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TMI Blog2012 (9) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... omplaints against the company and its directors/managerial personnel. 2. Company Petition Nos.196 and 197 of 2003 were filed before this court, under sections 391 and 394 of the Companies Act, 1956 ('the Act'), seeking its sanction for a scheme of arrangement whereby the petitioner in CP No.196 of 2003 was to amalgamate with the petitioner in CP No.197 of 2003. The scheme also provided for payment, to the depositors/prized chit subscribers/ creditors of both the companies, of a sum equal to the principal due, as reflected in the books of both the companies on the appointed date, together with interest at 4 per cent per annum from the date these debts became due till the appointed date in such installments as may be proposed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect the scheme, approved by this court, would enable the applicant to avoid making payment, if they so choose, even for the next decade or two. It is in this context that the prayer sought for in these two applications needs to be examined. While not making payment, in its entirety, to their creditors, the applicant has sought and obtained stay of the complaints lodged against them by the depositors and subscribers of the chits. In addition, the applicant has been filing one application after the other, using (abusing) the process of this court, for recovery of their dues. 4. On being asked as to how the provisions of sections 391(6) and 392 of the Act would apply to the case on hand, Sri S Ravi, learned senior counsel, would place relia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration of the scheme by the court, a situation may arise wherein individual creditors, as complainants, may be able to pressurise the directors of the company, who may be accused in the cases, to succumb to their demands, and that would not only jeopardise consideration and working of the scheme as a whole but may even, in a given case, amount to undue preference of creditors who might have filed criminal complaints, and to whose pressure the directors may succumb. The word 'proceeding', as employed by section 391(6), should be interpreted in the widest possible manner so that scheme of compromise and arrangement can be effectively examined, and can be properly executed - Divya Vasundhara Financiers (P.) Ltd. (supra). 6. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f additions and omissions. Section 2(1A) defines 'alter' and 'alteration' to include making of additions and omissions. 'Variation' is defined in section 2(50) to include 'abrogation'. In the context of section 392, 'modification' would mean addition to the scheme of compromise and/or arrangement or omission therefrom solely for the purpose of making it workable. Reading section 392, by substituting the definition of the word 'modification' in its place, if something can be omitted or something can be added to a scheme of compromise by the court, for the proper working of the compromise and/or arrangement, there is no justification for cutting down its meaning by a process of interpretation an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confers a sort of a supervisory role on the court during the period the scheme of compromise or arrangement is being implemented. Reading clauses (a) and (b) of sub-section (1) of section 392, it appears. that Parliament did not want the court to be functus officio as soon as the scheme of compromise and arrangement is sanctioned by it. The court has a continuing supervision over the implementation of the compromise and arrangement. Unenvisaged, unanticipated, unforeseen or even unimaginable hitches, obstruction and impediments may arise in the course of implementation of a scheme of compromise and arrangement and if, on every such occasion, sponsors have to go back to the parties concerned for seeking their approval for a modification, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their creditors and depositors, even nine years after they had proposed the scheme, that too after freezing the paltry interest at 4 per cent per annum only till 1st April, 2003, and not thereafter. In effect, the applicant does not have to pay any interest on their debts beyond 1st April, 2003 though they have not even repaid the dues, in its entirety, even nine years thereafter, i.e., till date. It is indeed a matter of concern that the applicant herein has been granted protection, in not having to face the ordeal of criminal proceedings, without any conditions being imposed on them, including "requiring them to repay the debts due to their creditors, in its entirety, within a specified time frame. 9. While this court was initially ..... X X X X Extracts X X X X X X X X Extracts X X X X
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