Bny Corporate Trustee Services Ltd. v. Wockhardt Ltd.

S.C. Dharmadhikari, J.

1. This company petition is for winding up of the respondent, i.e., Wockhardt Ltd. It is presented by the petitioner, a company incorporated in England and Wales and having its registered office at the address shown in the cause title and is engaged in the business of providing trusteeship services. The respondent shall for brevity's sake be referred to as the company. The respondent was incorporated on July 8, 1999, under the Companies Act, 1956, as a public company limited by shares. After setting out the details in relation to the respondents nominal capital and main objects, it is alleged in paragraph 7 that the respondent is indebted to the petitioner in aggregate sum of US $ 142,214,060 (US dollars one hundred forty two million two hundred fourteen thousand and sixty only). This amount which is stated to be outstanding is reflected in the particulars of claim annexed and marked as annexure "A" to the petition. In paragraphs 9 to 11 of the petition, this is what is alleged:

"9. The company issued US $ 110,000,000 Zero Convertible Bonds due 2009 in the denomination of US $ 1,000 each in registered form (hereinafter referred to as the Bonds). Under the said offering Circular, the Bonds were issued at 100 per cent of the principal amount on October 25, 2004, the maturity date being October 25, 2009 (maturity date). Unless previously redeemed, converted, or purchased and cancelled, the company had agreed to redeem each of the Bonds at 129.578 per cent of its principal amount on the maturity date. The petitioner craves leave to refer to and rely upon the terms and conditions of the offering circular dated October 20, 2004, for their true meaning, interpretation and import.

10. On October 25, 2004, as issuer of the Bonds, entered into a trust deed (hereinafter referred to as the trust deed) with the petitioner (then known as J.P. Morgan Corporate Trustee Services Ltd.) as the trustee (hereinafter referred to as the 'Trustee') for the holders of the Bonds (hereinafter referred to as the 'Bondholders'). Amongst other things, clause 2.2 of the Trust deed is a covenant by the company to unconditionally pay or procure to be paid to or to the order of the trustee in New York City in US $ in immediately available funds the principal amount of the Bonds becoming due for redemption or repayment on the date when the Bonds or any of them become due to be redeemed in accordance with the terms and conditions of the Bonds (hereinafter referred to as the conditions) together with applicable premium. The petitioner is filing this petition in its capacity as a trustee for the Bondholders and in discharge of its obligations as a trustee.

11. The petitioner learnt that on or about March 31, 2009, the company proposed and/or applied for restructuring of its debts and/or for a composition and/or arrangement with creditors and/or for the benefit of certain creditors to the corporate debt restructuring (CDR) cell in India."

2. It is alleged that the petitioner addressed an e-mail dated April 9, 2009, to the respondent stating that there may be a potential event of default on the bonds and requesting a certificate from the company confirming that the company is compliant with the provisions of clause 9.8 of the trust deed. It is stated that this certificate be provided to the petitioner within 14 days. After reproducing clause 9.8 of the trust deed/it is stated that a letter was received from the company dated April 15, 2009, wherein the company, inter alia, stated that it is seeking help in financial restructuring of debts and interests from various lenders in India through CDR mechanism. However, no certificate as requested by the petitioner was provided. Therefore, the petitioner reiterated its request by another e-mail dated April 16, 2009, to the respondent. The respondent-company addressed a letter dated April 23, 2009, inter alia, informing that an application has been made by the ICICI as the lead institution on behalf of the company to the CDR cell for a possible restructuring of company's loans and confirming that it shall revert to the petitioner with a submission of particulars with regard to the matters specified in clause 9.8 of the Trust Deed.

3. In the subsequent paragraphs it is alleged that the company did not revert as assured even after the time was granted in that behalf. Therefore, the letter dated May 6, 2009, came to be addressed and the reply was that the application for CDR is an event falling within condition No. 10.1.4 of the Bonds and, for this reason, the company is not in a position to provide certificate confirming that no event of default in respect of the Bonds has occurred. However, the company reported that its application for CDR has now been accepted. In the further paras of the petition, the petitioner points out as to how it addressed a notice of event of default and the company went on staring that a proposal was made to the CDR cell and that on receipt of the formal approval, it would intimate the petitioner and the bondholders and also advise them about the terms of the CDR package and make a proposal for restructuring of the bond/redemption payments. A meeting was proposed with the representatives of the bondholders by the petitioner during the week commencing from July 20, 2009. Thereafter, the company addressed another letter dated July 9, 2009, informing the petitioner about the letter of approval dated July 4, 2009, from the CDR cell. Although, there was a request to organise a meeting, the company failed to arrange any meeting and in such circumstances, the petitioner stated that the response to hold the meeting was delayed which shows that the respondent-company had no genuine intention to resolve the matter and was employing delaying tactics. Therefore, a notice dated October 12, 2009 (statutory notice) annexed as annexure P to the petition was addressed and a reply thereto by the company was received. In the reply, the execution of the trust deed with the petitioner is admitted. However, it is stated that the initiative to restructure its debt through CDR mechanism has been taken but it was denied that there was occurrence of an event of default.

4. There were certain statements made in this reply, which are termed as false by the petitioner. It is stated that without prejudice to what has been set out in the statutory notice and the foregoing paragraphs of the petition the CDR mechanism is not feasible because the package involved will not satisfy the claim of the petitioner. The averments in that behalf are made from paragraphs 28 to 34 and, therefore, it is alleged that the events would disclose that the company is unable to pay its debts and is commercially insolvent. The debt due to the petitioner has not been paid nor secured to the satisfaction of the petitioner. In these circumstances, reiterating the above position, the usual averments are made from paragraphs 36 to 40 of the petition, including the request to appoint a provisional liquidator. It is these circumstances, that the petitioner seeks winding up of the respondent and the necessary prayers are at page 23 of the petition.

5. An affidavit in reply has been filed by the respondent-company which is at Volume III of the petition. The affidavit in reply dated November 20, 2009, is affirmed by Rakesh Jain, Deputy General Manager, Finance of the respondent. In paragraph 4 of the reply, after denials it is stated that the respondent is a going concern doing huge volume of business. The present petition is misconceived and an abuse of the process of the court. It has been filed only with a view to pressurise and coerce the respondent to pay up the alleged debts. The respondent had a turnover approximately of Rs. 15,124.75 million for the year ended December 31, 2008. The respondent has 4,750 employees for its operations in India and it employs 1,250 persons through its various subsidiaries. The shareholders' funds as on December 31, 2008, aggregate to Rs. 6,772.66 million, including reserves and surplus of Rs. 6,225.48 million. Any winding up order would seriously prejudice the interest of various persons such as creditors, shareholders, employees, financial institutions, suppliers, etc. Thus, the respondent is a viable undertaking consistently earning large amount of profits for the last more than 10 years. The loss caused in the last financial year was an exception which arose out of the global economic downturn which affected the economy of most corporates in countries across the globe. Thus, there is no compelling reason to wind up the respondent-company as that would result in unemployment of more than 6,000 persons. The Government will also suffer on account of loss of revenue of excise and taxes. The extract of balance-sheet as on December 31, 2008, has been annexed as annexure A to the reply.

6. In paragraphs 5 and 6 of the reply, at pages 426 to 428 this is what is stated:

"5. I state and submit that winding up of the respondent would not benefit either the petitioner/FCCB holders or the other creditors of the respondent. The FCCB holders are unsecured creditors of the respondent and all of the assets of the respondent are encumbered. I say that the respondent has, inter alia, taken loans and/or finances and the facilities from ICICI Bank, LIC, IDBI Bank, Bank of India, PNB, HDFC Bank, ING Vysya Bank, ABN Amro Bank, Citibank NA, SICOM, HSBC, Calyon. The net block of fixed assets of the respondent, excluding intangible assets, as on December 31, 2008, are valued at Rs. 16,352 million. All the fixed assets are mortgaged and/or charged in favour of the secured lenders. Similarly, the current assets of the respondent including stock in trade, receivables, etc., are value at Rs. 16,832 million, as on December 31, 2008. The entirety of these current assets are charged by way of hypothecation or pledge in favour of the aforesaid secured lenders. The value of the lenders in whose favour the fixed assets and the current assets are charged aggregates to Rs. 31,609 million. Hereto annexed and marked exhibit B is a statement giving bank wise particulars of the aforesaid borrowings and the securities or charge created in respect thereof. In the event of winding up of the respondent, the FCCB holders would be entitled to only the residual portion, if any, after all the secured creditors' claims have been satisfied from sale of the respondent's assets and payment of preferential liabilities. Needless to add that any sale/liquidation through coercive measures or through the aegis of official liquidator is likely to fetch much less value. The FCCB holders, therefore, stands to get a much higher amount under the CDR scheme than they would in the event of winding up. The very fact that a large and substantial body of creditors, both secured and unsecured, has approved the CDR scheme, clearly goes to show that they have consciously and deliberately chosen the option of restructuring of the debt rather than forcing the respondent into winding up keeping in mind, inter alia, the viability, profit earning potential, goodwill, market capitalisation of the respondent. Thus the winding up would neither inure to the benefit of the petitioner nor the creditors at large.

6. I further say that the present petition is misconceived and not maintainable in so far as it has been filed by the petitioner as trustee for the foreign currency convertible bond (the FCCB) holders of the respondent, and not the FCCB holders themselves. The trustee is not a creditor of the respondent. In fact, the State Bank of India and Syndicate Bank, together holding approximately 37.31 per cent of the principal amount of the outstanding FCCBs have joined the respondent's corporate debt restructuring scheme. The respondent's corporate debt restructuring scheme, framed as per the guidelines laid down by the Reserve Bank of India (the 'RBI'), was sanctioned on July 4, 2009 (the CDR scheme)."

