N.P.V. RAMASWAMY UDAYAR ETC. versus ALL LNDIA SUBSCRLBER ASSOCIATION AND OTHERS ETC.

Citation: [1993] 3 S.C.R. 903 · Decided: 14-05-1993 · Supreme Court of India · Bench: R.M. SAHAI · Disposal: Disposed off
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Judgment (excerpt)

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N.P.V. RAMASWAl\IY UDA YAR ETC. 
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v. 
ALL lNDIA SUHSCRlBER ASSOCIATION AND OTHERS ETC. 
MAY 14, 1993 
[R.M. SAHAIAND N. VENKATACHALA,.J.J,J 
JJ 
Companies Ac1, 1956 : Ss. 391, .:/33, ./3./ . ././3-Su/Jsidiary company 
cond11c1ing chi1s-Defa11/1 in pay111ent 10 subscribers-\ Finding up order by High 
Co11rt-Revival e.ffort and 111ulerwking of liability 10 pay credi1ors l>y Holding 
Company-Compromise and arrange111en1 approved b:r High Co11rt-Winding 11p 
order held in aheya11ce-Permissio11.fi1r sale of land /Jy Holding Compt111Y to pay 
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Creditvrs-Oifer by intlivid11a/-Cu11111er c~[fer by Creditors associa1io11-High 
Court's order for sale i11 favo11r cf creditors assucia1iu11-Appea/s /Jy Holding 
Company anti 01//er bidder-Directions by S11pre111e Co11rt protecting creditor's 
in1erests. 
A subsidiary company ofthc appellant-holding com pan~· (C.A. No. 2866 
of 1993) di\'crtcd to the appellant rupees ten crores received b~· it by way of 
chit subscriptions. It foikd t•• pay the subscribers the prize money. When 
some of'thc subscribers inili',;tnl winding up proceedings against the subsid-
iary compan~· the appellant appeared before the High Court and undertook 
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the liability of'the subsidiaQ· company to an extentofa sum of Rs 10.40 Crorcs 
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to the subscribers. The High Court appro\'ed the scheme of compromise and 
arrangcri1cnt under s. 391 of' the Companies Act and directed the winding up 
order to he held in abe~·ancc on the condition that the appellant-holding 
compan~· would pay otl'thc amount of' Rs. 10.40 Crores to the subscribers, 
within fi\'C ~·cars. It also rcsti·ictcd alienation of any propcrt~· by the holding 
compan~· without obtaining prior permission of the Court. E\'en ten ~·cars 
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after the order of the High Court, more than one third of the subscribers 
remained unpaid. 
l\lcanwhilc the appellant company took steps to sell 20.79 acres of land 
to pay the Creditors. The appellant in C.A.No. 2863-65 of'1973 made an offer 
where as the respondent-creditors' association made a counter ofl'er. 
The High Court accepted the offer of' Creditors' association. Hence the 
appeals b~· special leave. 
Disposing of' the appeals, this Court gave the following 
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904 
SUPRE.\IE COURT REPORTS 
(1993] 3 S.C.R. 
Directions : ] . The holding compan~· shall deposit with the oflicial 
Receiver or Assignee concerned a sum equh·alent to the deposited sum on 
which the High Court had directed sale deed to he executed in favour of the 
creditors association together with 25% interest minus the interest, if any 
earned hy the deposit, made, calculated on the deposited amount, from the 
date of' deposit till 31st July, 1993, within a period of three months. 
2. Out of the amount mentioned in condition (1) above, a sum ~quivalent 
to the amount deposited b~· creditors Association, together with interest at 
25'7c thereon from the date of deposit upto 31st July, 1993 shall be refunded 
to the creditors association in lieu of their claim for the disputed land being 
gh·cn up. The balance amount shall remain for the benefit of general bod~· of 
creditors of the subsidiar~· company. 
3. The holding company shall pa~· through the receiver the entire 
out.;tanding debts pa~·ablc to the subscribers who were members of the 
creditors association on the date when their claim applications were decided 
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b)· the High Court, together with interest thereon at 12 per cent from the date 
of decision till 31st Jul~-, 1993. 
4. In case the above terms and conditions arc complied with, within the 
period allowed then the disputed land offered for sale b)· the holding company 
and purchased h~· creditors' associations shall stand released in holding 
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compan)"s favour. If such deposit., arc not made, the sale in favour of 
creditors compan)· shall stand confirmed 
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5 In l'icw of the offer made b)· the appellant in Appeals No. 2863-65 of 
1993, the land on its release shall he sold, for a price not less than five lakhs 
per acre. The amount so realised shall also he deposited of the holding 
company with the rcceh·er for distribution among general bod)· of creditors 
of the suhsidiar~· company. 
6.1. The receh·er shall further take steps to sec that the holding compan~· 
fulfils it..; obligations and pa)'S the entire balance within a period of' one year 
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from 31st August, 1993. 
6.2. In case of failure to clear the dues of all the subscribers it shall he 
open to an~· unpaid subscriber to approach the Hig
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