Intellectual Property Rights: Practice and Drafting by Adv Gautam Matani. Register Now!
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valentine (Advocate)     09 November 2009


Dear all,

A Pvt. Ltd. Co. issued in 2003 Secured Redeemable NCDs @ 11.50% interest for 15 months, interest payable at the interval of every 5 months. The said Co. did not pay a single rupee towards interest till date.

The Co. got the Schme of arrangement sanctioned by Bombay HC and sent consent forms to all investors for opting for Shares of the Co. which are not traded favourable on the bourses.

The investor went into litigation. Dist. Consu. Forum gave order that the investor should approach the Specila Committee appoint by the Bombay HC. On enquiry it was revealed no such committee formed by the Bombay HC. Aggrieved, the investor preferred appeal in the State Forum. The Opponent advocate pleads the scheme of arangement. The investor pleads that his demand notice was prior to the Co. went into litigation and hence the Scheme of Arrangment not binding.


Please give your valued opinion.


 2 Replies

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     11 November 2009

Your point of argument is good. Go on pleading that case effectively. State Commission definitely hear your point of view and I think it is your right to have interest at the accurate time from the company and no one can ignore it and the defence of the company is very weak.

1 Like

valentine (Advocate)     23 June 2010

Thanx, sir. However, the only hitch is the sanction of the Scheme of Arrangement by Hon. Bombay HC u/s 359 Companies Act. The appeal in the State Consumer Redressal Commission is still pending. The oponent advocate is still harping on scheme of arrangement. My say is that when the Co. circulated a letter requesting extension of the investment, no revalidation of the original NCDs was done and the assent of the invesator was also not sought. How can Bombay HC give a verdict on NCDs which must be, as a rule, protected by a security of the equivalent value? There is also a law regarding appointment of trustees in case of Non-convertible debentures. All these were flouted by the Co. and still the Bombay HC gave the verdict in Co.'s favour and many  investors are cheated. Do you have any case-law on this?

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