High Court clarifies need for specific compromise scheme before considering application

The High Court of Gujarat disposed of an application for holding a meeting of creditors and shareholders to approve a scheme of compromise or arrangement in a company under liquidation. The Court noted the absence of a specific scheme of compromise and clarified that the application could not be considered without it. The applicants were allowed to submit a formal scheme for compromise, which would be reviewed in compliance with the law and the Companies Act, ensuring all relevant parties have a chance to be heard before any orders are made.

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Issues involved: Application for holding a meeting of creditors and shareholders for approving a scheme of compromise or arrangement in a company under liquidation.

Summary:
The High Court of Gujarat heard an application registered as Company Application No.109 of 2012, where the applicant requested a meeting to be held for considering and approving a scheme of compromise or arrangement between the company and its creditors and shareholders. The company was under liquidation, with an order for winding up passed in 1999. The Official Liquidator reported that sale committee meetings had been held, and attempts to sell land were made. The applicants had paid off most creditors but debts of two creditors remained outstanding. However, no specific scheme of compromise was presented. The Court noted that without a formal scheme of compromise, the application could not be considered at that stage and thus disposed of it. The applicants were given the liberty to submit an appropriate scheme for compromise, which would be reviewed in accordance with the law and the Companies Act, with all relevant parties being heard before any orders were passed. The application was disposed of with this clarification.

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