JUDGMENT S.S. NIJJAR, J.:---The petitioner under sections 391 and 394 of the Companies act, 1956 has been filed for the sanction of a scheme of compromise/arrangement, hereinafter referred to as "the 1996 agreement." This compromise agreement has been arrived at between the petitioner and its preferential and unsecured creditors whereby the petitioner shall sell on "as is where is" and on "as is what is" basis, its immoveable property comprising of land and building situate at B-2 Laxmi Industrial Estate, Goregaon, Bombay-400 090 (hereinafter referred to as "the Goregaon Property") in such a manner to ensure that the entire sale proceeds are received within one year from the date of agreement of sale and pay firstly to the preferential creditors and secondly to the unsecured creditors of the petitioner, in final satisfaction of all claims, the principal amounts due to them as on 31st March, 1996 as per the audited accounts of the petitioner company. 2.The petitioner is a company incorporated under the Companies Act and has registered office at B-2 Laxmi Industrial Estate, Goregaon (West), Bombay 400 090 (hereinafter referred to as "Bedrock"). Bedrock was incorporated on or about 5th April 1979 as a Private Limited Company registered under No. 21169 of 79 with the Registrar of Companies, Maharashtra. The authorised capital of Bedrock is Rs. 25 lakhs divided into 25,000 equity shares of the face value of Rs. 100/- each. The issued, subscribed and paid-up capital of Bedrock is Rs. 15 lakhs divided into 15,000 equity shares of Rs. 100/- each. The objects for which Bedrock was formed are set forth in the Memorandum of Articles of Association of the Company. The main objects for which the Company was incorporated are as follows : "1. 100/- each. The issued, subscribed and paid-up capital of Bedrock is Rs. 15 lakhs divided into 15,000 equity shares of Rs. 100/- each. The objects for which Bedrock was formed are set forth in the Memorandum of Articles of Association of the Company. The main objects for which the Company was incorporated are as follows : "1. To enter into Partnership in the business carried on by Shri Narayan Prasad Poddar, Shri Dharaprasad Poddar, Mahabir Prasad Poddar, Shri Ram Prasad Poddar and Shri Baluram Poddar in partnership under a partnership deed dated 16th December, 1965, in the firm name and style of MESSRS BEDROCK TYRE AND RUBBER COMPANY at 6-B, Court Chambers, 35, New Marine Lines, Bombay - 400 020 or elsewhere of manufacturing and dealing in rubbers, tyres and tubes and materials of all kinds which are being used or capable of being used in tyre, tube and rubber industries and for that purpose to enter into and carry into effect with such (if any) modifications and/or alterations as may be agreed upon an agreement which has been prepared and expressed to be made between the said M/s. Narayan Prasad Poddar, Dharaprasad Poddar, Mahabir Prasad Poddar, Ram Prasad Poddar and Baluram Poddar and the Company. 2. To manufacture, produce, process, press, vulcanise repair, retread, re-sole, mould, extrude, regenerate, combine, mix, export and import and deal in all types of tyres, semi-tyres, inner tubes, flaps, medical and dipper rubber products, rubber tiles, toys, rubberised cloth, rubber belts, O seals, V belts, moulded and extruded products of commercial , household and industrial uses. 3. To manufacture, process, mix vulcanise, regenerate, import, export and deal in all varieties of rubber, synthetic rubber, reclaim rubber, rubber compounds, rubber repairs, materials, rubber combination, with any metallic or nonmetallic substances, rubber chemicals, synthetic resins, foam and sponge rubber and products therefrom." Bedrock is the owner of the Goregaon property. The said property is lying unutilised due to the closure of manufacturing activities since 1987. In or about November, 1989 disputes arose among the members of the Poddar family who were the Shareholders/Directors of Bedrock. Last Annual General Meeting of Bedrock prior to the disputes, being the 11th Annual General Meeting became the subject-matter of Suit No. 6092 of 1991 in the Bombay City Civil Court and the Appeal from Order being A.O. No. 898 of 1991. Last Annual General Meeting of Bedrock prior to the disputes, being the 11th Annual General Meeting became the subject-matter of Suit No. 6092 of 1991 in the Bombay City Civil Court and the Appeal from Order being A.O. No. 898 of 1991. Because of the deadlock the Annual General Meeting of Bedrock was not held within the time prescribed by law. One of the members of the Company, Mr. Arunkumar Poddar moved two petitions before the Company Law Board, Western Region under section 167 of the Companies Act seeking directions for the convening and holding of the 12th and 13th Annual General Meeting of Bedrock. By an order dated 14th May, 1993, the Company Law Board directed that the 12th and 13th Annual General Meeting of Bedrock be convened separately under the Chairmanship of Mr. T.D. Sugla, a retired Judge of the Bombay High Court. Two winding up petitions had also been filed by M/s. Matushree Investments Pvt. Ltd. and M/s. Matushree Finance Pvt. Ltd. being Company Petition Nos. 513 of 1991 and 611 of 1991, praying that the said two Companies be wound up on the ground that it would be just and equitable to do so under section 433(f) of the Companies Act. These Companies were major shareholders in Bedrock holding approximately 39 per cent of the issued and subscribed share capital of Bedrock. By an order dated 29-1-1992, Official Liquidator, High Court, Bombay was appointed as the Provisional Liquidator of the two Companies. By an order dated 14th July 1993 this Court also directed the representative of the Official Liquidator to vote for the election as Directors of Arunkumar Poddar, C.J. Halwasia and Kamalkumar Poddar, at the 12th Annual General Meeting. The said meeting was held on 15th July, 1993 and the three persons mentioned above were elected as Directors of Bedrock. The 13th Annual General Meeting of Bedrock was also held immediately thereafter. 3.Several other proceedings had also been taken against Bedrock by the creditors of the Company. Mr. Arunkumar Poddar, prior to his election as Director of Bedrock had filed Company Application No. 303 of 1992 proposing a scheme of compromise/arrangement between Bedrock and its creditors in July, 1992. Company Application No. 145 of 1993 was filed by Mr. 3.Several other proceedings had also been taken against Bedrock by the creditors of the Company. Mr. Arunkumar Poddar, prior to his election as Director of Bedrock had filed Company Application No. 303 of 1992 proposing a scheme of compromise/arrangement between Bedrock and its creditors in July, 1992. Company Application No. 145 of 1993 was filed by Mr. Arunkumar Poddar in the aforesaid Company Application No. 303 of 1992 seeking stay under section 391(6) of the Companies Act of continuation of suits, winding up petitions and other proceedings. These proceedings are said to be pending . 4.The various other proceedings filed against Bedrock include Summary Suit No. 2399 of 1992 filed by the Maharashtra Small Scale Industries Development Corporation Ltd., hereinafter referred to as "MSSIDC". It was prayed that the Company be ordered and decreed to pay MSSIDC a sum of Rs. 1,08,44,389.60 together with further interest at the rate of 18 percent per annum on the principal sum of Rs. 75,17,416/- from the date of the suit and costs. A winding up petition being Company Petition No. 38 of 1992 was also filed by MSSIDC against Bedrock on 24-12-91. M.S.S.I.D.C. is an unsecured creditor of Bedrock. The suit filed by them was disposed of in terms of the Consent Terms dated 1st Sept., 1995. Similarly Company Petition No. 38 of 1992 was also withdrawn by MSSIDC on or about Sept. 1-1995. On 15-2-92 Suit No. 2586 of 1992 was filed by Central Bank of India against Bedrock and Poddar Sales Corporation. This was a normal Bank suit. The Goregaon property was subject to an equitable mortgage in favour of Central Bank of India. This Bank also had a lien on the Bank Accounts of Poddar Sales Corporation. 5.As Bedrock was in financial difficulties measures for its revival were considered by its Board of Directors. The Board of Directors at a meeting held on August, 1993 considered the future course of action to be adopted by Bedrock for its revival. The measures recommended included the appointment of M/s. Joglekar, Mahar and Devdhar, Technical Consultants to advise Bedrock in the matter of reviving its manufacturing operations. The Board of Directors at a meeting held on August, 1993 considered the future course of action to be adopted by Bedrock for its revival. The measures recommended included the appointment of M/s. Joglekar, Mahar and Devdhar, Technical Consultants to advise Bedrock in the matter of reviving its manufacturing operations. The Board of Directors in a bid to resolve the disputes between Bedrock and its various creditors also considered the possibility of proposing a scheme of compromise/arrangement under section 391 of the Companies Act which would involve the due disposal of its unutilised assets and the use of the sale proceeds towards the satisfaction of the debts due to the creditors of the Company. Thus on 6-12-1993 Company Application No. 876 of 1993 was filed in this Court seeking directions to convene a meeting of the secured/preferential and unsecured creditors of the Company to consider the scheme of compromise scheme provided, inter alia, the sale of the Goregaon property. The proceeds from the sale were to be used for payment to the creditors. The payment was to be made on the principal amount due to the creditor as on 31st March, 1993 as per the audited accounts of Bedrock. The value of the Goregaon property which had been lying unutilised since 1987 was estimated to be approximately 4.68 crores as per the valuation report dated 4th June, 1992. This proposed agreement shall be referred to as "the 1993 agreement". 