1936 (12) TMI 23 - HC - Companies Law

Court rules in favor of appellant, invalidates scheme; notices defective, bank actions against depositors' scheme. Appeal allowed.

Sudhanya Kumar Rahut Versus Faridpur Loan Office Ltd.

The High Court ruled in favor of the appellant, holding that the scheme sanctioned by the court was not binding on the appellant. The court found ... Compromise and arrangement Issues:Interpretation of the scheme sanctioned by the Court and its binding effect on the appellant.Analysis:The appellant had a fixed deposit with the respondent bank, which became repayable on a specific date. A scheme was proposed by the bank, and a meeting of depositors was called, where the majority agreed to the terms of the scheme. The scheme restricted depositors from demanding immediate payment and offered interest at a fixed rate until a specified date. The appellant's suit for recovery was decreed through a compromise, where he relinquished a portion of his claim, and the bank agreed to pay the balance in installments. The bank later opposed the execution of the decree, citing the scheme as binding on the appellant. The main issue was whether the scheme was binding on the appellant, depending on the interpretation of the term 'depositors' in the scheme.The bank argued that 'depositors' should be interpreted as per its dictionary meaning, encompassing all individuals listed in the bank's deposit roll, regardless of the maturity of their deposits or ongoing legal actions. The appellant contended that his vested cause of action before the scheme's inception placed him in a different category from depositors whose deposits had not matured. The trial court found that notices were served on depositors, including the appellant, during the meeting called by the court under section 153 of the Companies Act. However, the appellant denied receiving such notice, leading to a dispute over the service of notice.The High Court scrutinized the evidence regarding the service of notice and found discrepancies in the bank's claims. The terms of the compromise reached between the appellant and the bank contradicted the scheme agreed upon by the majority of depositors. The court noted that the bank's actions, such as paying installments in contravention of the scheme, indicated its understanding that the scheme was not binding on the appellant. Consequently, the court allowed the appeal, set aside the lower court's orders, and directed the case to proceed with execution as per law, ruling in favor of the appellant and awarding costs for the appeal.In conclusion, the judgment clarified that the scheme sanctioned by the court was not binding on the appellant, as the term 'depositors' in the scheme did not encompass individuals like the appellant who had vested legal rights before the scheme's implementation. The court's detailed analysis of the service of notice and the bank's actions supported the decision to allow the appeal and proceed with the execution of the decree in favor of the appellant.