TaxTMI 
TaxTMI 
TaxTMI 
2020 (2) TMI 407
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Vishesh Chauhan, Advs. for Investors Sangharsh Samiti Mr. Sameer Jain and Mr. Angad Sandhu, Advocates for the Service Tax Department. Mr. Anish Dayal, Mr. Siddharth Vaid and Ms. Rupam Sharma, Advs. for ICT Mr. Kunal Sharma, Adv. for the OL Mr. Anil Grover, Adv. with Ms. Noopur Singhal, Adv. For DTCP, Haryana and HSIIDC Ms. Nipun Kapur, President, VVWA Mr. Ruchir Bhatia, Sr. Standing Counsel for Income Tax Mr. Manik Dogra, Mr. Dushyant Manocha and Ms. Ananaya Ghosh, Advs. for propounders/ex-management. CA 509/2018 in CP 885/2015 JAYANT NATH, J. (JUDGMENT) 1. This application is filed under section 391-393 of the Companies Act, 1956 by the promoters of Vigneshwara Developwell Private Limited and Vigneshwara Developers Private Limited praying for approval of the proposed Scheme of Compromise and Arrangement of the two companies with their respective members and creditors. Against the two companies in question, namely, Vigneshwara Developers Private Limited and Vigneshwara Developwell Private Limited winding up petitions were admitted and order appointing the OL as Provisional Liquidator were passed by this court on 22.7.2016 in CP No.534/2015 titled Naresh Chand Gupta and Anr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Kisson I Valley Business Park at Plot No.CP02, Sector 8, Manesar, Gurugram which was allotted for development of a technology park. Similarly, another project by the name of Aquarious Business Park has also been developed at Village Begumpur Khatola, Sector-74, Gurugram. The plea of the learned counsel for the applicant was also noted that the applicant has entered into settlements before the Delhi High Court Mediation and Conciliation Centre with the Investors Sangharsh Samiti (Regd.) who has 523 Members on 4.12.2017. A settlement was also entered into with Vigneshwara Barter Investors Association (VBIA) which had 250 members and Vigneshwara Victims Welfare Association who had 300 members. Some individual agreements had also been entered into. It was pleaded that out of about 1437 unit buyers, 1180 have agreed to the settlement and have signed the settlement agreements before the Delhi High Court Mediation and Conciliation Centre. This court noted that as out of 1437 unit buyers 1180 had supported the scheme, 80% of the stated class of creditors have agreed to the compromise or arrangement. The Court also noted that the OL had filed a report stating that 41 claims had been receive....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wo different formulas. One being Formula for Category-1 and one being Formula for Category-2 10. Formula for Category 1 and Formula for Category 2 read as follows:- "The claims of the Allottees under this category shall be settled for an amount, which is equivalent to his principal amount plus taxes, if any paid by such Allottee, less 40% of the assured return already paid to such Allottee by the Promoters / Companies from time to time ("Formula - Category 1"). Formula - Category 2: The claims of the Allottees under this category ("Formula - Category 2") shall be settled for an amount, which is equivalent to the difference between: (a) the amount invested by each Allottee in the projects (the principal amount plus any service tax I TDS paid) plus simple interest @ 8.5% per annum calculated up to March 31, 2017 from the dates of their respective payments; and (b) the amount received by such Allottee from time to time from the Companies and/or the Promoters, as assured return, plus simple interest @ 8.50% per annum calculated up to March 31, 2017 from the dates of their respective payments. 11. It is stated that upon determination of the settlement of amount, each of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er) in iValley project to the said Association on account of as-is-where-is basis. Structure of the Venus Tower is complete, however the inner partitions/walls, flooring, finishing, etc. are yet to be completed. It has a covered area of 2,65,151.23 sq. ft. The dues of HSIIDC and certain other government dues shall be cleared by the promoters along with other dues of any statutory authority within 90 days from the date of sanction of the scheme. 14. There are allottees who are not members of any association or have not initiated any claims against the company. They shall be entitled to seek settlement of such right/claim by electing to be part of any of the formulas either of Category 1 or Category 2 and the settlement amount by applying the elected formula shall be settled by the company by way of transferring appropriate area in any of these projects. Other details are stated in the scheme. 15. Pursuant to issue of notice inviting objections, number of objections have been received from allottees/unit buyers. I may note the salient objections raised to the scheme in question. 