7. In paragraph 7 of the reply it is then stated that without prejudice to the earlier statements, the petitioner is not entitled to any amounts claimed in the petition because by virtue of the Foreign Exchange Management (Transfer or Issue of any Foreign Security) Regulations, 2000 (for short the FEMA Regulations), no FCCB can have maturity of less than five years and any call and put option cannot be exercisable prior to five years. Under regulation 21 of the FEMA Regulations, an Indian resident may issue FCCBs up to the value of US $ 500 million to a person resident outside India in accordance with and subject to conditions stipulated in Schedule I of the FEMA Regulations. It is then alleged that as the claim of the petitioner is based on early redemption of FCCBs, the same is illegal and not maintainable at all. It is alleged that the petitioner has no authority or mandate to file the petition. Further the petitioner was not authorised to issue Notice of Acceleration of Bonds annexure K to the petition, wherein, inter alia, it was alleged that an event of default had occurred and, therefore, the FCCBs had become immediately due and repayable on their early redemption amount. Alternatively the trustee is obliged to give such a notice, if so directed by passing of an extraordinary resolution. Neither has there been a request in writing as aforesaid nor any meeting was convened for consideration or passing extraordinary resolution as required under the said clause. In such circumstances, the petitioner does not have an authority or mandate to file the present petition. Since the claim in statutory notice is based on notice for early redemption, even the statutory notice is without any legal basis and invalid.

8. It is stated that the respondent called upon the petitioner to specify the category of FCCB holders which it claimed to represent and who had authorised the petitioner to issue notice. The next plea is that the FCCB holders representing approximately 37.31 per cent of the principal amount of the total outstanding FCCBs had joined the CDR scheme. When these details were sought from the petitioner, they addressed a letter dated November 5, 2009, wrongfully contending that they were under no obligation to inform the respondent and substantiate their authorisation. In these circumstances, it is stated that the petitioners have deliberately and consciously failed to disclose their authority. It is one more reason why the petition should not be entertained. It is submitted that the petition proceeds on the basis that the respondents have failed to pay the maturity redemption amount of the FCCBs on the maturity date. If the petition is based on statutory notice dated October 12, 2009, but the FCCBs became due for redemption by reason of they being matured on October 25, 2009, the present petition based on statutory notice is not maintainable. It is then contended that the offering circular contains "risk factors". The risks associated with redemption of the FCCBs prior to the maturity date were expressly set out. Therefore, it is false to allege that respondents are fraudulently paying some amount to the promoters to enrich themselves in the form of non-compete fee. The allegations with regard to non-compete fees are denied. With regard to the allegation that the respondent is commercially insolvent, while denying the same in paragraph 14 it has been pointed out that the respondent has a definite standing in the market. Further the respondent also pointed out the RBI guidelines for CDR and how the CDR scheme works. The details are pointed out to support the contention that the CDR scheme has inherent safeguards. The respondent justifies the allegation that the petitioner did not join the CDR scheme, although it was in the interest of FCCB holders.

9. The rest of the affidavit in reply contains denials. There is supplementary affidavit in reply filed by the respondent stating therein that a majority of the creditors of the respondent-company amounting to Rs. 15,902 million out of a total value of creditors of Rs. 22,117 million have joined the CDR scheme. The CDR banks and creditors who have joined the CDR scheme on a transaction basis together constitute 72 per cent of the respondent's debts. As more particularly set out in the affidavit in reply to Company Petition No. 919 of 2009, the claims on account of derivative transactions are not legally recoverable or enforceable.

10. In view of the aforesaid it is submitted that a majority of creditors have chosen to approve and join the CDR scheme showing that they have consciously and deliberately chosen the option of restructuring of the debt of the respondent rather than forcing it into winding up keeping in mind, inter alia, the viability, profit earning potential, goodwill and market capitalisation of the respondent. The petitioner represents a small proportion of creditors and ought not to be allowed to jeopardise the interest of the general body of creditors by filing the present petition.

11. The petitioner filed rejoinder to both affidavits pointing out that the company's stand is false. The company has committed event of default under the terms and conditions of the US $ 110,000,000 Zero Coupon Convertible Bonds issued by the company and is liable to pay an early redemption amount and has in fact admitted its liability. The company is now wrongfully and dishonestly disputing its liability to pay the early redemption amount by raising false and frivolous pleas. If the company's position was sound and it was not commercially insolvent but doing huge volume of business, then, restructuring of its debts was not required. It is stated that the company has suffered huge loss and is in a precarious financial condition. It is denied that the company has a turnover or number of employees as stated in the reply. It is stated that in its latest unaudited financial report for the quarter ended on September 30, 2009, the company has disclosed the loss of Rs. 340 crores (34,000 lakhs). It is stated that this loss is disclosed after adjusting the profit of Rs. 15,347 lakhs earned from the sale of animal health care business in the quarter of June to September 2009. This itself mandates winding up of the company. It is denied that the loss caused for the current financial year is exceptional and arose out of the global economic down turn which allegedly affected the economy of most corporates in countries across the globe. All other allegations are denied and it is asserted that the petitioner has a right to file a winding up petition. It is stated that as per condition No. 13 of the conditions, no bondholder will be entitled to proceed against the company unless the petitioner, i.e., trustee having become bound to do so fails to do so within reasonable period and such failure shall be continuing. Further, the petitioner has been appointed by the company under the trust deed dated October 24, 2004, as trustee for bondholders. The company is a party to the trust deed and has executed the same. Clause 2.2 creates an obligation on the part of the company to pay to the petitioner. Thus, the petitioner is a creditor of the company by virtue of provisions of the trust deed. The petitioner is, therefore, entitled to file and maintain the petition in its own right as trustee of the bondholders. In any event as more particularly stated in the petition, the trustee is entitled to file and maintain petition under section 439(1)(b) read with section 439(2) of the Companies Act.

12. The petitioner has contended that the CDR scheme is not binding on the petitioner. It is denied that the CDR scheme has been framed as per guidelines issued by the RBI on corporate debt restructuring and the petitioner does not admit that the same was sanctioned on July 4, 2009. It is stated that the State Bank of India (SBI) and Syndicate Bank hold 37.31 per cent of the principal amount of the outstanding and they have not joined the CDR scheme. The other allegations and statements in the affidavit in reply have been dealt with in the rejoinder, including the plea about the FEMA Regulations. In such circumstances it has been stated in paragraphs 11 and 12 of the rejoinder as under:

"11. With reference to paragraph 10 of the said affidavit in reply, I say that in view of the event of default committed by the company, the petitioner was constrained to issue the said notice of acceleration. Further, in view of the failure on the part of the company to make payment of the early redemption amount on account of acceleration of the bonds, the petitioner was compelled to issue the said statutory notice. In view of the continued failure on the part of the company to make payment of the amounts claimed by way of the said statutory notice, the petitioner was obliged to file the present company petition. In the meanwhile, however, the bonds matured for payment on October 25, 2009 ('maturity date') at 129.578 per cent of their principal amount (the maturity redemption amount). Even as on the maturity date and till date, the company is unable to meet its liability. The subsequent events that have transpired after the service of the said statutory notice are relevant and material for the purpose of the hearing and determination of the matter in the present company petition. In the circumstances, it is futile for the company to now allege that the petitioner cannot invoke the provisions of sections 433 and 434 of the Companies Act, 1956, to wind up the company on the basis that the company has failed to pay the maturity redemption amount on the maturity date. I deny that the statutory notice is a mandatory precondition to invocation of the provisions under section 433 read with section 434 of the Companies Act, 1956.

12. With reference to paragraph 11 of the said affidavit in reply, I say that the company has interpreted the 'risk factors' contained in the offering circular to its convenience. The risk factors state that 'any repayment of the bonds prior to maturity as a result of early redemption pursuant to condition 8 or acceleration of the bonds pursuant to condition 10 would require the prior approval of the RBI'.

The contention of the company that the bondholders were aware of the risks associated with the redemption of the bonds prior to the maturity date, i.e., it requires the prior approval of the RBI, is in direct contradiction with its own statement in paragraph 7 of the said affidavit in reply to the effect that the petitioner's claim based on early redemption amount is illegal, and is clearly an admission of its liability to pay the petitioner. Moreover, the issue that any repayment due to acceleration would require prior approval of the RBI is separate from the issue that the company has not paid, or even taken any steps towards payment of the early redemption amount. Further, I submit that the risk will arise only after an application in that regard is made to the RBI. In any event, it is submitted that the company cannot rely upon the clause quoted in the paragraph under reply to justify non payment of the early redemption amount."

13. In paragraph 13 of the rejoinder, the petitioner has reiterated that the promoters of the respondent are seeking to enrich themselves. In paragraph 21, while making allegations of discrimination, this is what is stated:

"21. It is pertinent to note that there are numerous instances in the CDR scheme (some of which are set out below) which clearly demonstrate that the bondholders have not been treated equally with other creditors and have been discriminated against.

(a) The CDR lenders, save and except the bondholders and derivatives banks, have been secured by:

(i) fixed and current assets of the company, Wockhardt Infrastructure Development Ltd. (WTDL) and Vinton Healthcare;

(ii) pledges of all the unencumbered shares of the promoters and the encumbered shares, as and when those shares are released by those charge holders; and

(iii) the unconditional and irrevocable personal guarantee of the promoter, Mr. Habil Khorakhiwala;

(b) Further paragraph 4 of the 'other conditions' of the CDR scheme provides that the proceeds of the divestments by the ASC are to be utilised only for repayment of the secured lenders.

(c) The creditors of Wockhardt EU Operations (Swiss) AG (Wockhardt EU) who have an exposure of US $ 250 million (approx Rs. 1,200 crore) were originally secured for a lower amount. However, under the CDR scheme, the security has now gone up substantially. It is pertinent to note that ICICI Bank Ltd., has an exposure of US $ 30.5 million to Wockhardt EU.

