9911796707
TMI Blog1990 (5) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... le Co. (India) Ltd., hereinafter called "the company", was a joint stock company incorporated on November 14, 1951, under the Indian Companies Act, 1913. The company was set up for the business of manufacture of cycles, at its factory, situated at plot No. 30, New Industrial Township, Faridabad. The company was wound up, vide order dated March 9, 1978, in Company Petition No. 54 of 1977, and the official liquidator attached to this court was appointed as the liquidator of the company. Shri H. L. Seth, who was the member/shareholder and former managing director of the company, propounded a scheme of arrangement. He filed an application, being Company Application No. 26 of 1985, under section 391 of the Act, for summons for directions to convene separate meetings of the unsecured creditors of the company and its equity and preference shareholders, for the purposes of considering, and if thought fit, approving with or without modification, the scheme of arrangement proposed to be made between the company and its shareholders and creditors. Vide order dated April 10, 1986, B. N. Kirpal J. issued various directions including the one for holding of separate meetings of the unsecure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0, 1986. The Division Bench held: "It is, however, made clear that after the respective meetings- are held, and reports thereof made available to court the learned company judge will be free to approve the scheme or to reject it without being influenced by the decision in C. A. No. 963 of 1985" Mr. Seth approached the Supreme Court of India, by way of special leave petition, against the order of the Division Bench. The Supreme Court passed the following order on October 9, 1987: "Heard learned counsel for the parties. We do not propose to interfere in the matter except to indicate that as had been directed earlier by the learned company judge in his order dated April 10, 1986, votes cast in the meeting of the shareholders in regard to the transferee shareholders shall be separately recorded. The Division Bench of the High Court will do well to hear the appeal expeditiously. Special leave petition is disposed of accordingly" Vide order dated November 9,1987, Mahinder Narain J. issued further directions with regard to the holding of the meetings. The meetings of the creditors and shareholders of the company were held on July 16, 1988, at Hotel Imperial, New Delhi. The meeti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for confirming compromise or arrangement. Where the proposed compromise or arrangement is agreed to, with or without modification, as provided by sub-section (2) of section 391, the company, (or its liquidator, as the case may be) shall, within seven days of the filing of the report by the chairman, present a petition to the court for confirmation of the compromise or arrangement. The petition shall be in Form No. 40. Where a compromise or arrangement is proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies, or for the amalgamation of any two or more companies, the petition shall pray for appropriate orders arid directions under section 394. Where the company fails to present the petition for confirmation of the compromise or arrangement as aforesaid, it shall be open to any creditor or contributory as the case may be, with the leave of the court, to present the petition and the company shall be liable for the cost thereof. Where no petition for confirmation of the compromise or arrangement is presented, or where the compromise or arrangement has not been approved by the requisite majority under section 391(2) and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members of the company and the creditors, as given in the statement of affairs, and as amended, would be the members and creditors entitled to vote. These lists of members and creditors were submitted by the official liquidator to the chairman. He has also invited the attention of this court to the order dated August 4, 1987, passed by the Division Bench of this court and the order dated October 9, 1987, passed by the Supreme Court of India in Special Leave Petition No. 10600 of 1987 and the order dated November 9, 1987, passed by Mahinder NarainJ. Mr. Vohra has submitted that Mr. Seth had made a specific plea to enhance the credit amount of the statutory creditors to the extent of Rs. 23 lakhs But, the Division Bench did not agree to this prayer of Mr. Seth. According to Mr. Vohra, the compilation of votes, as submitted by Mr. Seth, is not correct. If the excess voting, as allowed by the chairman, is excluded, then certainly the scheme was passed by an overwhelming majority. According to Mr. Vohra, the statutory creditors were not entitled to vote for higher credits as per their claims and the chairman was not within his powers to allow them to vote for higher credits than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e propounder; and ( iv )the application, if other than the official liquidator, or the company, must be by a creditor or contributory of the company. I have already held that the applicants are competent to file the present application. According to Mr. Ved Vyas, the applicants have not been able to satisfy any of the conditions, so leave cannot be granted to them for presenting a petition under section 391(2) of the Act. Mr. Ved Vyas has further urged that the court should decide the questions whether resolution No. 1 with regard to the proposed scheme of arrangement/compromise, was approved by a majority of creditors and members, present and voting, in the meetings; and whether 3/4ths majority in value of votes, cast in the meetings, approved the scheme. Further, the latest financial position of the company must be given by means of an affidavit by the propounder. Mr. Ved Vyas has urged that the statutory creditors were entitled to vote for higher credits as per their claims and the chairman was within his power to allow them to vote for higher credits, rather than the amount shown in the list of creditors as prepared by the official liquidator. Mr. Seth has filed the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejudice, laches and unnecessary protraction of the proceedings may arise for consideration before an objection to the validity of the report is allowed to be raised for the first time in the course of the final hearing of the matter. If that is so then here the objection as to the absence of signature on the copy of the resolutions, which respondent No. 1 had produced in proof of his authority before the chairman of the meeting held on 9-11-1953, has to be held as rather belated; for it is not denied that no such objection had ever been raised before Mr. G. C. Banerji nor was it ever mooted in any manner by the appellants before the learned company judge until the hearing of the report had already been taken up. Therefore, on that technical ground alone this part of the argument has to fail. I further think that the right of a person to vote as the representative of a company under such circumstances depends essentially on the question whether he has been validly appointed or not and not upon evidence produced by him in support of that authority. And so far as the evidence is concerned, it is meant only to satisfy the chairman that he is the person duly authorised so that he may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng fairly dealt with or that it would approve the scheme. It was further held that the court should satisfy itself that those who take part in the meeting are fairly representative of the class and that the statutory majority does not coerce the minority in order to promote the adverse interests of those of the class whom they purport to represent. It may be noticed that the scheme of arrangement, as propounded by Kelvinator of India Ltd., is also under consideration. This is also to be considered at the appropriate stage. In his comments on the report of the chairman, the official liquidator has stated that, if the excess voting as allowed by the chairman is excluded and the voting is restricted to the amounts as shown in the list of creditors, the scheme was passed by an overwhelming majority of 93.93 per cent. At this stage, I am not considering the merits of the scheme of arrangement, under section 391(2) of the Act, as contained in Company Petition No. 131 of 1988. But, it is, however, appropriate to mention that under the proposed scheme of arrangement, the applicants have agreed to pay 100 per cent, to the creditors along with interest. No doubt, the court, vide its orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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