Madras HC dismisses Subhiksha plea

The Madras High Court today dismissed Subhiksha’s scheme of arrangement proposal, which was filed by Cash and Carry Wholesale Traders Private Limited (C&C), a subsidiary of cash-strapped Subhiksha Trading Services.

The court also told Kotak Bank to publish an advertisement seeking anybody’s objection for winding up the retail chain.

In an order today Justice P Jyothimani said that “scheme of arrangement has been dismissed,” the order came in response to the petition filed by N Srinivasan, one of the directors of C&C. In the petition the company has asked the secured lenders to settle for 50 per cent of the principal amount taken from October 2008 . It also said that the “corporate debt restructuring (CDR) process is not comprehensive”.

 

It may be recalled, the application also stated that the company cannot survive if the scheme is not sanctioned as it would have a debt burden of around Rs 1,000 crore. According to company's financial position, which was given in the petition as on March 31, 2008, liabilities and provisions stood at Rs 928.46 crore and total cash and bank balance stood at Rs 18.03 crore.

In an another order the court also allowed the Kotak Bank, to which Subhiksha has to owe Rs 40 crore, to publish an advertisement in a Tamil and English Daily seeking any objection for winding up Subhiksha.

“The petitioner is directed to advertise in Tamil Nadu Government Gazette fixing the date of hearing September 22, 2009. The petitioner also directed to publish an advertisement in one Tamil and English Daily about the petition,” ordered the Judge.

The advertisement is primarily to tell public and to find out anybody who has objection for winding up the company, according to a senior counsel. When contacted, R Subramanian, managing director, Subhiksha was not available for comment.