inasmuch as these judgments only provides that jurisdiction of company judge under Section 391 to 394 of Companies Act, 1956 will be subject to SICA which is a special statute. It does not states that any scheme presented before the court pending the reference before the BIFR is liable to be rejected. 7. Learned counsel for the petitioner submitted that the learned single Judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the statute have been carried out, the onus to show unfairness is on objectors. He submitted that the scheme is not oppressive to he minority shareholders. The scheme, as proposed is sanctioned. (vi) In case of Bank of India Vs. Ahmedabad Manufacturing Calico Printing Co Ltd., decided on 01.09.2071 by the High Court of Bombay, reported in 1972 (42) Comp Case 211 and laid emphasis upon paragraph nos.8, 9, 10 and 14; (vii) In case of K. Raveendranathan Nair Vs. Commissioner Of Income Tax Anr., decided by the Supreme Court on 10.08.2017; (vii) The counsel for the petitioner relied upon the judgment in case of Reliance Natural Resources Ltd. Vs. Reliance Industries Ltd., reported in 2010 (7) SCC 1, 2010, and submitted that the learned single Judge can modify the scheme. (viii) In case of Nand Prasad And Others Vs. Arjun Prasad And others, reported in AIR 1959 Patna 293 and laid emphasis upon paragraph nos.6 and 8; (ix) In case of Lawrence Dawson And Another Vs. J. Hormasji And Others, decided by Rangoon High Court on 20.07.1932 and laid emphasis upon paragraph nos.71 and 74; (x) In case of Madras Bar Association Vs. Union of India, reported in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at material facts relating to the company about the pendency of the investigation proceedings in relation to the company under Section 235 to 351 and the like are not disclosed and, therefore, no order sanctioning the proposed scheme can be passed by this Court. 16. Learned counsel for the respondent submitted that the material facts with regard to the prohibition order passed by SEBI against the petitioner and order passed by the SAT against Nirma and its sister concern were not placed before the meeting of the respective shareholders and lenders. If such facts were disclosed by the petitioner-company in the respective meetings, perhaps, the respective shareholders and lenders would not have voted in favour of the scheme. 17. Learned counsel for the respondent relied upon the following judgments: (i) In case of Madras Bar Association Vs. Union Of India, reported in 2015 (15) SCC 657; (ii) In case of Shree Balaji Cinevision (India) Pvt. Ltd. Vs. State of Gujarat, rendered by this Court in Company Petition No.100 of 2009 dated 14.09.2009; (iii) In case of Nirma Industries Limited Vs. Securities And Exchange Board, reported in 2013 (8) SCC 20; (iv) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company appears to have approached Board of Industrial and Financial Reconstruction (hereinafter referred to as the 'BIFR' for short) for declaration as sick company which was treated as Case No.69 of 2006. The same came to be rejected vide order dated 28th December, 2006. An appeal against the said order being Appeal No.61 of 2007 was filed and the appellate bench remanded the matter to BIFR. Subsequently, the said reference proposal was withdrawn as it was deregistered by the competent authority of board on 16.07.2014. (iii) The Company appears to have filed petition being Company Petition No.111 of 2005 in June, 2005 for requiring sanction for the arrangement and compromise with its creditors. The Same was withdrawn for the reasons stated in the affidavit. (iv) A new petition came to be filed being Company Petition No.403 of 2007, which also had been requested to be withdrawn and the Court granted permission to withdraw as per the order dated 11.04.2008. (v) Therefore, the present company petition was preferred. The petition came to be admitted on 23.09.2008. The notice for hearing of the petition was duly advertised in the newspaper on 30.09.2008 and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did approach the Court and place on record the fact that pursuant to the advertisement the meetings were held with all the stake holders separately and the stake holders like creditors, secure creditors and others as well as shareholders did not object rather supported the scheme of compromise. 