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of <h1>Court affirms power to stay proceedings under Companies Act, stresses binding effect of sanctioned scheme. Injunction issued.</h1> <h3>Jalpaiguri Banking & Trading Corporation Ltd. In re</h3> The Court affirmed its jurisdiction to stay proceedings in the Jalpaiguri Court under the Companies Act. It emphasized the binding effect of a sanctioned ... Compromise and arrangement Issues:1. Jurisdiction of the Court to stay proceedings in the Jalpaiguri Court under the Companies Act.2. Binding effect of a sanctioned scheme on creditors and the Company.Analysis:1. The main issue in this case was the jurisdiction of the Court to stay proceedings in the Jalpaiguri Court under the Companies Act. The applicant, a company, sought a stay on execution proceedings initiated by a creditor, Rai Bahadur Kalipada Banerji, in the Subordinate Judge of Jalpaiguri, contending that the scheme sanctioned by the Court should prevent such actions. The opposing argument was that the Court lacked jurisdiction to stay proceedings in the absence of a winding-up petition under section 169 of the Companies Act. Reference was made to a case highlighting the need for meetings to be held and schemes to be agreed upon before a stay of execution could be considered.2. The second issue revolved around the binding effect of a sanctioned scheme on creditors and the Company. Section 153 of the Companies Act was crucial in this regard, as it outlined the process for approving compromises or arrangements binding on creditors and the Company. The Court emphasized that the scheme in question had been sanctioned after a meeting where the majority of creditors had agreed to it. Despite a previous decree against the creditor's contention that he was not bound by the compromise, the Court held that the scheme was binding on all parties involved. Consequently, the Court exercised its power to issue an injunction restraining the creditor from further execution proceedings in the Jalpaiguri Court as long as the scheme remained in operation.In conclusion, the Court asserted its jurisdiction to stay proceedings in the Jalpaiguri Court under the Companies Act and emphasized the binding nature of a sanctioned scheme on creditors and the Company. The judgment highlighted the importance of following the prescribed procedures for approving schemes and arrangements, ensuring their enforceability and protecting the interests of all parties involved.
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