16. One set of objections have been filed by an Association i.e. Vigneshwara Victims Welfare Associatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....es of Vigneshwara Group. In return, as consideration, they were to receive space in the proposed buildings. It is stated that the objectors are pursuing the individual cases before appropriate courts in Gurugram against the said group companies of the Vigneshwara Group for cancellation of the sales of their respective barter properties. The said group companies are not before this court in the winding up proceedings. (b) It is further stated that the project in question failed to abide by the Real Estate (Regulation and Development) Act, 2016. (c) It is further stated that the Scheme envisages the companies transferring areas to investors association and these associations are responsible for development of buildings and allotment of space to individual members. It is stated that the promoter would be unable to obtain the said registration in respect of the projects and the same would not be RERA Compliant. Hence, such a Scheme would be illegal. (d) It is further stated that multiple investigations and criminal proceedings are pending against the promoters of the Vigneshwara Group. It is pointed out that on 12.7.2017 Central Government has directed the SFIO to conduct an inve....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t of maintenance services. Objections are being filed on the ground that the name of the applicant is not included in the Scheme of Settlement. 19. Objections have also been filed by Nitin Gupta, HUF through its Karta Nitin Gupta. Particularly, the following objections have been raised: (a) No General Meeting of Buyers or Creditors was called which is mandatory under section 391(1) of the Companies Act. (b) The respondent company has not filed list of creditors/unit buyers and their valuation of the credit so that the actual number of 3/4th of the value of creditors could not be ascertained. (c) It is stated that as per the proposed revival scheme total allottees of the project are 1550 and supporters of the Scheme are 1050 allottees. Hence, the criteria of 3/4th of total allottees of the scheme supporting the scheme does not follow. (d) It is stated that the respondent company has purchased a number of valuable immovable properties situated in Gurugram and other places in the name of his promoters and respective affiliates/associates. The list of 22 affiliates/associates is stated in the objections. These properties have been purchased with the precious funds of the inves....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ar General of this court. The escrow account has a balance of Rs. 2.71 crores. A sum of Rs. 1 crore also stands deposited in this court in various winding up petitions. Further a sum of Rs. 1.10 crore would be remitted by the propounders from their personal fund. Rs. 1.44 crores is said to have been attached by various orders of the court. Further the propounders would liquidate Rs. 1.5 crores from the fixed deposits held by sister companies. Further it is stated that the propounders can leverage unsold inventory. The iValley project has approximately 6,00,0000 sq.ft. of unsold inventory. The Aquarius project has approximately 19.5 lakhs sq. ft. of unsold inventory. It is admitted that DTCP has raised a demand of Rs. 44 crores in December 2018.However on audit reconciliation this demand comes to Rs. 19.44 crores as principal and the balance amount is towards interest and penal interest. After allowing benefits of policies after reconciliation, it is claimed that an amount of Rs. 26.06 crores (approx.) will remain due and payable to DTCP. Similarly, HSIIDC has raised a demand of Rs. 32 crores in July 2018 towards enhanced charges. It is claimed that this is a miscalculation of land ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lue of the creditors. This order dated 12.10.2018 had not been challenged in any form. No objections or review has also been filed to state that this court had come to an erroneous decision that the scheme is supported by a majority representing 3/4th in the value of creditors of the class of creditors. 31. Even otherwise, as per the Scheme propounded there are total 1437 allottees of space which have been sold, 1180 number of allottees have entered into agreements with the promoters of the Scheme before the Delhi High Court Mediation and Conciliation Centre. It is clear that the number who have entered into a Settlement Agreement cross the figure of 75% of the said allottees. The above figures are sought to be challenged at this stage. In my view there are no basis for this challenge. Accordingly, I do not find any merit in the said contention raised by some of the objectors and the same is rejected. 32. There are couple of more objections which I may note. Objections have been filed by Group Captain S.M.Puri, Shri S.Dasmahapatra and Shri V.K.Oberoi. It is their case that they have bartered their property with the respondent entities in lieu of allotment of units in the propose....