(d) The bondholders are unsecured creditors of the company. On converting the Bonds to preference shares, a bondholder would lose priority in repayment. In the event the company is unable to redeem the reference shares on their redemption date in 2018, the preference shareholder would only be paid after the secured and unsecured creditors' dues have been paid."

14. In paragraph 23 it is reiterated that apart from the CDR scheme being not binding on the petitioner, it is also arbitrary, discriminatory and unreasonable and whilst bondholders have been required by the CDR to make sacrifice and losses stated therein, the petitioner is not aware if the CDR lenders are at all suffering any loss or making any sacrifice because necessary information is with the company and it has not been provided to the petitioner. Thus, a detailed affidavit in rejoinder has been filed and there is also supplementary affidavit in the rejoinder affirmed on December 15, 2009, in which what has been stated is that the respondent-company has committed event of default and has in fact admitted its liability. Moreover, for the bonds matured for payment on October 25, 2009, at 129.578 per cent of their principal amount, the company is unable to meet the liability even on the matured date and subsequently. In such circumstances, while pointing out that the amount due and payable is not a small amount, it is stated that the defence of the respondent is not bona fide. In paragraph 6 of this supplementary affidavit in rejoinder together with annexure A thereto, it is pointed out as to how CDR is not viable.

15. The petitioner has also filed a further/supplementary affidavit affirmed on December 15, 2010 and filed on January 5, 2011, in which what has been brought on record are the facts relating to letter of understanding. The details have been pointed out in paragraphs 3 and 4 of this affidavit. It is stated that what the letter of understanding effectively states is that each of the instructing holders and the intervening holders confirm to the trust that such holders intend to settle each of their respective claims in connection with defaulting bond, if the company offers settlement proposal with terms reasonable, satisfactory to the instructing and intervening holders. There are certain options which are set out and what the instructing and intervening holders have stated in the letter of understanding is that if the company is unwilling to offer a proposal consisting of the bond offer and cash offer to the instructing bondholders they intend to instruct the trustee to pursue the winding up petition without any further delay and the intervening bondholders will take all such actions are necessary to enforce their rights in connection with the defaulted bonds, including pursuing their respective intervention application and oppositions.

16. Thus, together with the letter of understanding being brought on record, what has been highlighted are the terms thereof. It has been pointed out that the company has not reverted by forwarding their acceptance to the proposals stated in the letter of understanding.

17. The respondent has filed a sur-rejoinder in which while reiterating its earlier pleas, what the respondent-company referred to are the discussions in respect of settlement of the present petition with the petitioner as well as certain instructing the bondholders. It is stated that the consent terms dated August 17, 2010, were not filed in the court. Under the term sheet and the consent terms, the respondent agreed to issue to the bondholders in consideration of the existing bonds held by them, new foreign mandatorily convertible bonds due in 2014 carrying a coupon rate of 3.5 per cent per annum. The details of the said offer are set out. In paragraph 8, the allegation is made that Company Application No. 454 of 2010 was filed by Sun Pharma with oblique motive and by way of pressure tactics. It is only to object to the consent terms being filed in the court. The objections were raised by two separate intervening bondholders, viz., the Syndicate Bank and Sun Pharma. Allegations contained in paragraph 8 are against Sun Pharma pointing out that its a trade rival and in paragraph 11 allegations are made that one Syndicate Bank is signatory to the CDR mechanism and it is bound by it and, therefore, precluded from filing any application or petition winding up the company. Thus, the basis of the allegations in this sur-rejoinder is the alleged backing out of the petitioner and the intervening bondholders. Further, reasons are set out as to why the respondent cannot accept the proposal contained in the letter dated December 3, 2010, addressed by the advocates for the petitioner. The affidavit also highlights the CDR scheme and how under various options prescribed therein, it would be beneficial for the petitioner to become part of the said CDR scheme. It is pointed out that the settlement has been arrived at with creditors worth Rs. 1,363 crores. The amount that is settled is approximately Rs. 362 crores. Certain other claims have also been settled. The sacrifice under the scheme is, therefore, not of such a degree as would raise doubts about the genuineness thereof and the intentions of the respondent-company to repay the creditors. For these reasons it is submitted that the petitioners cannot seek winding up of the respondent and that the petition be dismissed.

18. On January 5, 2011, directions were issued by the court with regard to filing of pleadings/affidavits. The parties having abided by the same and therefore the petition was listed for admission. It is on this entire material that I have heard the submissions of learned senior counsel appearing for the parties.

19. Mr. Dwarkadas, learned senior counsel appearing for the petitioner submitted that the petitioner has filed this petition in its capacity as a trustee for the bondholders and in discharge of its obligation as a trustee. He submits that the respondent is indebted to the petitioner in the aggregate sum of Rs. 142,214,060 as on October 12, 2009, with future interest on the early redemption amount. Mr. Dwarkadas submits that the bonds came to be issued in the manner set out in the petition and the petitioner acts as a trustee under the trust deed dated October 24, 2004. Mr. Dwarkadas submits that the bonds were issued at 100 per cent of the principal amount and they were redeemable at 128.57 per cent of the principal amount on maturity date, i.e., October 25, 2009. He submits that document at annexure C (page 230, Volume II) is the trust deed under which the petitioner was to act as trustee for the holders of the bond. Inviting my attention to clause 2.2 thereof, Mr. Dwarkadas submits that in terms of this clause and clauses 9.3, 9.4, 9.8, 9.8.1 to 9.8.3 and 11.13 would show that it is for the petitioner to determine whether or not the event of default or potential event of default has occurred and whether it is capable of being remedied. That determination is conclusive and binding on the respondent-company and the bondholders. Mr. Dwarkadas invited my attention to the terms and conditions of the bond and particularly condition No. 10.1 and submitted that the petitioner became aware that the financial condition of the respondent is deteriorating. It is the respondent who proposed restructuring of its debts and/or for composition or arrangement with the creditors. That is how, the email and other communications have been exchanged.

20. Mr. Dwarkadas submits that the defence of the company that the petitioner has no right or authority to issue notice of acceleration of bonds dated June 23, 2009, is not correct because the bondholders have directed the petitioner to file the present petition. The present proceedings is one for enforcement of the claim under the terms and conditions of the bonds. Assuming and without admitting that even if the bondholders had not directed the petitioner to file the present petition, in its own right the present petition can be filed and maintained by the petitioner. He invites my attention to certain clauses in the trust deed in this behalf and relies upon sections 439(1)(b) and 439(2) of the Companies Act. Mr. Dwarkadas submits that as a trustee of bondholders, the petitioner has duty of care and is required to act in the interest of the bondholders or else it could be held liable for breach of duty of care. Thus, the statutory notice is based on the fact that the petitioner has discretion to accelerate redemption of bonds, where event of default has occurred. Therefore, it is false to suggest that the petitioner has no authority to file this winding up petition or that the statutory notice is not valid. Mr. Dwarkadas submits that after issuance of the statutory notice dated October 12, 2009, the bonds matured for payment on October 25, 2009 and the present petition came to be filed on November 5, 2009. Thus, notwithstanding the issuance of notice of acceleration seeking early redemption, even going by the maturity date the respondent-company has failed to pay the bondholders the maturity amount or any part thereof. Thus, the petition is maintainable even otherwise. Mr. Dwarkadas submits that the company's reliance upon the FEMA Regulations, 2000 is totally misplaced as it has been pointed out that the FEMA Regulations referred to by the company in its affidavit in reply are not applicable. Early redemption of FCCB is permissible with prior approval of the RBI which is required for payment of early redemption amount. He submits that the company has not stated that early repayment of bond amounts to, call option. Therefore, the question of applicability of the FEMA Regulations does not arise. The early redemption of foreign currency convertible bonds is permissible with prior approval of the RBI. Thus, there is no violation of the FEMA Regulations and the statements made in the affidavit in reply in that behalf are nothing but an attempt to mislead the court. Mr. Dwarkadas submits that the defence that offering circular contains risk factor is a plea which will support the petitioner's case. The risk factor and the contents of the offering circular in that behalf would show that repayment due to acceleration is permissible but prepayment would require prior approval of the RBI. The respondent has not paid or even taken steps towards payment of early redemption amount. The risk will arise only after an application is made to the RBI. Therefore no reliance can be placed on the clause relating to risk factor.

