- (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. The participating lenders namely State Bank of India, Bank of India, ICICI Bank, IDBI, State Bank of Patiala, Punjab National Bank and Bank of Baroda, all parties to Corporate Debt Restructuring Empowered Group (CDREG) approved the scheme in meeting dated 15-9-2003 and granted their respective approval detailed in para 13 of the petition. Salient features of the scheme provide as follows: " (i) Rescheduling of existing term liabilities, commensurate with future cash flows. (ii) Reduction in interest rates and bring them to a level which could be afforded by the sugar units. (iii) Arrangement to induct of fresh funds to meet shortfall in working capital requirements resulted by fall in free sale sugar prices. A shortfall of Rs. 22 crores has been identified by SBI. (iv) Setting up ethanol project in distillery division and expansion therein so that revenues from distillery division may be increased. (v) Cost cutting measures to be taken by the Company. " The Court passed orders convening meeting of the secured creditors. In this order dated 13-9-2004, the Chairman of the meetings was directed to add an exposure statement in the advertisement as well as the notices of the meeting to the effect that the meeting shall be convened without prejudice to the rights of the Unit Trust of India as involved in O. A. No. 69 of 2004 pending before Debt Recovery Tribunal, Lucknow. In Company Appeal No. 4 of 2004 a Division Bench of this Court by its order dated 14-10-2004 relying upon Rainbow Denim Ltd. v. Rama Petro Chemicals Ltd. , (2002) 10 SCC 498, found that it was not necessary to add such an exposure statement. The Unit Trust of India was however permitted to raise all such objections before the learned Judge when the confirmation scheme is taken up after the meeting of the secured creditors of the applicant- company. Sri Rajeev Sharma, Advocate, the Chairman of the meeting advertised the notice of the meeting in 'times of India', published from New Delhi and 'dainik Jagaran' published from Meerut on 14-10-2004 convening the meeting on 6-11- 2004.
(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. This petition for sanction of the scheme was directed to be advertised for hearing by order dated 13- 12-2004. The affidavit of service of Sri Yashwant Singh authorized by petitioner company brings on record, the advertisements carried out in the 'times of India' published from New Delhi and 'amar Ujala' published from Meerut dated 14-4-2005, advertising the date of hearing.;