Decree-holder unsecured creditors are not a separate class where they can consult together on a common reconstruction interest.

An unsecured creditor who has reduced its claim to decree is not, by that fact alone, a separate class for a reconstruction scheme under the Companies Act. The governing test is whether the creditors' rights are so dissimilar that they cannot consult together with a view to their common interest; here, decree-holder and non-decree unsecured creditors were held sufficiently similar to consult jointly. The objection that a separate meeting was required for decree-holder unsecured creditors therefore failed.

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Issues: Whether an unsecured creditor who holds a decree against the company constitutes a distinct class of creditors entitled to a separate meeting under section 153 of the Companies Act.

Analysis: The distinction between an unsecured creditor with a decree and one without a decree was held not to be so dissimilar as to make joint consultation impossible for their common interest in a reconstruction scheme. The governing test is whether the rights of the persons concerned are so dissimilar that they cannot consult together with a view to their common interest. On that basis, the mere fact that a creditor has reduced his claim to decree does not by itself create a separate class for purposes of the section.

Conclusion: The decree-holder unsecured creditor was not entitled to be treated as a separate class, and the objection to the scheme on that ground failed.

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