BANGESWARI COTTON MILLS LTD. Vs. ABC

JUDGEMENT

(1.) This is an application under Sec. 391 of the Companies Act, 1956. The petition has not yet been admitted and a question has been raised as to whether notice of this application, under Sec. 394A, should be given to the Central Government before any order is made. Sec. 394A has been introduced by the Companies (Amendment) Act, 1965, which received the assent of the President on 25th Sept., 1965, and was published in the Gazette of India on 27th Sept., 1965. The section runs thus:

(2.) As the point is of first impression and the application under Sec. 391 is at the moment being moved ex parte, I requested Mr. B. Das, the learned junior standing counsel, to assist me in this matter. I am grateful to Mr. Das and his learned junior, Mr. Basak, for the help they have given to me in coming to my conclusions. Before I proceed any further, it is necessary to set out the relevant provisions of Sec. 391 of the Act.

(3.) The procedure, therefore, in the case of a compromise or arrangement with creditors or members is that an application is first made to the court for convening a meeting to consider the proposal. After the meeting has accepted the proposal by the requisite majority, a second application to the court is necessary for the court's approval of the compromise or arrangement. The court has also the power of granting interim stay of suits or proceedings.