P L D 1957 Dacca 554 (PLP)

RAHMAN, J.‑‑This is an application on behalf of the petitioner‑Company for modification of the scheme of arrange ment sanctioned under section 153 of the Companies Act by this Court on the 2nd December 1954. By scab‑clause (b) (ii) of clause 4 of the scheme it was provided that a payment of 10 percent. of the dues of the creditors would be made within 12 months of the date of the sanction of this scheme. This period expired on the 2nd December 1955. The modification now sought by the petitioner‑Company is that the said date should to extended to the 31st of March 1956. The petitioner-Company states that under the said scheme of arrangement various steps had to be taken before the said payment could be commenced. The petitioner- Company took all diligent steps in that behalf, and although the order sanctioning the scheme was drawn up, completed and filed only on the 22nd December 11954, the petitioner- Company elected its new Board of Directors, as contemplated under the scheme, from amongst its share‑holders and creditors, on the 30th December 1954. This Board held its first meeting on the 7th January 1955, and on the 31st January 1955, it duly applied to the Controller of Capital Issues, for the extension of the period allowed for the issues of fresh capital by the order of the aforesaid Controller made on the 19th November 1953. Thereafter on the 3rd February 1955, the petitioner‑Company also applied to the State Bank of Pakistan for permission to operate upon its deposit of Rs. 50,000 with the National Bank of Pakistan, as also for the grant of the necessary licence for the reopening of its branches. The new Managing Director appointed under the scheme could not, in spite of his best efforts, obtain complete charge from the ex‑Managing Director until the 4th July 1955, and the necessary alterations of the Articles of Association of the Company could not be completed before the 21st September 1955. In spite of the efforts of the petitioner‑Company the sanction of the Controller of Capital Issues was received only on the 5th October 1955, and the licence issued by the State Bank of Pakistan was received on the 24th November 1955. In these circumstances the petitioner‑Company found that for no fault of its own, it would not be to a position to comply with the provisions of the scheme regarding the pay ment of the first instalment of the dues of the creditors and anticipating this, it, on the 17th November 1955, approached the State Bank of Pakistan for an extension of the aforesaid date for first payment from the 2nd December 1955, to the 31st March 1956, and filed this application before the expiry of the date provided for under the scheme, namely, on the 29th November 1955. The State Bank of Pakistan, it is stated, has by its letter of the 25th November 1955, intimated that it has no objection to the extension being granted. When this application first came up before me on the 2nd of December 1955, I indicated to the learned Advocate moving the application on behalf of the petitioner‑Company that after a scheme of arrangement under section 153 of the Companies Act has been sanctioned by the Court, the Court has no further jurisdiction to make additions, alterations or modifications in the said scheme, and, in those circumstances, I directed that the application be kept on the record, that notices of the application should; as if the application was one for the sanction of afresh scheme; be advertised in the Dacca Gazette and three local daily Newspapers, and that the necessary certificate from the State Bank of Pakistan under section 14 of the Pakistan Banking Companies (Control) Act, 1948, should also be obtained, for, without such a certificate, I would have no power to entertain the application. These directions have now been duly complied with, and the certificate of the State Bank of Pakistan certifying that the extension prayed for by the petitioner Company is not detrimental to the interests of the depositors has also been furnished. The petitioner‑Company has also since filed a further affidavit stating that the matter of extension of time, as prayed for by the present petition, was also included in the agenda of the second annual general meeting of the creditors and the shareholders of the Company after due notice to the said shareholders and creditors. It is stated that these meetings were presided over by the Registrar of the Joint Stock Companies, East Bengal, and the shareholders' meeting was attended by 28 shareholders, out of whom 13 attended by proxy. The said shareholders represented 14,766 shares, out of a total of 62,768 subscribed shares, and the value of the shares of the shareholders present at the meeting amounted to Rs. 1,11,915, out of the total paid up share capital of Rs. 2,01,

815. The creditor's meeting was attended by 57 creditors of whom 16 attended by proxy, and the total amount of the debts represented by these creditors came to Rs. 190,950, out of a total debt liability of Rs. 6,25,

