TMI Blog2010 (9) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... applicants of both these applications have taken out separate Judge's Summons seeking direction of this Court for convening the meetings of Secured Creditors, Statutory Creditors, Workmen, Unsecured Creditors and other Creditors of Omex Investors Private Limited (in Liquidation) for the purpose of considering and if thought fit, approving with or without modifications, Scheme of Arrangement / Compromise proposed between Omex Investors Private Limited (in Liquidation) and its Secured Creditors, Statutory Creditors, Workmen, Unsecured Creditors and other Creditors. 3. In Company Application No.97 of 2010, an affidavit in support of the Judge's Summons is filed by Shri Pravinchandra N. Jani, applicant No.1 therein, an Exemployee / workman of the Company in liquidation. Applicant No.2 Oswal Engitech (India) Private Limited is the sponsor of the Scheme. 4. In Company Application No.191 of 2010, an affidavit in support of the Judge's Summons is filed by the applicant himself i.e. Shri Dinesh P. Medh, one of the lessors of the Company in liquidation. 5. Initially, an order was passed by this Court on 10.05.2010 in Company Application No.97 of 2010 granting time to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. Final Plot Nos.31, 32 and 33 and they have shown their willingness to deposit ₹ 125 Crores with the Court, whereas the offer made by Jay Kanan Buildcon Private Limited of ₹ 150 Crores for two plots i.e. Plot Nos.32 33, the Court decided to explore the possibility of putting freehold land for sale fixing the upset price for these two plots for ₹ 150 Crores and directed the said Jay Kanan Buildcon Private Limited to deposit ₹ 15 Crores by way of EMD and on that basis, the advertisement etc., would be issued. Time was sought for to deposit the Demand Draft. However, a cheque duly signed by the Director of the said Jay Kanan Buildcon Private Limited for ₹ 15 Crores dated 18.8.2010 was handed over to the Official Liquidator as per the direction of this Court with an understanding that the cheque would be returned to the said party only on deposit of Demand Draft of ₹ 15 Crores by way of EMD for these two plots. Both the matters were thereafter adjourned to 20.08.2010. On that day, neither the Demand Draft of ₹ 15 Crores was deposited with the Official Liquidator nor any application was moved as undertaken earlier before the Court on 13.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. 10.On 27.08.2010, Mr. S. I. Nanavati, learned Senior Counsel appeared on behalf of the applicant of Company Application No.250 of 2010 and tendered an unconditional apology on behalf of the applicant. He also tendered unconditional apology on behalf of the learned advocates Mr. Viral Shah and Mr. Satyam Chhaya and requested the Court to delete the observations made against them in the order dated 25.08.2010. The said matter was thereafter adjourned to 30.08.2010 on which date, an unconditional apology of the applicant in writing was tendered and Mr. Nanavati was heard on merits of the said application. 11.So far as the present two Company Applications are concerned, hearing was fixed on 31.08.2010 and the learned advocates appearing for the respective parties were heard at great length and in light of the above facts and circumstances, their submissions are considered by the Court. 12.The brief facts giving rise to the present two applications seeking directions for convening the meetings for considering the Scheme of Compromise and Arrangement as indicated above, are as under :- 13.M/s. Omex Investors Limited (in Liquidation) was registered as a Company under the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the applicants. 18.The basis of the Scheme of the applicants in Company Application No.97 of 2010 are as under :- a) For the Secured Creditors as on the date of presentation of the Scheme towards full and final payment after adjusting the amount already disbursed to it by the Official Liquidator. b) For the Workmen as per their claim which has been found due and payable by the Official Liquidator upto the date of winding up order after adjusting the amount already disbursed to them by the Official Liquidator. c) For Ahmedabad Municipal Corporation, Torrent Power Limited, Union of India Excise Department, ESI Corporation and EPF Organization, State Government towards interest free determent loans and Sales Tax Department, an amount which the authorities have agreed to receive as full and final towards settlement of their dues. d) For Lessors Sponsor of the Scheme, upon Scheme being sanctioned by this Court, will negotiate with the lessors either to buy their leasehold right qua land admeasuring 20,487 Sq. Mtr. after paying agreed amount or continue to pay the lease rent as the lessors are already paid the lease rent till the Company went into liquidation. e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and until the SLP filed before the Apex Court is withdrawn, such proposal of the lessors cannot be accepted as there is a stay order from the Apex Court against the sale of land by the Official Liquidator. Over and above this, the said proposal could not find feasible to SBI and Textile Labour Association. 