Company reconstruction scheme under Section 153: court must focus on convening the members' meeting, not immediate sanction.

Section 153 of the Indian Companies Act concerns whether the court should call a meeting of members to consider a proposed compromise or reconstruction scheme, not whether the scheme should then be sanctioned. Objections to the scheme, including any challenge based on revived personal liability, may be raised at the meeting and again at the sanction stage if the proposal is approved. The refusal below was erroneous because it treated the application as one for immediate sanction rather than for convening a meeting. Where the company's funds were in court and liabilities were substantially discharged, permission to convene the meeting was granted.

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Issues: Whether permission should be granted to the official liquidator to convene a meeting of the members of the company in liquidation for considering a scheme for reconstruction under section 153 of the Indian Companies Act.

Analysis: Section 153 empowers the court to order a meeting where a compromise or arrangement is proposed between a company and its members, and the proposal need only be placed before the members for consideration. The proposed reconstruction scheme was not being sanctioned at this stage, and objections regarding the scheme, including any contention that it would revive personal liability, could be raised before the meeting and, if necessary, at the stage of court sanction. The refusal below treated the application as though sanction of the scheme itself were sought, although the immediate prayer was only for convening a meeting. In the circumstances, where funds of the company were in court and liabilities were substantially discharged, there was no sufficient reason to refuse the convening of a meeting.

Conclusion: Permission to convene the meeting ought to be granted, and the refusal was erroneous.

Final Conclusion: The appeal succeeded and the official liquidator was directed to convene a meeting of the members for considering the proposed reconstruction scheme.

Ratio Decidendi: At the stage of an application under section 153 of the Indian Companies Act, the court is concerned only with whether a meeting should be called to consider a proposed compromise or arrangement, and objections to the scheme itself are to be examined at the meeting and, if approved, at the stage of sanction.

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