Maneck Chowk and Ahmedabad Mfg. Co. Ltd. In re.
Citation: (1970) 2 Comp LJ 300 (Guj)
Facts: Messrs. ludequip Limited had filed this petition under section 391(2) of. the Companies Act, 1956, for sanctioning a scheme of compromise and arrangement between the creditors and members of Maneck chowk & Ahmedabad Manufacturing Company Limited (hereinafter referred to as the company) and the compromise proposed by the company and approved by the creditors and members of the company.
Issue: Determination of Class
Judgement: The court held that when it is shown that a group of persons would constitute a “class” that they have conveyed all interests, and their claims are capable of being ascertained by a common system of valuation. The group who are styled as “class” must have “commonality of interest” and ordinarily be homogeneous and they have been offered identical compromise. This will provide a rationale for determination of the peripheral boundaries of classification.
Further, if there are different groups within a class the interests of which are different from the rest of the class, or which are to be treated differently under the Scheme, such groups must be treated as separate class for the purpose of the scheme. Moreover, when the Company has decided what classes are necessary parties to the scheme, it may happen that one class will consist of a small number of persons who will all be willing to bound by the scheme. In that case it is not the practice to hold a meeting of that class, but to make the class a party to the scheme and to obtain the consent of all its members to be bound. It is however, necessary for at least one class meeting to be held in order to give the Court jurisdiction under the Section.