X X X X Extracts X X X X
X X X X Extracts X X X X
....upreme Court in Meghal Homes (P) Ltd. vs. Shree Niwas Girni K.K.Samiti and Others, (supra) where the court held as follows:- "45. Considerable arguments were raised on the role of the Court when a scheme under Section 391 of the Act was propounded for its consideration. The decision in Miheer H. Mafatlal v. Mafatlal Industries Ltd. [(1997) 1 SCC 579] was relied on. That was a case of merger or amalgamation of two companies. Neither of the companies was in liquidation. This Court held that compromise or arrangement included amalgamation of one company with another. This Court also defined the broad contours of the jurisdiction of the Company Court in granting sanction to a scheme in terms of Section 391 and Section 393 of the Act. This Court laid down the following parameters: "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 cred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at this Court did not have occasion to consider whether any additional tests have to be satisfied when the company concerned is in liquidation and a compromise or arrangement in respect of it is proposed. Therefore, it cannot be said that this would be the final word on any scheme put forward under Section 391 of the Act, whatever be the position of the company concerned. Even then, this decision lays down the need to conform to the statutory formalities, the power of the Court to ascertain the real purpose underlying the scheme, the bona fides of the scheme, the good faith in propounding it and that as a whole, it is just, fair and reasonable, at the same time emphasising that it is not for the court to examine the scheme as if it were an appellate authority over the commercial wisdom of the majority. 47. When a company is ordered to be wound up, the assets of it are put in possession of the Official Liquidator. The assets become custodia legis. The follow-up, in the absence of a revival of the company, is the realisation of the assets of the company by the Official Liquidator and distribution of the proceeds to the creditors, workers and contributories of the company ultimately ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....osed to Gopaldas Parikh and Linubhai Banker. The feud appears to be more between the blood relations rather than between the creditors and members who have offered their best commercial judgment to the scheme on its merits. It is an inescapable conclusion that Chandulal Banker as a power of attorney holder of Shardaben, and Shantaben who is the principal contender, opposed the scheme tooth and nail not because he had the interest either of the company or creditors and members at heart but because he had to leave the active management when Gopaldas Parikh and Linubhai Banker stepped in and because of his personal vandetta against both of them. In this view of the matter it is not possible to accept the submission of Mr. Vakil that the scheme should not be imposed upon dissentient members." 43. It is also trite law that the Court would not reject a scheme simply because there could have been a better scheme. In re. Sussex Brick Co. Ltd., 1960 (1) ALL E.R. 773, the Court brushed aside this type of criticism of the scheme in the following manner: "The applicant set out certain criticisms in his affidavit which undoubtedly show that a good case could be made out for the formulation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., but in this connexion, 'unfairness' means patent unfairness, obvious unfairness, convincing unfairness, and that has not been established in the present case. I am not satisfied that this scheme is unfair in the sense in which MAUGHAM, J., used that word in re. Hoare & Co. Ltd. and I decide that the application ought not to succeed." 38. Keeping in view the facts of this case, in my opinion, the Scheme as a whole is just, fair and reasonable. There is no violation of any statutory provisions. It is in the interest of justice that the Scheme is approved subject to supervision of this court through a retired Judge of this Court. 39. The Scheme is accordingly approved subject to the following:- (i) Mr.Justice Vinod Goel (Retd.) (Mobile No.9910384637) is appointed as the Court Appointed Supervisor to supervise implementation of the Scheme/ The Propounders would be entitled to implement the Scheme, as above, under supervision of the Court Appointed Supervisor. (ii) The Court Appointed Supervisor will ensure that the initial task as stipulated in the Scheme are completed expeditiously in a time bound manner. The OL will permit the promoters to implement the Scheme, as stated ab....