TaxTMI 
TaxTMI 
1997 (9) TMI 434
X X X X Extracts X X X X
X X X X Extracts X X X X
....nancial Corporation (K.F.C.), the Kerala State Industrial Development Corporation (K.S.I.D.C.), Indian Bank and the Kerala State Co-operative Bank Ltd. are secured creditors of the Company. According to clause 11 of the agreement, between the Company and the K.F.C. which financed the construction of the shopping complex and the hotel prohibited the borrower Company from selling, mortgaging, leasing, transferring, ex-changing or otherwise disposing of or creating any lien or charge in respect of the secured property which included the shops which are occupied by the tenants. Therefore, this Court while considering the application of the official liquidator for a direction to vacate the shops passed an order dated 7-7-1992. This Court held that in view of the prohibition mentioned above which binds the official liquidator and the Company it was not permissible to approve the draft lease agreement or to permit the official liquidator to create lease or otherwise transfer the shops. It was further held that in view of the prohibition mentioned above this Court could not order eviction of these occupants, but directed the official liquidator to treat the occupants as his licencees. This....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... made clear that unless the licencees which include tenancies are evicted it will be difficult for completing the revival scheme. It was further submitted that on condi- tion that the above mentioned licencees are evicted the intending purchaser will clear off the amount due to the secured creditors. This Court also observed that it is open to the parties to work out their remedies elsewhere regarding the eviction of the tenants. These are the circumstances under which the present application has been filed by the Company. Therefore, this Court has now to tackle the question whether the tenants are liable to be evicted from the premises of the Company in implementation of the scheme/compromise accepted by the Company in these proceedings itself or to direct the Company to initiate proceed- ings under the general law. 6. Section 391 of the Companies Act, 1956 ('the Act') gives power to the Company Court to compromise or make arrangements with creditors and members. Section 392 of the Act gives power to the High Court to enforce compromise and arrangements in the following words : "Power of High Court to enforce compromises and arrangements.-(1) Where a High Court makes an orde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s acquiesce in such alteration (cf. Premila Devi v. Peoples Bank). The effect of the scheme is 'to supply by recourse to the procedure thereby prescribed the absence of that individual agreement by every member of the class to be bound by the scheme which would otherwise be necessary to give it validity' (Palmer's Company Law, 20th Ed., page 664). Sub-section (2) of section 391 of the Act allows the decision of the majority prescribed therein to bind the minority of creditors and shareholders and it is for that reason that a scheme is said to have statutory operation and cannot be varied by the shareholders or the creditors unless such variation is sanctioned by the court....."(p. 711) 6A. The Supreme Court had occasion to consider the scope and ambit of section 392 in the ruling in S.K. Gupta v. K.P. Jain [1979] 49 Comp. Cas. 342. It is useful to refer the following observation of the Supreme Court which is as follows: "When a scheme is being considered by the court, in all its ramifications, for according its sanction, it would not be possible to comprehend all situations, eventualities and exigencies that may arise while implementing the scheme. When a detailed compromise ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iced by being deprived of the premises which the company would then be lawfully entitled to occupy and continue to be lessees thereof. The question about the validity of the scheme as well as with regard to the capacity of the alleged creditor to present the scheme is sub judice. Today it is not possible to say what would be the result of those proceedings. However, having Regard to the fact that the present premises, which are the subject matter of those proceedings, will be a valuable asset of the company in case it is revived, we think that the interest of everybody concerned and interested in the well being of the company will be sufficiently safeguarded if we make the order that the official liquidator will hand over possession of the premises to the appellants in case an order for reviving the company and for taking the company out of liquidation is not passed on or before December 31, 1984.........." (p. 240) On the other hand, Shri Ramachandran, the learned Senior Counsel appearing for the tenants forcibly argued that this Court cannot order eviction of the tenants from the premises in these proceedings. The petitioner is to approach the Rent Control Court for eviction o....