Delhi High Court
Malanpur Steel Limited vs Spice Jet Limited on 14 July, 2010
Author: A.K. Sikri
Bench: A.K. Sikri
REPORTABLE
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment Reserved On:17.5.2010
% Judgment Pronounced On: 14.07.2010
(1) C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003
MALANPUR STEEL LIMITED . . . PETITIONER
THROUGH Mr. Jayant Bhushan, Sr. Advocate
with Mr. Diwakar Maheshwari,
Advocates
VERSUS
SPICE JET LIMITED ...RESPONDENT
THROUGH Mr. Atul Sharma, Advocate with
Mr. Anand Srivastava, Ms. Neeru
M Jhan, Advocates
(2) C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003
SPICE JET LIMITED ..APPLICANT/PETR.
THROUGH Mr. Atul Sharma, Advocate with
Mr. Anand Srivastava, Ms. Neeru
M Jhan, Advocates
VERSUS
1.MALANPUR STEELS LTD.
2. PUNJAB NATIONAL BANK ....RESPONDENTS.
THROUGH Mr. Jayant Bhushan, Sr. Advocate
with Mr. Diwakar
Maheshwari,Advocates
Mr. Jagdeep Kishore, Adv. for PNB
(3) C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
SPICE JET LIMITED ....PETITIONER
C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 1 of 17
C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003
C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
THROUGH Mr. Atul Sharma, Advocate with
Mr. Anand Srivastava, Ms. Neeru
M Jha, Advocates
VERSUS
MALANPUR STEELS LIMITED & ANR. . .RESPONDENTS.
THROUGH Mr. Atul Sharma, Advocate with
Mr. Anand Srivastava, Ms. Neeru
M Jha, Advocates
Ms. Poornima Sethi, for Official
Liquidator.
CORAM :-
HON'BLE MR. JUSTICE A.K. SIKRI
1. Whether Reporters of Local newspapers may be allowed
to see the Judgment?
2. To be referred to the Reporter or not?
3. Whether the Judgment should be reported in the Digest?
A.K. SIKRI, J.
1. Company Petition No.385 of 2003 was filed by M/s Royal Holding Services Limited (RHSL) under Section 391-394 of the Companies Act for revival/restructuring of M/s Royal Airways Ltd. (earlier known as Modiluft and presently known as Spice Jet). It was second motion under the aforesaid provisions after convening the meetings of different traders on the directions of this Court in earlier proceedings filed by RHSL under Section 391 (1) of the Act. It was stated that meetings of Inter-Corporate Depositors and Staff Creditors were held and the scheme was approved by the Staff Creditors unanimously and by Inter- Corporate Depositors by a majority of more than 3/4th. On this basis of approval/sanction of the scheme for compromise with the Creditors was sought. The Regional Director as well as Official Liquidator gave their no objection to the proposed scheme. C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 2 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 However, three persons filed their objections namely S.K. Modi Group, Malanpur Steel Ltd. and Paradise Credit Pvt. Ltd.
2. Matter was heard at length which resulted in passing of orders dated 15th July, 2005. Vide this order, objections of the aforesaid three objectors were rejected and scheme was sanctioned by this Court. Co.Appl.No. 1130/2005 has been filed by Malanpur Steel Ltd. (hereinafter referred to as „Malanpur‟ ) seeking review of orders dated 15th July, 2005.
3. Though, number of objections were raised by Malanpur, what is relevant for the purposes of the present review petition is that the basic objection of the Malanpur was that it is a decree-holder and is thus wrongly classified as Inter Corporate Depositor and it should have been classified as a decree-holder and the decretal amount should have been treated at the principal amount.
4. It may be pointed at the outset that on the basis of this decree, it was also the contention of Malanpur that it was a secured creditor of the company and, therefore it had right to get the entire decretal amount. This objection was however turned down.
5. Other objection of Malanpur, which needs to be noticed, was that as per the scheme even the payment of first instalment had been made upon conditional withdrawal of suits and other criminal complaints filed under Section 138 of Negotiable Instruments Act and undertaking from respective creditors to support reorganization in the capital structure of the company. It was argued that first condition was against its interest and second condition was vague and C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 3 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 unworkable. This objection was also over ruled in the judgment dated 15th July, 2005.
