SIEL LIMITED Vs. STATE

JUDGEMENT

(1.) These petitions are filed under sections 391(2) and 394 of the Companies Act, 1956 praying for sanction of the scheme of arrangement between Siel Lmited, Siel Sugar Limited, Siel Holdings Limited and Shivajimarg Properties Limited. Company Petition No. 107 of 2003 is filed by Siel Limited, whereas Company Petition Nos. 108/2003, 109/2003, 110/2003 are filed by Siel Sugar Limited, Siel Holdings Limited and Shivajimarg Properties Limited, respectively. The registered office of the companies are located within the territorial jurisdiction of this Court and, therefore, this Court has jurisdiction to decide the present petitions. As the facts pertaining to all the petitions are same and the issues raised are also similar, I propose to dispose of all these petitions by this common judgment and order.

(2.) The Boards of Directors of all the companies prepared a scheme of arrangement consisting of debt restructuring as well as business restructuring and the said Boards of Directors have passed resolutions approving the said scheme of arrangement. Petitions were filed in this Court under section 391(1) of the Companies Act and this Court by order dated February 11, 2003 was pleased to direct the companies to convene separate meetings of its equity shareholders, preference shareholders, secured creditors and unsecured creditors for the purpose of considering and, if thought fit, approving the said scheme of arrangement with or without modification. Meetings of the equity shareholders, preference shareholders, secured and unsecured creditors were held in terms of the orders of this Court. After the aforesaid meetings were held the Chairperson has submitted his report which is placed" on record. It is reported that in compliance with the provisions of section 391 of the Companies Act the scheme of arrangement has been approved in those meetings. Thereafter, the companies have filed the present petitions for sanction of the scheme under section 391(2) read with section 394 of the Companies Act. Notice of these petitions were duly served on the Regional Director, Department of Company Affairs, Kanpur. Notice was also advertised in the newspapers in compliance with the court's order dated March 20, 2003. When the matter was listed on the date fixed, i.e., on April 10, 2003, a copy of the citation so published was filed in this Court. The Central Government submitted its report through the Regional Director. However, an objection was filed by Mr. R.K. Gupta, who appeared in person. On the subsequent date, i.e., on May 23, 2003, Mr. R.K. Gupta decided to withdraw the objection filed by him upon which the said objection was ordered to be closed. In the report submitted by the Regional Director, Department of Company Affairs, Kanpur, it is stated that the Unit Trust of India, who are not only shareholders but also debenture holders, has objection to the grant of scheme. Even after publication of the citation, the Unit Trust of India did not file any objection initially. But in view of the fact that it had raised its objections in the meetings and also because it is a financial institution this Court deemed it fit and appropriate to issue a notice to the Unit Trust of India informing it about the filing of the present petitions in this Court. On service of the said notice, the Unit Trust of India entered appearance and filed its objections. Another objection was filed by Rashtrawadi Janhit Sabha. The other objection was filed by Shri Nahar Singh who holds two shares in Siel Limited. Since the aforesaid objections were filed, pleadings in respect of the said objections were allowed to be completed. The matter was thereafter placed for hearing including hearing of the objections filed by the objectors. The learned counsel for the parties have painstakingly taken me through the various documents filed in the case and also various decisions which are cited at the bar, and on a close perusal of the same I propose to dispose of all these petitions by giving reasons for my decision.

(3.) One of the petitioners in the present company petitions is Siel Limited which carries on diverse business including chemicals, vegetable oils and sugar. It is stated in the petitions filed that pursuant to an order of the Supreme Court passed in November 1996 in the matter of M.C. Mehta v. Union of India and others, Siel Limited had to close its manufacturing units located in Delhi. Due to the said reasons and for various other reasons the company also faced financial problems. The chemical plant of the company was relocated at Rajpura, Punjab, which commenced its commercial production from the month of February 1999. During the aforesaid period from 1996 to 1999, the company incurred heavy losses resulting in a large debt burden consequent to which in October 1999 the company and the financial institutions agreed for restructuring of the debt without the intervention of the Court. However, despite the aforesaid restructuring the company continued to face financial problems.