The liquor major has said it owes Rs 263.91 crore to around 191 creditors. However, the division bench of Justices Ruma Pal and MK Basu, while rejecting the company's modified scheme on June 15, had opined that the company owes a total of Rs 400 crore. Officials maintained that the company is studying two options -- appealing before the Supreme Court against the division bench's order and filing a fresh scheme.

The company's spokesperson pointed out that, if a new scheme is submitted, the repayment process could be delayed by another couple of years. The company began work on the now-rejected scheme in December 1997.

On the other hand, given the critical remarks made by the division bench, the company could very well submit a fresh scheme, sources said.

The division bench hadgranted the Shaw Wallace management time till July 19, 1999, for appealing before the Supreme Court against its order.

Corporate watchers feel that it will make more sense to the company to draft a fresh scheme than to appeal the order.

Justices Pal and Basu had directed the trial court to hear the scheme submitted by one of the creditors, Pune-based Kirloskar Investment & Finance Ltd. On June 16 last year, Kirolskar had submitted an alternative scheme for repayment of creditors of the liquor major.

Shaw Wallace's earlier scheme was not passed by the required majority as laid down in Section 391 of the Companies Act, 1956. In addition to this, the bench also took into account relevant statutes of Companies (Court) Rules 1959, about the manner in which a meeting of the creditors is to be held.

While upholding the appeal of the creditors against the trial court's order which passed the scheme on December 24 last year, Justices Pal and Basu noted: "...there is no dispute that the statutory majority didnot approve the scheme either with or without the subsidiaries and associates of the company".

Since the modified scheme was also not passed, the bench said that, "the company could not have made any application for confirmation of the scheme at all".

After the adjourned meeting with the creditors were held on April 7 last year, certain creditors came out in support of the scheme, but had opposed it at the meeting. Yet, there were some who supported the scheme at the meeting, but later opposed it.

Shaw Wallace had submitted a letter from Casion Finance dated April 28, 1998, signed by its chairman Onkarnath Rampal. Later, on receiving objections from Rampal that his signature on this letter had been forged, the bench conducted its own visual assessment and found Rampal's allegation true.

According to the 43-page verdict of the bench, Shaw Wallace initially asserted that Rampal was incompetent to file any affidavit since Casion was facing liquidation but later said that it did not rely on theletter.

Two creditors had alleged that parties who supported the scheme after having opposed it earlier could have "derived an unfair benefit from the company [Shaw Wallace]".

Responding to this, the bench felt that the possibility of either "horse trading" or "under the counter trading" might take place subsequent to the meeting cannot be denied.