K.K. Srivastava, President:
1. These two appeals are directed against common order dated 13.9.2002 passed by District Consumer Disputes Redressal Forum-II (for short hereinafter referred to as the District Forum) disposing of two complaint cases bearing Nos. 801 and 802 both of 1998 filed by Shri Rajinder Mohan and Shri Puran Chand Wadhwa respectively against the same set of O.Ps. i.e. Gujarat Perstrop Electronics Limited through Managing Director, Gandhi Nagar, Gujarat and Industrial Development Bank of India (for short hereinafter referred to as the I.D.B.I.) through Managing Director, Mumbai. Since the District Forum has clubbed the two complaint cases together and decided by a common order, we also propose to decide these two appeals by this common order which is being delivered in Appeal No. 274 of 2002, Rajinder Mohan v. Gujarat Perstrop Electronics Ltd. and Anr. Appeal No. 273 of 2002 has been filed by the complainant Shri Puran Chand Wadhwa of Complaint Case No. 802 of 1998.
2. The common facts involved in the two complaint cases, stated briefly, are as under :
The respondent No. 1/O.P. No. 1 Gujarat Perstrop Electronics Ltd. (for short hereinafter referred to as the Company) had floated a Public Issue of Redeemable Partly Convertible Debentures of Rs. 140/- each in the month of January, 1994. The complainant Shri Rajinder Mohan applied for allotment of debentures and was allotted 10 such debentures under Registered Folio No. 0025982. It is alleged that Part A of these debentures was converted into 100 shares while Part B of these debentures (Rs. 40/- each) was non convertible and it carried interest @ 15% per annum. The interest was payable half yearly on 30th June and 31st December of each year. The respondent No. 1 - Company failed to pay interest of Rs. 240/- to the complainant for the period from 1.7.1994 to 30.6.1998 despite requests and reminders which led to the filing of the complaint wherein the complainant demanded interest and compensation. The respondent No. 1 - Company did not file a proper reply in the form of the written statement and instead moved an application under Section 22(1) read with Section 32 of the Sick Industrial Companies (Special Provisions) Act, 1985 wherein the objection taken was that a reference had been made to the Board for Industrial and Financial Reconstruction (for short hereinafter referred to as the B.I.F.R.) which was numbered as 82 of 1997 and the same was pending before B.I.F.R. and was in the process of formulating a rehabilitation scheme. The respondent No. 2-I.D.B.I. filed written statement wherein a plea was taken that it was acting as a trustee of the debentures in question for public-cum-rights of partly convertible debentures aggregating in nominal value of Rs. 1.8 million issued by respondent No. 1 - Company vide its Prospectus dated 6.12.1998. The respondent No. 1 - Company had executed a Trustee Agreement on 18.3.1994 and on the same date executed Debentures Trust Deed in favour of I.D.B.I. creating charge and mortgage on its movable and immovable properties situated at Plot Nos. B-1, B-2 and B-3 at Gandhi Nagar Electronic Area established by Gujarat Industrial Development Corporation (for short hereinafter referred to as G.I.D.C.), Gandhi Nagar district (State of Gujarat) on 2nd and subservient charge basis. The said Debenture Trust Deed was duly registered with the Sub-Registrar of Assurances. The respondent No. 1 - Company, it was alleged, in furtherance of the Debentures Trust Deed allotted debentures on 15.3.1994 which were redeemable in two equal instalments at the end of 7th and 8th year from the date of allotment of debentures. It was further contended that as a net worth of the respondent No. 1 - Company became negative, a reference under Section 15 of S.I.C.A. was made to B.I.F.R. and I.D.B.I. was appointed as Lender and Operating Agency (OA) to prepare a Draft Rehabilitation Scheme (for short hereinafter referred to as the DRS) for making a net worth of respondent No. 1 positive. In terms of the said DRS, Apollo Tyres Limited (for short hereinafter referred to as ATL), the guarantor of respondent No. 1 - Company for the term loans granted to them, was to make the payment of the entire principal amount and 50% of the simple interest outstanding as on 30.9.1998 which was to be paid by way of allotment and issue of equity shares of ATL as on 29.3.1999, it was further mentioned that the B.I.F.R. had rejected the DRS submitted by I.D.B.I. and appeal filed by the Company before the Appellate Authority for Industrial and Financial Reconstruction (for short hereinafter referred to as A.A.I.F.R.) was also dismissed on 8.5.2000. Thereafter, ATL filed a writ petition before the Gujarat High Court challenging the orders passed by B.I.F.R. and A.A.I.F.R. rejecting the DRS. The petition was allowed vide order dated 15.6.2001 and orders of B.I.F.R. and A.A.I.F.R. were quashed. The Gujarat High Court directed the respondents including B.I.F.R. to proceed to implement the DRS. The Gujarat High Court also made an observation while sanctioning the DRS that the provisions contained in DRS in respect of payment to be made to debenture holders was more beneficial and favourable to debenture holders than the proposal approved by the debenture holders at their meeting held on 21.8.1997. The respondent - I.D.B.I. as Trustee had taken adequate steps to safeguard the interest of debenture holders whose interest are also protected on equal footing with the Banks and financial institutions.