6.On 8th December, 1993 this Court directed that the meetings of the secured, preferential and unsecured creditors be held on 19th Feb., 1994. This meeting and the subsequent meeting were adjourned for various reasons. On application made by Bedrock the meeting to be held on 19-2-1994 was adjourned to 16-4-1994. This meeting was further adjourned to 28-6-1994 on orders of this Court. Again the meetings were postponed to 12-11-1994; 15-3-1995; 13-6-1995 and 28-9-1995. On 22nd September, 1995 this Court directed that the meeting be held on 30th March, 1996. This order was modified on 29th March, 1996 directing Mr. S.S. Pawar, Taxing Master and failing him Mr. R.G. Deorukhkar, Deputy Official Assignee, to act as Chairman of the said meeting to be held on 30th March, 1996 and any adjourned meeting thereof. A meeting of the secured creditors was held at 11.00 a.m. on 30th March, 1996. This order was modified on 29th March, 1996 directing Mr. S.S. Pawar, Taxing Master and failing him Mr. R.G. Deorukhkar, Deputy Official Assignee, to act as Chairman of the said meeting to be held on 30th March, 1996 and any adjourned meeting thereof. A meeting of the secured creditors was held at 11.00 a.m. on 30th March, 1996. At this meeting the sole secured creditor i.e. Central Bank of India attended and voted in favour of the compromise agreement. Similarly a meeting of the preferential creditors viz., Municipal Corporation Greater Bombay and Rubber Board was held at 12.00 p.m. on 30th March, 1996, two out of the three preferential creditors viz.. Municipal Corporation of Gr. Bombay and Rubber Board attended the said meeting. Municipal Corporation of Gr. Bombay approved the compromise agreement in toto whereas Rubber Board approved the same with a modification that the principal sum payable to the Rubber Board be paid together with interest at the rate of 12 per cent per annum. It is the case of Bedrock that a meeting of the unsecured creditors of the Company was held at 2.00 p.m. on the same day which was attended only by one unsecured creditor viz., M.S.S.I.D.C. In view of the fact that the quorum for the meeting had been fixed by this Court at 5 in the order dated 8th December, 1993, the meeting was adjourned for want of quorum. According to Bedrock, notices for holding the meeting of the unsecured creditors were issued from time to time. The business, however, could not be transacted for a variety of reasons. Meetings were however convened on 15-6-96, 5-9-96 and 4-11-96. The next meeting of the unsecured creditors was to be held on 23-1-1997 but could not be held as it was declared a public holiday. Fresh notice was issued for convening the meeting on 13th March, 1997 at 4.30 p.m. This meeting was adjourned to 13th April, 1997 and then to 28th April, 1997. 7.It is further the case of Bedrock that at the time when the 1993 Agreement was presented to the Court the audited accounts were available upto 31st March, 1992. Since then accounts have been audited upto 31st March 1996. 7.It is further the case of Bedrock that at the time when the 1993 Agreement was presented to the Court the audited accounts were available upto 31st March, 1992. Since then accounts have been audited upto 31st March 1996. Also at the time when the 1993 Agreement was presented there were numerous litigations pending between the members of the Poddar family as stated above, the Central Bank of India had an equitable mortgage in respect of the Goregaon property. As a result of the settlement amongst the Poddar family members credit balances appropriated by the Central Bank of India from a family concern of the Poddar family viz., Poddar Sales Corporation have been accepted by the Bank as discharge of the liability of Bedrock. The documents of title of the property had been returned to Bedrock by 31-3-96. As a result of this, Poddar Sales Corporation became an unsecured creditor of Bedrock to the extent of the amount which was due to the Central Bank of India as on 31-3-96. Some of the unsecured creditors have also settled their claims against Bedrock. Thus some of the creditors have ceased to be creditors of Bedrock on 31st March 1996. As a result of the aforesaid developments, as on 31st March, 1996, Bedrock did not have any secured creditors. Summary Suit No. 2399 of 1992 filed by MSSIDC had also been settled. The Company Petition filed by MSSIDC had also been withdrawn in the year 1995. In view of the above modification of the 1993 Agreement it was sought to provide that the preferential creditors will be paid the principal amount due as on 31st March, 1996 as per the audited accounts of Bedrock and the unsecured creditors will be paid the principal amount due as on 31st March, 1996 as per the audited accounts of Bedrock. Application Lodging No. 103 of 1997 (subsequently on 23-3-97 numbered as C.A. No. 132 of 1997) was taken out seeking leave to modify the 1993 Agreement. The only modification was that the agreement will now not include the secured creditors, and that the date 31-3-93 will be substituted by the date 31-3-96. Leave was granted in this application on 18-3-1997. In pursuance of this order the present petition has been filed on 3rd June, 1997. 8.It is also the case of Bedrock that in the year 1995, Bedrock made efforts for its revival. Leave was granted in this application on 18-3-1997. In pursuance of this order the present petition has been filed on 3rd June, 1997. 8.It is also the case of Bedrock that in the year 1995, Bedrock made efforts for its revival. Thus from October, 1995 onwards Bedrock has entered into an agreement with Poddar Tyres Ltd. (another company of the Poddar family and now under the same management of the Applicant Company) for the sale of their entire products. In other words the applicant Company has become the exclusive consignment agents of the Poddar Tyres Ltd. The applicant company earns commission to meet its overheads. It is stated that the Applicant Company has a turnover of more than 2 crores of rupees per month. As a result of the aforesaid arrangement, the average outstanding dues to the Poddar Tyres Ltd. from the time of the arrangement entered into in October, 1995 is in the tune of Rs. 4 crores per month. Thus Poddar Tyres Ltd. have also become unsecured creditors of the applicant Company. As noticed above, that the summary suit filed by M.S.S.I.D.C. was disposed of by an order dated 1st September, 1995 in terms of the consent terms. M.S.S.I.D.C. had also taken out Chamber Summons for attachment of the Goregaon property. Ad-interim application was moved on 12th December, 1996 which was disposed of on 12th December, 1996. This application for attachment of the property was taken out as Bedrock had failed to make the payments in terms of the consent terms. Bedrock, therefore, took out draft Notice of Motion subsequently numbered as Notice of Motion No. 591 of 1997 praying for condonation of default in non-payment of the decretal amount being Rs. 1,10,00,000/- within the time stipulated in Clause 2(ii) of the consent terms dated 1st Sept. 1995 and for enlargement of the time fixed by the consent terms to 30th November, 1997. This Notice of Motion was, however, rejected on 17-1-1997. Bedrock has filed Appeal Lodg. No. 187 of 1997 (Appeal No. 693 of 1997). The said appeal is admitted and pending. The execution of the decree was stayed on payment of a sum of Rs. 50 lakhs by the applicant Company. Thereafter another sum of Rs. 60 lakhs was paid on 3rd Dec. 1997 whilst the matter was being heard in Appeal. No. 187 of 1997 (Appeal No. 693 of 1997). The said appeal is admitted and pending. The execution of the decree was stayed on payment of a sum of Rs. 50 lakhs by the applicant Company. Thereafter another sum of Rs. 60 lakhs was paid on 3rd Dec. 1997 whilst the matter was being heard in Appeal. 9.It is also the case of Bedrock that all the meetings convened and held for considering the compromise agreement have been adjourned on the specific orders of this Court. The meetings were convened and postponed as follows : 16th April, 1994, 28th June, 1994, 12th November, 1994, 15th March, 1995, 13th June, 1995, 28th September, 1995, 30th March, 1996, 15th June, 1996, 5th Sept. 1996, 4th November, 1996, 23rd Jan. 1997, 13th March, 1997, 3rd April, 1997 and 28th April, 1997. 10.Relying on the aforesaid facts it is submitted by Mr. Chagla that on 31st March, 1996 there was no secured creditor. Two of the three preferential creditors had approved the scheme in the meeting held on 30-3-96. So far as MSSIDC is concerned, they were unsecured creditors. However, the meeting could not be held for want of quorum. In the meantime, ex parte application was made for modification of the scheme. The purpose was to bring the compromise agreement upto date i.e. 31st March, 1996. In the meeting held on 28th April, 1997 of the preferential and the unsecured creditors, the majority has approved the compromise. The approval is unanimous so far as the preferential creditors are concerned. An overwhelming majority of the value of the unsecured creditors have also approved the compromise agreement. The objections raised by the proxy of MSSIDC have been dealt with in the Chairman's report. These objections had been raised by Mr. Mulwad, General Manager of MSSIDC. Although there was nothing in the objections raised by the MSSIDC Bedrock offered to have the accounts independently audited. This offer was outrightly rejected by MSSIDC without any reason. It is further submitted that the objections raised by the MSSIDC that the audited accounts do not correctly reflect the amount due is wholly without substance. Even if it is accepted that the amount due to MSSIDC is Rs. 1,10,00,000/- or Rs. 1,60,000/- an overwhelming majority and value of the unsecured creditors have still approved the compromise agreement. It is further submitted that the objections raised by the MSSIDC that the audited accounts do not correctly reflect the amount due is wholly without substance. Even if it is accepted that the amount due to MSSIDC is Rs. 1,10,00,000/- or Rs. 1,60,000/- an overwhelming majority and value of the unsecured creditors have still approved the compromise agreement. It is submitted that the objection raised by the respondent that Poddar Tyres Ltd. and Poddar Sales Corporation ought not to be included in the class of unsecured creditors is wholly without any basis. These are two wholly independent Private Limited Companies having no concern with Bedrock. Legally they are unsecured creditors of Bedrock. Therefore, they have to be included in the class of unsecured creditors. Merely because Poddar Sales Corporation has stepped into the shoes of Central Bank of India by discharging the liability of Bedrock does not transform them into secured creditors. It is further submitted that merely because MSSIDC are decree holders does not change their position from being unsecured creditors. By virtue of section 290 (c) of the Companies Act a decree holder is in no better position than any other unsecured creditor. MSSIDC has already been paid a sum of Rs. 1,15,00,000/- as follows : 15-9-95 : Rs. 5 lakhs. 9-7-97 : Rs. 50 lakhs. 