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TMI Blog1939 (2) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... eded here, as it was conceded below, that if the scheme is not one which the court can sanction, a compulsory winding up order must necessarily follow. The appellants are the directors and they are supported by a number of creditors. The company was registered in 1908. Its head office was at Calicut and it had thirteen branches in British India, one at Cranganore in the State of Cochin and another at Colombo. Its issued capital was Rs. 2,77,280 divided into 27,728 fully paid up shares of Rs. 10 each. As the result of a run on the bank it was compelled to close its doors on the 16th August last year. The day before the closing of the doors the directors filed a petition in this court asking for the sanction of the scheme with which App. 75 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over a number of years, and if adopted it would only give the depositors part of what is due to them. Broadly speaking the proposals so far as the depositors are concerned are these: (1) The depositors to be paid two annas in the Rupee with interest at the contract rate up to the 15th August, 1938 as and when their deposits fall due; after that date interest on fixed deposits to be three per cent., on savings bank deposits two per cent. and on sums on current accounts one per cent; (2) the depositors to be paid eight annas in the rupee spread over a period of four years (two annas each year) with interest at the rate of 3 per cent. per annum; (3) the depositors to convert two annas in the rupee into fully paid up shares of the company; (4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... approved by 1669 creditors representing Rs. 9.38,770, and was disapproved by five creditors, representing Rs. 30,692. The application for the approval of the scheme and the application for the compulsory winding up of the company came before Gentle, J., on the 10th and 11th November. The learned Judge after a careful examination of the scheme and of the position of the company came to the conclusion that the proper course was to reject the scheme and direct the compulsory winding-up of the company. We consider that the decision which he arrived at is the proper one. The fact the shareholders and creditors of a company have approved of a scheme of compromise or arrangement as contemplated by Section 153 of the Indian Companies Act does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on business. All that the directors had in mind was a voluntary liquidation which would take years to complete. The learned advocate who appears for the appellant frankly told us that the intention was not to re-open the bank, and that no reconstruction was contemplated was also made clear by the learned Advocate-General who appeared for the directors when the case was before Gentle, J. The misleading character of this letter does not end with the passage just quoted. No reference was made in the letter to the expenses of continuing the business and no reference was made to the fact that certain directors, their friends and relations had withdrawn from the company over Rs. 5,00,000 of which Rs. 4,50,000 was considered to be completely los ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement which was issued by certain of the creditors before the meetings were held there is in our opinion an over whelming case for the rejection of the scheme and the enforcement of the order for the compulsory winding up of this company. It is necessary that the assets that do exist should be realized for the benefit of the creditors, and their realization can best be carried out by the official liquidators. A compulsory winding up will also result in a close inquiry into the conduct of the directors, past and present. For these reasons the appeals will be dismissed with the costs of App. No. 74 of 1938 against the appellant and the supporting creditors in favour of the creditors who oppose the appeal (one set). There will be no or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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