21. Mr. Dwarkadas then submitted that the pleas raised with regard to the CDR scheme, cannot constitute a bona fide defence. Mr. Dwarkadas submits that implicit in the reliance placed on CDR is the fact that the respondent-company acknowledges its liability not only to pay the amount as claimed by the petitioner but several other creditors. That some of the intervenors have thought it fit to join the CDR scheme, does not mean that the CDR scheme and its pendency itself is a defence. He submits that there are several flaws in the scheme. They are pointed out without prejudice to the rights and contentions of the petitioners. Mr. Dwarkadas submits that some creditors may have accepted some terms of the CDR but it has been pointed out as to how the scheme framed is not as per the guidelines of the RBI. There is a fresh master circular issued by the RBI on July 1, 2001. The CDR provides for setting up of the assets sale committee. The proceeds are to be utilised to repay the secured creditors. ICICI has been appointed as a monitoring institution and is being paid one time fee of Rs. 1 crore for allegedly preparing restructuring package and for which, fee of Rs. 22.50 lakhs for functioning of the monitoring institution is paid. Mr. Dwarkadas submits that apart from the own interest of ICICI, it has been pointed out as to how CDR mechanism is non statutory/voluntary. The CDR mechanism proposes to assume contractual basis through inter creditor agreement and debtor creditor agreement as and when entered into. The inter creditor agreement is binding agreement between creditors who have joined the CDR scheme. Thus, by certain percentage of CDR creditors joining and willing to accept a restructuring package of the existing debts, the same is stated to be binding on remaining CDR creditors. The lenders in foreign currency outside the country are not part of the CDR system. Further, Mr. Dwarkadas submits that the petitioner and the bondholders who are not members of the CDR scheme are not bound by the same. The CDR cell has requested the company to approach non CDR lenders for their approval for restructuring. The petitioners and bondholders having been deliberately excluded from the process of formulation of terms of the purported CDR package, have never agreed to the same. Mr. Dwarkadas submits that the restructuring package purports to operate against outstanding liabilities of the company to the petitioner or the bondholders and purports to bind the company to pay less than 35 cents for every dollar owed to the petitioner. This clearly constitutes an admission by the company to each of such creditors of the company who are the members of the CDR scheme, that the company is undisputedly indebted to the petitioner. It is also clear that the company and each of such creditors who are members of CDR are attempting to deny the amount owed by it and discriminate against the petitioner to their benefit and that of the company's promoters and shareholders. Mr. Dwarkadas has gone into the merits of the CDR restructuring package and pointed out that the same is not acceptable to the petitioners because the options for the FCCB therein requires them to wait for considerably long period. They will have to wait till the company is able to over-come its present crisis. He submits that the FCCB will in addition to being converted from creditor to shareholder, the petitioner's chance of being repaid will be conditional on not only profits in a given year and proceeds of fresh issuance of shares allotted to others and required to be redeemed before those that may be allotted to the bondholders, are actually redeemed. Thus, apart from long wait, options 1 and 2 under the scheme are not viable at all. He submits that it has been pointed out in detail as to how the CDR is unreasonable, arbitrary and discriminatory.

22. Further the petitioners have never been invited to any discussion or meeting of this CDR. Therefore, when they are in dark, have no adequate particulars of the scheme, which in any event is no defence to the claim, then all the more, the petition deserves to be admitted. Lastly, Mr. Dwarkadas submits that the claims of unsecured creditors like the petitioners cannot be brushed aside. Ultimately, winding up petitions can be filed by any creditor. Inviting my attention to section 439 of the Companies Act, it is submitted by Mr. Dwarkadas that any application for winding up of a company can be presented by any creditor or creditors, including any contingent or prospective creditor and, therefore, it cannot be said that the claim of unsecured creditors should be ignored, when, statutorily they are permitted to seek winding up. He submits that by virtue of section 439(1)(b) read with section 439(2), a secured creditor, holder of any debenture including debenture stock, whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures are by deeming fiction termed as creditors for the purpose of clause (b) of sub-section (1) of section 439 of the Companies Act. Therefore, to state that the petition for winding up cannot be filed by the petitioner is a plea which goes contrary to the statutory scheme. For all these reasons, this petition deserves to be admitted. Mr. Dwarkadas relied upon the following decisions in support of his afore-set out contentions:

(1) [2010] 159 Comp. Cas 369 (SC) : [2010] 10 SCC 553 (Iba Health (India) Private Limited v. Info-Drive Systems Sdn. Bhd..);

(2) Company Petition No. 960 of 2009 (Sublime Agro Ltd. v. Indage Vintners Ltd.) decided on March 19, 2010;

(3) [1906] 2 Ch D 327 (Crigglestone Coal Co. Ltd., In re);

(4) [2002] 111 Comp. Cas 1 (Guj.) (Gramercy Emerging Market Fund v. Essar Steel Ltd.);

(5) [2003] 116 Comp. Cas 248 (Guj.) (Essar Steel Ltd. v. Gramercy Emerging Market Fund);

(6) [1966] 36 Comp. Cas 426 (SC) (Harinagar Sugar Mills Co. Ltd. v. M.W. Pradhan (now G.V. Dalvi), Court Receiver, High Court, Bombay);

(7) [2002] 111 Comp. Cas 177 (Bom.) : [2002] 1 Mah. LJ 785 (Mrs. Pratibha Inerjit Kapur v. Nilesh Lalit Parekh);

(8) [1997] 1 SCC 326 (State of Tamil Nadu v. Arooran Sugars Ltd.).

23. Mr. Dwarkadas has been supported in his submissions by Mr. Behramkamdin who appears for the Syndicate Bank in Company Application No. 356 of 2010. He submits that for the reasons mentioned in the affidavit in support of this company application and as an intervenor, who presently holds Zero Coupon FCCBs (ISINXSO 201687570) with a face value of US $ 3,927,000 (US Dollars three million and nine hundred and twenty seven thousand) and redemption value of US $ 5,088,528.06 (US Dollars five million eighty eight thousand five hundred and twenty eight and six cents), this petition should be admitted.

24. He submits that the intervenor as a FCCB holder was never part of the CDR process and cannot be bound by the package. The intervenor, therefore, declined to accept the options provided to FCCB holder as part of CDR package. He relies upon the correspondence between the applicant/intervenor and the respondent post a meeting held in November 2009. He submits that it clarified that CDR package was not binding on the Syndicate Bank. He submits that the affidavit clarifies as to how the process was handled transparently by the applicants. He submits that if the Companies Act and particularly section 557 thereof gives discretion to the court to have regard to the wishes of the creditors or contributories of the company, then, all the more, considering the claim of the applicant/intervenor, the winding up petition should be admitted. He submits that the contents of the affidavit in reply to this company petition would also demonstrate as to how the applicants/intervenors have been opposing any consent terms which jeopardise the interest of the applicant/intervenors and similarly placed creditors. Therefore, the petition may be admitted.

25. On the other hand, Mr. Kapadia, learned senior counsel appearing on behalf of the respondent-company firstly submits that the respondent is in a temporary financial crisis and, therefore, it is not proper to wind up the same or admit the winding up petition against the respondent-company, in public interest. He invites my attention to the fact that the respondent has strong financial base. It is one of the leaders in Pharmaceutical products. It has about 6,000 employees. The interest of the shareholders and creditors so also the employees warrant that this court should not admit the present winding up petition.

26. Mr. Kapadia submits that in any event, this winding up petition cannot be admitted because the petitioner has no locus to file it. The petitioner cannot file the present petition. He submits that only a individual bondholder can file it. Inviting my attention to section 439 of the Companies Act, 1956, it is submitted by Mr. Kapadia that the trust deed must be read as a whole. He submits that even the conditions on which the bonds have been issued would clarify that there is no question of any entrustment to the petitioner. The petitioner does not have any right in law as the bondholder is the owner of the bond. The scheme is that a global certificate for the total amount of the bond is issued and a portion thereof is given to individual holder. Inviting my attention to the objections raised by the petitioner he submits that there is a specific plea raised to the maintainability of this petition and the right of the petitioner to present it in law. It is false to suggest that in the affidavit in reply no objection has been taken and there is no plea raised in this behalf. Inviting my attention to paragraph 28 page 12 of the petition to which reply has been given at pages 428 and 469 of the paperbook, Mr. Kapadia submits that the principles underlying the Indian Trusts Act, 1882, would apply. Mr. Kapadia submits that the definition of the term "trust" in section 3 of the Indian Trusts Act, 1882, would demonstrate that a trust is an obligation annexed to the ownership of property and arising out of confidence reposed in and accepted by the owner or declared and accepted by him for the benefit of another or of another and the owner. Mr. Kapadia submits that the person who accepts the confidence is called a "trustee" and the person for whose benefit the confidence is accepted is called a "beneficiary". Ultimately, the subject matter of a trust is called trust property. Therefore, it is the beneficiary who is the owner. The petitioner though styling itself as a trustee is not the owner. He submits that the petitioner has a limited right and, therefore, by virtue of collective method of suing for recovery of monies from the respondent, the petitioner cannot present the petition. In any event, the agreement between the petitioner and the bondholders cannot over-ride the statute and particularly the powers conferred in the trustee by Indian Trusts Act. Further, that power is coupled with a duty as is clear from sections 12 to 18 of the Indian Trusts Act.

27. Mr. Kapadia invites my attention to the terms and conditions of the bonds and particularly clauses 2, 3, 6, 6.1.1, 7, 8.1, 10, 11.26, 13 and 16.2 in support of his submission that for the purpose of section 439(1)(b) and sub-section (2) thereof to apply, a person must be a trustee or else the deeming provision will not apply. He submits that the definition of the term trust and trustee under the Indian Trust Act would show that the judgment of the learned single judge of the Gujarat High Court which is reported in [2002] 111 Comp. Cas 1 (Guj.) (Gramercy Emerging Market Fund v. Essar Steel Ltd.) delivered by the hon'ble the Chief Justice of this court Mohit Shah J., who at the relevant time was a judge of the Gujarat High Court will not apply.

28. Mr. Kapadia submits that in any event, the petitioner is not a debenture trustee. The petitioner is only holding bonds. No property of the company vests in the petitioner. If the petition is held to be maintainable, then, a right will be conferred on a person who is not a trustee. The petitioner is merely a facilitator. Tomorrow, a right will be conferred on a mere facilitator to present a winding up petition if the construction of the subject provisions, as suggested by Mr. Dwarkadas, is accepted. Once this position in law is understood, then, this petition deserves to be dismissed only on this ground.

29. Alternatively and assuming without admitting that there is a right in the petitioner to file a winding up petition, even then, in absence of the consent of bondholders who are sought to be represented, even if one bondholder has no right to present a petition, it must fail. The petitioner seeks to represent all the bondholders. However, in the affidavit in reply it has been pointed out that two bondholders, viz., Syndicate Bank and Sun Pharma supported the CDR scheme. They have about 25 per cent bonds approximately. In these circumstances, when two constituents constituting total group of bondholders, have suspect motives and are not acting in good faith, then, the petition must fail. Mr. Kapadia submits that Sun Pharma is competitor of the respondent in the pharmaceutical market. In such circumstances, when the CDR scheme evolves a package which is in the interest of all the creditors and shareholders, then, it must be allowed to be implemented fully.

