Delhi High Court sets aside order in CRB Capital case

The Delhi High Court has set aside an order by a Single Bench sanctioning a scheme for compromise between non-banking finance company CRB Capital and its depositors, creditors and shareholders, saying that it violates statutory provisions and is against public policy. A Division Bench of the Court comprising Justice B. D. Ahmed and Justice Veena Birbal quashed the order on a bunch of appeals by the Reserve Bank of India (RBI), the Securities and Exchange Board of India (SEBI) and others. The RBI opposed the sanctioning of the scheme approved by more than 50% of the stakeholders of the company at a meeting here, arguing that the Court could not approve it without deciding its petition for winding up the company. It further argued that the scheme was violative of the provisions of laws and against the public policy. The appellants also opposed the Single Bench order on allowing withdrawal of civil and criminal prosecution which the company is facing against various alleged violations of laws. “....we set aside the impugned judgment as also the scheme and remit the matter to the company court for consideration of the winding-up petition . We make it clear that there is no bar on CRB Capital propounding another scheme during the pendency of the said winding-up petition or even thereafter, in case winding up is ordered,” the Bench said. “However, only such a scheme may be propounded, which does not contravene any of the statutory provisions contained in the Companies Act, the RBI Act, the SEBI Act or the Income Tax Act and which is in public interest and not opposed to public policy.” “Violative of statutory provisions, against public policy”