Post-sanction scheme modification refused where proposed changes did not benefit creditors and High Court retained jurisdiction.

A post-sanction modification to a scheme of arrangement was refused because it was not shown to benefit debenture holders and appeared to serve mainly the promoters and former management. The sanctioned scheme had not been effectively implemented, and the proposed transfer of litigated properties to a trust was found unlikely to provide any immediate creditor benefit. The post-sanction applications were treated as retained by the High Court, and the earlier refusal to transfer the proceedings was held to have attained finality. The Companies Act, 2013 was held not to require transfer of these scheme-related proceedings to the NCLT, so the modification application and transfer request failed.

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Issues: Whether the modification sought to the sanctioned scheme should be allowed, and whether the proceedings were liable to be transferred to the NCLT.

Analysis: The requested modification would not advance the interests of the debenture holders and was found to operate mainly for the benefit of the promoters and former management. The sanctioned scheme had not been implemented, the company's assets and recoveries were not shown to have been pursued effectively, and the proposed transfer of litigated properties to a trust was viewed as incapable of giving any immediate benefit to creditors. On the jurisdictional objection, the post-sanction applications arising out of the scheme were treated as matters retained by the High Court, and the earlier order refusing transfer was held to operate as res judicata. The Court also held that the Companies Act, 2013 did not require transfer of these post-sanction scheme proceedings to the NCLT.

Conclusion: The modification application was rejected, and the request to transfer the proceedings to the NCLT did not survive.

Final Conclusion: The scheme was found to be non-viable for implementation in its present or modified form, and the proceedings remained with the High Court while the application was dismissed with costs.

Ratio Decidendi: A post-sanction application to modify a scheme of arrangement may be refused where the proposed modification is not for the benefit of creditors and the proceedings are retained by the High Court, especially when an earlier transfer refusal has attained finality.

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