3-12-97 : Rs. 60 lakhs. These payments have been made on the basis of the consent terms dated 1st Sept., 1995 in Suit No. 2399 of 1992 and in view of the orders passed by the Division Bench in Appeal No. 693 of 1997. 11.Under the consent terms the last payment of Rs. 1,10,00,000/- was to be made on or before 30th November, 1994. In default of payment of either of the instalments, decree was to become executable forthwith. Since there was a default in making payment of the aforesaid amount by 30th November, 1996 the decree became executable. It was in these circumstances that an application for extension of time was made before the learned Single Judge. Mr. Chagla submits that Bedrock was not doing well. Thus the compromise agreement was to put the Company on a sounder financial footing. 12.Mr. Thakkar on the other hand submits that the purpose of a scheme of compromise or agreement should be to revive the Company. Mr. Chagla submits that Bedrock was not doing well. Thus the compromise agreement was to put the Company on a sounder financial footing. 12.Mr. Thakkar on the other hand submits that the purpose of a scheme of compromise or agreement should be to revive the Company. The object of the scheme should not be to sell the only surviving asset and to profiteer from the sale proceeds. It is submitted that the sole aim of the agreement is to deprive MSSIDC of the benefit of the decree. It is submitted that in order to succeed in the design the petitioners have not held any meetings from 1993 till 1966. Pursuant to the orders dated 15-2-1994 and 16-2-1994 the petitioner Company proposed to hold the meeting of the unsecured creditors of the company at the Indian Merchants Chamber, Churchgate, Bombay on 19th February 1994 at 2.00 p.m. This was, however, postponed to 16th April. 1994. A notice to this effect was sent to the MSSIDC dated 17-2-94. By telegram dated 12th April, 1994 MSSIDC were informed that the meeting which was scheduled for 16th April, 1994 has been adjourned to 28th June, 1994. Thereafter by a telegram dated 23rd June, 1994 the meeting was adjourned to 12th November, 1994. By telegram dated 11th March. 1995 the meeting was adjourned to 15th March, 1995. Thereafter the meeting was fixed for 28th September, 1995. This meeting was also adjourned without fixing any date. Thereafter the next meeting fixed was 30th March, 1996. This meeting was attended by the representative of the MSSIDC which was adjourned to 15th June. 1996 for want of quorum. The meeting of 15th June. 1996 was adjourned to 5th September, 1996 for want of quorum. The meeting was also attended by the representative of MSSIDC. The meeting fixed for 5th September, 1996 was also adjourned to 4th November, 1996 for want of quorum. On 4th November, 1996 the meeting could not be held for want of notice from the Chairman. The meeting was thereafter fixed for 23-1-97 which was adjourned as the said date was declared as a Holiday by the Government of India on account of Centenary Celebrations of Netaji Subhash Chandra Bose. The next meeting was fixed on 13th March, 1997. By telegram dated 10th March, 1997 the petitioners informed MSSIDC that the said meeting is adjourned. The meeting was thereafter fixed for 23-1-97 which was adjourned as the said date was declared as a Holiday by the Government of India on account of Centenary Celebrations of Netaji Subhash Chandra Bose. The next meeting was fixed on 13th March, 1997. By telegram dated 10th March, 1997 the petitioners informed MSSIDC that the said meeting is adjourned. It was also stated that fresh notice shall be issued in due course. Subsequently the meeting was fixed on 28th April, 1997. This meeting was also attended by the representatives of the MSSIDC. At the meeting the approval of the 1996 Agreement was opposed by the representative of the MSSIDC. Objections were raised in writing to the Chairman of the meeting on behalf of the MSSIDC. It was pointed out that Bedrock is seeking approval of the modified scheme based on the unsecured creditors balance as on 31-3-96. The original scheme of balance as on 31-3-1993 is proposed to be substituted for consideration of MSSIDC. It is submitted by Mr. Thakkar that no notice of application to amend the scheme was given to the MSSIDC. This Company Application No. 132 of 1997 was filed on 28th February 1997. The Court was moved ex parte on 18th March, 1997. The suit for recovery was filed by the MSSIDC in August, 1992. This suit was in respect of bills of exchange drawn by MSSIDC in favour of State Bank of India. The said amount was paid to State Bank of India. The suit was for recovery of the principal amount plus interest on the bills of exchange from January, 1990 to March, 1990. The due dates of payment by the petitioner Company were April to June, 1990. Thus the petitioners were indebted to MSSIDC in the sum of Rs. 1,08,44,389.69 ps. Since the petitioners failed to discharge the liability the MSSIDC was also constrained to file petition for winding up being Company Petition No. 38 of 1990. It is submitted that the suit was decreed in favour of MSSIDC on the basis of the consent terms on 1st September, 1995. On the very same date in view of the consent terms MSSIDC withdrew the company petition. Having achieved that purpose, the petitioners are now trying to wriggle out of the decree. It is submitted that the suit was decreed in favour of MSSIDC on the basis of the consent terms on 1st September, 1995. On the very same date in view of the consent terms MSSIDC withdrew the company petition. Having achieved that purpose, the petitioners are now trying to wriggle out of the decree. It is submitted that the petitioners are seeking the sanction of the compromise agreement only to profiteer from the sale of the Goregaon property and to defeat the decree which has been passed against it. It is further submitted that there is deliberate misstatement in the amended scheme about the value of the claim of MSSIDC. It is further submitted that the petitioners have deliberately included their family members and secured creditors by styling them as unsecured creditors. This has been done merely to create a false majority to mislead the Court. It is submitted that the claim of MSSIDC is shown in different amounts in different proceedings according to the convenience of the petitioners. In the list of creditors given with the original scheme of compromise agreement, 1993 the claim of the MSSIDC is Rs. 75,17,416.35 ps. The claim of Poddar Tyres Ltd. is Rs. 21,24,030.27 ps. Poddar Sales Corporation is not listed as an unsecured creditor. In the list of creditors attached with the Agreement of 1996 the claim of MSSIDC is shown as 70,12,416.33 ps. In other words the petitioners have deducted Rs. 5 lakhs which have been paid pursuant to the consent terms on 15th September, 1995. At. Sr. No. 12 of this list the liability towards Poddar Tyres Ltd. is shown as Rs. 3,81,67,144.38 ps. At Sr. No 15 a liability towards Poddar Sales Corporation is shown in the sum of Rs. 1,02,33,393.85 ps. Thus out of a liability of almost 6.5 crores, Bedrock is shown to be indebted to Poddar Tyres and Poddar Sales Corporation in excess of Rs. 4,80,00,000/-. The liability of Bedrock towards MSSIDC is in fact Rs. 1,61,83,249.65 ps. as on 4-12-96. The order of attachment also mentions the principal amount of Rs. 75,17,416.35 ps. Mr. Thakkar refers to the affidavit in support of the application filed by the petitioners. It is submitted that the reasons set out in the affidavit in support are also wholly false. The liability of Bedrock towards MSSIDC is in fact Rs. 1,61,83,249.65 ps. as on 4-12-96. The order of attachment also mentions the principal amount of Rs. 75,17,416.35 ps. Mr. Thakkar refers to the affidavit in support of the application filed by the petitioners. It is submitted that the reasons set out in the affidavit in support are also wholly false. No reasons have been given to this Court as to why the meetings could not be held from 8th December, 1993 till 1996. It is categorically stated in paragraph 7 that the meeting of the unsecured creditors had to be adjourned for want of quorum. By taking advantage of this deliberate delay it was submitted before the Court that the modification of the scheme is required that the accounts have now been audited upto 31st March, 1996. Another reason set out in the affidavit is that the various litigations which were pending between the members of the Poddar Family and the Poddar family business firms and Companies have been compromised and settled. The other reason given is that the only secured creditor of the petitioner has been paid. The property is no longer subject to an equitable mortgage. It is categorically stated that as a result of the settlement amongst the Poddar family members, credit balances appropriated by the Central Bank of India from a family concern of the Poddar family viz. Poddar Sales Corporation have been accepted by the Bank as discharge of the liability of Bedrock. It is also asserted that the firm Poddar Sales Corporation (now being the entitlement of the outgoing shareholders and Directors of Bedrock in the family settlement referred to above viz., the Santosh Kumar and Vimal Kumar Group) became an unsecured creditor of Bedrock to the extent of the aforesaid amounts due to the secured creditors. In the affidavit while discussing the agreement entered into between Bedrock and the Poddar Tyres Ltd., the said concern is described as another company of the Poddar Family and now under the same management as of Bedrock. Mr. Thakkar submits that these averments categorically show that Poddar Sales Corporation and Poddar Tyres Ltd. are not bona fide unsecured creditors of Bedrock. It is submitted that they ought not to be included in the class of unsecured creditors. Mr. Thakkar submits that these averments categorically show that Poddar Sales Corporation and Poddar Tyres Ltd. are not bona fide unsecured creditors of Bedrock. It is submitted that they ought not to be included in the class of unsecured creditors. It is submitted that if these two creditors are excluded, by no stretch of imagination, can it be said that the agreement has been approved by the requisite majority of the unsecured creditors. It is submitted that the timing of the application for modification of the scheme clearly shows that the debts were first created by the petitioner Company in favour of Poddar Sales Corporation and Poddar Tyres Ltd. and thereafter the application for modification of the scheme was made. Mr. Thakkar submits that it is of significance that the decree was passed in favour of MSSIDC on 1st September, 1995. The first payment under the consent decree was made on 15th