30. Mr. Kapadia was at pains to explain the mechanism of the CDR. He submits that there is a monitoring agency which will supervise the implementation of the CDR. He submits that there are working capital loans and some amounts would be fused in ICICI has already put in a substantial sum of Rs. 220 crores. There are some internal concessions and moratoriums. The working capital once infused in this manner would improve the financial condition of the respondent enabling it to tide over the temporary crisis. In such circumstances, this court should allow the respondent to come out of the present situation by not admitting the winding up petition. A case has been made out for not exercising the discretionary jurisdiction of this court in favour of the petitioner but that of the respondent. Mr. Kapadia submits that the attack and criticism on the CDR scheme is totally unjustified. Mr. Kapadia invites my attention to the letter dated June 30, 2009, at page 341 of paperbook and pages 379, 380 and 469 and 470 of the paperbook to submit that no one was kept in dark about the CDR scheme and proposals. Everybody concerned was taken into confidence. He submits that the respondent's letter dated July 9, 2009, page 343 of the paperbook and page 345 would demonstrate as to how the CDR scheme is beneficial and feasible. The salient features have been pointed out. Instead, there was no response from the petitioner and, therefore, the argument that the petitioner was not taken into confidence is false and must be rejected outright. Mr. Kapadia has invited my attention to the further affidavit of the respondent and annexure A to the same. In this behalf, he invites my attention to pages 686, 692 and 670 of the paperbook and contends that the petitioner cannot take advantage of the scheme/CDR through some bondholder and financial institution (Syndicate Bank for example) and still pursue a winding up petition. The CDR involves active participation of the banks and now it has reached a advanced stage, when more funds have been put in. Thus, temporary set back to the company is being taken care of.

31. Mr. Kapadia submits that the criticism that the CDR contemplates fraudulent preference and indefinite wait for creditors is unfounded. Mere long wait beyond anything more by itself is not a ground for holding that the alleged preferences are fraudulent. Mr. Kapadia submits that this argument is based on the fact that the respondent has settled some claims whereas it decided to contest some others including the present petition. The petitioner is a unsecured creditor. By pressing the winding up petition, it cannot stop business of the respondent which is the very purpose of filing the petition. Therefore, there is no fraud and merely because consent terms have been filed in some petitions by and between the respondent and the creditors concerned therein, is no ground to entertain this petition. He submits that the options under the CDR scheme have been properly explained and, therefore, even the workers are supporting the respondent and the CDR scheme. Those options being exercised does not mean that legal rights have been completely given up or that the claims would be held in abeyance endlessly. For all these reasons, he submits that this petition should not be admitted.

32. In support of his submissions, he relies upon the following judgments:

(1) [2003] 116 Comp. Cas 248 (Guj.) : [2003] 6 Comp L.J. 538 (Guj.) (Essar Steel Ltd. v. Gramercy Emerging Market Fund);

(2) AIR 1937 Bom. 374 (Shivramdas v. B.V. Nerurkar);

(3) AIR 1919 Mad. 555 (Alagappa Chettiar v. Lakshmanan Chettiar);

(4) [2004] 118 Comp. Cas 356 (Bom.) (Krishna Filaments Ltd. v. Industrial Development Bank of India);

(5) AIR 1971 SC 2600 : [1972] 42 Comp. Cas 125 (SC) (Madhusudan Gordhandas and Co. v. Madhu Woollen Industries P. Ltd.);

(6) [1994] 79 Comp. Cas 835 (SC) (Pradeshiya Industrial and Investment Corporation of Uttar Pradesh v. North India Petro Chemical Ltd.);

(7) [1999] 96 Comp. Cas 841 (Guj.) (American Express Bank Ltd. v. Core Health Care Ltd.);

(8) [1990] BCLC 324 (MC Bacon Ltd. (No. 1), In re);

(9) AIR 1988 Karn. 1 [FB] : [1989] 65 Comp. Cas 427 (Karn.) [FB] (Chief Controlling Revenue Authority v. Manager, State Bank of Mysore);

(10) [1961] 43 TIR 352 (SC) : AIR 1966 SC 719 (CIT v. Shakuntala).

33. Mr. Kapadia has been supported by Mr. Swanand Ganoo who appears for the applicants/intervenors in Company Application No. 37 of 2011. He submits that the president of the Wockhardt Employees Union, who has filed the affidavit in support of this application, has pointed out that the petitioner should not be allowed to disrupt the functioning of the respondent-company for good reason, viz., under the CDR package, CDR lenders/banks have consented to restructure the facilities and the petitioner would be recognised as a secured creditor vis-a-vis the respondent and the company would start repaying the amount due from July 15, 2010. He submits that the livelihood of the workers depends upon the company. The company has a large net-worth, net sales of the company have grown up considerably. The company is a viable entity and is facing temporary financial crunch due to adverse market conditions. If petition is admitted, there is likelihood that the workers may lose their only source of livelihood as their jobs would be at risk. Therefore, this court by following the principle laid down in the decision of the Supreme Court (National Textile Workers' Union v. P.R. Ramakrishnan [1983] 53 Comp. Cas 184 (SC) : [1983] 1 SCC 28, should not admit this winding up petition. Workers' rights have been recognised in this decision, according to Mr. Ganoo and, therefore, even their wishes must be respected and taken into consideration.

34. The other applications/intervenors who have supported Mr. Kapadia is ICICI Bank. Mr. Madon, learned senior counsel appearing for ICICI Bank has submitted that the ICICI Bank has by filing a detailed affidavit pointed out as to how the admission of winding up petition would not be in the interest of anybody. The applicant is representative of member banks under the corporate debt restructuring (CDR) mechanism of the Reserve Bank of India in terms of the letter issued by the CDR Cell dated October 30, 2009 and November 25, 2009. It has intervened because the corporate debt restructuring mechanism is in the interest of all. In these circumstances, any order admitting the winding up petition would endanger the claims of the members of the mechanism. Their total outstanding is Rs. 1,775.57 crores. The CDR cell has faith and confidence in the management of the respondent. The chances of revival of the respondent are bright. The applicant ICICI has already put in Rs. 220 crores in the scheme. The CDR has gone forward and the liability being to the extent of Rs. 2,000 crores, this court may not pass any order admitting this winding up petition. That would mean that the CDR scheme and the package cannot be carried forward any longer. In these circumstances and when even the petitioner will have no chance of receiving the amount due, the CDR mechanism should be permitted to operate as envisaged by all. The petition, therefore, be dismissed is the submission.

35. In rejoinder Mr. Dwarkadas has submitted that the objections raised by Mr. Kapadia that the petitioners are not the trustees is not on affidavit. If it was raised on affidavit the petitioners would have met it by pointing out as to how it is entitled to file and maintain the present petition. Such pleas when not raised on affidavit have a result of, parties like the petitioner, being taken by surprise. Mr. Dwarkadas submits that it is no longer open to the respondents to raise such a technical objection because it is a party to the trust deed. He submits that deeming fiction in section 439(2) must be given its full effect. The intention of the Legislature is to allow any creditor to present a winding up petition and, therefore, the intention is to enlarge the scope of the provisions enabling filing up of a winding up petition. He submits that reliance on the decision of the Division Bench of the Gujarat High Court in the case of Essar Steel Ltd. v. Gramercy Emerging Market Fund reported in [2003] 116 Comp. Cas 248 (Guj.) is misplaced because there clause 13 was differently worded. Relying on a decision of Division Bench of this court reported in [2002] 111 Comp. Cas 177 (Bom.) : [2002] 1 Mah. L.J. 785 (Mrs. Pratibha Inerjit Kapur v. Nilesh Lalit Parekh), Mr. Dwarkadas submits that the winding up is recognised as a equitable mode of execution and enforcement of claims of creditors. Therefore, the objection raised to the locus of the petitioner is contrary to law and would defeat sub-section (2) of section 439 of the Companies Act, 1956. Mr. Dwarkadas then submits that the conduct of two bondholders is not relevant at all. Once the petitioner represents the bondholders as a class and there is a contract with the respondent, then, the petitioner's right to file a winding up petition can never be taken to be lost if some bondholders do not wish to join the petitioner earlier. However, now even the Syndicate Bank is supporting the petition. Mr. Dwarkadas submits that if some financial institutions think it fit to accept the terms in the CDR package and implementation of that package is pending is by itself no ground to refuse to admit this petition. There is no bar in law. Once the petitioner's debt is acknowledged and admitted, when the company is unable to pay it and when its defence is not bona fide, then all the more this petition should be admitted. It should be admitted because no steps have been taken by the respondent to satisfy the claim of the petitioner or to secure it otherwise. Mr. Dwarkadas has invited my attention to the pleading particularly paragraphs 21 and 23 of the petition. He has also invited my attention to some of the relevant annexures to the petition and a letter dated July 4, 2009. He also argued that the promoters of the respondent are enriching themselves endlessly. They are not putting anything personal at stake. They ensured that their shareholding is intact and undisturbed, even if the company goes in red. Therefore, when the CDR scheme does not prevent the promoters from continuing to hold on to their shares nor does it require them to contribute anything then, the petitioner cannot be told that it should not go ahead with this petition. This is one more reason why the petition should be admitted.

36. With the able assistance of learned senior counsel appearing for the parties, I have perused the company petition and its annexures and some of the affidavits together with their accompaniments. I have also perused the relevant statutory provisions and decisions brought to my notice.

37. Since heavy reliance is placed on the decisions of the Supreme Court outlining the principles enabling the company court to exercise its discretion to wind up a company, it would be worthwhile to refer to some of the provisions of the companies act and, thereafter the relevant decisions.

