Sanction of Scheme
8 (1) For the purposes of sub-section (2) of section 262, the company administrator shall issue a notice in Form O calling separate meetings of secured and unsecured creditors within sixty days of his appointment and place the scheme for their approval. The Tribunal may extend the time for approval of the scheme ofrevival upto a period of not exceeding one hundred and twenty days from the date of the appointment of company administrator.
(2) Where the scheme relates to amalgamation of the sick company with any other company, such scheme shall require the approval of the shareholders of the both the companies in terms of the proviso under sub-section (2) of section 262.
(3) The notices of such meetings of creditors and shareholders shall be published at least once in a vernacular newspaper in the principal vernacular of the district in which the registered office of the company is situated and circulating in that district and at least once in an English daily within twenty one clear days prior to the date fixed for the respective meetings.
(4) Every creditor shall be entitled to be present in person or through an authorized representative and the creditor shall submit the form of authorization or power of attorney not less than forty eight hours in advance intimating that the meeting will be attended by its authorized representative. The presence of an authorized representative of a creditor shall be deemed to be the presence of the creditor in person.
(5) In a shareholder meeting of a sick company, every shareholder shall be entitled to attend and vote in person or through a proxy.
(6) Meetings of creditors or shareholders shall be called and held only during working hours between 0900 Hrs to 1800 Hrs on any day that is not a National holiday.
(7) The quorum for such meetings of creditors shall be the presence in person or by proxy of creditors representing not less than threefourth in value of the amount outstanding against the sick company, in case of secured creditors and one-fourth in value in case of unsecured creditors or representing such other percentage of value of debts owned by the sick company to that respective class of creditors as may be ordered by the Tribunal and even the presence of single creditor of that class may be sufficient to form a valid quorum.
(8) The quorum for a meeting of shareholders of the sick company shall be the same as provided in section 103.
(9) The company administrator shall chair the meetings of creditors and shareholders of the sick company and regulate the meeting, as he thinks fit.
(10)Decisions in such meetings of secured and unsecured creditors shall be made by requisite majority of votes and value of debt owed by the sick company shall determine the number of votes of a particular creditor. The decision of the company administrator shall be final as regards the value of debt owed to a particular creditor by the sick company. Any accidental omission to consider, include or issue notice to one or more unsecured creditors shall not invalidate any action taken by the company administrator or as the case may be, by the creditors in good faith. However in case if omissions had resulted in an outcome which would not have been the outcome had the votes (based on value of debt) been recorded correctly application by creditors can be made for reconsideration.
(11)The company administrator shall make an application in Form P to the Tribunal for sanctioning the scheme.
(12) No application for sanctioning the scheme shall be filed before the Tribunal unless it is accompanied by the following:
(i) the fee prescribed in Anneuxre B;
(ii) a copy of the approved scheme of revival and rehabilitation duly certified by the company administrator;
(iii) a copy of the audited financial statements of the sick company for the financial year immediately preceding the date of the application;
(iv) any other document which the company administrator may consider necessary;
(v) a copy of the minutes of the meetings of creditors and shareholders, if any, that approved the scheme of revival and rehabilitation duly certified by the company administrator.
(13) The Tribunal shall post the matter for a hearing on any date within sixty days of the date of filing of the application. The company administrator shall advertise the date and time of hearing of the application by the Tribunal and also features of the draft scheme of revival and rehabilitation (in brief) in Form Q at least once in a vernacular newspaper in the principal vernacular of the district in which the registered office of the company is situated and circulating in that district and at least once in English in an English Daily within fifteen days prior to the date of hearing so fixed by the Tribunal.
(14) The Tribunal may make modifications in the scheme in pursuance of sub-section (3) of section 262.
(15) If the scheme has received the approval of the requisite majority of the creditors and also of the shareholders, if applicable, in accordance with sub-section (2) of section 262, the Tribunal may sanction the scheme with modifications, if any, in pursuance of sub-section (3) of section 262 and the order sanctioning the scheme shall be in Form R. A copy of the scheme duly bearing the seal of approval of the Tribunal shall be enclosed to the order.
(16) Within thirty days of the passing of the order sanctioning the scheme, the sick company or other companies involved in the scheme shall file a certified copy of the order with each Registrar of Companies having jurisdiction over the registered office of the respective companies.
(17) The company administrator shall preserve all the books and records of the sick company including all the notices, memos, vouchers, attendance slips, proxy forms, letters, correspondence, payments received, payment made, particulars of bank account operated, bank statements, reconciliation statements, valuation reports, title deeds, copies of public notices issued, and all other papers unless otherwise ordered to be disposed of by the Tribunal. He will hand over the records to the company or the liquidator, as the case may be, before demitting the office.
(18) On the application of any secured creditor, the sick company or the transferee company, where the scheme of revival and rehabilitation involves amalgamation, if the Tribunal is satisfied that the conduct of the company administrator was not fair and reasonable in the facts and circumstances obtained at that time when such question had arisen, it may, by order, terminate theoffice of the company administrator and appoint in his place another person and give such company administrator such time as may be necessary for meeting the objectives of the Act.
(19) Where the company administrator has not been able to perform or has become incapable of performing his duties due to his health or death or any other reason, the Tribunal may on its own or on the application of any interested party, appoint another person in his place who shall take charge of all records and properties from the previous incumbent as far as may be possible and either commence his duties de novo or continue from the stage before his appointment upon such terms and directions as the Tribunal may impose or enforce, from time to time.
(20) The Tribunal may, while sanctioning a scheme of revival or rehabilitation, on its own or on an application of any person interested in the scheme, including an objector who is bound by the scheme despite his objections, made prior to the sanctioning of the scheme, direct the enforcement or modification or termination of any contract or agreement or any obligation pursuant to such contract or agreement entered into by the sick company with any other person and such enforcement or modification or termination shall be specified in its order sanctioning the scheme.
(21) The Tribunal may, while sanctioning a scheme of revival or rehabilitation, on its own or on an application of any person interested in the scheme, including an objector who is bound by the scheme despite his objections, made prior to the sanctioning of the scheme, direct the company administrator to continue to be in office until effective implementation of the scheme. His remuneration and other terms and conditions for such continuance shall be determined by the Tribunal and specified in its order sanctioning the scheme. |