ARVIND MILLS LIMITED Vs. STATE OF GUJARAT

JUDGEMENT

(1.) This Petition under Section 391 (1) of the Companies Act (herein after referred to as the 'Act') has been filed by Arvind Mills Limited (herein after referred to as the "Company" ), seeking sanction to the Scheme of Restructuring of its debts, floated by the creditors.

(2.) The Company filed Company Application No. 160 of 2001 for requisite directions for convening meeting of the various classes of Creditors of the Company. Vide order dated 13-6-2001 the Court directed the Company to convene meeting of its various classes of creditors for the purpose of considering and if thought fit approve with or without modifications, the arrangement embodied in the Scheme of Arrangement. The order further directed Mr. A.L. Shah, Advocate and failing him Mr. A.C. Gandhi, Advocate to act as Chairman of the meeting of the Classes of Creditors of the Company, i.e. unsecured creditors, working capital lenders and secured creditors of the Company and to report the result thereof to this Court. Necessary notices of the meeting together with copy of the Scheme, explanatory statement and form of proxy were individually sent to each of the creditors of the company; that on 13-7-2001 meeting of each of the class of creditors of the Company was held at the Registered Office of the Company in accordance with the order dated 13-6-2001; that the meeting of the Unsecured Creditors of the Company was attended by 21 unsecured creditors. That the Scheme duly amended was placed for consideration of the meeting, after inviting debate thereon and the question submitted to the meeting of secured creditors, unsecured creditors and working capital lenders was, whether Unsecured/ Secured/ Working capital Creditors of the Company approved the Scheme of Arrangement submitted at the meeting in the form of resolution. That, thereupon the aforesaid resolution on the proposed Scheme of Arrangement was put to vote by poll. That twenty (20) Unsecured creditors holding Rs.8914.94 million of the outstanding unsecured debt of the Company as on 31/03/2000 voted in favour of the said Scheme of Arrangement, representing 95.24 % in the number of Unsecured Creditors and 98.95 % in value of the total outstanding unsecured debt of the Company as on of 31/03/2000, present and voting, excluding invalid ballot papers. One unsecured creditor voted against the Scheme of Arrangement representing 4.76 % in the number of Unsecured Creditors and 1.05 % in value of the total outstanding unsecured debt of the Company as of March 31, 2000 present and voting. Thus the Scheme was approved and resolution was passed with the requisite majority. That the meting of the Working Capital Lenders of the Company was attended by 12 Working Capital Lenders. That the resolution on the proposed Scheme of Arrangement was put to vote by poll. Ten Working Capital Lenders holding Rs.4432.32 million of the outstanding working capital debt of the Company as of 31/03/2000 voted in favour of the said Scheme of Arrangement representing 90.91 % in number of Working Capital Lenders and 96.2 % in value of the total outstanding working capital debt of the Company as of 31/03/2000, present and voting, excluding invalid ballot papers. One Working Capital Lender holding Rs. 175 million of the outstanding unsecured debt of the Company as of 31/03/2000 voted against the said Scheme of Arrangement representing 9.09 % in number of Working Capital Lenders and 3.80 % in value of the total outstanding working capital debt of the Company as of March 31, 2000, present and voting. One vote was found to be invalid. The Scheme was approved and resolution was passed by the Working Capital lenders with the requisite majority. That the meeting of the Secured Creditors of the Company was attended by fourty six (46) Secured Creditors. Fourty (40) Secured Creditors holding Rs.10735.30 million of the outstanding secured debt of the Company as of 31/03/2000 voted in favour of the amendment representing 90.09 % in the number of Secured Creditors and 89.90 % in value of the total outstanding secured debt of the Company as of 31/03/2000,present and voting, excluding invalid ballot paper. Four (4) Secured Creditors holding Rs.1205.16 million of the outstanding secured debt of the Company as of March 31, 2000 voted against the said Scheme of Arrangement representing 9.09 % in the number of Secured Creditors and 10.09 % in value of the total outstanding secured debt of the Company as of 31/03/2000, present and voting. Two (2) votes were found to be invalid. The amendment was approved and the resolution was passed with the requisite majority. Thereafter the Scheme duly amended was placed for consideration of the meeting. The meeting passed requisite resolution and approved the Scheme. Thereupon, resolution on the proposed Scheme of Arrangement was put to vote by poll. Thirty five (35) Secured Creditors holding Rs.9565.03 million of the outstanding secured debt of the Company as of March 31, 2000 voted in favour of the said Scheme of Arrangement representing 85.36 % in the number of Secured Creditors and 88.56 % in value of the total outstanding secured debt of the Company as of 31/03/2000, present and voting, excluding invalid ballot papers. Six (6) Secured Creditors holding Rs.1235.16 million of the outstanding secured debt of the Company as of 31/03/2000 voted against the said Scheme of Arrangement representing 14.63 % in the number of secured creditors and 11.43 % in value of the total outstanding secured debt of the Company as of 31/03/2000 present and voting. Five (5) votes were found to be invalid. That the Scheme was approved and resolution was passed with the requisite majority.

(3.) The Company along with the petition under sec. 391 (1) of the Act presented the Scheme 'Exhibit D' floated by the body of creditors for approval and prayed for the reliefs stated in para-24 of the petition.