38. Part VII in the Companies Act, 1956 is entitled "winding up". Chapter I thereof is entitled "preliminary". Below that there is a subheading "modes of winding up". Section 425(1) of the Act provides that the winding up of company may be either by the court or voluntary. Sub-section (2) of section 425 clarifies that provisions of the Companies Act with respect to winding up apply unless contrary appears, to the winding up of a company in any of those modes.

39. Section 426 deals with contributories and their obligation and duties. The term contributory is defined in section 428. Then comes Chapter II under this Part which is entitled "winding up by the court". Section 433 which falls in this chapter is entitled "circumstances in which the company may be wound up by the court". A company may be wound up by the court if the company is unable to pay its debts. Company is deemed unable to pay its debts if a creditor, by assignment or otherwise to whom the company is indebted in the sum specified in section 434(1)(a) has served on the company by causing it to be delivered at its registered office by registered post or otherwise, a demand notice under his hand requiring the company to pay the sum so due and the company has for three weeks thereafter neglected to pay the sum, or to secure or compound for it to the reasonable satisfaction of the creditor. Clauses (b) and (c) of section 434(1) state that a company shall be deemed to be unable to pay its debts if execution or other process issued on a decree or order of any court in favour of the creditor of the company is returned unsatisfied in whole or in part or if it is proved to the satisfaction of the court that the company is unable to pay its debts and, in determining whether a company is unable to pay its debts, the court shall take into account the contingent and prospective liabilities of the company.

40. Section 439(1) and (2) read thus:

"439. (1) An application to the court for the winding up of a company shall be by petition presented, subject to the provisions of this section,--

(a) by the company; or

(b) by any creditor or creditors, including any contingent or prospective creditor or creditors; or

(c) by any contributory or contributories; or

(d) by all or any of the parties specified in clauses (a), (b) and (c), whether together or separately; or

(e) by the Registrar; or

(f) in a case falling under section 243, by any person authorised by the Central Government in that behalf; or

(g) in a case falling under clause (h) of section 433, by the Central Government or a State Government.

(2) A secured creditor, the holder of any debentures (including debenture stock) whether or not any trustee or trustees have been appointed in respect of such and other like debentures, and the trustee for the holders of debentures, shall be deemed to be creditors within the meaning of clause (b) of sub-section (1)."

41. In a recent judgment of the Supreme Court reported in [2010] 159 Comp. Cas 369 (SC) : [2010] 10 SCC 553 (Iba Health (India) Private Limited v. Info-Drive Systems Sdn. Bhd..), the Supreme Court reiterated the settled principles. The facts are set out in paragraph 8 onwards and in paragraph 20, the Supreme Court set out the question that arose for consideration in that case, viz., when there is a substantial dispute as to liability, can a creditor prefer an application for winding up for discharge of that liability. The Supreme Court held that a dispute would be substantial and genuine, if it is bona fide and not spurious, speculative, illusory or misconceived. In paragraphs 20 to 23 of the judgment, the Supreme Court reiterated the principle that winding up petition is not a legitimate means of seeking to enforce payment of debt which is bona fide disputed by the company. It cannot be a means to exercise pressure on the company. Even an admission of winding up petition has serious consequences. There may not be neglect to pay and if there is no neglect, the deeming provision, viz., section 434(1) does not come into play. Once the debt is substantially disputed, then, there is no neglect to pay. In paragraphs 24, 25 and 29 the Supreme Court also reiterated that if the company is commercially solvent, then, it should not be called upon to pay the debt and liability which is bona fide disputed by it. In such cases, the winding up petition will have an adverse impact and at times, a disastrous effect on the business prospects of the company. All this has been observed in the context of a disputed debt and which dispute is found to be bona fide and substantial. There cannot be any quarrel with these principles and they are binding upon me. I have applied these very principles to the facts of the present case as I am obliged to. I am also aware of the seriousness of the proceedings and that any order during the course of such proceedings would affect the respondent-company.

42. From the record of this petition, it is apparent that the petition is presented by the petitioner BNY Corporate Trustee Services Ltd. It has pointed out that the claim as stated in the petition arises out of the early redemption of Zero Coupon Convertible Bonds. It has been pointed out vide annexure B that the respondent which is incorporated in India as a public company with limited liability, has issued US $ 110,000,000 Zero Coupon Convertible bonds. These bonds are convertible at any time on or after November 24, 2004, or such earlier date as is notified to the bidders of the bond up to close of business hours on September 25, 2009, by holders, into fully paid-up equity shares with voting rights with a par value of Rs. 5 each of the share of the company. The offer circular annexure B has been annexed as observed above and under the same, bonds were issued at 100 per cent of the principal amount on October 25, 2004, the maturity date being October 25, 2009. Unless previously redeemed, converted or purchased and cancelled, the company had agreed to redeem each of the bonds. It is stated that on October 25, 2004, the issuer of the bonds entered into a trust deed with the petitioner for the holders of the bond. Annexure C is a copy of the trust deed. With the assistance of both senior counsel, I have perused the trust deed. The trust deed stipulates that the bondholder will be paid the sums in terms thereof and clause 2.2 is relied upon in this behalf.

43. The definition of the term bondholder means a person in whose name the bond is registered in the register of bondholders and the persons indicated in the definition. The terms "bonds" and "certificate" are defined and the term "global certificate" and "outstanding" are also elaborately defined. The term "potential event of default" is defined to mean an event or circumstance which would with the giving of notice and/or the lapse of time and/or the issuing of a certificate become an event of default. Clause 2.2. reads thus:

"2.2. Covenant to pay: The company will on any date when the bonds or any of them become due to be redeemed in accordance with the conditions unconditionally pay or procure to be paid to or to the order of the trustee in New York City in US Dollars in immediately available funds the principal amount of the bonds becoming due for redemption or repayment on that date (to be received by 10.00 a.m. New York City time) together with any applicable premium and will (subject to the conditions) until such payment (both before and after judgment) unconditionally so pay to or to the order of the trustee interest in US Dollars on the principal amount of the bonds outstanding as set out in the conditions provided that (a) every payment of any sum due in respect of the bonds made to or to the order of the principal agent as provided in the agency agreement shall, to that extent, satisfy such obligation except to the extent that there is failure in its subsequent payment to the relevant bondholders under the conditions and (b) a payment made after the due date or pursuant to condition 10 will be deemed to have been made on the business day in New York City after the full amount due (including interest accrued) has been received by the principal agent or the trustee and notice to that effect has been given to the bondholders (if required under clause 9.11) except (if payment is made to the principal agent) to the extent that there is failure in the subsequent payment to the relevant bondholders under the conditions. The trustee will hold the benefit of the covenants in this clause 2.2 on trust for the bondholders."

44. Clause 2.4 stipulates as to what "payment after the default" contemplates and includes. As far as the petitioner is concerned, it states that it is a trustee. It is apparent from the reading of this definition and the substantive clauses that relationship between the petitioner and the respondent is contemplated or else, the term trustee would not be appearing in the trust deed itself. The petitioner's predecessor is termed as trustee and the trustees have agreed to act as such on the terms and conditions set out in the deed. Therefore, it would be of relevance to note the clauses 2.2, 2.4, 3.1, 3.6, 8.1 and 9.3, falling under the caption "general covenant". Clauses 11.13 and 11.19 read thus:

"11.13: Events of default: The trustee may determine whether or not an event of default or potential event of default is in its opinion capable of remedy and/or materially prejudicial to the interests of the bondholders. Any such determination will be conclusive and binding on the company and the bondholders.

11.19: Action by the trustee: Notwithstanding anything else contained in this trust deed the trustee shall not be required to take any action prior to making any declaration under condition 10 that the bonds are immediately due and payable (save that it will procure notice to be given to the bondholders of any event of default of which it has actual knowledge or express notice) if such action would require the trustee to incur any expenditure or other financial liability or risk its own funds (including obtaining any advice which it might otherwise have thought appropriate to obtain). The trustee shall not be under any obligation to take proceedings against the company to enforce payment of the bonds after the bonds have become due and payable unless it shall have been indemnified and/or provided with security to its satisfaction."

Clause 11.26 is also of some importance so also clauses 12 and 16.2. As far as the terms and conditions of the bonds themselves are concerned, they are at page 280 of the paperbook. A bare perusal of the same would indicate that these terms convey as to when the title to the bonds will pass, when transfers of bonds would be permissible and how it is to be effected, whether conversion is permitted or not. Even there, clause 8 at page 299 entitled "redemption, purchase and cancellation" and particularly clause 8.1 therein are material and is reproduced hereinbelow:

"8.1 Unless previously redeemed, converted or purchased and cancelled as provided herein, the issuer will redeem each bond at 129.578 per cent of its principal amount on October 25, 2009 (the maturity date). The issuer may not redeem the bonds at its option prior to that date except as provided in condition 8.2 or condition 8.3 below (but without prejudice to condition 10)."

Clause 13 has been emphasised by both sides and it deals with enforcement.

45. Thus, the claim of the petitioner is founded on the allegation that on or about March 31, 2009, the petitioner learnt that the company proposes restructuring of its debt and/or composition or arrangement with creditors. It applied to the Corporate Debt Restructuring Cell in India. That is how the e-mail was sent. A copy of this e-mail is at page 329 and the petitioner stated that there may be a potential event of default on the issue. As per clause 9.8 of the attached trust deed, the petitioners stated that the company should provide with a compliance certificate within next fourteen days, setting out as to how it has complied with clause 9.8. The company replied to this letter on April 15, 2009 and has stated as under:

"After the repayment of these loans, the company had raised short-term loans which are falling due in 2009 and the company is finding it difficult to roll over these loans in the liquidity constraints and high debt burden, the company is seeking help in financial restructuring of the debts and interest from various lenders in India of various forms through the CDR mechanism."

