LexINFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED versus B.P.L. LIMITED
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(2015] 2 S.C.R. 273 INFRASTRUCTURE LEASING & FINANCIAL A SERVICES LIMITED v. B.P.L. LIMITED (Civil Appeal No. 2701 of 2006) JANUARY 09, 2015 [ANIL R. DAVE AND DIPAK MISRA, JJ.] Companies Act, 1956 - s.391 - Compromise between Company and its creditors - Respondent-company proposed a scheme involving its creditors - Application ul B c s 391(1) by respondent-company seeking permission for holding meeting for consideration of approval of the D compromise - Objection to, by one of the creditors (appellant) denying applicability of the scheme on it on the ground that it was not a secured creditor as its status as secured creditor was changed in view of subsequent events including the arbitration award which was passed on E consent; and that in view of Order II r 2 CPC the arbitral award operates as res judicata and hence proceedings before Company Court were barred - Company Judge approved the scheme - In Company appeal, Order of Company Judge was upheld - On appeal to this Court, F held: The appellant-creditor would be bound by the scheme approved by the Company Judge - The appellant-creditor was a secured creditor and its status continued as such - The cause of action before the Arbitral Tribunal and the Company Court were different and hence the consent G award passed by the arbitrator would not operate as res judicata and Or II r2 would not apply - Even in view of the principles engrained u/ss. 176 and 177 of the Contract 273 H 274 SUPREME COURT REPORTS [2015] 2 S.C.R. A Act, proceedings before Company Court cannot be barred holding that the respondent-company waived the hypothecation by accepting the arbitral award - Code of Civil Procedure, 1908 - Or. II r. 2 - Contract Act, 1872 - ss. 176 and 177. B Dismissing the appeal, the Court HELD: 1.1 Sub-Section (1) of Section 391 stipulates that a compromise or arrangement can be proposed between a company or its creditor or any C class of them or between a company and its members or any class of them. It need not be between all the creditors or all the members. Contextually, "class of creditors" or "class of members" has a different meaning and connotation. It gains significance when D the question of approval of scheme under the Act arises for consideration. While dealing with the approval of a scheme, the Company Court is required to direct holding of meeting of the said class of creditors or members concerned and only when the scheme is E approved by the majority in number representing 3/4th in value by the class of creditors, or members present either in person or through proxy, the same becomes binding on the said class of creditors or members. Once there is a voting and the 3141h majority has voted F in favour of the scheme, it is binding on those who have dissented and had voted against the scheme or those who remained silent. [Para 19] [294-F-H; 295-A- B] G Miheer H. Mafatlal v. Mafatlal Industries Ltd. 1996 (6) Suppl. SCR 1 = (1997) 1 SCC 579 - relied on. Employees' Union v. Hindustan Lever Ltd 1994 (4) Suppl. SCR 723 = (1995) Supp (1) SCC 499 • referred H to. INFRASTRUCTURE LEASING & FIN. SERVICES LTD. 275 v. B.P.L. LTD. Alabama, New Orleans, Texas and Pacific Junction A Rly. Co. Re (1891) 1 Ch 213; Anglo-Continental Supply Co. Ltd. Re (1922) 2 Ch 723 - referred to. 1.2 The purpose of the classification of creditors has its significance. It is with this object that when a B class has to be restricted, the principle has to be founded on homogeneity and commonality of interest. It is to be seen that dissimilar classes with conflicting interest are not put in one compartment to avoid any kind of injustice. For example, an unsecured creditor who has C filed a suit and obtained a decree would not become a secured creditor. He has to be put in the same class as other unsecured creditors. (Para 26] [304-0-E] Sovereign Life Assurance Co. Ltd. v. Dodd 1892 (2) Q.B. 573 CA- referred to. D 2. For Order II Rule 2 CPC to apply, the cause of action in the cases should be similar and the bar of constructive res judicata would not be applicable. The consent award in an arbitral proceeding would not bar E a suit for enforcement of the charge and it would not be hit by Order II, Rule 2 CPC. In the present case, the issue before the Company Court was quite different than that was before the Arbitral Tribunal. True it is, it has the status of a decree which is executable, as a F decre
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