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TMI Blog1934 (2) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... osper, and in the balance sheet of the year-ending 31st July, 1932, a loss of Rs. 2,03,153-6-4 is reported. This drove the directors to financial expedients which have a somewhat desperate appearance. A lien was given to Jessaram Thakurdas on all stocks brought in and to be brought in by them in consideration of their agreeing to a mortgage. That mortgage was for a sum of Rs. 2 lacs; by it the applicant's mill, the mill property and unpaid capital and all their other assets were mortgaged to a syndicate. The date of the mortgage is 10th February, 1933. Up to date the syndicate referred to has advanced a sum of Rs. 2,15,000, but the funds available are still wholly insufficient to meet the claims which depositors may put forward. Up to 1st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for each debenture. Under section 153 of the Companies Act, VII of 1913, the Court has been asked to order a meeting of the class of creditors affected, which in this case, is the depositors. Such a meeting has been held and the Chairman has certified to the Court that all the depositors numbering 62 and holding Rs. 2,74,432-12-9 deposits accept the scheme submitted by the company in the Miscellaneous Application No. 333 of 1933, excepting only Dr. M.A. Carneiro who is a depositor to the amount of Rs. 45,000 only. As the result of the meeting an application was made on 24th January, 1934, whereby this Court is prayed to accord sanction to the arrangement already set forth. Now, the duty to be performed by a Court which is invited to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... within the meaning of section 153. The learned pleader who very ably argued the case for Dr. Carneiro has said, and said truly, that the word "arrangement" as used in this section must mean something analogous in some sense to a compromise. Authority for this contention .is to be found in In re General Motor Cab Co., Ltd. Mr. Lulla says that in any arrangement which can fairly be called a compromise, or considered as analogous to a compromise there must be both give and take. It is however his contention that in the arrangement now proposed he does all the giving and none of the taking. This contention, if it could be substantiated, would no doubt go far to give pause to this Court before it accorded sanction to the compromise. It is impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g will remain. This appears to be the expectation of Dr. Carneiro himself. On 6th February, 1934, he put in an affidavit wherein he says that; "I am informed and verily believe that no mill in Karachi and Sind has worked at a profit last year and on the contrary they all have lost heavily. This was admitted by the millers in Karachi and it is not likely that a flour mill has worked at a profit, however low the profit may be, nor is it likely to do so in the immediate or near future." This being the opinion of the objector himself it is scarcely to be supposed that any capitalist would take over a business which is in these desperate straits, and would attempt to carry it on in the face of these ominous anticipations. If it is not common ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issentient, or would be dissentient, creditors; and it therefore requires to be construed with care, so as not to place in the hands of some of the creditors the means and opportunity of forcing dissentients to do that which it is unreasonable to require them to do, or of making a mere jest of the interests of the minority. Bearing these things in mind, I still think that in the present case, there is no difficulty in regarding the body of persons who have made deposits on the same terms and similar agreements as constituting such a class of creditors as the legislature had in mind when it enacted section 153, Companies Act. The whole of that body has a common interest and is confronted with the same perils and the same possibilities of esc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting was for the common advantage of the whole class; that the majority acted in good faith; and that they did that which in the same position a reasonable man would rightly and properly do. It is quite obvious from the language of the Act and from the mode in which it has been interpreted, that the Court does not simply register the resolution come to by the creditors or the shareholders as the case may be. But if the creditors are acting on sufficient information and with time to consider what they are about, and are acting honestly they are, I apprehend, much better judges of what is to their commercial advantage than the Court can be. This proposition was laid down by Vaughan Williams, J., in In re London Chartered Bank of Australi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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