6. Before I take note of the averments on the basis of which review of the aforesaid order is sought, it would be necessary to take note of some developments which have taken place after passing of orders dated 15th July, 2005 sanctioning the claim. It may also be recapitulated that C.A. No. 265/2003 was filed by Mr. Siddhanta Sharma, under Section 534/441 of the Act. Genesis of this application could be traced to the allotment of certain shares of the company to three investors company belonging to S.K. Modi Group, namely, Modi overseas investment Pvt. Ltd., Kesha Investments Private Ltd. and Paradise Credits Pvt. Ltd.
7. An innovative and deceitful methodology was introduced for making payment against these shares, without at the same time affecting the pockets of the three investment companies. The company entered into a lease agreement with M/s Agache Associates agreeing to take the premises at Calcutta at a monthly rent of Rs. 10,000/-. However, it also agreed to give security deposit of realization amount of Rs. 36 crores. This artificial liability towards Agache was created in the books of Modiluft Ltd. so as to assign the liability of payment of security deposit to the investment company of S.K. Modi group. This liability of Modiluft was manipulated and shown to be taken over by the said investment companies and consequently the partly paid shares held by the investment companies remained wrongly shown as fully paid up shares. In this application, after hearing the parties, the court passed a detailed interim order dated 28th January, 2003 attaching property bearing No. 15, Ratan Babu Road, Cossipore, Calcutta and directing that it shall not be disposed of in any manner or its possession parted with without the leave of the court and also observing that if C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 4 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 the amount of Rs. 36 crores given as security by the company minus the rent upto date at Rs. 10,000/- per month is deposited in this Court, the attachment would be liable to be lifted forthwith.
8. In C.A. 265/2003, prayer was made that resolution dated 30th July, 1996 as per which the aforesaid shares were allotted by the Board of Directors to the said three companies be declared null and void. In the order dated 15th July, 2005 while sanctioning the scheme, decision on this application was deferred and a stipulation was made in the said order that scheme was sanctioned subject to the decision in C.A. 265/2003. However, the occasion to decide this C.A. did not arise, because of the reason that the disputes between the propounders and the Modi Group stood settled. C.A. No. 634/2009 was filed by both the parties recording the terms of settlement and on that basis C.A. 265/2003 was dismissed as withdrawn.
9. Another development which concerns Malanpur is this. For the ICD of Rs. 5 crores given by Malanpura, Modiluft had pledged 55,60,000 shares belonging to Paradise group of company, Kesha investment and Modi Overseas Ltd. Since ICD was not repaid, Malanpur took the stand that it had sold the shares for Rs.1.39 crores. However, when the transferees applied for transfer of shares in their names, company had not effected the transfer on the ground that it was a tainted transaction as the shares were not fully paid up. In the suit filed by the Malanpur in Calcutta High Court, this fact was mentioned. It was available when the decision dated 15th July, 2005 rendered.
10. In may, 1998 Malanpur had filed execution petition 1545/98(first execution petition) for execution of decree dated September 8, 1997 before the Calcutta C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 5 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 High Court. Proceedings in those execution proceedings were however stayed on 23rd June, 1998 as Provisional Liquidator was appointed by Delhi High Court in winding up petition filed by Indian Oil Corporation. This winding up petition was filed against Modiluft (CP 68/97) in which provisional Liquidator was appointed on 29th April, 1998.
11. It may also be noted that one CP 112/99 was filed before the Company Law Board in respect of transfer of shares allegedly made by Malanpur in favour of Prospective buyer. In this petition, orders dated 13.1.2001 were passed by CLB holding that transfer deeds are forged and not genuine. Against this order, appeal is preferred before this Court which is still pending.
12. In the suit filed before the Calcutta High Court, Malanpur had prayed for a decree of Rs. 5,83,96,465 (Rs. 5 crores ICD plus interest) together with future interest @ 20% per annum and had also sought declaration that it is entitled to sell pledge shares to realize the ICD. In this suit, Malanpur filed an interim application for a judgment upon admission and decree in the sum of Rs5,83,96,465/-. Decree in the sum of Rs.5,83,96,465/- was passed allowing that application on 8th September, 1997. Suit qua remaining prayers is still pending. Appeal against the decree has been filed by Modiluft which is also pending before the Division Bench.
13. In January, 2001, Malanpur filed another application in the Civil Suit pending in Calcutta High Court praying, inter alia, that Modiluft and Karvy be directed to register transfer of shares in the names of respective buyers. In this application, orders dated 27.8.2001 were passed holding that order of CLB was binding so long as it is not set aside by this Court in the appeal. This order was C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 6 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 challenged by Malanpur by filing appeal before the Division Bench of Calcutta High Court.
