HARISH C. RASKAPOOR AND ORS. Vs. JAFERBHAI MOHMEDBHAI CHHATPAR, DIVYA VASUNDHARA FINANCIERS P. LTD.

JUDGEMENT

(1.) THE present three applicants have taken out this judge's summons praying for an order that the hearing of Case No 374 of 1982 filed in the court of the learned Additional Chief Metropolitan Magistrate 37th Court, Esplanade, Bombay, be stayed. The application is filed against opponent No 1 who is the original complainant in the said criminal case and also against opponent No 2 which is the court committee appointed by this court in the case of Divya Vasundhara Financiers Private Limited, Ahmedabad.

(2.) .In order to appreciate the grievance of the applicants, it is necessary to note a few introductory facts leading to the present application. Opponent No 2, Divya Vasundhara Financiers Pvt Ltd , which is a private limited company, was floated with fixed capital of Rs 1 lakh divided into 1,000 ordinary shares of Rs 100 each. Its object was to promote a scheme of chief fund and savings, amongst others. It appears that the company had accepted deposits from the public under different schemes. The company gave advances against industrial and residential properties. After some time, the company ran into difficulties somewhere in April, 1977. At that time, the public deposits of the company were more than Rs 6,50,000 as stated in Company Petition No 18 of 1978 which was moved in this court for sanctioning a scheme of compromise or arrangement. As the company was in financial difficulties, the aforesaid scheme of arrangement and compromise was moved under section 391 of the Companies Act. It was registered as Company Petition No 18 of 1978. In that company petition, after hearing learned counsel for the concerned creditors, the scheme was permitted to be put to vote by different classes of creditors and ultimately, this court (coram : B K Mehta J) sanctioned the said scheme of compromise and arrangement by its order dated December 28, 1978, January 12/6, 1979. In the said company petition, Company Application No 179 of 1977 was moved by the said company and its chairman and managing director, Shri Keshavlal Dhoribhai Patel, requesting this court to stay commencement or continuation of any suit or proceedings against the company and/or its directors in connection with the affairs of the company on such terms as the court ultimately thought it fit to impose. B K Mehta J (as he then was), by his order dated July 28, 1978, stayed the commencement or continuation of suits or proceedings against the company and/or its directors in connection with the affairs of the company which were listed in the said application. Various criminal cases pending in the Chief Metropolitan Magistrate's Court at Ahmedabad in the Court of the learned Judicial Magistrate, First Class, Surat, in the Court of the learned Judicial Magistrate, First Class, Nadiad, and Criminal Case No 126/W/94 in the court of the Metropolitan Magistrate Esplanade, Bombay, were stayed, pending finalisation of the scheme proceedings. Several suits filed by several creditors in different courts were also stayed. Under the sanctioned scheme, a court committee was appointed to be the managing committee consisting of nine members whose names are mentioned in the scheme to do all that is necessary for the working of the scheme, to supervise the working of the company and to do all acts, deeds and things necessary or incidental for the working of the company. As chairman of the company, Shri N M Miabhoy, a retired Chief Justice of this court, was appointed. Eight other members were also appointed in the said committee. Shri G R Mankodi was appointed as the chief executive officer to look the day -to -day management of the affairs of the company on behalf of the committee. The said court committee is functioning from the date of sanction of the scheme till today. The court committee has been able to realise the money value of some of the assets of the company and has been able to distribute some dividends to the creditors of the company.

(3.) MR . Soparkar, for the applicants, contended that the very basis of the scheme of the compromise and arrangements is that all proceedings against the company and its directors pending in different courts, whether civil or criminal, arising out of the conducting of the affairs of the company should be stayed so that the court committee can effectively function with the co -operation of the directors of the company and can realise the assets of the company in the best possible manner. It was with that end in view that B K Mehta J passed an order in Company Application No 10 of 1978 in Company Petition No 179 of 1977 on July 28, 1978, staying various suits and criminal proceedings as mentioned earlier. It is, therefore, in the fitness of things that the present criminal proceedings also should be stayed. Mr. Soparkar submitted that when the earlier Application No 10 of 1978 in Company Petition No 179 of 1977 was moved for stay of civil and criminal proceedings, the present criminal case could not be included as the applicant -directors never knew that such a case was pending against them at Bombay. If they had known it, they would have certainly included the number of that case also, in Company Application No 10 of 1978. It was further submitted that if stay of these proceedings is not granted, the very purpose of the scheme of compromise and arrangement would be frustrated and the directors will have to suffer unnecessarily and there would be multiplicity of proceedings. The directors would never have agreed to surrender all the assets of the company for administration of the court committed as per the scheme of arrangement and compromise if they were not assured about stay of all pending civil and criminal proceedings against them, as directors of the company. It was, therefore, submitted that it is just and proper to stay the proceedings in the criminal case as prayed for in the present application.