BANERJEE, J. - (1.) THIS is an appeal from an order made on June 15, 1950, by Bachawat J., refusing to sanction a scheme. The Company in question is the Bengal Bank Ltd. which was incorporated in 1926 under the Indian Companies Act. The petition under Section 153 was first presented to this Court on or about December 9, 1949, on which day preliminary directions under that section were given.
(2.) THE Bank has twenty branches. Five of the branches are in Pakistan and the remaining fifteen are within the State of West Bengal. The authorised capital of the Company is Rs. 25,00,000/ -. The paid up capital is Rs. 11,70,000/ -. It carries on business as a Bank in India as well as in Pakistan. Its registered office and principal place of business is in India. The majority of the depositors are within the Union of India. Notice of the application has not been given to the creditors in Pakistan. Section 153 of the Indian Companies Act deals with the right of Companies to enter into a compromise or arrangement, (a) between itself and its creditors or any class of them, or (b) between itself and its members or any class of them. The procedure is as follows. First of all an application has to be made to the Court for leave to call a meeting or meetings, (a) of the share -holders or the class of shareholders, where the arrangement is intended to be between the Company and the share -holders or a class of them; or (b) of creditors, where the compromise or arrangement is intended to be made between the Company and the creditors or any class of them. Where there are different classes, separate meeting of each class must be held. After the meeting is held, if a majority in number representing three -fourths in value of the class of creditors or members present either in person or by proxy at the meeting agree to the compromise or arrangement, the matter is brought before the Court for its sanction. The matter is then dealt with by the Court and if sanctioned, the scheme or compromise becomes binding on the shareholders or the class of share -holders, or on the creditors or the class of them, with whom such an arrangement or compromise is intended to be made.
(3.) THE scheme of course is not effective unless it is confirmed by the Court. But before the Court makes an order sanctioning the scheme, it is necessary in the first place to have the scheme or arrangement approved and accepted by the requisite majority and if the scheme is sanctioned by the requisite majority then it is presented to the Court for confirmation. In other words, the Court cannot sanction a scheme until it has been approved by the majority in terms of Section 153 (2) of the Indian Companies Act.;