14. In July 2005, Malanpur filed second Execution Petition No. 54/2005 for the decretal amount with a prayer that to that extent the accounts be attached. Orders dated 7th July, 2005 were passed by the learned Single Judge of Calcutta High Court allowing this petition and attaching the accounts of SpiceJet/Modiluft. Against this, appeal is preferred by SpiceJet/Modiluft. The Division Bench passed orders dated 11th July, 2005 directing as under-
"(i) SJ and its transfer agents Karvy to register the transfer of 40,48,200 and 15,11,200 shares in the names of the respective purchasers;
(ii) restrains SJ and Karvy from returning from returning any shares without effecting the transfer;
(iii) requires SJ and Karvy from recalling 15,11,200 shares which they had returned without effecting any transfer:
Against this order, Spice jet preferred Special Leave Petition. This Special Leave Petition was disposed of by the Supreme Court vide orders dated 6th July, 2009.
15. On the basis of this order, plea is raised by the learned counsel for the Modiluft that issue of forfeiture of share is to be decided by this Court.
16. For the sake of clarity and convenience, the aforesaid developments/events are recapitulated below in a tabulated form:-
Sl. No. Date Details of Events 1. September 8, 1997 Calcutta High Court passes a decree upon
admission against Spice Jet (Modiluft) for the entire amount prayed for and directs that interim order dated April 23, 1997 shall continue. Suit remains pending for other prayers of Malanpur.
C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 7 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
2. April 29, 1998 Delhi High Court appoints Official Liquidator as Provisional Liquidator in winding up petition filed by Indian Oil Corporation before Delhi High Court.
3. May 1998 Malanpur files its first execution petition (No. 1545 of 1998 in CS 161A of 97) for execution of decree dated September, 8, 1997 before Calcutta High Court
4. June 23, 1998 Calcutta High Court stays Malanpur‟s petition No. 1545 of 1998, on account of appointment of provisional liquidator by Delhi High Court in winding up petition filed by Indian Oil Corporation.
5. January 13, 2000 In CP 12/111/99, CLB holds that the transfer deeds are forged and not genuine.
6. March 6,2000 Twenty Four Carats Investment Pvt. Ltd.
prefers Company Appeal 2 of 2000 against the order of CLB dated January 13,2000 (still pending before Delhi High Court)
7. January, 2001 Malanpur files another application GA 2293 of 2001 in CS 161A of 1997 praying inter alia that SJ and Karvy be directed to register transfer of 40,48,200 and 15,11,200 shares each in the names of the respective buyers and that SJ and Karvy be restrained from returning any shares without effecting any transfer and be required to call back 15,11,200 shares returned by them without effecting any transfer.
8. May 30, 2001 Provisional liquidator appointed on April 29, 1998 is recalled.
9. August 22, 2001 In GA 2293/2001 Calcutta High Court holds that the order of CLB is binding on upon the transferees so long as the same is not set aside by Delhi High Court and that Malanpur was trying to get relief in an indirect way.
Calcutta High Curt also pointed out that the matter was pending final adjudication before Delhi High Court.
10. July 7, 2005 Malanpur files its second execution petition no. 54/2005 for the order dated September 8, 1997 for the decreed amount and to that extend the accounts be attached.
11. July 7, 2005 Single Judge of the Calcutta High Court allows the second execution petition filed by Malanpur, attaching the accounts of Spice Jet to the extent of the decreed amount.
12. July 11, 2005 Calcutta High Court directs:
(i) Spice Jet and its transfer agents Karvy to register the transfer of 40,48,200 and 15,11,200 shares in the name of the respective Purchaser.
(ii) restrains SJ and Karvy from returning C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 8 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 from returning any shares without effecting the transfer;
(iii) requires SJ and Karvy from recalling 15,11,200 shares which they had returned without effecting any transfer.
13. July 15, 2005 Delhi High Court sanctions the scheme of compromise in CP 385 of 2003 and directs that the forfeiture of the shares has been made the subject matter of CA 265/2003 which is pending.
14. July 20, 2005 Division Bench of Calcutta High Court allows the appeal filed by Spice Jet and holds that:
Malanpur, even after obtaining the decree in its favour, is deemed to be in the same class as the unsecured creditors.
The scheme is binding on Malanpur and Malanpur must not proceed with the execution proceedings in any manner whatsoever.