September, 1995. Thereafter Bedrock had defaulted and MSSIDC had to resort to attachment proceedings. The other payments made to the MSSIDC have been on the direction of the Court given by the Division Bench in appeal. Mr. Thakkar lays emphasis on the dates of payment of money in the sum of Rs. 50 lakhs on 9th July. 1997 and Rs. 60 lakhs on 3rd December, 1997. The application for modification was made in 21st March, 1997. Mr. Thakkar submits that this Court whilst examining the bona fides of the scheme is entitled to take into account all the requisite facts and circumstances surrounding the compromise agreement. Mr. Thakkar further submits that a perusal of the Annual Report of the petitioner Company of 1995-96 would show that the petitioner Company has disposed of its whole plant. Thus no manufacturing activities are being carried on nor is there any intention of the petitioner to recommence manufacture. It is further submitted that the meetings of the unsecured creditors were deliberately adjourned. In the meeting held on 30th March, 1996 MSSIDC had directed its representative to oppose the approval of the scheme and the meeting was adjourned. For meeting to be held on 15th June, 1996 the representative had again been directed to oppose the approval of the agreement. This meeting was again adjourned for want of quorum. The meeting dated 15th September, 1996 was again adjourned for want of quorum. For meeting to be held on 15th June, 1996 the representative had again been directed to oppose the approval of the agreement. This meeting was again adjourned for want of quorum. The meeting dated 15th September, 1996 was again adjourned for want of quorum. On 4th November, 1996 the meeting was adjourned to 23rd January, 1997. That meeting also could not be held on account of Holiday. In the meantime on 11th December, 1996 draft Chamber Summons had been taken out seeking leave for attachment and for execution of the decree. This Court by order dated 12th December, 1996 directed the office to draw up decree expeditiously. In the meeting dated 23-1-97 again the MSSIDC opposed the agreement. In order to somehow clinch the agreement the chairman sent the report saying that the agreement has been approved by the statutory majority in the meeting held on 28-4-1997. According to Mr. Thakkar, a perusal of the report of the Chairman would make it amply clear that it can hardly be treated as report having been made in accordance with law. A perusal of the statement attached to this report would show that MSSIDC is stated to have voted for the proposed scheme. Not only this, the amount of credit is shown as Rs. 90,17,416.35 ps. This amount is clearly at variance with the amount due and recognised by Bedrock itself in the consent terms dated 1st September, 1995. 13.In support of his submissions Mr. Thakkar relies on a judgment in the case of (Re. Hellenic General Trust Ltd.)1, reported in 1975(3) All E.R. 382. The relevant facts in that case were that a Company which carried on business as an investment trust applied for the sanction of the Court to a scheme of arrangement under section 206 of the Companies Act, 1948 relating to the ordinary shares of the Company. Those shares were held as to 53.01 per cent by another Company (M.I.T.) which was a wholly owned subsidiary of a Bank (Hambros), and as to 13.95 per cent by the National Bank of Greece SA (NBG). By the proposed arrangement the ordinary shares of the Company were to be cancelled and new ordinary shares were to be issued to hambros with the result that the company would become a wholly owned subsidiary of hambros. By the proposed arrangement the ordinary shares of the Company were to be cancelled and new ordinary shares were to be issued to hambros with the result that the company would become a wholly owned subsidiary of hambros. The former shareholders of the company were to be compensated in cash for the loss of their shares. The offer price was 48 p. per share which was said to represent the true net asset value of the shares. On that basis it was between 20 and 25 per cent more than the shareholders would have been able to obtain elsewhere. However, if the scheme went through, NBG would become liable to a very substantial capital gains tax in Greece. At the meeting of all the ordinary shareholders summoned by the Court. 91 per cent of the shareholders by value attending and voting M.I.T. voted in favour of the arrangement and NBG voted against it. A resolution in favour of the proposal was carried by the requisite majority of three-fourths in value of the class present and voting but without the votes of M.I.T. the resolution would have been carried against the opposition of NBG. NBG opposed the Company's petition for the sanction of the Court. Delivering the judgment, Templeman, J., observed as follows : "The first objection put forward is that the necessary agreement by the appropriate class of members has not been obtained. The shareholders who were summoned to the meeting consisted it is submitted, of two classes First there were the outside shareholders, that is to say the shareholders other than M.I.T.: and secondly M.I.T. a subsidiary of hambros. M.I.T. was a separate class and should have been excluded from the meeting of outside shareholders. Although section 206 of the 1948 Act provides that the Court may order meetings, it is the responsibility of the applicants to see that the class meeting are properly constituted and if they fail then the necessary agreement is not obtained and the Court has no jurisdiction to sanction the arrangement. Thus in Re. United provident Assurance Co. Ltd the Court held that holders of partly paid shares formed a different class from holders of fully paid shares. Thus in Re. United provident Assurance Co. Ltd the Court held that holders of partly paid shares formed a different class from holders of fully paid shares. The objection was taken that there should have been separate meetings of the two classes and Swinfen Eady, J., upheld the objection saying..." the objection that there have not been proper class meetings is fatal, and I cannot sanction the scheme". Similarly Eve, J., issued a practice direction in which he reminded the profession, in dealing with the predecessor of section 206, that the responsibility for determining what creditors are to be summoned to any meeting as constituting a class rests with the applicant and if the meetings are incorrectly convened or constituted or an objection is taken to the presence of any particular creditors as having interests competing with the orders the objection must be taken on the hearing of the petition for sanction and the applicant must take the risk of having the petition dismissed. That direction applies equally to meetings of shareholders. The question therefore is whether M.I.T. a wholly owned subsidiary of Hambros formed part of the same class as the other ordinary shareholders. What is an appropriate class must depend on the circumstances but some general principles are to be found in the authorities. In Sovereign Life Assurance Co. v. Dodd, the Court of Appeal held that for the purpose of an arrangement affecting the policy-holders of an assurance company the holders of policies which had matured were creditors and were a different class from policy-holders whose policies had not matured. Lord Esher MR said : "... they must be divided into different classes... because the creditors composing the different classes have different interests and therefore if we find a different state of facts existing among different creditors which may differently affect their minds and their judgment they be divided into different classes." Brown, L.J. said: "It seems plain that we must give such a meaning to the term "class" as will prevent the section being so worked as to result in confiscation and injustice and that it must be confined to those persons whose rights are not so dissimilar as to make it impossible for them to consult together with a view to their common interest." (emphasis supplied). Vendors consulting together with a view to their common interest in an offer made by a purchaser would look askance at the presence among them of a wholly owned subsidiary of the purchaser. In the present case on analysis Hambros are acquiring the outside shares for 48 p. So far as the M.I.T. shares are concerned it does not matter very much to Hambros whether they are acquired or not. If the shares are acquired a sum of money moves from parent to wholly owned subsidiary and shares move from the subsidiary to the parent. The overall financial position of the parent and the subsidiary remains the same. The shares and the money could remain or be moved to suit Hambros before or after the arrangement. From the point of M.I.T. provided M.I.T. is solvent, the directors of M.I.T. do not have to question whether the price is exactly right. Before and after the arrangement the Directors of the parent company and the subsidiary could have been made the same periods with the same outlook and the same judgment. Counsel for the company submitted that since the parent and subsidiary were separate Corporations with separate Directors, and since M.I.T. were ordinary shareholders in the Company, it followed that M.I.T. had the same interests as the other shareholders. The Directors of M.I.T. were under a duty to consider whether the arrangement was beneficial to the whole class of ordinary shareholders, and they were capable of forming an independent and unbiased judgment, irrespective of the interests of the parent company. This seems to me to be unreal. Hambros are purchasers making an offer. When the vendors meet to discuss and vote whether or not to accept the offer, it is incongruous that the loudest voice in theory and the most significant vote in practice should come from the wholly owned subsidiary of the purchaser. No one can be both a vendor and a purchaser and in my judgment for the purpose of the class meetings in the present case, M.I.T. were in the camp of the purchaser. Of course this does not mean that M.I.T. should not have considered as a special class meeting whether to accept the arrangement. But their consideration will be different from the considerations given to the matter by the other shareholders. Of course this does not mean that M.I.T. should not have considered as a special class meeting whether to accept the arrangement. But their consideration will be different from the considerations given to the matter by the other shareholders. Only M.I.T. could say within limits, that what was good for Hambros must be good for M.I.T. Counsel for the company submitted that difficulties will arise in practice if every subsidiary or associated company may constitute a separate class. So far as a wholly owned subsidiary is concerned there is no difficulty at all, and in most cases it will be sufficient to judge the class composition by reference to the shareholding. .........." Thereafter Mr. Thakkar relies on a judgment of this Court in Company Petition No. 395 of 1994 connected with other matters decided on 3rd April, 1996. In view of the above Mr. Thakkar submits that the petition deserves to be dismissed. 