Scope of Compromise or arrangement in Companies Ordinance, 1984, Part 3
S J Tubrazy
It could be said for the purposes of section 284 that ‘secured creditors’ also constitute a separate and distinct class. Irrespective of the fact, whether they have filed suits or obtained decrees and other secured creditors who may not have filed any proceeding nor obtained any decree.
Not only in winding up, the interest of whole class of secured creditors would have to be dealt with on the same footing. After securing State revenue, salaries/wages/dues of the employees and insurance respectively, secured creditors have precedence over general or unsecured creditors. Even in cases where the assets of a company are sold whether under money or a mortgage decree, ‘secured creditors’ have priority after the State Revenue (see section 405 of the Companies Ordinance, 1984, Order XLIV, rule 13 read with section 73, C.P.C.). Thus it could be seen that, interest of secured creditors are common, irrespective of the time when charge on the property of the company was created or whether they have filed suit and obtained decree or not, interest of all the secured creditors is usually alike and common.
Objector Banks having first charge of hypothecation of stock and plant and machinery and a registered charge on land and building indeed they are secured creditor and thus form a distinct class.
As regard the function power and discretion of the Court to sanction or otherwise a scheme, the following broad contours of such jurisdiction have emerged:
(1) The sanctioning Court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by law have been held.
(2) That the scheme put up for sanction of the Court is backed up by the requisite majority vote as required by law.
(3) That the concerned meetings of the creditors or members or any class of them had the relevant Material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class.
(4) That all necessary material indicated by law is placed before the voters at the concerned meetings.
(5) That all the requisite material contemplated by law is placed before the Court by the concerned applicant seeking sanction for such a scheme and the Court gets satisfied about the same.