TaxTMI 
TaxTMI 
2015 (7) TMI 578
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.... be redeemed, and remain so till date. 2. In September, 2012 the petitioner sent a statutory notice to the company under sec.434 of the Companies Act, 1956 (hereinafter referred to as "the Act") calling upon it to repay the outstanding amount on the bonds within three weeks. The notice was duly served. A reply was sent to the petitioner on 15-10-2012; there was an exchange of correspondence but nothing worthwhile transpired, except that the meeting with the bondholders was postponed. 3. It is in the above circumstances that the petitioner filed the present company petition in this court. After the initial formal orders, an order was passed by this court (Indermeet Kaur, J.,) on 13-12-2012 restraining the company and its agents/officer/servants from transferring or alienating any of its assets, divisions, businesses and those of its subsidiaries or creating any third party interests therein. At the time of the passing of the order, the court was apprised of the fact that there were no prospects of settlement and that the Corporate Debt Restructuring (CDR) Scheme which was put in place would only infuse an amount of Rs. 150 crores into the company with a possible Rs. 40 crores to b....
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....appeal stands disposed of." 6. The Special Leave Petition (Civil) No.7919/2013 filed by the petitioner against the above order of the Division Bench was rejected by the Supreme Court by order dated 4.3.2013. 7. The company petition was thereafter taken up for hearing by this court. The petitioner was allowed to file a rejoinder to the reply of the company. 8. The principal contentions advanced on behalf of the petitioner are as under: (a) The debt is admitted by the respondent-company and therefore the petition ought to be admitted, as held by a learned Single Judge of this Court (T.P.S. Chawla, J, as he then was) in Bipla Chemical Industries v Shree Keshariya Investment Ltd. (1977) 47 Com.Cas. 211; (b) It is also admitted that there is "present inability" to repay the debt, thus satisfying the requirements of sections 433(e) and 434(1)(c) of the Act, in as much as even granting that a CDR Scheme is in place, still that will hardly leave anything for the unsecured creditors such as the petitioner, as the amount to be infused into the company under the Scheme is only Rs. 150 crores which would be woefully inadequate to meet even the interest liability on the bonds.  ....
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....es Pvt. Ltd. (1971) 3 SCC 682 and (iii) Pradeshiya Industrial & Investment Corporation of UP (1994) 3 SCC 348. 10. In its rejoinder to the above contentions, the petitioner controverts them on the following submissions: (a) the position of a disputed debt, which is not the present case, is different and hence the judgment in Madhu Woollen Industries (supra) does not apply; (b) Form No.48 read with Rules 24 and 99 do not contemplate any opposition from any person to the petition for winding-up before an order is made for publication of the citation in the newspapers, and that stage has not reached in the present case and hence any objection from the respondent-company at this stage is premature; (c) the plight of the unsecured creditors, such as the petitioner, cannot be refused to be taken note of by the company; (d) the respondent-company is paying interest to others, and dividend to its shareholders, whereas no interest was paid to the bondholders for the past 6 years and (e) the provisions of section 557 come into operation post- admission of the winding-up petition and not at this stage. 11. In support of the above contentions, reliance was placed on three judgments of the Bo....
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.... - in the opening part of the section, as contrasted with the use of the word "shall" in the proviso to clause (h) which does not confer any discretion on the court where the winding-up petition is presented by the Government (Central or State) on the ground that the company has acted against the interests of the sovereignty and integrity of the country, security of the State, public order etc. Moreover, the judgment of the learned Single Judge of this court (T.P.S. Chawla, J., as he then was) in Bipla Chemical Industries (supra) seems to me to be in favour of the view that the company sought to be wound-up shall be heard at the admission stage. There, the question was whether creditors who were inclined to oppose the winding-up were entitled to be heard at the stage of the admission of the petition. It was held that their interests, at that stage, were not likely to be prejudicially affected and therefore they were not as of right entitled to be heard at the admission stage. There was no dispute as to the entitlement of the company sought to be wound-up to be heard at the admission stage. The fact that in the judgment of D.Y. Chandrachud, J., (supra), the judgment of T.P.S. Chawla....
