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Issues Involved:
1. Applicability of Section 153 of the Indian Companies Act to a foreign company. 2. Jurisdiction of the High Court of Madras to entertain the application. 3. Timing of the application under Section 153. 4. Initiation of the application in the court of the place of incorporation. 5. Bona fides and feasibility of the proposed scheme of arrangement. 6. Direction to call a meeting of creditors and shareholders. 7. Appointment and role of Official Liquidators. Detailed Analysis: 1. Applicability of Section 153 of the Indian Companies Act to a Foreign Company The primary contention was whether Section 153 applies to a foreign company. The argument against its applicability was based on the interpretation that the term "company" in Section 153 refers to a company formed and registered under the Indian Companies Act or an existing company, which a foreign company is not. The court, however, held that the Travancore National Bank, though incorporated outside British India, qualifies as an unregistered company under Sections 270 and 271 of the Act, making it liable to be wound up under the Act. Hence, Section 153 applies to foreign companies as well. 2. Jurisdiction of the High Court of Madras to Entertain the Application The court addressed the jurisdiction issue by interpreting the term "court" in Section 153. It was argued that the High Court of Madras would not have jurisdiction as the registered office of the bank was in Quilon, Travancore. The court, however, held that the term "court" should be interpreted to mean the court in which the company is liable to be wound up. Since the central administrative control of the bank was in Madras, the High Court of Madras had jurisdiction to entertain the application. 3. Timing of the Application under Section 153 Another issue was whether an application under Section 153 could be made before an order for winding up was passed. The court clarified that Section 153 applies both to a going concern and a company in liquidation. Thus, the application could be made before a winding-up order was passed. The court emphasized that the section was intended to provide an alternative to winding up, allowing for a scheme of arrangement to be considered. 4. Initiation of the Application in the Court of the Place of Incorporation It was argued that the application under Section 153 should be initiated in the court of the place of incorporation, i.e., Travancore. The court rejected this argument, stating that the High Court of Madras had jurisdiction due to the central administrative control being in Madras. The court also noted that while cooperation with the Travancore court was necessary, it did not preclude the High Court of Madras from initiating the application. 5. Bona Fides and Feasibility of the Proposed Scheme of Arrangement Several objections were raised regarding the bona fides and feasibility of the proposed scheme. These included the issuance of preference shares, the interests of shareholders versus creditors, the role of directors, and the accuracy of the information on which the scheme was based. The court held that these objections could be addressed by the general body of creditors and shareholders at a meeting. The court emphasized that the purpose of Section 153(1) is to ascertain the wishes of the creditors and shareholders, not to determine the feasibility of the scheme at this stage. 6. Direction to Call a Meeting of Creditors and Shareholders The court decided to direct a meeting of creditors and shareholders to consider the proposed scheme. It was noted that the usual practice is to direct a notice for such a meeting, and the objections raised did not justify rejecting the application at this stage. The court emphasized the importance of having correct information before the general body of creditors and shareholders to make an informed decision. 7. Appointment and Role of Official Liquidators The court appointed Mr. James Voce Pirrie and Mr. Cyril Gill as Official Liquidators, rejecting the suggestion to appoint the Official Liquidators of Travancore. The court emphasized that the liquidators should be under the control of the court and not subject to dual or foreign control. The Official Liquidators were directed to submit a correct report of the bank's affairs and to convene meetings of creditors and shareholders to consider the proposed scheme. Conclusion The court concluded that the High Court of Madras had jurisdiction to entertain the application under Section 153 of the Indian Companies Act for the Travancore National and Quilon Bank Ltd. The application was maintainable before a winding-up order was passed, and the court directed a meeting of creditors and shareholders to consider the proposed scheme. The court appointed Official Liquidators and emphasized the need for correct information to be provided to the creditors and shareholders before the meeting.
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