Case: Administrator Of S.U.,U.T.I.  Vs. Garware Polyster Ltd

cases which confer specified power to them. The Appellants herein cannot claim any priority or preference in the matter of realization of their dues over the other debenture holders. Each debenture holders has a pari passu right with each other, as is evident from clause 2.2. 42. In J.K. (Bombay) (P) Ltd. (supra), it was held : "The Court could not have completed, as contended by the appellants, their rights which were still incomplete or order the company to execute a debenture trust deed or the second mortgage, and thus set up the appellants and the other Sch. B creditors as secured creditors against the rest of the unsecured creditors. Such an order could not be passed as it would be contrary to and in breach of the right of distribution pari passu of the joint body of unsecured creditors." [See also Andhra Bank Vs. Official Liquidator and Anr., 2005 (3) SCALE 178 ] 43. In view of the our findings aforementioned, we are of the opinion that the Appellants herein having failed to establish that they could hold the entire scheme to ransom so as to stall the proceedings as a result whereof the majority of debenture holders would be deprived, the purpose or object motivating the Appellants to advance such a huge amount to the Respondent against issue of debentures is a matter of little or of no concern to the Respondent - company or other debenture holders. A special or a new right cannot be found in favour of the Appellants in the agreement when it creates none. The scheme applies equally to all debenture holders and as such the Appellants cannot be treated as a separate class. Once the Respondent-Company prima facie showed that the scheme is fair and reasonable and also that the requisite majority of the debenture holders recorded their decision in its favour, the court in absence of any unforeseen unjustness or unreasonableness therein ought not to reject the same.44. The Company Judge by reason of the impugned judgment while exercising a supervisory jurisdiction only accepted the scheme. The High Courts decision is not being questioned as unfair.45. The Respondent in view of the Scheme has no remedy other than approaching the High Court under Section 391 of the Companies Act. 46. In Sardar Amarjit Singh Kalra (Dead) by Lrs. and Others etc. vs. Pramod Gupta (Smt.) (Dead) by Lrs. and Others etc. [(2003) 3 SCC 272] , this Court stated : "As far as possible, courts must always aim to preserve and protect the rights of the parties and extend help to enforce them rather than deny relief and thereby render the rights themselves otiose, "ubi jusibi remedium" (where there is a right, there is a remedy) being a basic principle of jurisprudence. Such a course would be more conducive and better conform to a fair, reasonable and proper administration of justice." 47. We may at this stage refer to the decisions relied upon by Dr. Dhawan. 48. In the case of Nanakram Vs. Kundalrai [(1986) 3 SCC 83] as also Nutan Kumar and Others Vs. IInd Additional District Judge and Others [(2002) 8 SCC 31] the question which arose for consideration was as to whether a lease in violation of statutory provision was void. Such a question does not arise for consideration herein. 49. In Delhi Development Authority Vs. Durga Chand Kaushish [(1973) 2 SCC 825] , the court was concerned with the interpretation of a deed of lease. It was noticed: "19. Both sides have relied upon certain passages in Odgers Construction of Deeds and Statutes (5th Edn. 1967). There (at pp. 28-29), the First General Rule of Interpretation formulated is: "The meaning of the document or of a particular part of it is therefore to be sought for in the document itself". That is, undoubtedly, the primary rule of construction to which Sections 90 to 94 of the Indian Evidence Act give statutory recognition and effect, with certain exceptions contained in Sections 95 to 98 of the Act. Of course, "the document" means "the document" read as a whole and not piecemeal." (Emphasis supplied) 50. There is no quarrel with the aforementioned position of law. 51. In Smt. Rajbir Kaur and Another Vs. M/s. S. Chokesiri and Co. [(1989) 1 SCC 19] , the court was concerned with the interpretation as to whether a document in question was a lease or a licence. The said decision has been rendered on the fact of the said case and on the basis of the evidence brought on records as to whether the tailor and the ice-cream vendors had been put in exclusive possession in the tenanted premises. The said decision has no application to the fact of the present case. 52. Delta International Ltd. Vs. Shyam Sundar Ganeriwalla and Another [(1999) 4 SCC 545] again dealt with a similar question. It was observed: "27. Lastly, it is to be noted that if the document is a camouflage as stated earlier, the mask or veil is required to be removed for determining the true intent and purpose of the document. In the present case, there is no pleading by the defendants that the document was a camouflage so as to defeat the rights of a tenant who had inducted the appellant or that of the owner of the premises. As stated earlier, the document contemplates three types of agreements, one, that of a leave and licence; secondly, in case a consent is obtained from the tenant (sic landlord), for execution of a sub-lease which would create an interest in the property as a sub-tenant and thirdly, in case of a sub-lease, for purchase of equipment, fitting and fixtures at a price of Rs 2,50,000. The second and third parts of the agreement never came into operation. Hence, for the reasons discussed above, we hold that the agreement dated 18-7-1970 is a deed of "leave and licence" and not a "lease". 53. The said decision also has no application in the instant case.