Court Approves Company Arrangement Scheme under Companies Act 1956 The court approved a Scheme of Arrangement under section 391(1) of the Companies Act, 1956, resolving disputes with most creditors accepting claims except ...
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Court Approves Company Arrangement Scheme under Companies Act 1956
The court approved a Scheme of Arrangement under section 391(1) of the Companies Act, 1956, resolving disputes with most creditors accepting claims except one. Payments were made in phases, with a four-year plan for the remaining balance. The company was allowed to pay creditors in installments, except one, and was directed to provide security for the unpaid balance. Interest at 5% per annum was ordered on creditor claims. Winding up was ordered but stayed pending scheduled payments, with the Official Liquidator to take over in case of default. Advertisement costs were to be paid, and non-appearing creditors couldn't take action without court permission. An injunction restrained a creditor from filing suit until after a specified period. All related applications were disposed of by the court.
Issues: 1. Scheme of Arrangement under section 391(1) of the Companies Act, 1956 2. Disputes regarding amounts claimed by creditors and admitted by the company 3. Payment schedule for creditors 4. Security for unpaid balance 5. Interest payment on claims 6. Order of winding up and stay conditions 7. Advertisement costs 8. Treatment of non-appearing creditors 9. Injunction against filing suits 10. Disposal of all connected applications
Scheme of Arrangement under section 391(1) of the Companies Act, 1956: The company proposed a Scheme under section 391(1) of the Companies Act, 1956, and filed an application for final sanction of the Scheme of Arrangement. The court resolved disputes regarding amounts claimed by creditors and admitted by the company, with the company accepting most claims except for one creditor. Lump sum payments were made to creditors in a phased manner, and the company proposed to pay the remaining balance over four years.
Payment schedule for creditors and Security for unpaid balance: The court permitted the company to pay the balance dues of creditors, except for one, in three yearly installments. The company was directed to furnish security to the satisfaction of the Registrar for the unpaid balance of one creditor by a specified date. Failure to provide security would result in the amount being included in the creditor's claim.
Interest payment on claims: The company was directed to pay interest on the respective claims of creditors at a rate of 5% per annum until payment, with the interest amount due by a specified date.
Order of winding up and stay conditions: An order of winding up was issued, but it would remain stayed as long as the company made the scheduled payments. In case of default, the Official Liquidator would take possession of the company's assets.
Advertisement costs and Treatment of non-appearing creditors: The company was directed to pay the actual advertisement cost to the petitioning creditor. Non-appearing creditors were not allowed to take punitive steps without court permission once the order of winding up was passed and stayed due to payments to appearing creditors.
Injunction against filing suits: One creditor was restrained from filing a suit for a disputed sum until a specified period after furnishing security. Failure to file the suit would allow the company to request the return of the security.
Disposal of all connected applications: All connected applications were disposed of by the court's order, resolving the issues related to winding up, creditor payments, security, and interest payments.
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