Vacates the order dated July 7, 2005 passed by the single Judge of Calcutta High Court.
15. August 12,2005 Malanpur files review petition CA 1130/2005 before Delhi High Court seeking review of the July 15, 2005 order passed by Delhi High Court
16. August 24,2005 Spice Jet files SLP 17474/2005 against order of the Calcutta High Court dated July, 11, 2005
17. November 26, 2008 Memorandum of Settlement (MOS) effected between SK Modi group, RHSL, Spice Jet and BS Kansagra covering inter alia the dispute regarding shares (including Pledged Shares) being partly paid.
18. December 12,2008 Decree in terms of the said MOS is passed by Delhi High Court.
19. January 16,2009 CA 265/2003 (covering dispute of partly paid shares) is dismissed as withdrawn pursuant to permission from Delhi High Court.
20. July 6, 2009 SLP No. 17474/2005 is disposed of by Supreme Court with directions to the Delhi High Court to decide the issue of forfeiture of shares de novo and till such time this issue is decided, status quo shall be maintained.
17. Now I proceed to discuss the grounds on which the review of orders dated 15th July, 2005 is sought.
C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 9 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
18. First submission is that this court has wrongly treated the Malanpur as Creditor belonging to ICD category. According to the learned counsel, since Malanpur is having decree in his favour and further sharers were also pledged by Spice Jet( Modiluft) at the time of advancing the loan, it should have been treated as secured creditor and thus a different class.
19. Merely because the Malanpur has a decree would not make it secured creditor. This aspect was dealt elaborately in orders dated 15th July, 2005 in the following manner:-
"51. The first objection flows fro the fact that there is a decree in favour of Malanpur. It is not disputed, however, that Malanpur had advanced a sum of Rs. 5 crores to the company which was treated as Inter Corporate Deposit (ICD). It wants change of categorization only on the basis of decree obtained by it. It may be significant to mention that this decree is obtained on the basis of admission by the company and the admission relied upon was the one which was mentioned as principal amount due to Malanpur in earlier scheme of compromise with the creditors propounded by the company. Decree which is passed includes Rs. 5 crores as principal amount and interest plus future interest. Principal amount Rs. 5 crores, therefore, remains. Other component of the decree is the interest amount. It could not be disputed by the learned counsel for Malanpur that in the scheme propounded by the company all the creditors are classified on the basis o of „principal amount‟ owed to them. It may be mentioned that Deutsche Lufthansa also has a decree for an amount equivalent to US$ 5 million. However, in the scheme what is offered is US$ 1.20 million which has even been accepted by Lufthansa. Further, merely because of Malanpur has got a decree in its favour it would not become a secured creditor.
52. Even otherwise, nothing much would turn by seeking change in the categorization. If Malanpur is to be classified in class I alongwith Lufthansa as contended by it and the decretal amount is to be taken into consideration, as against the decree of Rs. 5,83,96,465/- in its favour the decretal amount of Lufthansa is US$ 5 million. In that case, Malanpur would have represented 18% of the said class and Lufthansa 82%. Lufthansa has given its consent ot the C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 10 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 proposed scheme and even if Malanpur had been included in that category and voted against the scheme, the creditors in that class with 82% stakes would have the approval of the scheme and the objection of Malanpur would not have made any difference.
53. It may not be out of place to mention that as per Malanpur‟s own admission even this decree passed in its favour is under challenge before the Division Bench of the Calcutta High Court. It may also be of significance to point out that Malanpur has right to recover a sum of Rs. 1.39 crores out of the decretal amount. If that is to be treated as payment against the principal amount, the principal amount would stand reduced by this amount."
There is hardly any ground to seek review inasmuch as under the garb of review, Malanpur is trying to re-argue the matter which is not the scope of the review and thus impermissible.
20. The plea predicated on pledged shares was not even raised at the time of arguments and, therefore, in review application, such a plea cannot be permitted to be raised for the first time. In any case this plea is without any merit.
