S. K. GUPTA & ANR. versus K. P. JAIN & ANR.

S. K. GUPTA & ANR. versus K. P. JAIN & ANR.

The substitution of a sponsor in a scheme of compromise or arrangement is a modification within the meaning of Section 392 as defined by Section 2(29) of the Companies Act, 1956; locus standi under Section 392 extends to any person interested in the affairs of the company, including appellants with assigned shareholding and debt; the court has the power to grant substitution without reference back to creditors if satisfied as to bona fides and fitness of the applicant.

Parties
Appellants: S. K. Gupta & Anr.; Respondents: K. P. Jain & Anr.; Respondent No. 2: Pramod Dayal and S. K. Gupta; Intervener: Dena Bank
Jurisdiction
India
Judgment Date
30 January 1979
Procedural Posture
Civil Appeal / Appeal by Special Leave From the Delhi High Court Division Bench Judgment
Outcome
Appeal allowed; Division Bench judgment set aside, Company Judge's order restored with costs.
Legal Topics
Scheme of Compromise and Arrangement, Modification of Scheme, Companies Act, 1956 Section 391, 1956 Section 392, Locus Standi Under Section 392
Company Law Scheme of Compromise and Arrangement Modification of Scheme Companies Act, 1956 Section 391 Companies Act, 1956 Section 392 Locus Standi Under Section 392

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Parties

S. K. Gupta & Anr.

Appellants

K. P. Jain & Anr.

Respondents

Pramod Dayal and S. K. Gupta

Respondent No. 2

Dena Bank

Intervener

Procedural Posture

Civil Appeal / Appeal by Special Leave From the Delhi High Court Division Bench Judgment

Legal Issues

  1. 1 Whether substitution of sponsor in a court-sanctioned scheme is a permissible modification under Section 392 of the Companies Act, 1956
  2. 2 Scope of locus standi for applications under Section 392
  3. 3 Meaning of 'modification' under Section 392

Ratio Decidendi

The substitution of a sponsor in a scheme of compromise or arrangement is a modification within the meaning of Section 392 as defined by Section 2(29) of the Companies Act, 1956; locus standi under Section 392 extends to any person interested in the affairs of the company, including appellants with assigned shareholding and debt; the court has the power to grant substitution without reference back to creditors if satisfied as to bona fides and fitness of the applicant.

Court Disposition

Appeal allowed; Division Bench judgment set aside, Company Judge's order restored with costs.

Orders

  • Judgment of Division Bench dated 16-7-1976 in Company Appeal No. 15/76 set aside.
  • Order of Company Judge dated 26-4-1976 in Company Application No. 193/76 restored with costs throughout.