TMI Blog2023 (4) TMI 1148X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the recoveries made by VIL against the advances and loans mentioned in financial position as on 30.09.2013. This Court is of the view that allowing the modification only affect the interest of the debenture holders and further it would be more beneficial for the promoters to safeguard them from all the criminal proceedings and other liabilities and thereby, they will absolve from all the responsibilities. Therefore, this Court cannot be wittingly or unwittingly be a party for all those misdeeds of the applicant as well as Mr.R.Subramanian, party-in-person and other Directors of VIL - this Court is not inclined to entertain this application and the same is liable to be dismissed. While dismissing the application, this Court is of the considered view that this application came to be filed only to cheat debenture holders by gaining more time. Therefore, for wasting the Court time and making an attempt to defraud the creditors and the debenture holders, this Court is inclined to dismiss this application with the cost of a sum of Rs.2,00,000/- to the Official Liquidator and the said amount shall be utilised by the learned Official Liquidator to defray his expenses with regard t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enture holders in excess of the principal amount due as on 31.01.2013 shall be treated by the Company as premium on redemption 8. All realisation from the Trust, net of expenses, will be wholly paid to the Debenture holders upto a premium of 50% of the amount due on the debenture as on 31.01.2013 9. All balance assets of the Trust as available after the distribution of the amount due as at 31.01.2013 and the 50% premium thereon will vest on the company provided however that such vesting will occur only after payment of the entire dues as at 31.01.2013 and the premium thereon 10. The entities set out as the persons who have obtained the rights over the properties from the registered owners as set out in the Annexures to Affidavit dated 26.10.2015 shall execute all necessary documents to pass over the rights vested on them to the Trust including by way of authorisation by Power of Attorney to the Trust to represent them in all proceedings and matters including suits and other such proceedings 11. That as it would be advantageous and expedient that all the disputes if any in respect of the properties set out in the Annexures to Affidavit dated 26.10.2015 are all pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been furnished separately. Upon going through those properties, it is clear that there are lot of litigations, which are pending with regard to more than 11 properties and those properties were also available at the time of sanctioning the scheme by this Court on 30.04.2014. When the scheme was sanctioned by this Court, the applicant provided the financial position of the M/s.Viswapriya India Limited (hereinafter called as VIL ) as on 30.09.2013, which reads as follows: Share holders Funds: Share Capital 4,95,31,350 Reserve Surplus 28,29,34,597 Loan Funds: Secured Debentures 124,12,09,000 Deferred Tax Liability 74,162 Total 157,37,49,109 Application of Funds: Fixed Assets: Gross Block: 1,06,60,242 Less: Accumulated Depreciation 91,48,530 Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re lot of litigations pending and during the pendency of litigations, it was suggestion by the applicant to transfer those properties to a Trust as per the modification of the scheme. When that being the case, if modification is considered and any order is passed for transfer of those properties with litigation to the Trust, it will only be a relief for the Directors of VIL including Mr.R.Subramanian, partyin- person and other accused in the criminal proceedings and it will not at all provide any immediate relief for the debenture holders. 6. Further Mr.H.Karthik Seshadri, learned counsel, who is appearing for the debenture holders also submitted that this application for modification of scheme is filed only at the instigation of Mr.R.Subramanian, party-in-person, who is Ex-director of VIL. The applicant filed this application only to escape from the criminal liabilities and it will not be beneficial for the debenture holders. The applicant as well as the Directors of the VIL are intended to transfer all the liabilities and responsibilities to the Trust, so as, they could safely come out of the criminal prosecution and other liabilities. Therefore, for this purpose only the pres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... implemented the same with the realization of the current assets alone. When the scheme was approved, they have highlighted the above financial position and obtain the approval of this Court as well as the approval of the debenture holders. However, when the present modification has been filed, nothing has been mentioned about the recoveries made by VIL against the advances and loans mentioned in financial position as on 30.09.2013. 11. Under these circumstances, this Court is of the view that allowing the modification only affect the interest of the debenture holders and further it would be more beneficial for the promoters to safeguard them from all the criminal proceedings and other liabilities and thereby, they will absolve from all the responsibilities. Therefore, this Court cannot be wittingly or unwittingly be a party for all those misdeeds of the applicant as well as Mr.R.Subramanian, party-in-person and other Directors of VIL. 12. Ultimately, for the reasons assigned above, this Court is not inclined to entertain this application and the same is liable to be dismissed. 