SICOM LTD. Vs. DEVE SUGARS LTD.

JUDGEMENT

(1.) This application is filed for giving effect to the memorandum of understanding entered between the applicant-company and Pragosa Ventures (P.) Ltd.

(2.) The applicant-Deve Sugars Ltd. is a public limited company. The respondent-Sicom Ltd. is also a public limited company. According to the respondent, they have advanced corporate loan of Rs. 3,00,00,000 to Rajadhiraj Industries Ltd., a company incorporated and registered under the Companies Act, 1956 (hereinafter 'the Act'). The applicant-Deve Sugars Ltd. stood as guarantor for the due payment of the debt. The principal debtor and the guarantor did not make payment and, therefore, Sicom Ltd. filed Company Petition No. 170 of 1995 for winding up of the applicant-company. Sicom Ltd., the respondent herein, also filed an application CA No. 2255 of 1997 to restrain the applicant herein by an ad interim injunction from transacting special business Nos. 8 and 11 or any other business which may tantamount to creation of charge on the properties. In that application, the applicant, herein as respondent, gave an undertaking that before entering into any transaction pursuant to the impugned resolution, the respondent shall approach this court for suitable directions. Now the applicant has come forward with the instant application seeking permission to give effect to the memorandum of understanding entered into between the applicant and Pragosa Ventures (P.) Ltd.

(3.) The managing director of the applicant has filed an affidavit to the effect that the applicant-company had exhaustive meetings with the Government of Karnataka, conducted by the Minister for Sugar, Government of Karnataka, which was attended by the representatives of the Sugar Directorate, Industries Department, Commercial Taxes Department, Labour Department, District Collector, Labour Unions, cane-growers, bankers and representatives from the management, in which a proposal, as per the memorandum of understanding, was arrived at and the Government of Karnataka directed the mill to be handed over to the new management and, if not, the mill will be taken over by the Government of Karnataka by way of issue of an Ordinance. As per the memorandum of understanding, Deve Sugars Ltd. is the seller and Pragosa Ventures (P.) Ltd. is the buyer. It was agreed that Deve Sugars Ltd. will hand over the management of the mill to Pragosa Ventures (P.) Ltd., retaining 49 per cent. of its capital. It was also agreed that all suits and appeals, of the nature of judicial, quasi-judicial, civil, criminal, consumer, industrial and labour, arbitration pending shall be continued and prosecuted by the buyer and seller-company jointly. The buyer-company had undertaken not to alienate or create any charge or transfer in any manner any of the assets transferred, without the concurrence of the seller. The transferee-company had also agreed to invest about Rs. 10 crore for the reopening of commencement of the production of the factory. The scheme of undertaking would enable the applicant to restart the sugar factory, which would be beneficial to the general public, i.e., cane-growers of the vicinity and also help in more production of sugar. Therefore, the applicant prays for permission to give effect to the memorandum of understanding entered into between the applicant and Pragosa Ventures (P.) Ltd. The applicant had also filed an affidavit from Mr. M. V. Subramanian, a director of Pragosa Ventures (P.) Ltd. to the effect that Pragosa Ventures (P.) Ltd. agreed for terms of memorandum of understanding.