Disposed

Indian Overseas Bank v. Parekh Aluminex Limited

Bombay HC23 Apr 2014CA/198/2014

Case brief

AI extract

What is this about?

The High Court allowed the applicant's intervention application and adjourned the winding up petition against the Company. This enables the monitoring of an ongoing Corporate Debt Restructuring scheme, ensuring interests are protected while revival efforts continue.

What did the court decide?

Company application made absolute limited to intervention; petition adjourned to 7th October 2014.

Indian Overseas Bank Vs Parekh Aluminex Limited — Insolvency and Bankruptcy | Bombay HC (2014)

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911-CAL-18-14.DOC

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Shephali

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION (L) NO. 18 OF 2014

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IN

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COMPANY PETITION NO. 226 OF 2013

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Indian Overseas Bank.…Applicants
In the matter between
Lindsay Securities Pvt. Ltd....Petitioners
Versus
Parekh Aluminex Limited.…Respondents

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Mr. Kevic Setalvad, ASG, Senior Advocate a/w A. Davar i/b M/s.
M. V. Kini & Co., for the Applicants.

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Mr. H. V. Chande, for the Petitioners.

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Mr. Rohit Chakraborty a/w Mr. Simil Purohit i/b M/s. S.
Mohamedbhai & Co., for the Respondents.

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CORAM:G.S. PATEL, J
DATED:23rd April 2014

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PC:-

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1.The company petition seeks winding up of Parekh Aluminex
Limited (“the Company”). The petitioners’ claim is that there is an
amount of Rs. 53,90,274/- (including interest till 5th March 2013)
that is due from the Company. Mr. Chande, learned Advocate for the
petitioner, submits that there is absolutely no defence to the petition
and the petition must be admitted and ordered to be advertised.

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911-CAL-18-14.DOC

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2.The company application is filed by Indian Overseas Bank
(“IOB”). IOB is the lead bank of a consortium of banks that has
approved a revival package for the Company as part of a Corporate
Debt Restructuring (“CDR”)proposal. The affidavit in support of the
company application makes it clear that this sanctioned scheme is
being monitored by both IOB and Axis Bank. There are as many as
22 banks or other financial institutions who are part of this
consortium. The total amount of debt involved is in excess of Rs.
2200 crores. The scheme is already under implementation. Paragraph
4 of the affidavit in support indicates that following the
implementation of this revival package, even working at only 30%
capacity due to its financial problems, the respondent-Company has
already achieved sales of around Rs. 90 crores.

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3.Mr. Chande is undoubtedly justified in his submission that the
petitioner is not bound by any such CDR scheme, that being a
private treaty between the Company and its secured creditors. In a
given case, a mere proposal for a CDR scheme, not yet sanctioned or
implemented, cannot stand in the way of an admission of a company
petition for winding up. It is certainly no answer to a petition for
winding up. But, where a scheme is not only sanctioned but is under
implementation and has begun to show results, I do not see how it is
in the interests of an unsecured creditor to insist on the admission of
a winding up petition; for this would only have the effect of
completely derailing the CDR proposal and sending the company
spiralling into insurmountable debt and complete commercial
insolvency. These consequences are clearly not in the interest of any
unsecured creditor, the petitioner included. In that eventuality the
prospect of the petitioner or any other unsecured creditor ever being
able to recover even a fraction of its dues would remain illusory.

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911-CAL-18-14.DOC

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4.I do not propose by this order to dismiss the petition. All that I
proposed to do is to allow IOB’s intervention application and to
adjourn the petition without any orders for a reasonable period of
time. At the end of that period, the applicant will file a status report
as to the progress of the Company as part of the revival scheme.
Should the revival scheme, for any reason, fail and the CDR package
be withdrawn, IOB will be obliged to file an affidavit to that effect
within seven days of such failure. I believe this fully and adequately
protects the interests of the petitioner and other unsecured creditors.

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5.In that view of the matter, the company application is made
absolute in terms of prayer clause (a), limited to the prayer for
intervention.

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6.The company petition is adjourned to 7th October 2014. On
or before that date, the applicant will file a further affidavit in the
company petition setting out the financial progress of the company
from the date the CDR scheme was made operational. In that time,
should the CDR scheme, for any reason, fail or be withdrawn, the
applicant shall, within seven days of such failure or withdrawal,
immediately file an affidavit to that effect in this Court, and the
petition will then be placed on board for admission in the week
following such affidavit being filed.

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7. The Company Application is disposed of in these terms.

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8.The Company Application No. 301 of 2014 for appointment
of the Provisional Liquidator is also adjourned to 7th October 2014.

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(G. S. PATEL, J.)

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Indian Overseas Bank v. Parekh Aluminex Limited

Case brief

What is this about?

What did the court decide?

Indian Overseas Bank v. Parekh Aluminex Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

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