SPARTEK CERAMICE INDIA LTD Vs. STATE

JUDGEMENT

(1.) The petitioner company seeks sanction of the scheme of arrangement under Sections 391 and 394 of the Companies Act.

(2.) M/s. Spartek Ceramices India Limited, the petitioner company was incorporated on 09-03-1983 with its Registered Office at Mittapalem in Chittoor District, with the object of carrying on the business of ceramic and stoneware glazed and unglazed tiles; ceramic electronic components and powerline insulators, spark plug and industrial ceramic components; and to deal in frits and glazes, colour stains, chinaware and glassware articles of industrial and domestic application. The authorized, issued, subscribed and paid up share capital of the company as on 31-03-2003 was Rs.17,30,11,100/-. The audited balance sheet of the company as on 31 -03-2003 has been annexed to the petition. The company is also a registered company having its stock listed in three stock exchanges at Mumbai, Madras and Hyderabad. For the purpose of its business, the petitioner company availed terms loans from various Banks and financial institutions for its working capital requirements during the course of its operations such as IDBI, ICICI, State Bank of India, Central Bank of India, Indian Bank, Unit Trust of India (hereinafter referred to as "UTI"), Life Insurance Corporation of India (hereinafter referred to as "LIC of India") and Army Group Insurance Fund. Owing to various internal and external factors including recession in ceramic tile industry, the petitioner company was unable to adequately service their secured loans.

(3.) The Reserve Bank of India in consultation with the Government of India finalized the scheme of Corporate Debt Restructuring (hereinafter referred to as "CDR") a non-statutory mechanism for restructuring corporate debts on voluntary basis outside the purview of BIFR and Debt Recovery Tribunals for the benefits of all concerned. The petitioner company approached the CDR empowered group and the CDR Cell in fact framed and approved a restructuring package for the petitioner company and its secured creditors. A scheme of arrangement had been framed as contemplated under Sections 391 and 394 of the Companies Act with a view to benefit the petitioner company and its creditors as well. The Board of Directors of the petitioner company at its meeting held 21-11-2003 approved the said scheme of arrangement between the petitioner and its secured creditors with effect from 01 -04-2003 subject to approval and consent of the secured creditors and confirmation by the Company Court.