13. While dismissing this application, this Court is inclined to hold that the scheme sanctioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al: Provided also that- (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with the provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.... The other provision of relevance, in this regard, is Section 465 of CA 2013, which, in relevant part, is as under: ''65(1) The Companies Act, 1956 (1 of 1956) and the Registration of Companies (Sikkim) Act, 1961 (Sikkim Act 8 of 1961) (hereafter in this section referred to as the repealed enactments) shall stand repealed: .... Provided further that until a date is notified by the Central Government under sub-section (1) of section 434 for transfer of all matters, proceedings or cases to the Tribunal, the provisions of the Companies Act, 1956 (1 of 1956) in regard to the jurisdiction, powers, authority and functions of the Board of Company Law Administration and court shall continue to apply as if the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anctioned the Scheme and had initiated action pursuant thereto by also appointing an Administrator. This order is the subject matter of O.S.A.SR.No.26384 of 2017. Although an appeal was filed, the said appeal is stated to be at the stage of consideration of an application to condone the delay in filing thereof. Notwithstanding the above position, both Analog and Mr.Subramanian contend that the order dated 05.01.2017 does not preclude the reiteration of a request for transfer because the order dated 05.01.2017 is erroneous and, therefore, does not operate as res judicata. 11. In this regard, both Analog and Mr.Subramanian rely upon Section 231(3) of CA 2013. Sub Section 3 of Section 231 reads as under:- ''3. The provisions of this section shall, so far as may be, also apply to a company in respect of which an order has been made before the commencement of this Act sanctioning a compromise or an arrangement'' Section 231 of CA 2013 mirrors Section 392 of CA 1956. These provisions are enabling provisions whereby the Court under Section 392 of CA 1956 or the NCLT under Section 231 of CA 2013, as the case may be, may consider applications relating to a scheme o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive territorial jurisdiction: provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred.'' From the above Rule, it is evident that except proceedings reserved for orders, all other proceedings pending before the Companies Court are liable to be transferred. On the basis of this Rule, both Mr.Goklaney and Mr.Subramanian contended that since none of the pending applications are reserved for orders, they are liable to be transferred. 13. In the specific context of the Scheme, Analog, the propounder, initially filed applications to convene meetings of stakeholders to consider the draft scheme, and thereafter filed a petition to sanction the draft scheme upon approval by its stakeholders. By this process, the Scheme was sanctioned by order dated 30.04.2014 in C.P.No.15 of 2014. Subsequent thereto, applications were filed under Section 392 of CA 1956 in C.P.No.15 of 2014 by various stakeholders. From the above narration, there is no doubt that all the applications and the petition under Section 391 are closely interconnected. The power under Section 392 of CA 1956 is a consequential po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 434(1)(c) of CA 2013 is applicable. This proviso uses the expression only such proceedings...shall be transferred to the Tribunal and makes it clear that if orders are reserved in the proceedings, the proceedings shall not stand transferred. Thus, in contrast to service of notice under Rule 26 (i.e. pre-admission), the cut-off is fixed further down the road at the point of reserving orders in the proceedings. Significantly, the cut-off criterion is if orders are reserved in the proceedings, and not in an application in the proceedings. In the case at hand, orders were passed in the petition under Section 391 as early as on 30.04.2014 and only consequential applications under Section 392 of CA 1956 are pending. If an analogy is drawn to winding up proceedings, once the Scheme was sanctioned, the applications under Section 392 of CA 1956 are similar to applications filed after a winding up order is passed under Section 433 read with 443 of CA 1956. Thus, this Court is dealing with applications at the post-sanction stage of proceedings initiated under Section 391 of CA 1956. In an appropriate case, where no applications are pending after the sanction of a scheme of arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retained matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications. 17. For reasons set out above, the order dated 05.01.2017 does qualify as res judicata and is not erroneous in any respect. In any event, for reasons set out in the preceding paragraphs, the specific applications and, indeed, the proceedings relating to the Scheme are not liable to be transferred to the NCLT. Except for the assertion that this Court has no jurisdiction, no reasons are set out in Comp.A.No.313 of 2021 to dismiss Comp.A.No.56 of 2021. For these misadventures, in the face of the earlier order of this Court, each set of applicants should be suitably rewarded. 18. As a corollary, Company Application Nos. 413 and 414 of 2019 and Company Application No.313 of 2021 are dismissed. Each set of applicant/s shall pay costs of Rs.1,00,000/- to the Tamil Nadu State Legal Services Authority within two weeks from the date of receipt of a copy of this order. All the other pending applications shall be retained in this Court. List all pending applications on 11.02.2022. The Registry is directed to communicate a c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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