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....ts a CDR Scheme led by a consortium of banks, to whom an amount of Rs. 2000 crores (app.) is outstanding, which have infused a further amount of Rs. 150 crores, out of which Rs. 40 crores can be set apart for the bond-holders. The banks have also agreed to a moratorium on their dues for a period of 18 months ending in April, 2014. The workforce of about 4000 is kept intact. Nevertheless, at the stage of admission, the company court is in no position to - and there are no manageable standards for indulging in such an exercise - take a decision as to the prospects of the company in the immediate or short-term future, even accepting that a CDR Scheme is afoot and efforts are on for the revival of the company with the infusion of further funds. I cannot however help observing - it is only a prima facie observation - that considering the quantum of further funds to be infused, as juxtaposed with the amount due to the secured creditors (the banks) and as further compared with the liability of around Rs. 863 crores due to the bond-holders, and even taking note of the moratorium, it seems to me to be not a case where the discretion of this court not to order winding-up can be exercised at ....
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.... due and cases where the merits of the revival scheme are projected as a defence and an appeal is made to the conscience of the company court to exercise the discretion not to order winding-up. Pradeshiya Industrial and Investment Corporation of UP (supra) decided by the Supreme Court is a case which exemplifies the first category. There, there were certain questions of law raised in defence of the plea against the winding-up under section 433(e): that the promoters‟ agreement was cancelled, which aspect was not taken note of by the company court, that the appellant before the court which was sought to be wound-up was not a debtor at all as it was a financial institution which aspect was also not considered and that the claim was the subject matter of arbitration proceedings, which had also been overlooked by the company court. It was in these circumstances that the Supreme Court held that the defence of the company was a "substantial one and not mere moonshine". In this background, the reliance placed by the counsel for the respondent-company on the sentence (at page 356 of the report) to the effect that the courts below failed to note that the admission of a winding-up peti....
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.... in April, 2014. What will happen thereafter is a matter of speculation. The amount outstanding today to the bond-holders is stated to be around Rs. 863 crores. Given this scenario, one cannot possibly fault the petitioner if it took the decision, as trustee for the bond-holders, to seek winding-up of the respondent-company. The trustee has to undoubtedly act for the benefit of the bond-holders. If it has taken a decision - even assuming that it is imprudent or insensitive - that alone cannot persuade the court to exercise the discretion in favour of the respondent-company at the stage of admission. 19. National Textile Workers‟ Union and Ors v P.R. Ramakrishnan & ors. (supra), cited on behalf of the respondent-company, deals with the rights of the workmen and employees of the company sought to be wound-up, to be heard in the proceedings relating to the winding-up petition. I do not think it necessary to deal with the decision since it does not touch the point with which I am confronted. I would however refer to the judgment when I dispose of the application filed by the workmen of the respondent-company. 20. The judgments of the Bombay High Court, both by two learned Singl....
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....restructure it, after taking the necessary approvals and after ascertaining the views of the petitioner formally. There will be no bar on any such attempts at settlement or arrangement. Both sides are at liberty to take any such steps. 23. Coming now to the Company application No. 1115/2013 filed by the workmen, it is for impleadment of the workmen in the company petition. They undoubtedly have a right to be heard in view of the Constitution Bench judgment of the Supreme Court in National Textile Workers‟ Union vs P.R. Ramakrishnan and Ors (supra) both before the winding-up petition is admitted and an order for advertisement is made and also after the admission and advertisement is made, until an order is made for winding-up of the company. I have taken note of the claim made on behalf of the workmen that there are about 4000 of them who are bread-winners of their families and if an order of winding-up is made, around 20,000 members of the workmens‟ families will go hungry. For the reasons given by me in the preceding paragraphs, I am unable at the stage of admission to refuse entry to the petitioner to this court. The workmen, however, will have a right to be heard ev....