20.Mr. Desai further submitted that the applicant No.2 approached Textile Labour Association and expressed its desire to start the manufacturing activity by producing the industrial valves which are being sold to the Refineries. The sponsor is also keen to provide employment to approximately 100 workers. The Scheme is in consonance with the interim order of the Apex Court. He has further submitted that Oswal Industries Limited, main Company in Oswal Group of Companies is having its factory premises at Kalol, Bileshwarpura Unit No.1 and Bileshwarpura Unit No.2, is doing the activity of production of / manufacturing of industrial valves on the land admeasuring about 1,00,000 Sq. Mtr. The Oswal Industries Limited is at present having a limited capacity of manufacturing industrial valves in total 27,000 Units. Bileshwarpura Unit No.2 is doing casting, finishing and Unit No.3 is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. Though at the time of hearing of these two Company Applications, Mr. Kamal Trivedi, learned Senior Counsel appearing for the applicant of Company Application No.191 of 2010 has restrained himself from raising any objection against the Scheme proposed by the applicant of Company Application No.97 of 2010, the objections are still on record and it is submitted that a Scheme of Compromise / Arrangement may be proposed either by the Company or a Creditor or a member of the Company or in case of a Company which is being would up by a Liquidator and no one else. Company Application No.97 of 2010 is filed by applicant Nos.1 2. Applicant No.2 is neither Creditor nor member of the Company and, therefore, they cannot present the application under Section 391 of the Act and, therefore, no meeting be convened at the instance of a stranger. The applicant No.1 is only an intermediary assisting the applicant No.2 and is not the propounder of the Scheme in view of which the application is not maintainable under Section 391 of the Act. 24.It is further stated that the applicant No.1 has filed the present application making a bald statement that he was an employee / workman of the Company an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... class of Creditors and members as prayed for may be rejected. 26.Mr. Kamal B. Trivedi, learned Senior Advocate appearing with learned Advocates Mr. Sunit Shah and Mr. Rajeshwar J. Dave for the applicant in Company Application No.191 of 2010 has submitted that the applicant being one of the lessors of the land of the Company in liquidation is entitled to present the Scheme before this Court in view of an interim order passed by the Apex Court. He has further submitted that taking a clue from the observations made by the Apex Court in the SLP filed by the owners of various closed Textile Mills including the applicant stating that the revival of Company is in the workers' interest, the applicant thought it fit to propose a Scheme with an object to revive the Company while satisfying the outstanding claims of Creditors on the date of winding up with reasonable interest and also the claims of workers of the Company and thereby to provide job opportunities to the workers and also to return the amount invested by shareholders in the capital of the Company and to meet fair treatment to the lessors that while offering the Scheme under Section 391, applicant had adopted philanthropic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir banking branch in the premises to be let out at a token rent of ₹ 1/- with a view to see the Secured Creditors get a banking business of housing loan to labours and also micro finance which in turn will generate lot of employments. 27.While inviting to the provisions of the proposed Scheme, Mr. Trivedi has submitted that the Secured Creditors will be paid their dues of ₹ 4,70,39,812.78 as per the Statement of Affairs less the amount received by them in course of winding up proceedings with simple interest @ 4% p.a. from the cut-off date till the effective date towards full and final settlement of all their claims. Over and above, Secured Creditors will be provided a business place admeasuring land area of 1500 Sq. Feet at a token rent of ₹ 1 for 25 years, if they agree to undertake a micro finance business for the benefit of the workmen and advancing housing loan to the workmen in the above Scheme as per their norms. Unsecured Creditors will be paid their dues of ₹ 70,30,577.92 as per statement of affairs less the amount, if any, received by them in course of winding up. 28.Mr. Trivedi has further submitted that the nominal share capital of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, the directions sought for by the applicant for convening the meetings should be issued by this Court. 