AXIS BANK LIMITED Vs. NATUROL BIOENERGY LIMITED

JUDGEMENT

(1.) C.A.No.1691 of 2011 is filed by M/s Naturol Bioenergy Limited (hereinafter called as 'NBL') to issue and publish notices for convening, holding and conducting of meetings of the creditors for approval of the proposed scheme of arrangement, and for the immediate implementation of the package. This Court, by order in C.A.No.1691 of 2011 dated 21.11.2011, directed that a meeting of the secured creditors of NBL be convened on 24.12.2011 at 10.30 A.M. at their registered office for the purpose of considering the reworked CDR Package, and for implementation of the MRA with NBL. Sri Ch.Pushyam Kiran, an Advocate of this Court, was appointed as the Chairman of the meeting. This Court also directed that notice be given to each creditor, and an advertisement be published in "Business Standard" (English daily) Mumbai and Hyderabad editions and "Andhra Prabha" (Telugu daily) Hyderabad edition. In its order dated 22.11.2011 this Court noted the affidavit placed on record by Sri Ch.Pushyam Kiran that he had appeared on behalf of one of the creditors of NBL. The earlier order, in C.A.No.1691 of 2011 dated 21.11.2011, was modified and, in the place of Sri Ch.Pushyam Kiran, Sri B.S.Sivaji, Advocate, was appointed as the Chairman to convene and hold the meeting of the secured creditors of NBL on 24.12.2011 at 10.30 A.M. at their registered office, and the application was directed to be listed on 30.12.2011 for the report of the Chairman. On 30.12.2011, extension of time was sought for submission of the report of the Chairman. Thereafter, on 06.01.2012, this Court noted that Axis Bank had raised objections with regards acceptance of the Chairman's report and, hence, the application was adjourned to 18.12.2012 for Axis Bank to place on record their objections. C.A.No.75 of 2012 is filed by NBL requesting this Court to receive the additional affidavit together withthe documents filed therewith. C.A.No.285 of 2012 is filed by Axis Bank Limited to recall the order passed on 21.11.2011, and the modification order passed on 22.11.2011; to declare the convening of the meeting of the creditors held on 24.12.2011, pursuant to the order passed in C.A.No.1691 of 2011, as being null and void; and to dismiss C.A.No.1691 of 2011. All the three applications were heard together, and are now being disposed of by this common order. C.A.No.75 of 2012 is allowed and the additional affidavit, and the documents filed therewith by NBL, is taken on record.

(2.) IN their affidavit filed in support of C.A.No.1691 of 2011, NBL have detailed their efforts to liquidate their stock to enable them to pay their debts, but attributed their inability to do so to global recession, and extreme price fluctuations of petro-crude, and crude palm oil, which constituted the main raw material for bio-diesel.- It is their case that these factors resulted in erosion of the inventory value of biodiesel to an extent of Rs.30.00 crores; a joint meeting of its lendors was convened on 3.6.2009 but to no avail;- Axis Bank, one of the lendors of NBL, had filed a petition before the Debt Recovery Tribunal for recovery of the amount appropriated by another creditor of NBL i.e., ICICI Bank contrary to the inter-se agreement between all the banks for apportionment of the amounts realized from NBL;- thereafter NBL had entered into negotiations, with the consortium of lenders led by IDBI Bank, on the Corporate Debt Restructuring (CDR) package approved by the CDR cell constituted in accordance with the directives of the Reserve Bank of India; the CDR package provided that all the dues/debts from NBL, until the cut off date of 1.4.2009, should be restructured and repaid over a period of 10 years in a progressive manner;- Axis Bank did not accept the CDR package in view of the stipulation of 1.4.2009 as the cut off date for restructuring of the debt due by NBL;- as the CDR package was not accepted by all the banks, a reworked and approved CDR package was sought to be implemented between NBL and their secured creditors i.e., IDBI Bank, Andhra Bank, Central Bank of India, LIC of India, NABARD, Axis Bank and ICICI Bank; however, ICICI Bank and Axis bank did not agree to the reworked CDR package, and made it clear that they intended to stay outside the corporate debt restructuring proceedings; and pursuant to the order of this Court, in C.A.No.1691 of 2011 dated 21.11.2011 as modified on 22.11.2011, a meeting of the secured creditors of NBL was held on 24.12.2011.

(3.) ORAL submissions were made by Sri S.Ravi, Learned Senior Counsel appearing on behalf of Axis Bank Limited, and-- Sri S.Niranjan Reddy, Learned Counsel appearing on behalf of NBL. Written arguments have also been submitted by Sri Ch.Pushyam Kiran, Learned Counsel for Axis Bank and Sri S.Niranjan Reddy, Learned Counsel for NBL.