TaxTMI 
TaxTMI 
2023 (4) TMI 1148
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....an Viswapriya India Limited a company registered under the Companies Act with its registered office at 2 First Cross Road Kasturba Nagar Adyar Chennai 600020 PART II-THE MODIFIED SCHEME 1. The Scheme shall become effective from the Appointed Date, 2. The Company shall transfer all rights vested on it in the properties as set out in Annexure to Affidavit dated 26.10.2015 filed at the Madras High Court to a Trust created for the benefit of the Debenture holders 3. The Trust will be managed under the Directions of the Madras High Court which is vested with the power of supervision of the Scheme 4. All Debenture holders of the company will be beneficiaries of the Trust pro rate to their holdings as at 31.01.2013 including all amounts accrued if any as interest as on that date 5. All proceeds realised from the Trust properties shall be distributed net of expenses pro rata to the debenture holders at the end of each quarter and such payment shall be made within 2 weeks of the last date of each quarter 6. Payments from the Trust made to debenture holders will be treated as repayment of the debentures to extent of such repaymen....
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.... with the properties vested on it including the power to borrow against the same 14. In respect of any legal proceedings of the Trust in respect of the properties the Trustee shall be entitled but not obliged to use the legal services of Mr R Subramanian Advocate who is Director of the Company and Mr R Subramanian shall be bound to provide services without any professional charges whatsoever except however that all out of pocket expenses would be reimbursed 15. On and from the Effective Modified date the terms of repayment set out at the time of issue of debentures and under the scheme dated 31.01.2013 set out in CP 15/2014 shall stand modified by the terms set out here above and that there shall be no other amounts payable to the debenture holders other than as set out in this Modified scheme." 3. In the above modification, the applicant asked for transfer of all the rights vested in the properties as set out in Annexure to the affidavit dated 26.10.2015 filed at the Madras High Court, to a Trust created for the benefit of the debenture holder. Though he had stated the details with regard to the properties in the modification, which is available in the Annexur....
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.... submitted that upon sanctioning the scheme, the relief also granted to free from the prosecution of EOW. However, since they have initiated the criminal proceedings after some point of time, the scheme was not workable. Hence, they have come with the present scheme to transfer all the rights in the 14 assets said to have mentioned affidavit dated 26.10.2015. Though the asset particulars are not available, both Mr.Prakash Goklaney, learned counsel for the applicant and Mr.R.Subramanian, party-in-person would submit that they provided the particulars with the regard to the 14 properties. Upon perusal of the details of those 14 properties, it is clear that there are lot of litigations pending and during the pendency of litigations, it was suggestion by the applicant to transfer those properties to a Trust as per the modification of the scheme. When that being the case, if modification is considered and any order is passed for transfer of those properties with litigation to the Trust, it will only be a relief for the Directors of VIL including Mr.R.Subramanian, partyin- person and other accused in the criminal proceedings and it will not at all provide any immediate relief for the deb....
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.... holders. 9. A mere perusal of the above balance sheet would clearly shows that there are assets about Rs.171.64 crores and after the liabilities, about a sum of Rs.157 crores are available. If they had realized those advances and loan, easily the company would have paid the amount to the debenture holders but it appears that no steps have been taken on their part and no report was filed with regard to the collection of those advances and loans. 10. Further, the total amount outstanding to the debenture holders is about Rs.125 crores along with interest. If really the VIL and its sponsors had any intention to implement the scheme, they could have very well implemented the same with the realization of the current assets alone. When the scheme was approved, they have highlighted the above financial position and obtain the approval of this Court as well as the approval of the debenture holders. However, when the present modification has been filed, nothing has been mentioned about the recoveries made by VIL against the advances and loans mentioned in financial position as on 30.09.2013. 11. Under these circumstances, this Court is of the view that allowing the modification on....
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....mise, arrangements and reconstruction and winding-up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer: Provided that only such proceedings relating to the winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government: Provided further that only such proceedings relating to cases other than winding up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal: Provided also that- (i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or (ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts; shall be dealt with in accordance with the provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959...." The other provision of relevance,....
