Re-M/S Bharat Carpets Ltd. vs ..........
2018 Latest Caselaw 4785 Del

$~CP-7
*    IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                           Date of decision: 14.08.2018
+      CO.PET. 50/1984

       RE-M/S BHARAT CARPETS LTD.          ..... Petitioner
                    Through     Mr.Kunal Sharma, Adv. for OL.
                    Mr.Kirti Uppal, Sr. Adv. with Ms.Prema
                    Priyadarshini, Mr. Abhimanyu, Mr.Ashish Shaw
                    and Mr.Shresth Arya, Advs. for the propounder of
                    the Scheme.
                    Mr.Akhilesh Gupta, Applicant-in-person in CA
                    No. 880-81/2017
                    Ms.Bhavna Kohli, Adv. in CA Nos. 656-58/2018
                    Mr.Sudeep Dey, Adv. for Mr.R.N.Gupta in CA
                    655/2018

       CORAM:
       HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.(ORAL)

CA No. 442/2012

1.     This application is filed under Sections 391 to 394 of the Companies
Act, 1956 seeking sanction of the Scheme of Revival.
2.     The winding up order was passed against the respondent Company on

18.05.1987. The Official Liquidator was appointed as Provisional Liquidator on 23.08.1984. Subsequently, it appears that there was an agreement/arrangement/understanding that was reached between Mr.Manish Arora, the Managing Director of UCC Care Pvt. Ltd. and the Ex. Management of the respondent Company, namely, Mr.R.N. Gupta and Ms.Veena Gupta to revive the respondent Company in 2005-06. UCC

Builders Pvt. Ltd. (now known as UCC Care Pvt. Ltd.) bought the shares from the old shareholders.

3. UCC Care Pvt. Ltd. and M/s. Maharani Paints Pvt. Ltd. entered into an MOU/Share Purchase Agreement/Deed of Arrangement with Mr.R.N.Gupta and Mrs. Veena Gupta, family members, friends and relatives and purchased their shareholding after paying the agreed consideration. Several company applications were filed in this court seeking validation of transfer of equity shares. This court vide judgment dated 24.11.2011 validated the shares transferred by the applicants/petitioners/propounders under Section 536(2) of the Companies Act. Against the said order passed by the learned Single Judge, some of the shareholders filed an appeal before the Division Bench which was dismissed on 01.05.2012 and an SLP was also filed which was dismissed on 30.10.2012.

4. In the meantime, in 2006, two secured creditors, namely, Haryana Financial Corporation and United Commercial Bank (UCO Bank) with the consent of the former directors and with the permission of this court were paid their entire dues. An appropriate settlement between UCC Care Pvt. Ltd. and Haryana Financial Corporation was recorded on 04.04.2007. Similarly, a settlement was recorded with UCO Bank on 13.07.2007.

5. The main object of the revival scheme is to commence manufacture wooden furniture and allied handicraft articles in the first phase of the business in which the propounders/contributories are said to have experience. It is also proposed to take up manufacturing of machine made woven carpets in the second phase. Details of the cost of the project, etc. are given.

6. By order dated 19.09.2011, this court was pleased to direct that a

meeting of the unsecured creditors and shareholders of the respondent Company be convened. The reports regarding the meetings have been received. The Chairperson of the meeting of the unsecured creditors in his report dated 16.02.2012 has noted that total 24 unsecured creditors were present of whom 21 voted in favour of the Scheme. Three of the votes were held invalid. A value of Rs.13,83,257/- have been voted in favour of the scheme. Similarly, a meeting was also held of the shareholders. The Chairperson of the said meeting has filed her report dated 18.02.2012 wherein she has noted that it was unanimously resolved to accept the revival scheme.

7. The OL has also filed his report dated 10.07.2012. In the said report, the OL has noted the meeting held by the respective Chairpersons for the shareholders and the unsecured creditors. The report states that the revival scheme of the respondent Company is not prejudicial to the interest of the members or the public interest.

8. I have heard Mr.Akhilesh Gupta appearing in person and learned counsel appearing for Mr.R.N.Gupta. Mr. Akhilesh Gupta and Mr.R.N.Gupta state that they have total 3% shares in the shareholdings of the respondent Company. They are opposing the present application. Mr.Akhilesh Gupta has broadly submitted that the scheme itself is totally stale inasmuch as the projection stated in the scheme are only till 2018 and a fresh scheme has to be submitted by the respondent Company. He has further pleaded that a sister concern of the respondent Company, namely, Bharat Kala Kendra Pvt. Ltd. is also subject to winding up process. It is pleaded that the objectors have large number of shares in Bharat Kala Kendra Pvt. Ltd. and that the said Bharat Kala Kendra Pvt. Ltd. is also a

creditor of the respondent Company.

