ARBITRATION’S, COMPROMISE, ARRANGEMENTS AND RECONSTRUCTIONS:
Interpretation of sections 391 and 393 bisections 391 and 393,-(a) the expression “company” means any liable company under this Act to be wound up with the compromise ; the expression “arrangement” includes the company share-capital reorganization of different classes consolidation by the shares, or by the shares division into different classes shares or, by both those methods; and unsecured creditors who may have obtained decrees or file suits shall be deemed to be of the same class as other unsecured creditors. 391. Power to compromise or make arrangements with members and creditors.
(1) Where a arrangement or compromise is proposed-
(a) between a company and its creditors or any class of them; or (b) between its members and the company or any class of them; the. [Tribunal] may, the company application or of any creditor or company member, or, in the case of a company which is being wound up, of the liquidator, fleeting of the creditors order or creditors class , or of the members or members class , as the case may be, to be called, conducted and held in such manner as the [Tribunal]
2) If a majority in number representing the creditors value three-fourths , or class of creditors, or members, or class of members, as the case may be, present and voting either in Person or, where allowed proxies under the rules made under section 643, by proxy, at the meeting, agree to any arrangement or compromise, the compromise or arrangement shall, by the sanctioned Tribunal, on all the creditors be binding , all the creditors class, all the members, or all the class members , as the case may be, and also on the company, or in the company case which is being wound up, and company “contributories” on the liquidator.
Provided that no order sanctioning any compromise or arrangement shall be made by Tribunal unless the Tribunal is satisfied that the company or by whom any other person an application has been made under sub-section (1) has disclosed to the Tribunal, by affidavit or otherwise, every company related material facts , such as the recent financial company position the auditor’s recent report on the accounts of the company , any investigation pend-ency proceedings under sections 235 to 251 in relation to the company and the like.
3. Tribunal made an order under sub-section (2) shall have no effect until a certified copy order with the Registrar has been filed.
4. Every such order copy shall be annexed to every issued copy of the company memorandum after the certify order copy as aforesaid has been filed, or in the company case not having a memorandum, so issued to all copy constituting instrument or defining the constitution of the company.
If default is made with sub-section (4)every officer of the company and the company who is in default with fine shall be punishable with fine that may extend to one hundred rupees in respect for each copy of which the default is made.
The tribunal may at any time after an application under this section has been made stay the continuation or any suit commencement or against the company proceeding on such terms as Tribunal thinks fit, untill is finally disposed the application.
Power of enforce tribunal compromises and arrangements.
Where the tribunal under section 391 makes an compromise order sanctioning or in respect to the arrangement of the company it shall have power to supervise out of compromise carrying out or an arrangement and may, of making such order at the time or thereafter any time, give such directions in regard to any matter or make such modifications in the arrangement or compromise sanctioned under section 391 cannot be worked satisfactorily with or without modifications it may either on its own motion or on any interested person application in the company affairs makes a company order winding up and such an order shall be deemed to be an order made under section 433 Act.
Informations as to Arrangements or compromises with members and creditors:
Where a creditor meetings or any class creditors or of members or any class member is called under section 391.with every meeting calling which is sent notice to the creditor or the member there shall be sent also a statement the compromise terms setting forth or arrangement and explaining its effect or in particular stating any directors material interests managing director or company manager as such whether in their capacity or as members or company creditors or otherwise and those interests effects, or arrangement or the compromise if and insofar as which is different from the other persons effects like interests and in every notice calling the meeting by the advertisement that is given there shall be either included as aforesaid such a statement or notification of the place at which and in the manner in which the creditors or the members entitled may be obtain to attend the meeting such copies of the statement as aforesaid.
Where the arrangements or the affects of the compromises the debenture holders right of the company and the said statement shall give the like explanation and the information as trustees respect for securing any deed the debenture issue to give as the company director’s respects as it is required.
Where a notice given by advertisement that includes a notification that statement copies setting forth the compromises terms or proposed arrangement and explaining its effect can be obtained by members or creditor entitled to attend the meeting every member or the creditor so entitled shall, on making an application in the manner by the notice indicated by the company be furnished with the statement copy, free of charge.
Where default is made in complying with this section any requirements the company and every company officer who is in default, shall be punishable with fine that may extend to fifty thousand rupees; and for the purpose of this sub-section may company liquidator and a deed trustee for securing company debentures issue shall be deemed to be the company officer.
Provided that the person under this section shall not be punishable if he shows that the default was due to any other person refusal, being a director, managing director, debenture holders trustee or manager, to supply the particulars that are necessary as to his material interests.
Every director, company manager or managing director, and every trustee for debenture holders of the company shall give a company notice of such matters relating to himself that may be necessary for this section purpose and if he fails to do so, he shall be punishable with fine that may extend to rupees five thousand.
394. FACILITATING RECONSTRUCTION PROVISIONS AND COMPANIES AMALGAMATION.
Where an application is made under section 391 for the sanctioning of a compromise to the tribunal or arrangement proposed between a company and any such as are mentioned in that section and shown to the Tribunal.
that the compromises or arrangement has been proposes of for the purposes, or in connection with, a reconstruction scheme of companies or any company or any two or more companies amalgamation.
that under the scheme the whole or undertaking any part of concerned liabilities of any company in the scheme or property (in this section referred to as “transfer-or company”) to be transferred to any other company (in this section referred to as ” the transferee-company”);