3. The District Forum had taken up the Complaint Case No. 801 of 1998 for hearing and dismissed the same vide order dated 8.2.2002. The other Complaint Case No. 802 of 1998 was dismissed vide order dated 11.3.2002. The two complainants have filed separate appeals to this Commission which was decided by a common order dated 18.6.2002 and were allowed and the complaint cases were remanded to the District Forum with the direction to dispose of the complaint cases on merit.
4. The District Forum after remand of the cases, took up the complaint cases for hearing and in the meantime, the respondent No. 1 - Company had paid Rs. 800/- to the complainant in terms of the order of Gujarat High Court and moved an application seeking disposal of complaint as fully satisfied. The complainants, however, contested the application and summoned number of documents from the respondent and also wanted to elicit some information. The District Forum passed an interim order on the applications. On the date of hearing arguments, the respondent brought to the notice of the District Forum the order passed by the Gujarat High Court dated 15.6.2001 in Special Civil Application No. 5098 of 2000, Apollo Tyres Limited v. Appellate Authority for Industrial and Financial Reconstruction and Anr., including M/s. Gujarat Pestrop Electronics Limited under Article 226 of the Constitution of India which has been referred to above. The Gujarat High Court, as mentioned earlier, set aside the order of B.I.F.R. and A.A.I.F.R. and sanctioned the DRS circulated along with B.I.F.R. notice dated 6.10.1999 and directed all the respondents including B.I.F.R. to proceed for implementation of the Scheme. The District Forum noted that the DRS also made provision for debenture holders, which is mentioned at Item No. C, at Internal Page 5, of the impugned order as under :
âC. Debenture holders
(Sacrifices - Rs. 62 lakhs (Trustees - IDBI)
(i)Â To waive 50% interest accrued till September 30, 1998.
(ii) To fund the balance 50% overdue interest @ 15% p.a. repayable in 2 equal instalments in April, 2003 and April, 2004.
(iii) Interest @ 15% per annum would be payable on the principal amount w.e.f. October 1, 1998.