14.In reply, Mr. Chagla submits that the whole scheme of compromise cannot be rejected merely because one creditor happens to object. His objection, according to Mr. Chagla, is wholly irrelevant. The attitude of the MSSIDC is to somehow scuttle the compromise agreement which is for the benefit of other creditors. All creditors under the agreement have to be paid the principal amount due on 31st March, 1996. Both the secured and preferential creditor have voted in favour of the Agreement. Now the only secured creditor has been paid and the preferential creditors have approved the modified scheme. It is further submitted that there is no suppression of any material facts as alleged. The affidavit in support is dated 28-2-1997 and the warrant of attachment was served on the petitioner on 14th March, 1997. Thus they were not even aware of the attachment. Mr. Chagla further submits that the judgment in Hellenic's case (supra) rather supports the case of the petitioner. In that case the Court was dealing with a wholly owned subsidiary of Hambros. The interest of Hambros was identical to the wholly owned subsidiary M.I.T.. It was thus held that vendor and the purchaser having the same interest cannot be included in the same class of creditors as the objectors NBG. Thus, according to Mr. Chagla, learned Counsel, there is a distinction between the aforesaid case and the present case. 15.I have considered the rival submissions of the learned Counsel anxiously. It was thus held that vendor and the purchaser having the same interest cannot be included in the same class of creditors as the objectors NBG. Thus, according to Mr. Chagla, learned Counsel, there is a distinction between the aforesaid case and the present case. 15.I have considered the rival submissions of the learned Counsel anxiously. The ambit of the power and the jurisdiction of the High Court while considering whether the compromise agreement is to be sanctioned by the Court has been settled by a catena of judgments of the Supreme Court, various High courts and the English courts. In the case of (Miheer H. Mafatlal v. Mafatlal Industries Ltd.)2, 1997(1) S.C.C. 579 : A.I.R. 1997 S.C. 506, the Supreme Court has called out the broad contours of the jurisdiction of the Company Court in granting sanction to the scheme as follows: "1. The sanctioning Court has to see to it that all the requisite statutory procedure for supporting such a scheme has been complied with and that the requisite meetings as contemplated by section 391(1)(a) have been held. 2. That the scheme put up for sanction of the Court is backed up by the requisite majority as required by section 391 sub-section (2). 3. That the meetings concerned of the creditors or members or any class of them had the relevant material to enable the voters to arrive at an informed decision for approving the scheme in question. That the majority decision of the concerned class of voters is just and fair to the class as a whole so as to legitimately bind even the dissenting members of that class. 4. That all necessary material indicated by section 393(1)(a) is placed before the voters at the meetings concerned as contemplated by section 391 sub-section (1). 5. That all the requisite material contemplated by the proviso of sub-section (2) of section 391 of the Act is placed before the Court by the applicant concerned seeking sanction for such a scheme and the Court gets satisfied about the same. 6.That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. 6.That the proposed scheme of compromise and arrangement is not found to be violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme with a view to be satisfied on this aspect the Court, if necessary can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the same. (emphasis supplied)" 7. That the Company Court has also to satisfy itself, that members or class of members or creditors or class of creditors as the case may be, were acting bona fide and in good faith and were not coercing the minority in order to promote any interest adverse to that of the latter comprising the same class whom they purported to represent. (emphasis supplied)" 8. That the scheme as a whole is also found to be just, fair and reasonable from the point of view of prudent men of business taking a commercial decision beneficial to the class represented by them for whom the scheme is meant. 9. Once the aforesaid parameters about the requirements of a scheme for getting sanction of the Court are found to have been met the Court will have no further jurisdiction to sit in appeal over the commercial wisdom of the majority of the class of persons who with their open eyes have given their approval to the scheme even if in the view, of the Court there would be a better scheme for the company and its members or creditors for whom the scheme is framed. The Court cannot refuse to sanction such a scheme on that ground as it would otherwise amount to the Court exercising appellate jurisdiction over the scheme rather than its supervisory jurisdiction." 16. Examining the facts in this case it has to be seen whether Poddar Sales Corporation and Poddar Tyres have a commonality of interest with MSSIDC. It has also to be seen whether the scheme is bona fide. It has to be seen whether Podar Sales Corporation and Poddar Tyres are acting bona fide in the interest of the class of unsecured creditors. It has to be seen whether the compromise agreement has been proposed bona fide for revival of Bedrock. It is further to be seen whether the statutory requirements with regard to the conveying of the meeting has been complied with. It has to be seen whether the compromise agreement has been proposed bona fide for revival of Bedrock. It is further to be seen whether the statutory requirements with regard to the conveying of the meeting has been complied with. The facts which are relevant for the determination of the aforesaid questions have already been narrated above in extenso. These may, however be recapitulated. 17. Bedrock is a Company under the exclusive control of the Poddar family. The Goregaon property is the asset which is sought to be sold purportedly to revive Bedrock. Application No. 876 of 1993 was filed in this Court for seeking sanction of the 1993 Agreement on 6th December, 1993. At that time the audited accounts of Bedrock were available upto 31st March, 1992. Various proceedings has been pending against Bedrock for winding up and for recovery of money. MSSIDC had filed Suit No. 2399 of 1992. Suit No. 2586 of 1992 was filed by the Central Bank of India on 15th September, 1992. The Goregaon property was subject to equitable mortgage in favour of Central Bank of India. This property had been lying unutilised since 1987 and was valued at approximately Rs. 4.68 crores in the valuation report dated 4th June, 1992. This Court by an order dated 8th December, 1993 in Company Application No. 876 of 1993 had ordered the holding of the meeting of the creditors on 19th February, 1994. The meetings were adjourned from time to time as follows; 16th April, 1994, 28th June, 1994. 12th November, 1994, 15th March, 1995, 13th June, 1995, 28th September, 1995, 30th March, 1996. 15th June, 1996, 5th Sept. 1996, 4th November, 1996, 23rd Jan., 1997, 13th March, 1997, 3rd April, 1997 and 28th April, 1997. Various litigations between the members of the Poddar family were settled in 1995. The liability towards Central Bank of India was discharged by appropriating the credit balances of Poddar Sales Corporation. The documents of title of Goregaon property had been returned to Bedrock by 31st March, 1996. Summary Suit No. 2399 of 1992 filed by MSSIDC was settled and a decree was passed in their favour on 1st September, 1995. The Company Petition filed by MSSIDC was also withdrawn in terms of the consent terms. The documents of title of Goregaon property had been returned to Bedrock by 31st March, 1996. Summary Suit No. 2399 of 1992 filed by MSSIDC was settled and a decree was passed in their favour on 1st September, 1995. The Company Petition filed by MSSIDC was also withdrawn in terms of the consent terms. In October, 1995 Bedrock entered into an agreement with Poddar Tyres Ltd. "(another Company of the Poddar Family and under the same management of the Applicant Company)" as a consignment agent for sale of the products of Poddar Tyres Ltd. on an exclusive basis. Bedrock had committed defaults in payment of instalments in terms of consent terms dated 1st September, 1995. MSSIDC took out proceedings for attachment of the Goregaon property. Bedrock took out Notice of Motion No. 591 of 1997 praying for condonation of non-payment of the decretal amount being Rs. 1,10,00,000/- and for enlargement of time fixed in the Consent Terms. This notice of Motion was rejected on 17-1-1997. The matter is pending in Appeal No. 693 of 1997. Under the orders of the Division Bench, Bedrock has paid a sum of Rs. 50 lakhs on 9th July, 1997 and a sum of Rs. 60 lakhs on 3rd December, 1997. The liability of the Central Bank of India having been discharged by Poddar Sales Corporation they became the unsecured creditors of Bedrock. Poddar Tyres Ltd. are stated to be the other unsecured creditors. The present petition has been filed seeking the modification of the 1993 agreement to the effect that the scheme will apply only to preferential and unsecured creditors, there being no secured creditors as on 31st March, 1996. In the meeting of the creditors held on 30th March, 1996 two of the three preferential creditors had approved the scheme. In the meeting dated 28th April, 1997 the unsecured creditors also approved the scheme with an overwhelming majority. Mr. Chagla has submitted that the scheme is bona fide and it is in the interest of the creditors. The statutory provisions have been complied with. Thus this Court should not hesitate to approve the scheme. The arguments of Mr. Chagla had been noticed earlier. Mr. Thakkar's arguments have also been noticed earlier. Mr. Chagla has submitted that the scheme is bona fide and