21. Merely because certain shares were pledged with the Malanpur, would not make it a secured creditor. This plea is after thought as well. Malanpur had raised this very issue in the execution petition filed by it in the High Court of Calcutta. The Division Bench of Calcutta High Court formulated the question raised in the following manner:-
"very interesting que3stion, although already settled by the court earlier, that whether a decree-holder stands at the same footing as that of an unsecured creditor when the matter is before the company court for sanction of a scheme filed by a company"
22. Following answer was provided by the Division Bench:- C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 11 of 17
C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 "After considering the facts and circumstances of the case and the cases which were cited before us by Mr. Mukherjee and Mr. Bose and after analyzing the same, we do not have any hesitation to hold that the decree-holder in the light of the said section 390 (c) of 1956 Act also stands on the same footing as that of an unsecured creditor and it has to be accepted that even after obtaining a decree against the appellant/petitioner by the decree-holder, the respondent herein, shall be deemed to be of the same class as that of other unsecured creditors under the said section."
23. Interestingly, in this execution petition, the Malanpur wanted the Court to treat it as a Secured Creditor with an attempt to bring difference out of the sanctioned scheme, even when it had participated in the proceedings when the scheme was sanctioned. The Division Bench did not accept the plea and also held that the case of Malanpur was covered by the said scheme:-
"In these circumstances, we do not have any hesitation to held that the execution proceedings cannot be proceeded with when the court has already sanctioned the scheme in question. So far as application under Section 391(3) is concerned, as Mr. Bose has tried to take a point that the said order has no effect, we cannot accept such submission since his client duly contested the proceeding and thereafter the scheme was sanctioned. At this stage his client cannot turn back and say that the said order should not be given effect to. Furthermore, the order so passed by the Delhi High Court would relate back to the date of the filing of the said application by the appellant for sanction of the scheme"
24. When the matter was proceeded on the basis that Malanpur was an unsecured creditor and was to be clubbed with other such creditors who had also given Inter Corporate Deposits (ICDs), it is a desperate and misconceived attempt on the part of Malanpur to consider it as a secured creditor.
25. It would also be of interest to note that even the suit filed by the Malanpur in Calcutta High Court proceeds on the premise that it is a unsecured creditor. In C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 12 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 that suit, simpliciter money decree alongwith interest is prayed. Additional prayer is that decree of declaration be passed that the Malanpur is entitled to sell the said shared by public auction and/or private treaty and realize the sale proceeds thereof in protanto satisfaction of its claim. Therefore, I do not agree with this contention of Malanpur.
26. Another plea taken in this review petition relates to the proceedings initiated by Malanpur under Section 138 of Negotiable Instruments Act. It was submitted by Mr. Jayant Bhushan, learned Senior Counsel appearing for the Malanpur that even when the Company Court is considering scheme under Section 391/392 of the Companies Act, it has no jurisdiction to stay such proceedings. In support, the learned Senior Counsel referred to a Division Bench Judgment of this Court in Krishna Texport Industries Ltd. Vs. DCM, 150, (2008) DLT 259.
27. This contention is again misconceived. In para 56 of the judgment, same very objection was dealt with in the following manner:-
"56. In so far as objection of Malanpur to the two conditions attached to making payment of first instalment are concerned, there may not be of any cause of worry inasmuch as it can be directed that the suits or other proceedings under Section 138 of the Negotiable Instruments shall be withdrawn only after the complete payment is made as per the scheme. Till that time, the complainant as well as the company may apply for adjourning of the pending matters. On the final payment being made a joint compromise application can be filed for disposing of the said pending proceedings. It has been pointed out by the petitioner that in the creditors‟ meeting, this term had been changed and it was decided that the withdrawal of such complaints would be simultaneously with the payment of second instalment amount. Therefore, this objection is rendered nugatory"
28. There is no order directing Malanpur to withdraw the proceedings. Only arrangement which is made is that Malanpur and /or the Company may apply for C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 13 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 adjourning the pending matters which could be withdrawn only after payment as per the scheme is made. Malanpur has to accept the position that the scheme has since been sanctioned. The amount due to Malanpur is now payable as per the sanctioned scheme. Because of non -payment of this very amount due to Malanpur in respect of which Spice Jet has given the cheques and they are dishonoured, Malanpur has taken due proceedings under Section 138 of the NI Act. Naturally, once the amounts as per the scheme are paid, the Spice Jet shall be absolved of any liability in respect of the aforesaid ICDs given by the Malanpur to Spice jet. In such an eventuality, it would always be permissible to Spice Jet to contend before the Court, where these proceedings are pending that amount in question stands paid. The consequence flawing there from can always be taken into account by the Court where these proceedings are pending. In this backdrop once the scheme has already been sanctioned, this ground seeking review of the order is not even available to Malanpur.