9. The grievance of the said objectors is that the respondent Company is proposing to treat the said Bharat Kala Kendra Pvt. Ltd. differently as compared to the other unsecured creditors. Much stress has been laid that the respondent Company should pay all the dues of Bharat Kala Kendra Pvt. Ltd. in terms of the orders dated 05.07.2011 and 02.11.2011, namely, that 5% interest should also be paid from the date of winding up order till payment of dues.

10. As far as the contention that the scheme has become stale with the passage of time is concerned, in my opinion, the argument appears to be misconceived. The matter has been pending in court. Under the scheme, the entire secured creditors' dues already stand paid. The Scheme of the respondent Company envisages that on revival it will pay all the dues of the unsecured creditors. Hence, I do not see, how the projection, in case it has become out dated would in any manner effect the revival scheme.

11. Regarding the second contention of the objectors, learned senior counsel for the petitioner has relied upon the orders of this court dated 05.07.2011 passed in CA 1303/2010 wherein with the consent of the parties, the Registrar General of the Delhi High Court where the money had been deposited was directed to pay a sum of Rs. 60,16,104/- along with accrued interest to the OL which was deposited in the name of Bharat Kala Kendra Pvt. Ltd. Hence, it is pleaded that the dues of Bharat Kala Kendra Pvt. Ltd. stand paid.

12. I may only note that against the said order dated 05.07.2011, Mr.Akhilesh Gupta had gone in appeal before the Division Bench. On 17.02.2012, the Division Bench had directed the OL to take up the matter on

behalf of Bharat Kala Kendra Pvt. Ltd. so that the interest of the said company is secured and ultimately when the money is to be paid to different creditors, the same is given to Bharat Kala Kendra. The appellant was also permitted to assist the OL in preparing and pursuing the said matter. On 10.04.2013 in CCP 690/2012, this court had directed that the order of the Division Bench shall be complied with in letter and spirit.

13. It is manifest from the reading of the above that presently there are no secured creditors. The unsecured creditors have unanimously in the meeting held agreed to abide by the scheme. The shareholders in the meeting have also unanimously agreed to abide by the revival scheme. In court two share holders having a share of 3% are objecting pleading essentially that Bharat Kala Kendra Ltd. be treated at par with all other unsecured creditors.

14. In this context, reference may be had to the judgment of the Supreme Court in Miheer H.Mafatlal vs. Mafatlal Industries Ltd., 1997 1 SCC 579 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 broad contours of such jurisdiction have emerged:

1. The sanctioning court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by Section 391(1)(a) have been held.

2. That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by Section 391 sub- section (2).

3. That the meetings concerned of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class.

4. That all necessary material indicated by Section 393(1)(a) is placed before the voters at the meetings concerned as contemplated by Section 391 sub-section (1).

5. That all the requisite material contemplated by the proviso of sub-section (2) of Section 391 of the Act is placed before the Court by the applicant concerned seeking sanction for such a scheme and the Court gets satisfied about the same.

6. That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme with a view to be satisfied on this aspect, the Court, if necessary, can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same.

7. That the Company Court has also to satisfy itself that members or class of members or creditors or class of creditors, as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent.

8. That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant.

9. Once the aforesaid broad parameters about the requirements of a scheme for getting sanction of the Court are found to have been met, the Court will have no further jurisdiction to sit in appeal over the commercial wisdom 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."

15. In my opinion, there is no impediment to passing of the scheme as proposed. It clears all prescribed parameters.

16. The only issue that survives is the payment of the dues by the respondent Company after revival of Bharat Kala Kendra Pvt. Ltd., if any. In my opinion, in view of the order of this court dated 05.07.2011 as also clarified by the Division Bench, these are issues which the OL has to raise in the winding up proceedings pertaining to Bharat Kala Kendra Pvt. Ltd., namely, CP No. 160/1985.

17. The issues regarding the payment of interest, etc. are kept open and passing of the scheme will not in any manner dilute the said contentions that are raised by Mr.Akhilesh Gupta and learned counsel appearing on behalf of Mr.R.N.Gupta. These aspects would be adjudicated upon in the winding up petition which is dealing with Bharat Kala Kendra Pvt. Ltd.

18. The present application is allowed.

19. The revival scheme as proposed is sanctioned. The OL will hand over possession of all the existing properties and assets of the respondent Company and the statutory records, books of accounts, etc. to the proposed management of the respondent Company. The winding up order is recalled.

20. Application stands disposed of.

CO.PET. 50/1984 In view of the above order, the present petition stands disposed of.

JAYANT NATH, J AUGUST 14, 2018/rb