Ex parte scheme meetings under company law are permissible, but stay of proceedings needs mandatory notice to the winding up petitioner.

An application under rule 67 for directions to convene a creditors' meeting under section 391(1) is to be moved ex parte; at that stage the court need only form a prima facie view on the scheme's bona fides and compliance with the rules, so prior notice and personal hearing to an unsecured creditor who is also the petitioner in a pending winding up petition are not required. By contrast, a stay application under section 391(6) is subject to rule 71, which mandates notice to the petitioner in the pending winding up petition. Accordingly, the meeting could be convened without prior hearing to the objector, but the stay request was not maintainable without the required notice.

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Issues: (i) Whether an unsecured creditor who is also the petitioner in a pending winding up petition is entitled to notice and personal hearing at the threshold stage of an application under section 391(1) of the Companies Act, 1956 for convening a meeting of creditors to consider a scheme of arrangement and compromise; (ii) Whether an application under section 391(6) of the Companies Act, 1956 for stay of proceedings against the company is maintainable without notice to the petitioner in the pending winding up petition.

Issue (i): Whether an unsecured creditor who is also the petitioner in a pending winding up petition is entitled to notice and personal hearing at the threshold stage of an application under section 391(1) of the Companies Act, 1956 for convening a meeting of creditors to consider a scheme of arrangement and compromise.

Analysis: Rule 67 of the Companies (Court) Rules, 1959 provides that a summons for directions to convene a meeting shall be moved ex parte, while rule 68 requires service only where the company is not the applicant. The scheme of the rules draws a clear distinction between the preliminary stage of directing a meeting and the later stage of notice of the meeting itself. The Court also relied on the settled position that, at this stage, it must only form a prima facie view on the genuineness and bona fides of the proposal and the statutory requirements in the rules, rather than hear every affected creditor before issuing directions. The objector, being one of the scheme creditors, remained free to raise objections in the meeting and at the stage of sanction.

Conclusion: The request for prior notice and personal hearing at the ex parte stage was rejected, and the application to convene the creditors' meeting was allowed.

Issue (ii): Whether an application under section 391(6) of the Companies Act, 1956 for stay of proceedings against the company is maintainable without notice to the petitioner in the pending winding up petition.

Analysis: Rule 71 makes notice mandatory to the petitioner in a pending winding up petition when stay of proceedings is sought under section 391(6). The Court treated the requirement as compulsory and applied the reasoning of earlier authorities holding that pending winding up proceedings cannot be ignored for the purpose of the stay application. Since no advance notice had been given to the winding up petitioner, the application did not satisfy the mandatory procedural requirement.

Conclusion: The stay application was not maintainable without notice to the petitioner in the pending winding up petition and was dismissed.

Final Conclusion: The Court permitted the convening of the creditors' meeting for consideration of the proposed scheme, but refused stay of further proceedings for want of mandatory notice to the winding up petitioner.

Ratio Decidendi: An application under rule 67 for convening a meeting under section 391(1) is to be moved ex parte, with the court at that stage forming only a prima facie view on the scheme's bona fides, whereas an application under section 391(6) for stay of proceedings requires mandatory notice to the petitioner in a pending winding up petition under rule 71.

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