46. However, the petitioner persisted with the request of calling upon the company to comply with clause 9.8 of the trust deed and the petitioner received a reply dated April 23, 2009, from the respondent stating that the company has approached the CDR cell with a view to take advantage of the initiative of the RBI to assist creditworthy companies to tide over temporary liquidity crunch for a possible restructuring of its loans. The company replied that it would keep the petitioners notified with regard to compliance with clause 9.8 of the trust deed. Since the company did not revert back, even after time being allowed, the petitioner addressed a letter dated May 6, 2009, with the following:

"In view of the aforementioned and in accordance with our powers set out in clauses 9.3 and 9.4 of the trust deed, we hereby urgently request you in your capacity as issuer of the bonds to produce a certificate of compliance and no event of default or potential event of default within five calendar days hereof.

Note that the certificate should make reference to the trust deed and the notes and should be issued in compliance with the terms of the trust deed.

Please provide the said certificate as a matter of urgency and in any event, no later than 5 p.m. (London time) on May 11, 2009.

Should you have any queries, please contact Zaira Jehangir on + 44 207 964 4981.

The trustee hereby reserves all of its rights and the rights of the bondholders under the trust deed, the conditions, any other documents relating to the bonds and at law."

47. To this, reply was received on May 11, 2009 (annexure I--page 336) which reads thus:

"We refer to the trust deed dated October 25, 2004, made between Wockhardt Ltd. (the company) and BNY Corporate Trustee Services Ltd. (formerly J.P. Morgan Corporate Trustee Service Ltd.) as trustee (the trust deed) relating to the bonds. We also refer to your letter dated May 6, 2009, requesting a certificate from the company pursuant to clauses 9.3 and 9.4 of the trust deed.

As mentioned in our letter of April 23, 2009, an application has been made by ICICT Bank as the lead institution on behalf of the company for corporate debt restructuring (CDR) for a possible restructuring of certain of the company's loans.

We have now been advised that the application for CDR is an event falling within condition 10.1.4 of the bonds and, for this reason, the company is not in a position to provide you with a certificate confirming that no event of default in respect of the bonds has occurred."

48. In these circumstances, the petitioner states that it addressed a notice of event of default dated May 19, 2009, confirming occurrence of event of default. Thereafter, the petitioner addressed a notice of acceleration of bonds dated June 23, 2009, declaring the bonds as immediately due and payable at their early redemption amount. As a result of occurrence of event of default, the petitioner contemplated payment of early redemption amount by the company in immediately available funds.

49. To this, a reply was received from the respondents dated June 30, 2009. It is stated in this reply that the proposal to CDR Cell was taken up in the meeting of the empowered group on June 25, 2009 and the company expected to receive formal intimation of the terms of debt restructuring as approved in the meeting within four to five working days. Various aspects of CDR proposals were pointed out in this letter with a view to justify that the cell has invited participation of some banks and the petitioner was requested not to precipitate any action which will delay the debt restructuring process. On the other hand, the petitioner was requested to furnish the details of the current bondholders in order to enable the company to explain the proposal to them.

50. Subsequently, a letter dated July 9, 2009, was also addressed forwarding therewith the letters of allotment dated July 4, 2009, to the CDR Cell.

51. The petitioner also received a letter dated October 9, 2009, purporting to reply to their letters dated June 23, 30 and July, 9, 2009. Once again the company outlined the CDR proposal with its details and stated as under:

"In view of the above, we once again request your co-operation and request a meeting with you and the representatives of the bondholders, wherein we can, discuss with you the salient features of the CDR package and a way forward for repayment of the FCCB bonds in a manner that is not prejudicial to any other class of creditors."

52. The petitioners were not satisfied with this response and addressed the statutory notice in reply to which the respondent's advocate in their letter dated October 30, 2009, firstly questioning the authorisation of the petitioner, who represents the bondholders, then, stated that the bondholders to the extent of 40 per cent have consented to and joined the scheme. It is pertinent to note that the petitioners locus was questioned, but, at the same time both the petitioner as well as the bondholders have been accused of not acting bona fide and pressurising the company.

53. Paragraphs 3, 4 and 5 of the reply then made various proposals to the bondholders and particularly to join the CDR mechanism for the benefit of all creditors, according to the company. At the same time, there is an admission that the company is facing liquidity issue. The general economic condition was stated to be responsible to all this. The petitioner replied to the same and whilst stating that it is under no obligation to substantiate its authorisation, pointed out that the trustees have acted bona fide and it was for the company to have involved the bondholders in the CDR scheme by placing the proposal for their consent as group by convening the meeting, which was never done. It is pointed out that the company has admitted the event of default.

54. To my mind, it is not open to the respondent to urge that the petitioners have no authority to file the winding up petition. The argument in that behalf clearly overlooks the trust deed. In the trust deed it has been stated very clearly that the trustee will hold the benefits of covenants in trust for the bondholders. If clause 2.2 as referred to above is perused, it is clear that the payment has to be made to the order of the trustee instead in US $. The fact that it is a trust deed and it has been executed by the respondent and the predecessor in title of the petitioner, goes to show that the payment is to be made to the order of the trustee. Merely because a bondholder is to be treated as an absolute owner of the bond (clause 3.6) does not mean that the petitioner has no authority to file winding up petition. In this behalf, reliance is rightly placed by the petitioner on clause 8.1 of the trust deed together with other clauses, which would go to show that the trustee has a definite role to play and can initiate actions. Clause 11.19 of the trust deed which is already reproduced above.

55. A bare perusal of the same would make it clear that the trustee shall not be required to take any action prior to making any declaration under condition 10 that the bonds are immediately due and payable, if such an action would require the trustee to incur expenditure of another liability to risk its own funds. It will act on the basis that it is satisfied as required from further clauses and particularly clauses 11.20 to 11.35. In this behalf, clause 11.26 is also relevant. Clause 12 also would be indicative of the fact that the trustee has the power and it is not as if the trustee is a vague concept but it is in consonance with the principles of trust and that is how clause 12 is worded. The wide powers that are given to the trustees would go to show that there is no substance in the contentions that the petitioner has no authority to file this petition. Once the law recognises the right of any creditor to, present a winding up petition and the petitioner is admitted to be a unsecured creditor of the company, then, all arguments about the lack of authority of the petitioner must fail on this ground alone. If the terms and conditions of the bond read with the clauses of the trust deed are considered, then, at least the right of the petitioner to receive payment under the bonds is admitted. If the petitioner allegedly has a limited right and that is to resort to various modes of recovery of money, which is not disputed by the respondent, then, despite being a party to the trust deed granting such a right, the respondent cannot question the locus of the petitioner. Really speaking, the argument to this effect overlooks the fact that the petitioner is treated as a unsecured creditor by the company throughout. Once it treats it as such then strictly speaking it is not necessary to decide any wider controversy.

56. As far as the contention that the petitioners does not satisfy the requirement of section 439(2) of the Companies Act is concerned, it is clear that a perusal of the same would reveal that the trustee is capable of presenting a winding up petition. It is not as if the debenture holder has to file a winding up petition. The argument that the Division Bench of the Gujarat High Court would suggest that individual bondholders alone have to file a winding up petition, is not accurate because a reading of the judgment and particularly the following paragraphs would indicate that the observations made were in the context of considering over-ruling the objection to the maintainability of the petition. The court does not suggest that a trustee cannot file a winding up petition under any circumstances (page 288 of 116 Comp Cas):

"Even if it is assumed that it was the trustee who was required to present the winding up petition, the trustee clearly was not wanting to do so on the ground that it was not its job under the terms of the trust deed to file a winding up proceeding. The trustee was bound to show a degree of care and diligence required of it as a trustee as per clause 10 of the deed. The trustee could not have waived the default unless in its own opinion, the interest of the note holder was not to be materially prejudiced, as contemplated in clause 11(1) of the deed. This is why the trustee refused to agree in its letter of May 2, 2001, to the company's request that the notice of default from the trustee should be treated as of no effect and insisted that the notes were properly called due and payable. The trustee in its letter dated February 19, 2002, has taken a stand that it is not the creditor and that the winding up proceeding is a matter between the company and the note holders. Therefore, the note holders were perfectly within their rights as creditors to present the winding up proceedings in which, according to the trustee, it had no voice having regard to the nature of such proceedings which were not merely for enforcement of the trust deed and the notes.

The nature of a winding up proceeding under section 439 of the said Act is obviously different from mere enforcement of payment of the dues under the note or trust deed. Clause 13 of the conditions of the notes does not contain any specific reference to winding up proceedings which some trust deeds or notes may contain and rightly so, because, in the context of section 9 of the said Act, such a condition against the provisions of the Act by which the creditors are enabled to present a winding up proceeding would be void. Clause 13 only refers to the discretion of the trustee to institute such proceedings against the issuer as it may think fit 'to enforce the terms of the trust deeds and the notes'. The subject of winding up of the issuer company could not have depended on the conditions of the trust deed or the notes. In fact, winding up was not a term or condition of the trust deed or notes. The nature of the proceedings contemplated by the enforcement clause 13 of the conditions of notes was obviously proceedings in person am for recovery of the dues from the issuer company under the trust deed and notes which would be principal and interest and remunerations, expenses and indemnities for the beneficial owners or the trustee, as the case may be. The winding up proceedings under section 439 are not proceedings for recovery of dues, but are proceedings in rem based on statutory grounds on which a company may be wound up by the court such as, a company being unable to pay its debts or if the court is of the opinion that it is just and equitable that it should be wound up as contemplated by clauses (e) and (f) of section 433 of the said Act. The jurisdiction of the company court does not extend to mere enforcement of the terms of the contract of the parties to satisfy a claim of a creditor made under it. The function of a court in a winding up proceeding is not to decide matters of recovery of a particular debt owed by the company to any person, but to examine whether there exists any circumstances on the basis of which the company is liable to be wound up. The reliefs granted by a court in a winding up petition are different from the reliefs in an inter-partes enforcement action. Therefore, ability to give a valid discharge test cannot be applied to a creditor beneficiary who is a creditor within the meaning of section 439(1)(b) and can knock at the door of the company court to draw its attention to the circumstances that warrant winding up of the company. The inquiry in the present case will be, whether there is inability on the part of the company to pay its debt and/or whether it would be just and equitable to wind up the company. That has nothing to do with the question of creditor's ability to give a valid discharge, because, a creditor who moves the court may ultimately be offered nothing.

