Ruma Pal, J. - (1.) Shaw Wallace and Company Ltd. (referred to as the Company) admittedly has a large number of creditors-both secured and unsecured. Its indebtedness runs into several hundreds of crores of rupees. More than a hundred creditors including Hindustan Development Corporation (hereinafter referred to as HDC) filed winding up proceedings against the company. Most of the winding up petitions were based on claims on account of inter-corporate deposits (ICD) and bill discounting facilities availed of by the company. According to the company, in 1997, the total dues of the company to its creditors in this account alone were about Rs. 300 crores. In a few cases, the creditors made applications for appointment of provisional liquidator over the company. No provisional liquidator was appointed but interim orders of injunction were obtained by them restraining the company from disposing of any of its assets. More than 20 creditors have filed suits and some have obtained decrees against the company. Some creditors have also filed criminal proceedings against the directors of the company under section 138 of the Negotiable Instruments directors of the company under section 138 of the Negotiable Instruments Act in respect of cheques issued by the company which were dishonoured on presentation.
(2.) In this background, the company filed an application under sections 391(1) and 393 of the Companies Act, 1956 (referred to as the Act) seeking to convene a meeting for approval of a scheme of compromise/arrangement with a defined class of creditors. The creditors were defined in clause 1.5 of the scheme as follows : "1.5 'Creditors' means persons other than subsidiaries and associate concerns of the company, who had financial claims against the company as on 30 June, 1996 arising out of : (i) Inter-corporate deposits made with the company, or (ii) bill discounting facilities availed by the company, irrespective of whether those persons have instituted proceedings against the company, inter alia, by way of suits or petitions for winding up of the company, for recovery of such claims, and have or have not obtained decrees or orders by consent or otherwise in their favour for payment of such claims against the company but does not include those who have been paid in full as on 1 December, 1997, in respect of such claims in terms of such decrees, orders or otherwise, and also does not include any other persons having claims against the company whether secured or not."
(3.) On 18 December, 1997, an ex parte order was passed directing meeting of the creditors 'as mentioned in the scheme of the company' to be convened and held on Saturday, 28 February, 1998, for the purpose of considering and, if thought fit, approving with or without modification the scheme of compromise and/or arrangements of the creditors 'as mentioned in the scheme'. Mr. N.C. Roychowdhury, Senior Advocate, was appointed as Chairman of the meeting of the creditors 'as mentioned in the scheme'. Notice was directed to be published at least 21 clear days before the date of the meeting by advertisement which was to state that the copy of the scheme as well as the statement required to be furnished pursuant to section 393 of the Act could be obtained free of charge at the registered office of the company. The advertisements were directed to be published once in 'The Statesman' and once in the 'Bartanran'. In addition, notices, proxy forms as well as copies of the scheme and Explanatory Statement were directed to be sent to the creditors 'as mentioned in the scheme'. The order further provided that the voting of proxy to be allowed provided a proxy in the prescribed form duly signed by a person entitled to attend and vote, and at the meeting were filed with applicant company at its registered office not later than 48 hours before the meeting and that the value of each creditor shall be in accordance with the books of the company and where the entries in the books were disputed, the Chairman would determine the value for purposes of the meeting. In terms of the order, the Chairman was to submit a report as to the result of the meeting within 15 days of the conclusion of the meeting.;