MAHIGANJ LOAN OFFICE LTD Vs. BEHARI LAL CHAKI

JUDGEMENT

(1.) The question involved in this Rule is whether the opposite party is precluded from executing his decree by reason of scheme sanctioned by this Court in its original jurisdiction under Section 153, Companies Act. The material portions of the scheme are as follows: (a) The depositors of the company including those who have filed suits and obtained decrees against the company shall not be entitled to demand payment of their dues at once except in terms of the present scheme which shall remain in force for 10 years. ..... (e) The company until all depositors are paid off under this scheme set apart and distribute at least three-fourths of the total cash realization after deduction of all necessary expenses and costs among the depositors pro rata to be applied by them in the first instance towards the principal due to them and in the next place to the interest accruing due thereon. Such distributions shall be made as soon as a sufficient sum accumulates and shall be made at least once a year commencing from the year 1811 B.S.

(2.) This scheme was sanctioned by Buckland, J. on 27 November 1933. A few more facts, which are undisputed, are material: they are as follows: (i) at a meeting of the directors of the company held on 21 May 1933, a resolution was passed for filing an application in this Court under Section 153, Companies Act, on the averments, inter alia, that the gross value of the assets of the company as on 13 April 1932 was Rs. 2,18,530-13-0, that the company had 333 depositors of different kinds, including those who had filed suits and obtained decrees against the company; that the assets of the company were locked up in securities and that the company was desirous of proposing a scheme for arrangement with its aforesaid depositors for gradual payment with reduced interest. (ii) On 30 May 1933, an application with these averments, made to this Court on the Original Side was allowed and the company was directed to convene a meeting of the depositors of the company in terms of its prayer; that is of depositors who had not filed, suits and obtained decrees as well as those who had done so. (iii) On 2 July, 1933, a meeting of depositors was held and the statutory majority accepted the company's proposal and (iv) in the meantime on 22 May, 1933, the opposite party instituted his suit against the company in the Small Cause Court at Rangpur, for recovery of his deposit money and on 28 June 1933 he obtained a decree payable in instalments of Rs. 150 a year.

(3.) The application for execution for the balance due under this decree was filed on 6 July 1936, one instalment having been paid out of Court. This application was allowed to proceed by the Small Cause Court Judge by his order dated 26 September 1936, which is under review before us. He gave the following reasons for overruling the objection of the company: (i) that the scheme sanctioned by this Court was not intended to be operative against the opposite party, (a) as he was a judgment-creditor before the approval of the scheme by this Court, and (b) as no notice of the meeting convened in terms of the order of this Court under Section 153 dated 30 May 1933 had been served on him and (c) as an instalment due under the decree had been paid to him out of Court, and (ii) that the scheme sanctioned by this Court does not bind judgment creditors, as no separate meetings of depositors, who had not obtained decrees and those who had, been convened.