(iv)Â The debentures would be redeemable in 2 equal instalments in April, 2003 and April, 2004.â
5. The District Forum observed that it was not informed to the District Forum by any side that the order of the Gujarat High Court had either been set aside, varied or reversed. The District Forum thus noted that the order of the Gujarat High Court had become final and with this decision of the Gujarat High Court, the queries of the complainants relating to the meeting of the shareholders and all other connected queries became irrelevant and infructuous. The application in this regard moved by the complainant was dismissed. The District Forum held that since the respondent No. 1 - Company had tendered Rs. 8,800/- to the complainant on 15.7.2000, the claim of the complainant stood fully satisfied in terms of the order of the Gujarat High Court. The break up of the amount of Rs. 800/- was given by the District Forum in Para 10 of the impugned order which may be mentioned for the sake of reference and convenience as under :
|Â¾||Amount of no-convertible portion per debenture||Rs. 40.00|
|Â¾||No. of debentures.||(10)|
|Â¾||Total Principal amount payable||Rs. 400.00|
|B.||Interest @ 15% p.a. payable.|
|1.||For 1.10.1998 to 31.3.1999||Rs. 30.00|
|1.4.2002 to 11.7.2002||Rs. 17.50|
|2.||Interest @ 15% p.a. on 50% intt. Element accrued upto 30.9.1998||Rs. 108.77|
|3.||Interest @ 15% p.a. on||Rs. 108.77|
|From 1.10.1998 to 31.3.1998||Rs. 8.16|
|1.4.2002 to 11.7.2002||Rs. 4.76|
|Total interest payable (1)+(2)+(3)||Rs. 398.15|
|Total amount payable (A)+(B)||Rs. 798.17|
7. Mr. S.M. Wadhera, Advocate appearing for the two appellants/complainants challenged the impugned order mainly on the ground that the debenture holders were distinct from the shareholders and they are not even having voting rights like shareholders and have no concern with the rehabilitation of the respondent No. 1 - Company. The order passed by the Gujarat High Court in the case filed by the ATL, guarantor of respondent No. 1-Company and other financial institutions is not binding on the debenture holders. It was also submitted that the debenture holders are not at all concerned with the fate of respondent No. 1 - Company.
8. Mr. Deepak Sibal, Advocate appearing on behalf of respondent No. 1-Company contended that the respondent No. 1-Company was bound by the order passed by the Gujarat High Court and the order of the Gujarat High Court insofar as it related to the debenture holders at item No. C has been duly complied with and the entire amount has been paid as per the DRS sanctioned by Gujarat High Court and implemented the same and the respondent No. 1-Company is thus not in any way deficient in rendering service to the debentureÂ holders. The contention of Mr. S.M. Wadhera, Advocate regarding the debenture holders was replied by Mr. Deepak Sibal, Advocate appearing for respondent No. 1 who pointed out that even the cases of debenture holders were duly considered by Gujarat High Court and the I.D.B.I. while preparing the DRS had made provisions for the debenture holders at Item No. C and it could not be said that the debenture holders were totally unconcerned with the dispute which was before the Gujarat High Court. Mr. Deepak Sibal, Advocate contended that the debenture holders are equally bound by the order passed by the Gujarat High Court.
9. We have carefully considered the rival contentions. On facts, it is not disputed that the complainants in two complaint cases were allotted debentures which were partly convertible into shares and partly non-convertible. The dispute is regarding that the part of the debenture which is not convertible and the value of which is Rs. 40/- each. It may be mentioned that the respondent No. 2 - I.D.B.I. who was acting as a Trustee in the case and also looking after the interest of the debenture holders had prepared the DRS and submitted the same before B.I.F.R. which rejected the same and an appeal also proved futile as the same was dismissed by the A.A.I.F.R. The orders passed by the B.I.F.R. and A.A.I.F.R. were challenged by filing a writ petition before the Gujarat High Court which came up for hearing before the Bench of the Gujarat High Court which ultimately allowed the same and set aside the orders passed by the B.I.F.R. as also by A.A.I.F.R. and accepted the DRS prepared and submitted by respondent No. 2 - I.D.B.I. It is not disputed that the matter in the writ petition had been filed by atl as guarantor of respondent No. 1-Company and the respondent No. 1-Company was also impleaded as a party before the Gujarat High Court. It is equally not in dispute that the case of debenture holders had been duly considered while preparing the DRS which has been sanctioned by the Gujarat High Court and the same has been directed to be implemented. As a matter of fact, the same has been implemented by the respondent No. 1 - Company.
10. In this view of the matter, the respondents i.e. M/s. Gujarat Perstrop Electronics Limited and I.D.B.I. are not deficient in rendering service to the complainants. The District Forum has rightly dismissed the complaint cases. These appeals lack merit and are dismissed leaving the parties to bear their costs of appeal.
Copies of this judgment be sent to the parties free of charges.