BANGODAYA COTTON MILLS LTD Vs. STATE

JUDGEMENT

(1.) An application was made to this court under Section 392 of the companies Act for sanctioning a modification in the Scheme, which had earlier been sanctioned by this Court. The only modification that has been asked for is an extension of time for making Payment in terms of the Scheme originally sanctioned. The said application of the company came up for hearing before me and I made an order on the said application sanctioning the said modification on the 21st of this month. At the time when the said application come up for consider action, no body had appeared to oppose the said application.

(2.) Mr. N. C. Roy Chowdhury, the learned counsel, thereafter mentioned the matter and wanted to make submissions on behalf of a creditor who has filed an affidavit in opposition to the said application for sanctioning the modification of the scheme. Mr. Roy Chowdhury submitted before me that as he was engaged in some other Court he unfortunately could not be present at the time when the said application was called on and disposed of. I gave Mr. Roy Chowdhury liberty to make his submissions.

(3.) Pursuant to the said leave granted by me the matter was argued by Mr. Roy Chowdhury before me and Mr. Roy Chowdhury submitted that the Court should not have sanctioned the said modification. Mr. Roy Chowdhury argued that unless a fresh meeting of the creditors had been called and the modification had been accepted by the creditors concerned at a meeting this Court had no power to sanction any modification of the scheme. It is the argument of Mr. Roy Chowdhury that the scheme of arrangement is really in the nature of an agreement between creditors and the company and without considering the views of the creditors at a meeting the scheme cannot be modified by this Court. Mr. Roy Chowdhury is support of this submission has referred to the decision of the Judicial committee in the case of Sm. Pramila Debi & Ors. Vs. Peoples Bank of Northern India Ltd., A.I.R. (1938) P. C. 284. In that case Judicial committee held that upon confirmation by the Court of a scheme become by virtue of section 153 of the companies Act binding upon the creditor, the shareholders and the company. Its terms can thereafter only the varied by order of the Court after the variation had been approved at a meeting of the creditors and shareholders and it is not possible for the company or its directors or shareholders and it is not possible for the company or its directors or share holders whether by resolution or ratification or otherwise to alter the scheme. The judicial committee further held it was not possible for the company or its directors to vary the scheme under the guise of a compromise with a shareholder, as no variation or departure from the scheme would be validated by mere acquiescence of the shareholders or the creditors.