it is in the interest of the creditors. The statutory provisions have been complied with. Thus this Court should not hesitate to approve the scheme. The arguments of Mr. Chagla had been noticed earlier. Mr. Thakkar's arguments have also been noticed earlier. It is a settled proposition of law that before sanctioning the scheme the Court must be satisfied that the provisions of the statute have been complied with; that the class was fairly represented by those who attended the meeting and that the statutory majority are acting bona fide and are not coercing the minority in order to promote interests adverse to those of the class whom they purport to represent and that the arrangement as such as an intelligent and honest man, a member of the class concerned and acting in respect of his interest might reasonably approve. That is the well recognised approach of the Court to a scheme of compromise and arrangement. The scheme should not be examined in the way a carping critic, a hairsplitting expert, a meticulous accountant or a fastidious Counsel would do it. (Navjivan Mills Co. Ltd. v. Kohinoor Mills Co. Ltd.)3 1972(42) Company Cases 265. Justice Vyas in Company Petition No. 395 of 1995 (Smt. Saroj G. Podar and others. v. T. Mathew)4, also reiterated the above view when considering the ambit of the power of the Court. Justice Vyas has, however, further observed that the Court is not bounded to superadd its seal to the scheme merely because it has received approval of the requisite majority at the meeting held for that purpose. The Court will refuse to put its seal there to if its purpose is not bona fide but merely to shield the misdeeds of the ex-directors or is otherwise inequitable. Therein Justice Vyas had an occasion to examine two claims put forward for the revival of the Company. Both the schemes had proposed to sell of part of the immovable property. These were referred to as the "Mathew Scheme" and the "Poddar Scheme". After examining the whole facts situation it was observes as follows: "Is the Mathew Scheme propounded in good faith and is it viable? These are the next question to be answered. (a) As mentioned above, while dealing with the question of credibility and credentials of Mr. These were referred to as the "Mathew Scheme" and the "Poddar Scheme". After examining the whole facts situation it was observes as follows: "Is the Mathew Scheme propounded in good faith and is it viable? These are the next question to be answered. (a) As mentioned above, while dealing with the question of credibility and credentials of Mr. Mathew, his obsession for acquiring the said land gathered from his past attempts has been discussed. In my view, paradoxically, instead of the paramount objective being revival of the Company, the paramount objective of Mr. Mathew in undertaking the present exercise is to develop the said land after acquisition. (g) Taking an overall view and for the reasons mentioned above it is not possible to sanction the Mathew scheme, the entire exercise undertaken by Mr. Mathew with the support of the New Union appears to be only to acquire the land in order to develop the said land. The Denim Scheme is only an excuse, a front. The Mathew Scheme is thus neither genuine nor bona fide but patently fraudulent. I also do not find any substance in the submissions made by Mr. Doctor that the scheme may be submitted to industrial Development Bank of India to find out whether the same is feasible or not. In my opinion, the Mathew Scheme is not at all propounded in good faith and therefore does not deserve such consideration from this Court." With regard to the Poddar Scheme (in that case) the submission was that the scheme was nothing but an attempt to grab the land of the company. To examine the aforesaid submission the whole fact situation was examined by the Court to conclude that the "Poddar Scheme" also lacks the bona fides. It was observed that it is the duty of the Court to be satisfied with all the aspects of the scheme. The burden is entirely on the propounder to remove all doubts and satisfy the Court's conscience that the scheme is not only fair and reasonable but also not contrary to any public interest. It was found as a fact that all the secured creditors had been paid before the filing of the scheme. It was also found that different amounts, some being less than the principal amount and some being more, had already been paid to such creditors before the date of the petition. It was found as a fact that all the secured creditors had been paid before the filing of the scheme. It was also found that different amounts, some being less than the principal amount and some being more, had already been paid to such creditors before the date of the petition. It was thus observed that the propounders of the schemes in that case had not come to Court with clean hands. It was also found that even on the day when the directions were obtained form the Court, which is the stage when Summons were taken out ex parte, no effort was made to inform the Court that in fact implementation of the scheme had already commenced. It is held that it was the duty of the petitioners to have informed the Court as to why, when the scheme was to become effective after sanction by the Court that they had started implementing the scheme. Thus both petitions came to be dismissed. The scheme was not sanctioned. Mr. Thakkar also relied upon Re Hellenic (supra) in support of his submission that the class of creditors was not properly constituted. To this the reply of Mr. Chagla was that Poddar Sales Corporation and Poddar Tyres were two wholly independent Private Limited Companies which had nothing to do with Bedrock. I have carefully examined the facts narrated by both the sides. I am unable to hold that Poddar Sales Corporation has nothing to do with Bedrock. In the pleadings, it is clearly stated that Poddar Sales Corporation is a family concern of Poddars. It is also clearly mentioned that the equitable mortgage of the Goregaon property was created by Bedrock and the central Bank of India had a lien on the accounts of Poddar sales Corporation. It was for this reason that poddar Sales Corporation's credits were appropriated by the Central Bank of India. In my view, the modification sought by the 1996 agreement is not bona fide. Debts were due to the Central Bank of India from Bedrock for a period prior to 1992. Thus the 1993 agreement had been propounded to seek approval of the creditors. No cogent reason is however given as to why the meeting of the secured creditors could not be held till 30th March. 1996 Numerous applications and proceedings were taken out in Court to obtain orders for postponement of the meetings. 18. Thus the 1993 agreement had been propounded to seek approval of the creditors. No cogent reason is however given as to why the meeting of the secured creditors could not be held till 30th March. 1996 Numerous applications and proceedings were taken out in Court to obtain orders for postponement of the meetings. 18. It transpires from the pleadings that on the one hand that Central Bank of India had an equitable mortgage in its favour in respect of the Goregaon property of Bedrock as also lien on the bank accounts of Poddar Sales Corporation. On the other hand it is pleaded that Poddar Sales Corporation is a totally independent Private Limited Company, having no connection with Bedrock. In the suit filed by Central Bank of India, Poddar Sales Corporation was impleaded as defendant No. 8. Thus in terms of the settlement arrived at between the Central Bank of India on the one hand, Bedrock and Poddar Sales Corporation on the other, credit balances of Poddar Sales Corporation were appropriated by the Bank towards the satisfaction of the debt of Bedrock. As a result of the settlement, Suit No. 2856 of 1992 was withdrawn. It is not pleaded as to when the suit was withdrawn. It is also not pleaded as to whether the sum of Rs. 1,02,33,393.85 ps. represents the principal amount due to Central Bank of India or it also includes the interest. It is also not mentioned as to when the liability towards Central Bank of India was discharged by Poddar Sales Corporation. Bedrock, Poddar Sales Corporation and Poddar Tyres Ltd. are variously described as family concerns or firms under the same management. Yet it is sought to be argued that Poddar Sales Corporation and Poddar Tyres Ltd. are independent unsecured creditors of Bedrock. I am unable to accept the submissions of Mr. Chagla. In my view a systematic design has been pursued to pay off the inconvenient creditors like Central Bank of India and other sundry creditors in order to secure an overwhelming majority of unsecured creditors who voted in favour of the 1996 agreement. Inspite of the fact that there was a decree in favour of MSSIDC passed in terms of the consent terms, yet even the said consent decree were not honoured. Under the said consent decree Bedrock was to make a payment of Rs. 1,15,00,000/- (Rupees One crore fifteen lakhs) Rs. Inspite of the fact that there was a decree in favour of MSSIDC passed in terms of the consent terms, yet even the said consent decree were not honoured. Under the said consent decree Bedrock was to make a payment of Rs. 1,15,00,000/- (Rupees One crore fifteen lakhs) Rs. 5 lakhs on or before 15th September, 1995 and Rs. 1,10,00,000/- on or before 30th November, 1994. Rs. 5 lakhs were paid. The sum of Rs. 1,10,00,000/- was not paid as agreed. Instead Bedrock resorted to taking out Notice of Motion being Notice of Motion No. 591 of 1997 for extension of the time granted under the decree. Having failed before the Single Judge, Appeal Lodging No. 187 of 1997 was filed (Appeal No. 693 of 1997): It was only on the directions of the Division Bench that further sums of money were paid. From the aforesaid conduct of Bedrock it becomes apparent that all our efforts have been made to defeat the decree which has been passed in favour of MSSIDC. Further, on the one hand it is asserted that Bedrock entered into an arrangement with Poddar Tyres Ltd. in October, 1995. Yet the list of creditors attached with the 1993 scheme would clearly show that Bedrock was indebted to Poddar Tyres Ltd. in the sum of Rs. 21,24,030.27 ps. Thus it becomes apparent that there were business transactions between Bedrock and Poddar Tyres Ltd. before October, 1995. It is the pleaded case of Bedrock that the modification of the 1993 agreement is sought on the ground that during the pendency of the original application for the sanction of the 1993 scheme certain changes have occurred. It is categorically averred that in the