Above all, no term of agreement can prevail over the statutory provision enabling the creditor to present a winding up petition. This clearly follows from the provision of section 9(b) of the Act which, inter alia, provides that, save as otherwise expressly provided in the Act, any provision contained in the agreement or resolution of the company shall to the extent to which it is repugnant to the provisions of the Act, become or be void, as the case may be.

The trustee is appointed by the company, is remunerated and indemnified by it and can even be replaced as per the terms of the deed. The trustee has to safeguard the interest of the beneficiaries and it was justified in not acting as a puppet of the company. In view of what we have said hereinabove, we hold that the winding up petitions are maintainable at the instance of the petitioners note holders who are beneficial owners, and, since the interests of other note holders may also be involved, the trustee would be a proper party to assist the company court in the proceedings and it was therefore absolutely correct on the part of the learned single judge to direct the trustee to be impleaded as a party to these proceedings. As noted hereinabove, even the company, has in terms, pleaded that the trustee was a necessary party, and, obviously therefore, it cannot grudge against that direction. However, these petitions are maintainable even at the instance of the note holders in their own capacity as creditors. It is not even the trustee's stand, as is clear from the aforesaid correspondence, that it did not take the proceedings, because, there was no requisite resolution passed by the note holders as contemplated by clause 13. The stand of the trustee rightly is that the winding up proceedings are not contemplated by clause 13 and that the note holders who are the creditor beneficiaries were free to initiate them since the notes had become due and payable by virtue of the trustee having issued notices to the company demanding repayment as per the terms and conditions thereof. Thus, there is no substance in the preliminary objection that even if the petitioners are creditors, they do not have an enforceable claim in view of clause 6 of the trust deed or condition 13 of the notes."

I have reproduced the paragraphs from the Division Bench judgment only to demonstrate that the Division Bench affirmed the judgment of the learned single judge (as his Lordship the hon'ble Chief Justice of this court, then was) of the Gujarat High Court in Gramercy Emerging Market Fund v. Essar Steel Ltd. (delivered on March 20, 2002) [2002] 111 Comp. Cas 1 (Guj.). The statement of the law in paragraphs 27 and 28 of the judgment of the learned single judge has my respectful concurrence.

57. In such circumstances and even the general principles would indicate that the bondholders could be represented by trustee and a deed executed in that behalf, which is binding on the petitioner as also the respondent, then, cannot be ignored. Once that deed does not go contrary to the statutory principle recognised by section 439(2), then, there is no substance in the contention that the petition is not maintainable. In any event, it is conceded that the petitioner is an unsecured "creditor". It is defined to mean a person to whom the debt is payable. I do not see how by raising technical objections the respondent can escape its liability to pay the sum due in terms of the bonds and the trust deed.

58. Even a reading of clause 10.13 of the terms and conditions of the bonds would indicate that the trustees' rights recognised by the deed of trust are not affected or taken away in any manner. The argument of Mr. Kapadia based upon reading of the Global certificate and other clauses of both documents, to be accepted, would mean that the documents should be seen in an isolated manner and not together. If they are seen, considered and read together, then, the conclusion is inevitable that the petitioner can present the instant petition.

59. As far as the maintainability of the petition is concerned, once the objection raised in that behalf is found to be of no substance, then, the other contentions need not detain me. The petitioner cannot be forced to join the CDR scheme. The law does not postulates any such compulsion on the petitioner. Once section 433(e) and section 434(1)(a) of the Companies Act, 1956, is applicable, then, the section does not confer a right on a debtor but only gives him an opportunity to discharge the debt in one or other of the ways mentioned therein. The debtor could secure or compound for a debt only where the circumstances under which the demand is made permit such a discharge. It is not the respondent's case that CDR is a discharge. It seeks the petitioner's approval to agree to postponement of payment to a future date. However, once the petitioner does not agree to any such course in law, it cannot be said that a winding up petition should not be presented by it. There is no absolute right in a creditor and he cannot insist on a winding up order being passed but the court cannot refuse to entertain a petition merely because CDR scheme for settlement of its debts is proposed by the company. A scheme is proposed and the creditors will have to wait for settlement of their dues, by itself, cannot be a ground to refuse the admission of winding up petition. Something more will have to be set out and proved in that behalf. In this case, there may be participation of some bondholders in the scheme and they may choose to wait for settlement of their dues but by that itself and without anything more, this court cannot in the garb of refusing to entertain the winding up petition, issue any directive or require the petitioners to wait in queue for settlement of their dues, if the petitioner does not choose to do so. Moreover, it is not the case of respondent that the petitioner has accepted the CDR scheme or has participated in the same. Merely because the company finds that it is feasible and some other creditors may have agreed with that view, does not mean that the petitioner can be directed to join the said scheme or the petition at its instance can be dismissed straightaway. The argument on feasibility of the scheme also need not be gone into nor the objection that the scheme is being implemented by giving preference to some creditors and such preference is fraudulent in nature requires any answer. Once a view is taken that the petition cannot be dismissed merely because the scheme is proposed and is being implemented, then, all other contentions are of assistance to the company and they need not detain me.

60. The other objection raised to the maintainability of the petition is that some of the creditors have found the scheme feasible and have pumped in funds. This also cannot be a ground not to admit the petition because there is no dispute about the liability, there is no denial thereof and there is nothing which would indicate that the respondent has a bona fide defence. The only defence seriously pursued is on the maintainability of this petition. That defence has no substance. There is no denial of the liability or any dispute raised in that behalf. In fact, the liability to pay the amount is admitted throughout. The company calls upon the petitioner to enter into a package or scheme of compromise allegedly to secure the debt. That package or scheme (CDR) has been rejected by the petitioner and it proceeds to institute this petition. Once it rejects the proposal and the conduct of the petitioner in trying to protect the interest of bondholders cannot be termed as blameworthy or questionable, then, it must be held that the alternatives or options suggested to secure the debt in this case do not constitute a substantial defence. The claim is huge and the petitioner has filed the petition as a trustee. Therefore, it would not be proper to hold in this case that the power to admit this petition cannot be exercised at the instance of the petitioner. Similarly, the conduct of some of the bondholders also is no ground to refuse entertainment of the petition at the instance of the petitioner.

61. Having dealt with these objections and finding that there is no merit in it and prima facie the presumption under section 433(e) can be raised, then, this petition deserves admission. All the authorities cited need not be considered as this is a stage of admission of the petition. I am aware of the consequences of such an order, but having adverted to the principles in the latest decision of the Supreme Court reported in Iba Health (India) Private Limited v. Info-Drive Systems Sdn. Bhd.. [2010] 159 Comp. Cas 369 (SC) : [2010] 10 SCC 553 it would not be necessary to refer to each and every judgment cited before me. Suffice it to note that this judgment which is relied upon both by Mr. Dwarkadas and Mr. Kapadia reiterates the principles of entertaining a winding up petition and I have proceeded on that basis itself. The Act does not make any distinction between secured and unsecured creditor and, therefore, all other judgments brought to my notice need not be dealt with.

62. The judgments cited by Mr. Kapadia on the principles enshrined in the Indian Trusts Act, 1882, also need not be referred to in detail. Further, these principles have been referred to in the judgment of the hon'ble Gujarat High Court and I have already referred to them in detail and concurred with the views expressed therein. As far as entertaining a winding up petition is concerned, I have applied the very same principles which have been set out in the judgments relied upon by Mr. Kapadia. Therefore, these decisions also need not be referred to again. The Full Bench decision of the Karnataka High Court reported in AIR 1988 Karn. 1 [FB] : [1989] 65 Comp. Cas 427 (Karn.) [FB] (Chief Controlling Revenue Authority v. Manager, State Bank of Mysore) has been relied upon by both sides and though the observations made therein are in the context of levy of stamp duty, they highlight the principles that it is recognised in Indian law that a trustee can ensure repayment of interest as well as the principle and reliance on paragraphs 13 to 16 of this judgment by Mr. Dwarkadas is apposite. The argument of the respondent that the petitioner is not a debenture trustee but represents the bondholders and no property of the company vests in it overlooks the wide definition of the term "debenture" appearing in section 2(12) of the Companies Act, 1956.

63. In the result the company petition is admitted. The same be advertised in accordance with the Companies (Court) Rules, 1959, within a period of twelve weeks from today on the petitioners depositing in this court the advertisement charges. The charges be deposited within four weeks from today.

64. Company Application No. 1213 of 2009 for appointment of official liquidator be placed before the regular court. Mr. Dwarkadas, learned senior counsel submits that vide this application the petitioners have applied for appointment of provisional liquidator. Liberty to apply for reliefs in terms of this application before the regular court. As all interventions were permitted and those present were heard, Company Application No. 1279 of 2009 along with Company Application No. 10 of 2010 and Company Application No. 356 of 2010 and Company Application No. 36 of 2010 do not survive in view of the order passed in Company Petition No. 971 of 2009 and are disposed of accordingly.