9911796707
TMI Blog1973 (3) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of Rs. 18,650 being the principal and interest due on a fixed deposit receipt dated November 20, 1967, under which the first defendant, Messrs. Somasundaram Mills (P.) Ltd., Coimbatore, received a deposit of Rs. 15,000 belonging to the plaintiff returnable within a period of one year ending with June 17, 1968. The plaint averred that on November 20, 1967, P. S. S. Somasundaram Chettiar, the second defendant, who was the managing director of the first defendant-company, gave a letter to the plaintiff guaranteeing payment of the amount covered by the fixed deposit receipt in the event of the first defendant failing to repay the amount due after maturity of the fixed deposit receipt, and that despite repeated demands, both the defendants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the depositors in stated instalments. Under the scheme of compromise the company was liable to pay the first instalment within 3 months from the date on which the High Court sanctioned the scheme, that is to say, by December 15, 1970. The decree-holder in O.S. No. 1978 of 1969 has not so far received a paisa towards his decree, either from Somasundaram Mills (P.) Ltd., the first defendant, or Somasundaram Chettiar, the second defendant. Consequently, the decree-holder got the decree transferred from Coimbatore Sub-Court to Devakottai Sub-Court and filed the Execution Petition No. 95 of 1970 for attachment and sale of the properties of the second defendant in execution of the decree obtained by him. This execution petition was filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the scheme sanctioned by the High Court, Madras, in Company Petition No. 31 of 1970. Section 391 of the Companies Act runs as follows : "391. (1) Where a compromise or arrangement is proposed-- (a)between a company and its creditors or any class of them ; or (b)between a company and its members or any class of them; the court may, on the application of the company or of any creditor or member of the company, or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the court directs. (2) If a majority in number representing three-fourths in value of the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months' time for payment. The moment the prescribed time terminated, both of them would become liable to pay the decretal amount, and if they defaulted, execution proceedings could be taken against them in accordance with law. So far as the first judgment-debtor is concerned, it being a company, and it having invoked the jurisdiction of this court under the Companies Act and entered into a compromise arrangement with its creditors, which was sanctioned by this court, it can, by virtue of section 391 of the Companies Act, interdict execution by the ordinary civil court, because section 392(1) says that: "Where a High Court makes an order under section 391 sanctioning a compromise or an arrangement in respect of a company, it-- (a)shall ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not expressly reserve the rights of any creditors against sureties for debts of the company, as such rights are unaffected by a scheme.' It was held in In re Garner's Motors Ltd. [1937] Ch 594; [1937] 1 All ER 671 (Ch D) that the scheme when sanctioned by the court has a statutory operation and the scheme does not release other persons not parties to the scheme from their obligations." As the second judgment-debtor had entered into a contract of guarantee with the plaintiff, and a decree has been obtained by the plaintiff against him and the company jointly and severally, there is no legal embargo against the decree-holder executing the decree against the second judgment debtor. The scheme, which was sanctioned by the company court, does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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