Court Orders Fresh Creditor Meetings for Company Revival

The court emphasized the importance of reviving the company over winding it up and decided to give another opportunity to the petitioner to convene fresh meetings for unsecured and secured creditors to vote on the modified scheme proposing 100% repayment of dues within 24 months. The petitioner was granted liberty to move an appropriate application to convene such meetings. The case was listed for further consideration on 23.04.2019.

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Issues Involved:
1. Application under section 391 of the Companies Act, 1959.
2. Convening and conducting meetings of creditors and employees.
3. Approval and implementation of the proposed scheme of arrangement.
4. Objections to the scheme.
5. Compliance with statutory requirements under sections 391 and 392 of the Companies Act.
6. Consideration of subsequent consents and modifications to the scheme.

Detailed Analysis:

1. Application under section 391 of the Companies Act, 1959:
The petitioner filed an application under section 391 of the Companies Act, 1959, seeking to dispense with the meeting of shareholders and to convene meetings of secured and unsecured creditors to approve and implement a proposed scheme of arrangement to pay creditors. The company faced a financial crunch after IBM transferred the Master Services Agreement to another company. The proposed scheme created four Classes of creditors and outlined specific repayment plans for each class.

2. Convening and conducting meetings of creditors and employees:
The court directed the convening of meetings for secured creditors, statutory creditors, unsecured creditors, and employees on 25.10.2016. The quorum was set at 50% in number and more than 50% in value of the total unsecured debt. The meetings were held after several extensions, and the Chairmen filed their reports.

3. Approval and implementation of the proposed scheme of arrangement:
The scheme proposed 100% payment of statutory dues and secured creditors within 24 months, 50% payment of unsecured creditors within 24 months, and specific payments to employees. The scheme received mixed responses:
- Employees approved the scheme with a majority.
- No voting took place for secured creditors due to lack of authorization letters.
- Statutory creditors approved the scheme by majority.
- Unsecured creditors expressed confusion and dissatisfaction, leading to the scheme's rejection in their meeting.

4. Objections to the scheme:
Two objections were filed against the scheme. 'My Kind of Vacations Private Limited' withdrew its objection upon assurance of 100% principal payment. DLF Assets Private Limited opposed the scheme, claiming a higher outstanding amount than stated by the petitioner.

5. Compliance with statutory requirements under sections 391 and 392 of the Companies Act:
The objector argued that the scheme was rejected by secured and unsecured creditors and that all material facts and the latest financial position were not disclosed. The petitioner countered that all relevant financial documents were filed, and the scheme had the necessary approvals.

6. Consideration of subsequent consents and modifications to the scheme:
The court noted that consents received after the meetings could be considered. Three unsecured creditors withdrew their objections upon assurance of 100% payment. The court found that the new scheme had substantial support but still fell short of the required three-fourths majority.

Conclusion:
The court emphasized the importance of reviving the company over winding it up and decided to give another opportunity to the petitioner to convene fresh meetings for unsecured and secured creditors to vote on the modified scheme proposing 100% repayment of dues within 24 months. The petitioner was granted liberty to move an appropriate application to convene such meetings. The case was listed for further consideration on 23.04.2019.

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