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]28. We may at the outset notice that clause 7.8 of the said agreement uses the expression any or all of debenture holders. The parties to the agreement, therefore, have used two different expressions in the said agreement, namely, (1) debenture-holders/trustees; and (2) any or all of debenture holders. We have noticed hereinbefore that the debenture holders have been referred to in the agreement in the said capacity collectively. The definition of debenture holders contains the expression means which shows that it is not an expansive definition. The category of the debenture holders are confined to those who in terms of the agreement are holders of the debentures deriving their title thereto.29. In terms of clause 10 of the Trust Deed, the rights, privileges and conditions attached to the debentures may be varied, modified or abrogated only in accordance with the Articles of Association of the Company and the Act and with the consent of the debenture holders by a special resolution passed at the meeting of the debenture holders but in terms of the proviso appended thereto nothing in such resolution shall be operative against the company where such resolution modifies or varies the terms and conditions governing the debentures, if the same are not acceptable to the company. The Trust Deed speaks of such resolution also in terms of clauses 22 and 24 thereof. Clause 25 provides that such a resolution may be adopted by circulation of letter or letters. The provisions of the Trust Deed and in particular clauses 22, 23, 24 and 25 thereof leave no manner of doubt that a resolution has to be passed in the manner laid down therein and/or in terms of the Companies Act.30. The common subscription agreement is an investment/ loan agreement. The provisions contained therein are required to be read in their entirety and for the said purpose it is permissible to read the negative covenants with the positive covenants. It will, however, not be correct to say that the common subscription agreement has to be interpreted on its own without any reference to the trust deed. The provisions of the trust deed, in our opinion, can be referred to for the purpose of giving a true meaning to the agreement, as there does not exist any conflict between the two. They are to be considered together for the purpose of finding out as to how the agreement can be worked out.This Court in this case is not called upon to interpret the nature of a document or the covenants entered into by and between the parties. The agreement specifies the rights and privileges of the parties thereto and in particular the rights and privileges of the debenture holder either collectively or individually.32. The underlying or basic thread of the agreement vis-a-vis the trust deed is that the majority principle was accepted by the authorities. They do not provide for an unanimity; or any veto power in favour of one debenture holder so as to scuttle the decision of the majority.Section 391 read with Section 393 of the Act postulate that where a compromise or arrangement is proposed between a company and its creditors or any class of them; or between a company and its members or any class of them, the court is required to direct holding of meetings of creditors or class of creditors or members or class of members who are concerned with such a scheme. In the event majority of the creditors representing three-fourths in value of the creditors or class of creditors or members or class of members, as the case may be, present or voting either in person or by proxy at such a meeting accord their approval thereto thus put to vote, whereupon, the court may consider the question of grant of sanction thereto. Section 391(1)(a) enjoins that requisite information therefor should be placed for consideration before the voters, in terms whereof the creditors or class of creditors can take an informed decision in relation thereto. The court, however, would not grant sanction to such a scheme only because the same reflects the will of the majority of the creditors or a class of them but it must consider all aspects of the matter so as to arrive at a finding that the scheme is fair, just and reasonable and does not contravene public policy or any statutory provision. Such a care or caution is required to be exercised by all courts including the Civil Court in terms of Order XXIII, Rule 1 of the Code of Civil Procedure.It is difficult for us to agree with the submission of Dr. Dhawan that clause 7.5 puts a total embargo on the part of the company or other creditors to file a compromise under Section 391 of the Companies Act without obtaining the consent of all debenture holders. Clause 7.5 neither can be read in such a manner nor should be read. Such a construction would be unwarranted having regard to the fact that two different expressions have been used in different clauses. Wherever a right has been conferred upon an individual debenture holder, the agreement used the expression any or all the debenture holders as contrasted by all debenture holders. The debenture holders are required to exercise their right through the trustee save and except in the cases which confer specified power to them. The Appellants herein cannot claim any priority or preference in the matter of realization of their dues over the other debenture holders. Each debenture holders has a pari passu right with each other, as is evident from clause 2.2.In view of the our findings aforementioned, we are of the opinion that the Appellants herein having failed to establish that they could hold the entire scheme to ransom so as to stall the proceedings as a result whereof the majority of debenture holders would be deprived, the purpose or object motivating the Appellants to advance such a huge amount to the Respondent against issue of debentures is a matter of little or of no concern to the Respondent - company or other debenture holders. A special or a new right cannot be found in favour of the Appellants in the agreement when it creates none. The scheme applies equally to all debenture holders and as such the Appellants cannot be treated as a separate class. Once the Respondent-Company prima facie showed that the scheme is fair and reasonable and also that the requisite majority of the debenture holders recorded their decision in its favour, the court in absence of any unforeseen unjustness or unreasonableness therein ought not to reject the same.44. The Company Judge by reason of the impugned judgment while exercising a supervisory jurisdiction only accepted the scheme. The High Courts decision is not being questioned as unfair.45. The Respondent in view of the Scheme has no remedy other than approaching the High Court under Section 391 of the Companies Act.In Delhi Development Authority Vs. Durga Chand Kaushish [(1973) 2 SCC 825] , the court was concerned with the interpretation of a deed of lease. It wasBoth sides have relied upon certain passages in Odgers Construction of Deeds and Statutes (5th Edn. 1967). There (at pp. 28-29), the First General Rule of Interpretation formulated is: "The meaning of the document or of a particular part of it is therefore to be sought for in the document itself". That is, undoubtedly, the primary rule of construction to which Sections 90 to 94 of the Indian Evidence Act give statutory recognition and effect, with certain exceptions contained in Sections 95 to 98 of the Act. Of course, "the document" means "the document" read as a whole and not piecemeal.". There is no quarrel with the aforementioned position of law.