Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Companies Act 1956 Loss Revival Restructing Company package/Scheme |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | Companies Act, 1956; Ss. 113, 391, 393/Companies (Issue of Share Certificate) Rules, 1960/Bombay Relief Undertakings (Special Provision) Act, 1958/Indian Contract Act, 1872; Section 28/Code of Civil Procedure, 1908; Order XXIII Rule 1: Company-Loss-Revival-Restructing package/Scheme-Common Subscription Agreement entered into between a Company and debenture holders-Creation of Debenture Trust Deed-Challenged by one of the debenture holders-appellant-Filing of a Petition by the Company seeking approval of the Scheme-Allowed by the Company Judge-Appeal dismissed by the Division Bench of the High Court-On appeal, Held: In terms of the Trust Deed, the rights, privileges and conditions attached to the debenture holders could be varied, modified or abrogated only in accordance with the provisions of law with the consent of debenture holders by way of a special resolution passed-But resolution shall not be operative.against the company if its modifies or varies the terms and conditions governing the debentures-No provision as of Veto Power/unanimity provided for passing a resolution-Principle of Majority accepted by the authorities-Court could grant sanction to a scheme only when it is satisfied that the scheme is fair, just reasonable and does not contravene public policy or any statutory provision-The scheme applies equally to all the debenture holders and the appellant cannot be treated as a separate class-The purpose and object of advancing a huge investment by the appellant to the company is a matter of no concern to the company/other debenture holders-The Company prima-facie showed that the scheme is fair and reasonable and having approval of the requisite majority of the debenture holders-Hence, the Company Judge rightly accepted the scheme-Sick Industrial Companies (Special Provisions) Act, 1985. The Securities and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Commercial documents-Meaning of The respondent-Company is engaged in the manufacture of polyster film and also exporting its product. The company went for expansion and in connection thereto obtained finance by way of term loans and by issuance of debentures to financiers. However, the company suffered a huge loss and it approached the Industrial Development Bank of India for restructuring package to clear its liabilities. All the debenture holders except the appellant no. 2 agreed to the proposed package/scheme. A common Subscription Agreement was entered into between the company and the debenture holders. Later, in terms of the agreement, a Debenture Trust Deed was created. The company filed a petition seeking grant of sanction to the Scheme before the High Court in terms of Section 391 of the Companies Act. The Company Judge allowed the application. Aggrieved, the appellant preferred an appeal which was dismissed by the Division Bench of the High Court. Hence the present appeal. |
Judge | Hon'ble Mr. Justice S.B. Sinha |
Neutral Citation | 2005 INSC 270 |
Petitioner | Administrator Of The Specified Undertaking Of The Unit Trust Of India |
Respondent | Garware Polyster Ltd. |
SCR | [2005] Supp. (1) S.C.R. 192 |
Judgement Date | 2005-05-09 |
Case Number | 3196 |
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