1980 (3) TMI 225 - HC - Companies Law

Summary

Issues Involved:
1. Whether the petitioner can maintain the present application for a modification of the scheme under section 392(2) of the Companies Act, 1956.
2. Whether the court has jurisdiction to grant any relief as asked for.
3. Whether the application is maintainable in view of the respondent-company being a relief undertaking under the West Bengal Relief Undertakings (Special Provisions) Act, 1972.

Issue-wise Analysis:

1. Maintainability of Application under Section 392(2) of the Companies Act, 1956:

The petitioner sought modification of the first and second schemes of compromise sanctioned in 1958 and 1969, respectively. The court noted that the petitioner relied on the Supreme Court decision in S.K. Gupta v. K.P. Jain, which emphasized the court's power under section 392 to address unforeseen situations and impediments in implementing a scheme. The petitioner argued that the court has the power to make any order for the proper working of the compromise or arrangement, including modifications. However, the court clarified that its power under section 392 is limited to the implementation of schemes already sanctioned and does not extend to matters outside those schemes. Therefore, the court concluded that the application for modification under section 392(2) was not maintainable.

2. Jurisdiction of the Court to Grant Relief:

The petitioner contended that the court has the jurisdiction to grant the relief sought based on the broad powers conferred by section 392(1)(b) of the Companies Act, 1956. This section allows the court to supervise and make necessary modifications to ensure the proper working of a sanctioned scheme. However, the court held that its jurisdiction under section 392 is confined to difficulties arising in the implementation of the sanctioned schemes and does not extend to new claims or matters not covered by the existing schemes. The court emphasized that extending its jurisdiction beyond the sanctioned schemes would lead to an absurdity and a never-ending process, which was not the intention of section 392.

3. Application Maintainability in Light of the West Bengal Relief Undertakings (Special Provisions) Act, 1972:

The respondent-company was declared a relief undertaking under the West Bengal Relief Undertakings (Special Provisions) Act, 1972. The petitioner argued that their claim, arising from a contract for the sale of goods, should not be suspended under the Act. They contended that the claim was a debt due and not a contract in force immediately before the undertaking was declared a relief undertaking. The court, however, disagreed, stating that the petitioner's claim still arises out of a contract for the sale of goods and remains an executory contract. The court held that the claim is suspended under sections 3 to 6 of the West Bengal Relief Undertakings (Special Provisions) Act, 1972, which suspend all remedies under the contract during the period the company is declared a relief undertaking. Consequently, the court found that the application was not maintainable during the period the notification under section 4 of the Act remains in operation.

Conclusion:

The court concluded that the application for modification under section 392(2) of the Companies Act, 1956, was not maintainable. The court emphasized that its jurisdiction under section 392 is limited to the implementation of sanctioned schemes and does not extend to new claims or matters outside those schemes. Additionally, the court held that the petitioner's claim is suspended under the West Bengal Relief Undertakings (Special Provisions) Act, 1972, and thus, the application is not maintainable during the period the company is declared a relief undertaking. Therefore, the court made no order on the application.