V. SUGANDHA LAL Vs. ST. MARYS FINANCE LTD.

JUDGEMENT

(1.) M.C.A. No. 6 of 1999 is filed by a company named St. Mary's Finance Limited, Nedumchalil Buildings, Mullassery Canal Road, Cochin-682011, under Sec. 391(1) of the Companies Act, 1956 ("the Act"). The said company will be referred to as the company hereinafter. The company prayed that a meeting of the creditors be held "for the purpose of considering and if thought fit, approving, with or without modification a scheme of compromise or arrangement proposed to be made between the company and the said creditors". The proposed scheme is produced as annexure "F". The application was filed on Jan. 20, 1999. On Jan. 21, 1999, when it came up for admission, this court passed an order appointing a chairman for the conduct of the said meeting to be held on March 7, 1999. In the said application it is admitted by the company that it had been declared a "Nidhi" company as per notification dated Dec. 17, 1988, by the Central Government. Nidhi company is referred to in Sec. 620A of the said Act to mean a mutual benefit society. It is averred in the application that the main objects of the company are as follows.

(2.) Immediately after the order dated Jan. 21, 1999, to convene the meeting, a few of the creditors and their association approached this court seeking modification of the said order, in C.A. Nos. 78 of 1999, 81 of 1999, 91 of 1999 and 95 of 1999.

(3.) In C.A. No. 78 of 1999 the applicants had asked for an order to cancel or postpone the creditors meeting and a further order directing the directors of the company to desist from collecting blank proxy forms signed by the creditors. It has been averred that all the creditors had not been sent notices with necessary statutory requirements and enclosures ; that the managing director, one Mr. Boby Varghese, of the company had written to each of the creditors a letter, produced as annexure "1", wherein he had mentioned that the company is facing a hard and difficult situation. It is averred in the application that the attempt of the company is to delay and defeat the creditors and their just and legitimate dues and notices are not properly sent with necessary enclosures thereto such as the proposed scheme and statement in respect of the same. It is also contended that notice contained a statement that "no director in his capacity as a member of the company has any personal interest in the compromise agreement placed before the creditors". It is submitted that this statement was misleading and untrue as, even as mentioned in the M.C.A. itself, the two directors including Sri Boby Varghese and his wife had interests in St. Mary's Properties Ltd., to which a large amount of Rs. 7.6 crores, as admitted in M.C.A. No. 6 of 1999 itself, had been sanctioned. Therefore, the directors of the company as members of the company were really interested in the compromise. Therefore, such statement in the notice is incorrect and creditors were kept in the dark as to the real situation. It is the right of every member and creditor to know about the interest of the directors, if any, and that right had been denied to the creditors. Therefore, the meeting itself is convened in an illegal manner.