COMMISSIONER OF INCOME TAX Vs. INDIA METERS LTD

JUDGEMENT

(1.) TAX Case No. 436 of 1999 is a reference under the Income -tax Act, 1961, and Tax Cases Nos. 35 and 36 of 1998 are references made under the Companies (Profits) Surtax Act, 1964.

(2.) WE first take up the reference under the Income -tax Act as the answer to the question referred therein will also govern the question referred in the references under the Companies (Profits) Surtax Act.

(3.) THE facts are not in dispute. The assessee is a public limited company incorporated in the year 1963. The assessee -company incurred a huge loss up to September 30, 1974, and it was declared as a relief undertaking under the Tamil Nadu Relief Undertaking (Special Provision) Act, 1969, and there was a lock -out also. The company had an accumulated loss of Rs. 362 lakhs as on March 31, 1991, as against the paid up share capital of Rs. 74 lakhs and with a view to revive the company, a scheme for reduction of share capital under Section 101 of the Companies Act, 1956, as well as a compromise or arrangement under Section 391 of the Companies Act, 1956, was arrived at. The parties to the compromise or arrangement were the secured creditors most of whom were financial institutions, the unsecured creditors and the Industrial Reconstruction Corporation of India. The scheme was to be effective and operative in accordance with the provisions of the Companies Act, 1956, under which a certified copy of the order of the court approving the scheme must be filed with the Registrar of Companies. It is seen that the scheme was approved by the majority of the shareholders and the secured creditors and a learned single judge of this court has also sanctioned the scheme by order dated August 16, 1983. Some of the unsecured creditors raised objections against the order granting sanction to the scheme and filed an appeal before a Division Bench of this court and the Division Bench in O. S. A. No. 215 of 1984, by judgment dated November 26, 1991, reversed the judgment of the learned single judge granting approval of the scheme and allowed the appeal preferred by the unsecured creditors. The Division Bench also remitted the matter to the learned single judge for rehearing the matter. The Division Bench also opined that it is open to the learned single judge to call for a meet -ing of the different classes of unsecured creditors for their consent to the scheme in accordance with law.