IN RE: TELESOUND INDIA LTD. Vs. STATE

JUDGEMENT

(1.) Telesound (India) Ltd., for short, "the transferor -company", was incorporated in the year 1966, inter alia, for the manufacture and sale of radio -receivers, record -players, record -changers, tape -recorders, valves and commercial apparatus. The subscribed and paid up capital of the company was Rs. 99,45,455 at all material times. It was initially an Indo -German collaboration and following the reverses suffered by it and on heavy losses, the German collaborator withdrew and it became a wholly owned Indian company in 1973 but was unable to recover and was compelled to lay off the workers by 1976. By the year 1976, the liabilities of the company exceeded its assets, the accumulated losses exceeded the share capital and the capital reserves, the industrial activity of the company came to a halt and the company was unable to pay its creditors, which included, secured creditors, consisting of financial institutions and banks, unsecured creditors, such as, trade creditors, landlords and large number of depositors. In December, 1976, M. L. Sondhi carrying on business under the name and style of Laxmi Finance Exchange, for short, Sondhi, who claimed a sum of over Rs. 12 lakhs from the company, sought its winding -up by C.P. No. 90/76 inter alia, on the ground that the company was unable to pay its debts. The claim was contested on behalf of the company on the ground that Sondhi was not a creditor of the company, but it was not disputed that the company was otherwise in shambles and unable to meet its liabilities. The petition was admitted and this court appointed the official liquidator as the provisional liquidator by an order made on May 4, 1977, in C.A. No. 751 of 1976. The petition is still pending. Meanwhile, the Industrial Finance Corporation of India, for short, the Corporation, one of the secured creditors of the company, sought the intervention of this court under s. 30 of the Industrial Finance Corporation Act for the sale of the mortgaged assets of the company for the realisation of its heavy outstandings and for the appointment of a receiver by a petition being C.M. (M) (IFC) 56/77 and by an order made by this court on March 28, 1977, a receiver was appointed to take possession of the mortgaged assets of the company, including land, building, machinery, etc. The assets of the company included a tenanted commercial premises in South Extension Part I, New Delhi, in which were housed the registered office and the commercial offices of the company. This was among the assets which was taken over by the receiver appointed by this court. This petition is also pending.

(2.) During the pendency of these proceedings, efforts were being made by some of the promoters of the company with the co -operation of the Corporation and some of the other institutions, which were the secured creditors of the company, for the amalgamation of the company with any other company which may be able to take advantage of s. 72A. of the I.T. Act, introduced in the year 1977, in that Act, so as to reduce the latter's tax liability. The efforts apparently bore fruit with the willingness of Dalmia Cement (Bharat) Limited, for short, the transferee -company, to be a party to a scheme for the amalgamation of the transferor -company with the transferee -company and to a scheme of compromise between the creditors of the transferor -company and the transferor -company for the payment to the creditors on amalgamation by the transferee -company in terms of the schemes of amalgamation and compromise.

(3.) By C.A. 480 of 1979, directions of this court were sought under s. 391 of the Companies Act for convening separate meetings of the secured and unsecured creditors of the transferor -company to consider and, if thought fit, to adopt, with or without modification, the proposed scheme of compromise between the company and the creditors concerned. The scheme of compromise, as then proposed, inter alia, envisaged that the secured creditors of the company would be paid their principal amount in full with the arid interest up to June 30, 1976, and all the unsecured creditors, except depositors with interest -bearing deposits, would be paid 50 per cent of the principal sum due to them without any interest and that depositors having interest bearing deposits would be paid 50 per cent of the principal amount of deposit with full interest up to June 30, 1976. It was further provided that on the scheme being sanctioned, the transferee -company would meet the liabilities of the transferor -company in terms of and in the manner provided in the scheme of amalgamation whereby the transferor -company was proposed to be amalgamated with the transferee -company. The scheme refers to the preferential creditors, which includes employees, secured creditors and the landlords but provides that they would be paid in full and would, Therefore, not be affected by the scheme.