meeting held on 30th March, 1996 at 11.00 a.m. the Central Bank of India being the only secured creditor approved the scheme. Yet in the same breath it is stated that the suit filed by Central Bank of India had been settled and thus they were no longer secured creditors as on 31st March, 1996. If the liability towards Central Bank of India had already been discharged, the question of the Central Bank of India approving the agreement on 31-3-1996 did not arise. If the liability had not been discharged, the question of Poddar Sales Corporation being the unsecured creditors did not arise. If the liability towards Central Bank of India had already been discharged, the question of the Central Bank of India approving the agreement on 31-3-1996 did not arise. If the liability had not been discharged, the question of Poddar Sales Corporation being the unsecured creditors did not arise. Thus in my view the date of discharge of liability of the Central Bank of India by Poddar Sales Corporation has been deliberately withheld from the Court. The averments about the events leading upto the settlement with the Central Bank of India and the withdrawal of Suit No. 2856 of 1992 are to be found in the affidavit in rejoinder filed by Bedrock on 18th December, 1997. It is also stated in paragraph 17 of Company Petition No. 469 of 1997 that Poddar Sales Corporation is the entitlement of the out going shareholders and Directors of Bedrock viz. Santosh Kumar and Vimal Kumar Group. It is also the pleaded case of Bedrock that settlement were reached with some of the unsecured creditors by virtue of which some of the creditors ceased to be creditors of Bedrock as on 31st March, 1996 but no details are given as to what were the amounts paid and to which creditor. Nor is it disclosed as to whether these creditors were paid on the basis of the principal amount due on 31st March, 1993 or on the basis of the principal amount which would be due on 31st March, 1996. It is also not disclosed as to whether or not these creditors have been paid any interest. To my mind gaps have been deliberately left in the material which has been placed before this Court which would enable it to come to the conclusion that the agreement of 1993 and the modification sought is bona fide. Although the shareholding of Bedrock as it exists on 31st March. 1996 has been disclosed, the said information is lacking as to the shareholding prior to the presentation of 1993 agreement. 19. On the basis of the information disclosed in the pleadings it is not possible to hold as to whether the credits as shown in favour of Poddar Tyres Ltd. are bona fide. The pleaded case of Bedrock is that in October, 1995. 19. On the basis of the information disclosed in the pleadings it is not possible to hold as to whether the credits as shown in favour of Poddar Tyres Ltd. are bona fide. The pleaded case of Bedrock is that in October, 1995. Bedrock entered into an exclusive agency agreement to sell the products of Poddar Tyres Ltd. in the Southern and Western States of Gujarat, Karnataka, Madras, Tamil Nadu, Kerala and Andhra Pradesh. It is stated that by virtue of the aforesaid agreement Bedrock sells the products of Poddar Tyres Ltd. and forwards the amount received to Poddar Tyres Ltd. It is also the case that the average outstanding dues of Bedrock to Poddar Tyres Ltd. from October, 1995 has been in the region of Rs. 4 crores. Computing it as on 31st March, 1996 the liability of poddar Tyres Ltd. has been shown. It is stated that as a result of the arrangement with Poddar Tyres Ltd. there are hopes of reviving Bedrock. It is the case of Bedrock that in the arrangement with Poddar Tyres Ltd. the entire invoicing is done in the name of bedrock. The amounts collected on behalf of Poddar Tyres Ltd. is to be returned to the said Company by Bedrock. In this process there is a running credit balance in favour of Poddar Tyres Ltd. in the region of Rs. 4 crores. In my view, the aforesaid stand of Bedrock clearly shows that even the arrangement with Bedrock is only an internal family affair. Bedrock cannot on the one hand claim to be consignment agents and on the other, and claim to be the owners of the goods which rightly belong to Poddar Tyres Ltd. These fact are eloquently set out in paragraph 12 of the affidavit filed on 28th February, 1997 by Arunkumar Poddar in Company Application No. 132 of 1997. For better appreciation of this point of view averment made in paragraph 12 may be reproduced in toto : "12. On the Poddar Family settlement being arrived at in February, 1995, the applicant Company took the initiative and steps to make their presence felt again in the market for sale of tyres and tubes which were earlier marketed under its trade mark. For this purpose, the applicant company recruited diverse personnel for its operations in the Southern India and Western India regions, viz. For this purpose, the applicant company recruited diverse personnel for its operations in the Southern India and Western India regions, viz. the States of Gujarat, Maharashtra, Tamil Nadu, Karnataka, Kerala and A.P. Apart from having a managerial team the work force exceeds 100 employees and the applicant company has 12 branch offices in the aforesaid various States. For the purpose of setting up branch offices the applicant company also took premises in various locations under independent arrangements, like rent/lease. The overhead expenses including the salaries of the applicant company are approximately Rs. 1 crores per annum out of which the salary bill alone would be Rs. 41 lacs approximately per annum. The applicant Company has entered into the arrangement from October, 1995 onwards for sale of the products of Poddar Tyres Limited (another company of the Poddar Family and now under the same management as of the applicant company), (emphasis supplied). In terms of the said agreement the applicant company has given the required security deposit of Rs. 10,00,000/- and has undertaken to sell the products of the said Poddar Tyres Limited on an exclusive basis in the aforesaid States. The entire obligation for sale in the aforesaid States is with the applicant company to the extent that even the invoices raised for sales are that of the applicant company. Sales tax Registrations etc. required for the said purpose have also been obtained from the concerned authorities by the applicant company. (emphasis supplied). As a result, the applicant company earns commission to meet its overheads and salaries and have a turnover of more than Rs. 2 crores per month. As a result of the aforesaid arrangement, the average outstanding dues to the said Poddar Tyres Limited from the time of the arrangement entered into in October, 1995 is in the tune of Rs. 4 crores per month." From a perusal of the above it leaves no manner of doubt that Poddar Tyres Ltd. is only a part and parcel of Bedrock and Poddar Sales Corporation. The aforesaid transactions narrated in paragraph 12 are not reflected in the balance sheets and the statement of accounts which have been attached with the agreement and on the basis of which the Chairman's report has been given. Thus the submission of Mr. Thakkar to the effect that Bedrock is merely a conduct for Poddar Tyres Limited cannot easily be brushed aside. Thus the submission of Mr. Thakkar to the effect that Bedrock is merely a conduct for Poddar Tyres Limited cannot easily be brushed aside. Applying the principles laid down by the Supreme Court in Mafatlal case (supra) (Principle No. 61), I am constrained to hold that the three masks viz. Bedrock. Poddar Sales Corporation and Poddar Tyres Ltd. are three aspects of the same entity. I see no difference between the face behind the mask. I am, therefore unable to agree with Mr. Chagla that the observations made in the case of Re Hellenic (supra) would not be applicable in the fact and circumstances of the present case. In my view Poddar Sales Corporation and Poddar Tyres Ltd. are not bona fide unsecured creditors of Bedrock. I am also of the considered opinion that the meetings have been deliberately delayed and adjourned in order to create a situation where the only substantial unsecured creditor MSSIDC would be rendered helpless. The systematic manner in which Court as well as creditors are sought to be misled is obvious from the fact that even the liability towards MSSIDC has not been correctly depicted. These facts have already been noticed above. In view of the above, I find substance in the submission made by Mr. Thakkar that the scheme has not been put forward bona fide. 20. In the old list of creditors the amount due to MSSIDC were shown at Rs. 75,17,416.35. The amount due to Poddar Tyres Ltd. were shown at Rs. 21,24,030.27. Poddar Sales Corporation was not a creditor at all. In the new list of creditors the amount due to Poddar Tyres Ltd. is shown at Rs. 3,81,67,144.38. The dues of MSSIDC are shown at Rs. 70,17,416.35. This has been done by deducting Rs. 5 lakhs paid on 15th September, 1995 from the principal amount due to MSSIDC. In the warrant of attachment dated 31-1-97 the principal amount due to MSSIDC is shown as Rs. 75,17,416.35. On 31st March 1996 Poddar Sales Corporation are added to the list of unsecured creditors in the sum of Rs. 1,02,33,393.85 ps. From the pleadings of Bedrock and the submissions made by the Counsel it becomes apparent that both Poddar Sales Corporation and Poddar Tyres Ltd. are not bona fide unsecured creditors of Bedrock. These so called creditors have no commonality of interest with MSSIDC. 1,02,33,393.85 ps. From the pleadings of Bedrock and the submissions made by the Counsel it becomes apparent that both Poddar Sales Corporation and Poddar Tyres Ltd. are not bona fide unsecured creditors of Bedrock. These so called creditors have no commonality of interest with MSSIDC. It was for this reason that the meeting of the unsecured creditors were got adjourned from 1993 till 28th April, 1996. It was after securing an agreement from the so called creditors that the Company Application No. 132 of 1997 was filed for seeking modification of the 1993 agreement. From the aforesaid fact it becomes apparent that the acts of Bedrock are not bona fide. I also find substance in the submission of Mr. Thakkar to the effect that the underlying idea of the agreement is to sell the Goregaon property and to profiteer from the proceeds thereof. This motive of Bedrock becomes quite evident from Clause 10 of the 1993 and 1996 agreements which is as follows: "10. The surplus sale proceeds (if any) may thereafter be utilised by the Company as its Board of Directors may decide." 