TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Court overturns compromise order, finds deception, and imposes penalties for non-compliance with statutory provisions.</h1> The court set aside the order sanctioning the scheme of compromise and arrangement due to non-compliance with statutory provisions. Shri K. W. Desai was ... Compromise and arrangement Issues Involved:1. Winding up of Beclawat of India Limited.2. Scheme of compromise and arrangement proposed by Engineering Majdoor Sangh.3. Review of the order sanctioning the scheme.4. Allegations of false statements, concealment of facts, and fraud by Shri K. W. Desai.5. Conduct and responsibilities of the official liquidator.Detailed Analysis:1. Winding up of Beclawat of India Limited:The company was ordered to be wound up on December 2, 1999, due to its inability to pay its debts, and an official liquidator was appointed.2. Scheme of Compromise and Arrangement:Engineering Majdoor Sangh, Baroda, proposed a scheme of compromise and arrangement between the workers of the company in liquidation, unsecured creditors, and other interested parties. The court directed the convening of a creditors' meeting, which was to be held after notifying the secured creditors. The scheme was sanctioned by the court on September 23, 1997, without issuing any notice to any party, based on the impression that there were no secured creditors.3. Review of the Order Sanctioning the Scheme:State Bank of India, shareholders, and unsecured creditors filed applications for review of the September 23, 1997 order, citing non-compliance with statutory provisions and the non-convening of meetings for secured creditors, unsecured creditors, and shareholders. The court reviewed and set aside the order on December 2, 1999, due to the admitted non-compliance with section 391(1) of the Companies Act and rule 80 of the Companies (Court) Rules.4. Allegations Against Shri K. W. Desai:Shri K. W. Desai was accused of making false statements, concealing material facts, and practicing fraud on the court. Despite being given an opportunity to admit his mistake and avoid severe consequences, he persisted with untenable arguments, wasting judicial time. The court found that Shri K. W. Desai had misled the court into passing the impugned order by falsely representing the absence of secured creditors and avoiding the publication of public notice required by rule 80.5. Conduct and Responsibilities of the Official Liquidator:The official liquidator was also found to have failed in his duty by not pointing out the existence of secured creditors and the need for notices to be issued to all relevant parties. The court decided that action was required against the official liquidator for misleading the court.Conclusion and Costs:Considering the elapsed time and the recall of the order obtained by misleading the court, the court decided not to refer the matter for contempt proceedings but focused on the issue of costs. Shri K. W. Desai was directed to pay Rs. 10,000 to the applicants in each of the four applications, and the official liquidator was ordered to pay Rs. 5,000 to each applicant. The official liquidator was to be reimbursed by the concerned officer/employee found remiss in their duties at the relevant time.
TaxTMI 
TaxTMI 
