1939 (8) TMI 22

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....cation is made on behalf of the Benares Bank Ltd. A learned Judge of this Court passed an interim order during the Vacation on July 12, 1939. He had before him a report of the Registrar of Joint Stock companies as required by sub-section (2) of section 277N. This report recommended that proceedings should be stayed as contemplated by section 277N for a period of four months upon certain conditions and the learned Judge passed an order, accordingly, but he directed that notice should be published in certain newspapers which he indicated and that the matter should be put up again before me after a month so that any creditors or depositors might make objections to the application. He made it clear that the order which he passed was liable to b....

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....r which must be decided in the proper way in the proper court. I have to consider the main question whether the order staying proceedings under section 277N of the Indian Companies Act should be withdrawn or whether it should be confirmed under the same conditions or under different conditions. This question really turns upon the answer to the further question whether the bank is entitled to ask the court to pass an order of this kind. In order to do so it must establish that it is temporarily unable to meet its obligations and I consider that the intention of obtaining a report from the Registrar of Joint Stock Companies is that he should examine and inform the Court of the true financial position of the company. The Registrar's report ....

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..... on sums deposited with them. There are said to be about 4,000 depositors who have sums of Rs. 100 or less in deposit with the company. These are to be paid off within two years. The remaining 4,000 depositors who have larger sums in deposit are to be offered payment of 6½% in 1939 and 1940, 12½% in 1941 and 1942 and higher percentage in the three following years during which their claim will finally be met. Even on this scheme it is obvious that the company has no hope of meeting all its liabilities for another period of six years and these liabilities are liabilities only to the depositors. It does not appear whether anything will be left over for the shareholders of the company. It may be that the directors and the present....