STATE OF TAMIL NADU Vs. STATE

JUDGEMENT

(1.) BY this judge's summons, the State of Tamil Nadu (hereinafter referred to as 'the State') seeks to vacate the ex parte order dated 11th October, 1974, and as modified by an order dated 14th October, 1974. The ex parte orders were obtained under section 391(6) of the Companies Act, 1956, by Uma Investments Private Ltd. (hereinafter referred to as 'the company') in an application filed by it under section 391 for sanction of a scheme of compromise with certain classes of creditors.

(2.) THE background of the case is that the company was incorporated on 13th January, 1965. The registered office of the company is in Bombay. The authorised capital of the company is Rs. 5,00,000 divided into 5,000 equity shares of Rs. 100 each and the subscribed and paid up capital is Rs. 1,00,000 divided into 1,000 equity shares of Rs. 100 each. From its inception the company carries on chit business. According to the company from the month of October, 1973, it faced financial difficulties and was unable to meet its requirements and particularly the amounts payable to the non -prized members at the termination of the chits. Several reasons are given. One of them is that in the States of Tamil Nadu and Kerala misleading and incorrect news items appeared. The newspaper, Dina Thanti, published in Tamil Nadu, circulated false reports. Another cause was that the company's discharged employees had spread imaginary and false stories among the public. The company's managing director, Acharath Vasu Appukutta Gupta, was illegally detained for two days by the police of Madras in connection with a subscriber's complaint to the police regarding a cheque for Rs. 50,000 towards his dues. For all these reasons, the members of the chits started demanding payment of their dues. Many of them took legal proceedings against the company and obtained orders of attachment before judgment. In these circumstances, the company's business and its liquid resources were seriously affected. The daily reports from the administrative office at Madras showed that every day many proceedings were adopted against the company and attachments before judgment were obtained in many such proceedings.

(3.) THE proposal of the company for compromise and arrangement with three classes of creditors is the subject -matter of Company Application No. 142 of 1974. This application was filed on 11th October, 1974. Directions under rule 69 of the Companies (Court) Rules, 1959, have been obtained to call, hold and conduct meetings. Shortly stated, so far the result of the meetings held under the chairmanship of an officer of this court is not known as the report is not ready on account of some difficulties encountered by the chairman. What is the fate of the scheme cannot be foretold. Whether the court will sanction the scheme or not is also a thing of the distant future.