CHAIRMAN&MNG DIR. CENT.BANK OF INDIA&ORS Vs. CENT.BANK OF IND.SC/ST EMP.WEL.ASN& ORS. - Synopsis
Team SoOLEGAL 10 May 2017

The case is for BPL limited the respondent herein was incorporated under the Companies Act, 1956 (for brevity ‘the Act”) and on 16.4.1963, certificate of incorporation in the name of the company as British Physical Laboratories India Pvt. Ltd. was issued. The company became deemed public company and the word “Private” stood deleted with effect from 24.3.1981. Subsequently, the name of the company was changed to BPL Limited and fresh certificate of incorporation was issued by the Registrar of Companies. The company had diversified  its activities and also embarked on various diversifications, expansion programmes and had facilities for manufacture of television, Alkaline batteries, colour monitors etc. Due to manifold reasons, the company faced cash flow constraints which adversely affected its operations. It suffered a loss of Rs.287.8 crores in the last 18 months. Due to the said loss, the debt of the company increases. In order to keep technological advancement initiated a comprehensive restructuring of its operations which primarily involved rejuvenating its main business through a joint venture with “Sanyo Electric Co. Ltd.” Japan and accordingly entered into a shareholder.Both the companies BPL and Sanyo had equal partnership in the ratio 50:50 in the joint venture. The CTV business was valued at Rs.368 crores and BPL was required to invest approximately Rs.46 crores in the joint venture company and to receive a net cash inflow of Rs.322 crores. BPL  proposed a scheme and modified in which business institutions and banks were involved. There are 36 creditors in this scheme. After approval of scheme respondent filled an application seeking permission for holding a meeting for consideration for approval of compromise or arrangement proposed to be made between companies and the creditors. The second prayer had been made for orders governing the procedures to be complied with. There were 15 respondents. After the application was filled many finance institutions filled their affidavits. The present appellant, Infrastructure Leasing & Fin. Services Ltd., which was the 8th respondent, filed its counter affidavit and in it, had raised objections to the prayer for stay of various proceedings before number of forums including debt recovery. Some  files affidavits in support and some in no support.  M/s Hewlett Packard Ltd.; that the respondent had filed Forms 8 and 13 and the charge by way of hypothecation was duly registered with the Registrar of Companies; that the appellant had initiated an arbitration proceeding which eventually resulted in the consent award dated 1.7.2004 whereby the arbitral tribunal directed a sum of Rs.48,683,710/- as due on 30.06.2004 along with interest @ 20% p.a. on the principal amount of Rs.36,360,000/- from 01.07.2004 till realization; that the award stipulated due discharge of the liability on payment of Rs.36,360,000/- in four instalments for the purpose of which post-dated cheques were issued; that there was a postulate that in case of default of payment of any instalment, the entire amount may become due and payable and the appellant would be entitled in law to execute the award for recovery of the entire due without  prejudice.The respondent failed to pay the first instalment of Rs.17,500,000/- on or before 30.09.2004; that on 30.09.2004 the respondent filed a petition. The meeting of the secured creditors guarantors was held on 6.4.2005 and a Chairperson was appointed Bank Ltd., WTI Bank Ltd. and Bank of Rajasthan Ltd. in appeals but the same were dismissed. Scheme which has been amended was put to vote and was duly approved by the three-fourth of the secured creditors present and voting in value terms; and that the Court has approved and accepted the modified Scheme.  Formalities for creating the charge is duly followed and the appellant shall remain as a secured creditor. Thereby appellant cannot be treated as an unsecured creditor and it is not permissible for him to put forth a stand that it would not be bound by the Scheme that has been approved by the learned Company Judge and it cause inevitable dismissal of the appeal.

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