Full asset disclosure requirement: inadequate cross-border and domestic disclosures rendered the restructuring scheme unreasonable and non implementable.

Application for leave under section 153 to convene creditor and shareholder meetings was refused because the proposed scheme lacked adequate disclosure and practicability. The court found asset and liability statements vague, noting diminished cash, doubtful recoverability of a bank claim, minimal paid-up capital and obstacles to attracting deposits; it emphasised that a scheme binding cross-border creditors requires full disclosure of all assets and liabilities to assess fairness between creditors in different Dominions. On that basis the scheme was not shown to be reasonable or implementable and leave to convene meetings was rejected.

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Issues: Whether the Company should be granted leave under section 153 of the Indian Companies Act to convene meetings of its creditors and shareholders to consider and, if thought fit, approve the proposed scheme of arrangement for gradual payment of its debts.

Analysis: The Court examined the proposed scheme and the supporting statements of assets and liabilities and found the material disclosures as to the Company's Indian assets vague and meagre. The Court noted the diminution of cash and liquid assets, the doubtful recoverability of a substantial sum due from a bank in liquidation, the very small paid-up capital, and practical difficulties in attracting future deposits. The Court also considered cross-border implications, observing that a scheme binding all creditors wherever they are requires disclosure of the company's entire assets and liabilities (including those in Pakistan) so that fairness between creditors in different Dominions can be assessed and notice can be given to all creditors. The Court concluded that on the present material the scheme was not shown to be reasonable or practically implementable and that it would be improper to permit the Company to continue in existence on the basis of the proposed plan.

Conclusion: Leave to convene meetings under section 153 of the Indian Companies Act to consider the proposed scheme is refused; the application is rejected.

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