- (1.) The Court : This appliction was moved on December 15, 1999, by counsels on behalf of Capsulation Services Ltd. a creditor of Shaw Wallace & Co. Ltd., which hereinafter shall be referred to as the "Company". The prayers in the petition included a direction for the payment of the claims of the intercorporate deposit holders and bill discounting creditors, of the Company out of a fund being held by joint special-officers, in terms of an order of the Court. The Company was agreeable to payment being made to all intercorporate deposit holders and bill discounting creditors, who were represented in Court or whose petitions for winding-up of the Company were pending before this Court. As regards interest, the Company was agreeable to pay at the agreed rates till December 23, 1996, and thereafter at the rate of 10% per annum. It is significant, that the claim of Hindustan Development Corporation Limited, an intercorporate deposit holder of the Company, had been admitted by an order of the Court made on September 30th, 1997 the Company failed to pay its dues, inspite of an opportunity afforded to it, and the petition was advertised by publication in the local news papers. In the process, the matter acquired a representative character. According to the Company, since this was the only petition which had been advertised, the Company agreed to pay in terms of the order dated September 30, 1997. The reason why the Company had proposed to pay the agreed interest from December 23, 1996, according to counsel for the Company, was because that was the date of the presentation of the petition by Hindustan Development Corporation. In a further application made in this application, an order was made on October 12, 1999, directing the parties to file their respective affidavits, and all winding-up petitions were adjourned till the disposal of the application. The application had been moved upon notice, and all creditors who participated in the instant application had been represented in Court. In the order, liberty was given to other creditors, whose application for winding-up of the Company were pending before the Court, to file their respective affidavits in the matter, and the application was adjourned till December 14, 1999. This application was moved on December 12, 1999, by Capsulation Services Ltd. upon notice to the parties concerned. Court gave directions to file affidavits and adjourned the matter till January 12, 2000. The matter was taken up for hearing on April 12, 2000, and the following order was made : "It was submitted by counsel appearing for the Company, that the Company, was ready and willing to pay its creditors in terms of the order dated September 30, 1997. Counsel appearing for Hindustan Development Corporation Limited submitted in Court, that if payment was made in terms of the orders dated September 30, 1997, his client was agreeable to accept in full and final satisfaction of its claim, and counsel appearing for Kirloskar Investment and Finance Limited submitted, that he would furnish full particulars of his claim in keeping with the spirit of the order dated September, 30, 1997, with the advocate-on-record for the Company. The appearing parties are directed to furnish their respective claims to the advocate for the Company, in terms of the order dated September 30, 1997, by April 20, 2000 and the matter shall appear in the cause list marked as "Specially Fixed Matter", on May 3, 2000 at 2 p.m. It is made clear that the creditors shall furnish particulars of claims after adjustment of monies already received by them. It was pointed out by counsel for the Company that the date of presentation in the order dated September 30, 1997, was December 23, 1996. Parties shall act on a xerox of the signed copy of this dictated order on the usual undertaking.
(2.) Large number of creditors, including Hindustan Development Corporation Limited and Kirloskar Investment and Finance limited, opposed the prayer when the matter was taken up for hearing, and counsels on their behalf were heard at length on affidavits. Of course, some of the creditors chose not to file affidavits. Arguments on behalf of those creditors who opposed the prayer made by Capsulation Services Limited, and which had been agreed to by the Company, were principally forwarded by counsels representing Hindustan Development corporation Limited and Kirloskar Investment and Finance Limited. In fact, their submissions had been adopted by counsels appearing for the other opposing creditors. By way of additions, it had been submitted that the Company had incorrectly computed the dues, by adjusting the amounts paid out of the principal instead of the interest, and that the petitions of some creditors had been admitted by Court and interest from the date of presentation of their petitions had been allowed at the rate of 18% per annum and that thus an order in this application would in effect amount to variation of the earlier orders of this Court, which this Court was not empowered to do.
(3.) It was argued, by counsel, for Hindustan Development Corporation Limited, that there were orders of this Court, admitting the winding up petitions of several creditors, and that such orders would be rendered ineffective and modified to the prejudice of those creditors, in the event an order was made in the present application. He contended, that a scheme application which had been made by the Company in April 1999, was pending before this Court, and another scheme application had been prepared by Kirloskar Investment and Finance Limited. According to him, this present application was made in December, 1999 in an attempt to obtain an order without reference to any of the two scheme applications or any scheme, and that this Court was not empowered to entertain this application without disposing of the pending scheme applications. He submitted that the winding up petition, of Hindustan Development Corporation Limited, by reason of being advertised had acquired a representative character, and in that view of the matter payment must be made pari passu to all creditors and not just intercorporate deposit holders had bill discounting creditors. He contended, that an order for payment, as prayed for, would in effect, tantamount to preferential payment, especially prohibited in the Companies Act. Shutting out creditors with lawful claims but not represented before this Court, he argued, would be unjust and in violation of the principles of law and equity. In support of his submissions he cited and relied on the decisions reported in A. (1931) Bom. 2, A. (1942)All/141; 55 Comp. Cases 75 : 2000(2) SCC 756. JT (2000)2 SC : 113; and 53 CWN 239.;