COMPANIES ACT 1956 UNDER SECTION 391 READ WITH SECTION 394 OF COMPANIES ACT 1956 Vs. IN THE MATTER OF: SCHEME OF ARRANGEMENT RESTRUCTURING OF DEBTS THE SIMBHAOLI SUGAR MILLS LTD

JUDGEMENT

(1.) SUNIL Ambwani, J. This is a petition for obtaining sanction of the Scheme of Restructuring (in short, the Scheme), without any modification, between petitioner' company and its secured creditors, to reduce the interest liability on the debt burden on the petitioner-Company. The Scheme was prepared by State Bank of India through its Industrial Finance Branch, New Delhi, the leader of the working capital consortium to the petitioner- company under the Corporate Debt Re-structuring Mechanism ('cdr' Mechanism), and submitted to the Corporate Debt Restructuring Forum ('cdr Forum') set up by the Reserve Bank of India as a package to the Company involving re-phasing of repayment of the existing terms loans and debentures, and induction of fresh funds, to the extent of erosion in the working capital of the petitioner's company.

(2.) THE 'cdr Mechanism' set up by the Reserve Bank of India vide its Circular dated 23-8-2001, ensures a timely and transparent mechanism for the restructuring of the corporate debt, of viable corporate entities affected by internal or external fixation outside the purview of the Board of BIFR, DRT and other legal proceedings for the benefit of all concerned. It applies to multiple banking syndicate consortium accounts, with outstanding exposure of Rs. 20 crores or above, with financers and financial institutions.

(3.) THE Chairman reported to the Court that the meeting was attended by 14 secured creditors in person or proxy representing the total value of amount outstanding as March 31, 2004 at Rs. 20303. 19 lakhs. It was approved by 12 secured creditors, excluding UTI having the total voting power of Rs. 18096. 47 lakhs without any modification which constituted 88. 94% of the secured creditors by value as on 31-3-2004. THE Unit Trust of India having an aggregate value of Rs. 2206. 72 lakhs as on March 31, 2004 attended and voted against the proposed scheme vide their letter dated 5-11-2004 produced by Mr. Satish Kumar on behalf of UTI.