22. As against this, learned counsel appearing for the respondent no.2, the objector, submitted that the decision cited at the bar, which have been cited hereinabove, would clearly go to show that the appellant Company cannot be permitted to circumvent the ban imposed by SEBI nor can it be permitted to accord a special treatment to an investor. The counsel for the respondents elaborately submitted on the various aspects of ban of SEBI and SET against the Company called Nirma and its sister concern, wherein the present appellant's name is also figuring as a target Company. It was submitted that the Court's power for sanctioning of the scheme of amalgamation, arrangement or compromise needs to be guided by the fundamental underlying principles that the bonafide attempt to revival of the Company should only be supported and there should not be any support to any surreptitiously pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the passage of time and the dates mentioned thereunder could be held against the prayers in the petition for sanctioning the scheme. The learned counsel for the appellant was not wholly unjustified in contending that the learned single Judge ought not to have dismissed the petition on account of the dates mentioned under the scheme had gone by. In other words, it can well be said that it was open to the learned single Judge to modify the scheme suitably in case, if the scheme was otherwise found to be appropriate and deserving to be sanctioned. 25. The learned single Judge in paragraph nos.15, 16 and 17 elaborately and in detail adverted to the serious contention of the objectors, which in our view, needs to be appreciated in proper perspective. The observations of the learned single Judge in his own words deserve to be set out as under for ready reference: 15. It is also clear from the record that SEBI has passed an order on 6.6.2008 which is produced by the objector at page 289 of the compilation. The said order was passed giving direction under Sections 11 and 11(B) of the SEBI Act read with Regulation 11 of the SEBI (Prohibition of Fraudulent and Unfair Trade Practic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter, the Board was justified in characterising the situation that the appellants are faced with as the result of lack of due diligence and/or sheer business misfortune. They are only trying to wriggle out of a bad bargain which is not permissible under Regulation 27(1)(d) of the takeover code. 9. This brings us to the last contention advanced by the learned senior counsel on behalf of the appellants. It is contended that the Board did not afford any personal hearing to the appellants before taking the final decision on the request made on their behalf for the withdrawal from the public offer and, therefore, the principles of natural justice were flagrantly violated. Here again we are unable to agree with the learned senior counsel. There is no gainsaying the fact that the appellants themselves in their letter dated May 4, 2006 and subsequently their merchant banker in the communication dated September 22, 2006 had stated all the circumstances on which they were relying to seek withdrawal from the public offer and there was nothing more that they had to say. The Board considered all aspects of the matter and declined the request which has been discussed in detail hereinabove. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 391(1) and 391(2) provides as under: 391. Power to compromise or make arrangements with creditors and members. - (1) Where a compromise or arrangement is proposed - (a) between a company and its creditors or any class of them; or (b) between a company and its members or any class of them, the [Tribunal] may, on the application of the company or of any creditor or member of the company or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be to be called, held and conducted in such manner as the [Tribunal] directs. (2) If a majority in number representing three-fourths in value of the creditors, or class of creditors, or members, or class of members as the case may be, present and voting either in person or, where proxies are allowed [under the rules made under section 643], by proxy, at the meeting, agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the [Tribunal], be binding on all the creditors, all the creditors of the class, all the members, or all the member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the passage of time i.e. when the scheme was floated or sought to be implemented after approval of the Court was that of year 2008. The requisite meeting of the concerned stake holders were held within that year or around that time and when the petition was taken up for hearing and judgment was rendered in the year 2015, the said consent or lack of objection of the stake holder could not have been acted upon by the Court and therefore from that angle also one has to accept that the learned single Judge did not erred in not granting the prayers. The Court hasten to add here that the filing of earlier petitions on a different factual aspect may perhaps not act as res judicata so far as the petition was concerned, but the peculiar facts of the present case and the passage of time from the date of filing of the scheme holding the meetings separately with the stakeholders and final orders which were required to be passed in the year 2015 itself was sufficient ground for rejecting the prayers, else it would have amounted to acting upon the consent or lack of objection or from that matter approval by the stakeholders before seven to eight years, which would be justified in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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