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....this court having appointed an Administrator, by order, dated 22.08.2016, it is for this Court to monitor as to whether the Scheme has been implemented or not, and what is the intent and purport for giving up the scheme and whether there were any hidden agenda for giving up the Scheme with an intention to stall the criminal proceedings, etc. Therefore, the submission of the Director of VIL, Mr.R.Subramanian, that the applications have to be transferred to NCLT, stands rejected and this Court will continue to hear these applications.'' From the above extract of the order dated 05.01.2017, there is no doubt that this Court rejected the earlier request for transfer primarily on the ground that this Court had sanctioned the Scheme and had initiated action pursuant thereto by also appointing an Administrator. This order is the subject matter of O.S.A.SR.No.26384 of 2017. Although an appeal was filed, the said appeal is stated to be at the stage of consideration of an application to condone the delay in filing thereof. Notwithstanding the above position, both Analog and Mr.Subramanian contend that the order dated 05.01.2017 does not preclude the reiteration of a request ....
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.... transfer of individual applications or petitions relating thereto. As regards proceedings relating to schemes of arrangement, the second proviso to Section 434(1)(c) provides for transfer thereof if orders were not reserved. Rule 3 of the Transfer Rules also deals with the transfer of pending proceedings other than winding up proceedings. Rule 3 is as under: ''Transfer of Pending Proceedings relating to cases other than winding up: All proceedings under the Act, including proceedings relating to arbitration, compromise, arrangements and reconstruction, other than proceedings relating to winding up on the date of coming into force on these rules shall stand transferred to the Benches of the Tribunal exercising respective territorial jurisdiction: provided that all those proceedings which are reserved for orders for allowing or otherwise of such proceedings shall not be transferred.'' From the above Rule, it is evident that except proceedings reserved for orders, all other proceedings pending before the Companies Court are liable to be transferred. On the basis of this Rule, both Mr.Goklaney and Mr.Subramanian contended that since ....
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.... a situation wherein the petition in which the scheme is sanctioned and individual applications in which orders are reserved would be retained by the high court concerned, whereas other applications relating to the same scheme of arrangement would stand transferred to the NCLT. In such event, the appeals arising out of the retained petition and applications would also remain in the high court. This would make a mockery of the object and purpose of transfer, which is to consolidate the petition and all applications relating to and arising out of a winding up petition or a scheme of arrangement, as the case may be, so as to enable one forum to deal with the same in a meaningful way. As regards proceedings relating to schemes of arrangement, the second proviso to Section 434(1)(c) of CA 2013 is applicable. This proviso uses the expression "only such proceedings...shall be transferred to the Tribunal" and makes it clear that if orders are reserved in the proceedings, the proceedings shall not stand transferred. Thus, in contrast to service of notice under Rule 26 (i.e. pre-admission), the cut-off is fixed further down the road at the point of reserving orders in the proceedings. Signif....
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....f issuance of notice as per Rule 26 of the Companies (Court) Rules 1959. Pursuant to the amendment to Section 434 by the introduction of the last proviso thereto, a party to the proceedings is entitled to file an application for transfer in retained matters. Applications for transfer were filed in those cases by resorting to such proviso. In contrast, in the present case, as indicated above, the Scheme was sanctioned by this Court and several applications were dealt with thereafter under Section 392 of CA 1956. Indeed, it bears repetition that the cut-off, as regards schemes of arrangement, is fixed at the advanced stage of reserving orders in the proceedings. Consequently, there is no provision analogous to the last proviso to Section 434(1) of CA 2013 to seek transfer of retained matters. In fine, these applications are completely misconceived and premised on the mistaken notion that CA 2013 provides for transfer of applications. 17. For reasons set out above, the order dated 05.01.2017 does qualify as res judicata and is not erroneous in any respect. In any event, for reasons set out in the preceding paragraphs, the specific applications and, indeed, the proceedings rel....