30.In support of his submissions, Mr. Trivedi has relied on the decision of this Court in the case of Gujarat Kamdar Sahkari Mandli Limited and others V/s. The Ahmedabad Shree Ramkrishna Mills Company Limited, (1995) 36 (2) GLR 1619 wherein it is held that the approach of examining the essential nature of the Scheme at the stage when it is launched and to satisfy the conscience of the Court about the viability of the Scheme is one which is required to be discouraged. The approach of reading Section 391 (1) as one providing a 'checkpost' and not as a 'sign-post' so as to examine the Scheme at its very threshold is required to be properly understood and in the opinion of this Court what is expected of the Court hearing application under Section 391 (1) is simply to see as to whether the Scheme is fair, reasonable and workable. Even if some of the provisions of the Scheme may appear to be not workable or unworkable, possibility of such provisions being deleted and/or suitably amended after deliberations and exchange of views at the meeting of the concerned inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereto thus put to vote, whereupon, the court may consider the question of grant of sanction thereto. Section 391(1)(a) enjoins that requisite information therefor should be placed for consideration before the voters, in terms whereof the creditors or class of creditors can take an informed decision in relation thereto. The court, however, would not grant sanction to such a scheme only because the same reflects the will of the majority of the creditors or a class of them but it must consider all aspects of the matter so as to arrive at a finding that the scheme is fair, just and reasonable and does not contravene public policy or any statutory provision. 33.Mr. Trivedi further relied on the decision of the Apex Court in the case of Chembra Orchard Produce Limited and others V/s. Regional Director of Company Affairs and another, AIR 2009 SC 1278 wherein it is held that an application seeking directions to convene a meeting of creditors and members to consider a Scheme of Amalgamation is required to be heard and decided ex-parte. There is rationale for stating that the summons shall be moved ex-parte and that rationale is that it is an application for an order for meeting as a pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the same shall be considered by the Court. They have, therefore, submitted that the prayer for convening the meetings deserves to be rejected. 37.Having heard learned counsels appearing for the parties in both these matters and having considered their rival submissions in light of the relevant statutory provisions and decided case law in the subject, the Court is of the view that no directions are required to be issued for convening the meetings of the creditors/shareholders/workers of the Company (in liquidation), as prayed for in the respective Company Applications. It is true that an application seeking direction for convening the meetings of creditors etc., for considering the scheme of arrangement and/or compromise and if thought fit, to approve it with or without modification, is decided ex-parte and the Court normally at that stage, does not go into the merits of the Scheme. Such exercise is undertaken by the Court when substantive petition is filed seeking sanction of the Court to the Scheme. This is, however, not the absolute proposition of law. In an appropriate case, the Court even refuses to issue such directions. The case on hand is one of such cases, where the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any direction for convening the meetings of creditors etc. for considering the scheme proposed by them. 40.The applicant of Company Application No.191/2010 claims himself to be one of the lessors of the land possessed by the Company (in liquidation). Taking clue from the interim order passed by the Apex Court on 18.11.2009 in SLP (C) No.29282-29284 of 2008 and other petitions including SLP (C) No.1866/2009 wherein, it is observed that an attempt should be made by the Company Court to see that the defunct Company can be revived and those who have not moved the Company Court, two weeks time was granted to them, the present application is filed. It is worthwhile to note that the said order was passed by the Apex Court on 18.11.2009, whereas the present application is filed in July 2010, i.e. after about 8 months. The applicant claims to be one of the lessors of the land holding 1/12th share in the lease hold land of the Company. However, other lessors of the lease hold land of the Company have strongly objected the scheme. Moreover, the applicant does not have any resources to provide and generate necessary funds in the scheme. He has not disclosed the name of the party who wants t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, there is no embargo for sale of free hold land of the Company (in liquidation). The Apex Court has not issued any direction even to go for a scheme in respect of free hold land. It is, therefore, open for the Court to reject both these applications which inter-alia includes the consideration of the proposed scheme in respect of free hold lands. The free hold land, therefore, can straight way be put to sale, keeping aside for the time being the sale of the lease hold land and such lease hold land can separately be dealt with after the out come of the Apex Court judgment in the pending matter. In this view of the matter, while rejecting both these applications, the Court hereby directs the Official Liquidator to separately identify the lands of all the three final plots either by erecting wire fencing or by any other mode and put to sale the lands bearing final plot nos.32 and 33 admeasuring about 36,250 sq. meters and 6,858 sq. meters, fixing up-set price at about ₹ 150 Crores and Earnest Money Deposit at about ₹ 15 Crores and issue public advertisements in two leading news papers of Ahmedabad namely Indian Express , English Daily and Divya Bhaskar , Gujarati Dail ..... X X X X Extracts X X X X X X X X Extracts X X X X
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