21. Before proceeding any further, it would be apt to notice that Bedrock and Poddar Tyres Ltd. are described as Companies of the Poddar Family under the same management. Thus it becomes apparent that Poddar Tyres Ltd. are unsecured creditors and will also be beneficiaries of the proceeds of the sale of Goregaon Property. It is also a matter of record by now that the Goregaon property has been attached on an application made by MSSIDC. Thus if the property is to be sold at present on "as is where is basis" and on "as is what its basis" the same would be sold through the Court. Thus obviously public auction would be the most appropriate mode of sale of the said property. However, if the property is not under attachment, on the Scheme being sanctioned by this Court the property can be sold by Bedrock and the proceeds can be utilised by Bedrock at the sole discretion of the Board of Directors. Another important fact which would show lack of bona fides of Bedrock is that although the scheme is sought to be sanctioned on the basis of the credit balances due on 31st March, 1996, yet the present value of the Goregaon property has not been disclosed. Another important fact which would show lack of bona fides of Bedrock is that although the scheme is sought to be sanctioned on the basis of the credit balances due on 31st March, 1996, yet the present value of the Goregaon property has not been disclosed. The value disclosed is that which existed in the year 1992. It was incumbent on the petitioner to disclose the value of the property as on 31st March, 1996. An objection to this effect has also been taken by the Joint Director, Department of Company Affairs. The Joint Director further states that in the absence of proper, complete and upto date details in the proposed scheme of compromise/arrangement the scheme evidently is vague, uncertain and could hardly be implemented. 22. Keeping the aforesaid facts in view it would be difficult for this Court to close its eyes to the huge amount of tax evasion that may be involved. In my view, the sanctioning of the scheme would clearly be against the public policy and public interest. Keeping the similar circumstances in view, Justice N.A. Mody (as he then was) in Company Application No. 13 of 1965 in Company Application Nos. 2201 and 2369 of 1957 observed as follows : "The existence of the evil of black money has been recognised by the Government itself by giving inducements for declaring such moneys and by issuing Gold Bonds. No Court and no Judge can afford to sit in an ivory tower and say he knows of no such thing as blackmoney. (emphasis supplied). He must take such a fact into account, of course, in conjunction with all other relevant factors when considering whether an offer should be or should not be accepted. It is my humble opinion that a Court cannot emulate the proverbial attitude of an Ostrich of burying its neck in the sand to avoid seeing the facts, which do exist, in all their naked ugliness nor can it emulate the attitude of any of the three monkeys which has been considered to be wise in normal circumstances in seeing no evil, hearing no evil and if I may make a slight modification in speaking of no evil." 22A. These principles have also been reiterated by the Supreme Court in Mafatlal's case (supra) to the effect that the proposed scheme should only be sanctioned if it is found to be not violative of any provision of law and is not contrary to public policy. For ascertaining the real purpose underlying the scheme the Court can pierce the veil of apparent corporate purpose underlying the scheme and can judiciously X-ray the scheme. Where the Court finds that the scheme is fraudulent and is intended for a purpose other than what it professes to be, it may be rejected even at the outset without calling a meeting of the Creditors. The Court does not function as a rubber stamp or Post Office and it is incumbent upon the Court to be satisfied that the scheme is genuine, bona fide and in the interest of creditors of the Company. 23. All our efforts have been made by Bedrock to defeat the decree in favour of MSSIDC. I am of the considered opinion that the two fold purpose of the 1993 and 1996 agreement is merely to profiteer from the sale of the Goregaon property and at the same time to defeat the rightful claim of MSSIDC. This point of view of mine has been further reinforced when at the time of hearing a draft proposed modification was submitted before this Court by the learned Counsel Mr. Chagla. The draft proposed modification is as under : "(1) Clause 8 of the Scheme (Exh. to the petition) is modified as under : (a) Provided however, that the Company shall pay interest at the rate of % p.a. to MSSIDC Ltd. as under : (i) On Rs. 1,10,00,000/- (Rupees One crore ten lakhs) for the period from 1-12-1996 to 9-7-1997. (ii) On Rs. 60,00,000/- for the period from 9-7-1997 to 3-12-1997." A perusal of the above clearly shows that Bedrock is proposed to pay interest to MSSIDC for a period after 1-3-96. Clearly then, all unsecured creditors are not being treated with an even hand. Bedrock would go to any extent to somehow obtain the sanction of this Court of the agreement and to sell off the Goregaon property to receive the proceeds thereof. The relevant information as noticed earlier has been withheld from this Court. The petitioners, in my view, are clearly guilty of suppressio vari and suggestio falsi. Bedrock would go to any extent to somehow obtain the sanction of this Court of the agreement and to sell off the Goregaon property to receive the proceeds thereof. The relevant information as noticed earlier has been withheld from this Court. The petitioners, in my view, are clearly guilty of suppressio vari and suggestio falsi. It is a settled principle of law that courts of law are meant for imparting justice between the parties. One who comes to Court must come with clean hands. A person whose case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation. Observations to this effect were made by the Supreme Court in the case of (S.P. Chengalvaraya Naidu v. Jagannath)5, A.I.R. 1994 S.C. 853 : 1994 A.I.R. S.C.W. 243 : 1994(1) S.C.C. 1 , wherein Kuldip Singh, J., observed as follows : "7. The High Court in our view fell into patent error. The short question before the High Court was whether in the facts and circumstances of this case Jagannath obtained the preliminary decree by playing fraud on the Court. The High Court, however went haywire and made observations which are wholly perverse. We do not agree with the High Court that "there is no local duty cast upon the plaintiff to come to Court with a true case and prove it by true evidence. The principle of "finality of litigation" cannot be pressed to the extent of such an absurdity that it becomes an engine of fraud in the hands of dishonest litigants. The courts of law are meant for imparting justice between the parties. One who comes to the Court must come with clean hands. We are constrained to say that more offer that not process of the Court is being abused. Property grabbers, tax-evaders, bank loan dodgers and other unscrupulous persons from all walks of life find the Court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood has no right to approach the Court. Property grabbers, tax-evaders, bank loan dodgers and other unscrupulous persons from all walks of life find the Court process a convenient lever to retain the illegal gains indefinitely. We have no hesitation to say that a person whose case is based on falsehood has no right to approach the Court. He can be summarily thrown out at any stage of the litigation." The same principle was recognised earlier in the case of (Rex v. Kensington)6, 1917(1) K.B. 486, wherein Cozens Hardy M.R. observed : "on an ex parte application uberrimae fidei required and unless than/that can be established if there is anything like deception practised on the Court, the Court ought not to go into the merits of the case, but simply say we will not listen to your application because of what you have done." Lord Serutton, L.J., observed : "It has been for many years the rule of the Court and one which it is of the greatest importance to maintain that when any applicant comes to the Court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts, facts not law.... The applicant must state fully and fairly the facts and the penalty by which the Court enforces that obligation is that if it finds out that the facts have been fully and fairly stated to it the Court will set aside any action which it has taken on the faith of the imperfect statement." 11. In (Req v. Garland)7, (1870)39 L.J.Q.B. 86, it has been held : "Where process is ex debito Justice the Court would refuse to exercise its discretion in favour of the applicant where the application is found to be wanting in bona fides." Thus it becomes apparent that a party seeking discretionary relief from the Court must come with clean hands, must not suppress any relevant fact from the Court, must refrain from making misleading statements and from giving incorrect information to the Court. The petitioners in this case have not stated the relevant facts correctly and candidly either in the petition or in the affidavit in support of the petition. This by itself is sufficient to entail an outright dismissal of the petition without going into the merits. The conduct of the petitioner has not been above board. Deliberate efforts have been made by the petitioner to mislead the Court. This by itself is sufficient to entail an outright dismissal of the petition without going into the merits. The conduct of the petitioner has not been above board. Deliberate efforts have been made by the petitioner to mislead the Court. Keeping the aforesaid state of affairs in view, this Court would be justified in taking a very serious view of the matter. However since the petition is liable to be dismissed on merits as well, the Court will refrain from taking such a course. It must however, be reiterated and emphasised that the lenience of the Court cannot be taken for granted for all times to come. This note of caution must necessarily be sounded to all who approach the Court for discretionary relief. 24. Having considered all the facts and circumstances as narrated above, I am of the considered opinion that the submissions made by Mr. Thakkar to the effect that the scheme is not bona fide deserve to be accepted. In view of the above I am unable to approve the scheme. The Company petition as well as the Company application are therefore dismissed with costs. Company petition and application dismissed. *****