29. In Krishna Textport (supra), this Court was of the opinion that Company Court was not empowered to stay criminal proceedings against officers of the company involved in cheating, criminal breach of trust, misappropriation, forgery and dishonor of cheques. Likewise, provisions of Section 391 (6) of the Companies Act, could not be used to bring an end the prosecution arising from Income Tax Act or Foreign Exchange Control Act. Because of this reason, the court also opined that proceedings under Section 138 of the N.I. Act instituted against the company could not be stayed. That stage is long over. It is stated at the cost of repetition that scheme was sanctioned way back in the year 2005. But for the present review petition, said scheme has attained finality. That has even been substantially acted upon as well, inasmuch as, payment to most other creditors have already been given as per the scheme.
C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 14 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
30. One aspect, however, which needs to be discussed which does not arise out of the review petition. As pointed above, the Division Bench of Calcutta High Court has passed orders directing Spice Jet to register the transfer of pledged shares in the names of their respective purchaser. The Spice jet had filed SLP their against. In its order dated 6th July,2009, the Supreme Court has directed this Court to decide the question regarding forfeiture of shares.
31. As already noted above, decree was passed by the learned Single Judge of Calcutta High Court for a sum of Rs. 5,83,96465/- alongwith interest. The Spice Jet has filed appeal there against which is pending before the Division Bench. Malanpur had filed execution petition which was, however, stayed by the learned Single Judge accepting the plea of Spice jet that provisional liquidator has been appointed by this Court in winding up petition filed by Indian Oil Corporation. Against that order the Malanpur has also filed appeal which is pending before the Division Bench of Calcutta High Court. In that appeal, Malanpur filed application seeking direction to Spice Jet to transfer the shares in favour of the purchasers. It is in this application, orders dated 11th July, 2005 were passed by the Division Bench directing Spice Jet to affect the transfer of shares in the name of purchasers.
32. Against this order, SLP was filed which was disposed of on 6th July, 2009 in the following manner:-
"By Order dated 16th January, 2009 the Delhi High Court in C.M. Nos. 1469-1470 of 2008 in Co. P. No. 385 of 2003 observed that the question regarding forfeiture of shares in pending in the Supreme Court and it would be open to M/s Malanpur Steel Limited to make its submissions before the Supreme Court.
Today when the Special Leave Petition came before this Court the above order was shown to us. We are of the opinion that the High Court should decide the said question in accordance with law. In the meantime, status quo as regards the transfer of shares shall continue till the High Court decides the matter expeditiously.
Accordingly, the Special Leave Petition stands disposed of."C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 15 of 17
C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
33. Learned Counsel for the Malanpur argued that Supreme Court permitted this Court to decide only question regarding forfeiture of shares, and otherwise, this Court cannot decide the validity of orders passed by the Division Bench of Calcutta High Court. This submission appears to be well founded. On the date when the Supreme Court passed the aforesaid order regarding forfeiture of shares, CA 265/2003 was pending in this Co. Petition. It is in this context the Supreme Court observed that said issue could be decided by this Court. Said issue has become infructuous because of compromise having arrived at between S.K. Modi Group , RHSL, Spice Jet and B.S. Kansangra covering, inter alia, the dispute regarding shares including the pledged shares with Malanpur. Obviously, it could not be the intention of the Supreme Court to direct the Delhi High Court to decide upon the validity of orders passed by the Division Bench of Calcutta High Court. The limited issue which this Court was called upon to decide no more survives in view of the said settlement.
34. The aforesaid discussion leads to the conclusion that in so far as review petition is concerned, it is bereft of any merit and warrants to be dismissed. It is dismissed as such.
C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003
35. In this order, C.A. 634/2009 in C.P. 385/2003 also stands decided inasmuch as it is clear that payment would be made to Malanpur Steels Ltd. as per the sanctioned Scheme and once the entire payment is made, Malanpur shall withdraw the proceedings under Section 138 of the N.I. Act which were filed by it alleging non-payment of dues in the form of dishonor of the cheques. C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003
36. C.A. 659/2009 in C.P. 385/2003 was only for advancing the date of hearing of CM 634/2009 which does not survive.
C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 16 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003 (A.K. SIKRI) JUDGE JULY 14, 2010/skb C.APPL. No.1130 OF 2005 in CO.PET. 385 OF 2003 Page 17 of 17 C.APPL.NO. 634 OF 2009 IN CO.PET. 385 OF 2003 C.APPL. NO. 659 OF 2009 IN CO.PET. 385 OF 2003