000. The proposal regarding extension of time was duly read over and explained to the persons present at each of the above meetings, and the same was approved and passed unanimously at both the said meetings. A copy of the printed notice and true copies of the minutes of the aforesaid meetings have also been annexed to the said affidavit. I am satisfied that the said meetings were duly held, and the proposal for the extension of time was approved unanimously by all present, either in person or by proxy, in the aforesaid meetings, which were presided over by an independent person not connected with the management of the affairs of the petitioner‑Company. In these circumstances, the learned Advocate for the petitioner‑Company contends that even if the application is to be treated as a fresh application under section 153 of the Companies Act all necessary requirements of law have been complied with, and it is in the best interests of the petitioner- Company and its creditors and shareholders that the extension should be granted. The learned Advocate has further contended that even though the scheme does not contain any clause providing for the modification of the scheme by the Court this Court has the power to modify such schemes, after they have been sanctioned under section 153 of the Companies Act, if the creditors and shareholders have also approved of the said modification: Apart from this, according to the learned Advocate, there is no other bar to the making of modifications in such schemes. In support of this contention the learned Advocate has relied on two decision of their Lordships of the Privy Council namely, in the cases of Kamlapat Mod Lal v. Union Indian Sugar Mills Co. Ltd. (AIR 1929 P C 256) and Sm. Premila Devi and others v. Peoples Bank of Northern India Ltd. (in Liquidation) (AIR 1938 P C 284), as also a decision of the Calcutta High Court in the case of In Re: Mahaluxmi Colton Mills Ltd. (54 C W N 80). In the case reported in A I R 1929 P C 256, after a scheme had been sanctioned by the Court it was modified to meet certain changed circumstances, and the modification was also eventually approved by the Allahabad High Court, although the said modification had not been placed before or accepted at a meeting of the shareholders of the Company. In those circumstances their Lordships of the Judicial Committee set aside the orders of the Allahabad High Court assenting to the modified scheme, and indicated that a meeting of the shareholders should be summoned to consider the scheme. Again in the case reported in A I R 1938 P C 284 their Lordships observed as follows: "Upon confirmation by the Court of the amended scheme of arrangement that scheme became by virtue of section 153, Companies Act, binding upon the creditors, the share holders and the Bank alike. Its terms could thereafter only be varied by the order of the Court after the variation had been approved at meetings of the creditors and shareholders. It was not, therefore, possible for the Bank or its Directors or shareholders whether by resolution or ratification or otherwise to alter the dates fixed by clause 6 of the scheme * * * *, neither the Bank nor its Directors could vary the scheme under the guise of a compromise with a share‑holder." Following the principles enunciated by their Lordships of the Judicial Committee in the above‑mentioned case Sinha, J. of the Calcutta High Court in the case of In Re: Mahaluxmi Cotton Mills, Ltd. in order to remove an omission in the scheme sanctioned by the Court, directed the convening of meetings of the shareholders and creditors of the Company for amending the scheme. In the case of In Re : Bank of Mymensingh Gouripur, Ltd. (53 C W N 143), Das, J. of the Calcutta High Court held that after an order sanctioning a scheme under section 153 of the Companies Act has been drawn up, completed and filed, the Court can do nothing except correcting accidental omissions or mistakes in the order. But if any alteration or amendment other than correcting the accidental omissions or mistakes is required then this can only be done by way of a fresh scheme. The same learned Judge again, whilst Chief Justice of the East Punjab High Court, dealt with this question more fully in the Full Bench decision of the East Punjab High Court in the case of Sm. Bhagsvati v. New Bank of India, Ltd. Amritsar (AIR 1950 E P 111). The learned Chief Justice (Now Chief Justice of the Supreme Court of India) after reviewing a number of English and Indian authorities laid down certain general principles, and one of those principles is that where a scheme which is not of the kind mentioned in sections 153‑A or 153‑B is sanctioned otherwise than in the course of a winding up, the Court sanctioning the scheme has no further seisin of the scheme, and has no jurisdiction or power as the Company Court to entertain any application for modifying the scheme, and that this jurisdiction cannot be conferred on the Court even by providing in the scheme for reservation of powers to the Court to entertain such subsequent applications. Applying the principles that can be gathered from the above‑mentioned decisions it seems to me that any application for the modification of a scheme sanctioned under section 153, of the Companies Act must be treated in the same manner as if it is a fresh application for sanction of a scheme under section 153 of the Companies Act, and all the requirements on the aforesaid section must be duly satisfied before such' modification can be sanctioned. It is on the basis of this principle that in the very first stage, I treated this application as a fresh application under section 153 of the Companies Act, and directed the issue of the notices of this application. The provisions of the said section 153 and the provisions of the Pakistan Banking Companies (Control) Act, 1948, have in the present case, been duly complied with, and I am satisfied that the modification has become necessary not by reason of any fault of the petitioner‑Company, but by reason of circumstances over which it could have had no possible control, namely, the delay in granting the sanction by the Controller of Capital Issues, and the licence by the State Bank of Pakistan. I am also satisfied that this is a bona fide application in the best interests of the shareholders and the creditors of the petitioner‑Company. The proposed modi fication has, as I have already indicated, been duly placed before properly convened meetings of the shareholders and creditors and has been unanimously approved by them. In these circumstances, I sanction the proposed modi fication under section 153 of the Companies Act. Costs of this application assessed at five Gold Mohurs will be paid out of the assets of the Company. K. B. A. Proposed modification sanctioned.