Supreme Court has asked the Madras High Court to look into the cash-strapped retail chain Subhiksha’s scheme to settle its outstanding dues with its creditors, if it found the amalgamation of the retail chain with Blue Green Constructions financially viable.

While pronouncing its decision in the special leave petition filed by Subhiksha’s stakeholder, Cash and Carry Wholesale, the division bench headed by justice S H Kapadia, directed the high court to hear the merger petition first. The winding-up petition filed by Kotak Mahindra Bank and HCL Infosystems will be heard only if the settlement scheme was found viable.

As per the order, Madras High Court will hear the case filed by creditors and investors against the merger of Subhiksha and its MSE-listed acquired entity Blue Green Constructions scheduled for November 26. Earlier, on November 15, the apex court had stayed the winding-up and merger proceedings against Subhiksha till Monday.

Cash and Carry had approached the Supreme Court after the high court dismissed its plea to meet its creditors for a credit settlement scheme under Section 391 of the Companies Act.

According to the scheme, Cash and Carry sought waiver of 50 per cent of the credit dues of Subhiksha, amounting to over Rs 800 crore. Further, the merged entity was to infuse Rs 250 crore in the ailing company and settle the remaining portion of the credit within 10 years.

The settlement plea was first dismissed by a single judge of the Madras High Court in August and later by a division bench in the first week of November. Cash and Carry then approached the Supreme Court on November 9.