Report No. 26
1. Presidency Act.-This and the following three clauses1 deal with the topic of composition and schemes of arrangement. The statutory provisions bearing on this subject are sections 28 to 32 of the Presidency Act, and sections 38 to 40 of the Provincial Act. While both these groups of sections contain the same provisions in substance, they differ on the procedure to be adopted for the acceptance of a composition or scheme. Under the Presidency Act, it is the Official Assignee that has in the first instance seisin of the matter, and it is he that has to arrange for a meeting of the creditors. If the conditions laid down in section 28 of the Presidency Act are satisfied, then the matter comes before the court under section 29 of that Act; section 30 of that Act provides for the composition or scheme being accepted by the court, and section 31 for its annulment. Section 32 states the effect in law of the acceptance and approval of a composition or scheme.
Provincial Act.-Under the Provincial Act however, it is the court that has the entire seisin of the matter. It is the court that under section 38 calls for a meeting of creditors and under section 39 makes an order if the requisite conditions are satisfied. The effect in law of a composition or a scheme is also set out in section 39. Section 40 of the Provincial Act provides for annulment of the composition or scheme.
2. The difference in procedure between the two groups of sections is due to the fact, that whereas under the Presidency Act there will be an Official Assignee who can deal with the matter in the first instance, under the Provincial Act there may or may not be an Official Receiver, and the matter has therefore necessarily to go to the Court. As it is proposed to make the appointment of an Official Assignee obligatory2, there is no reason why the provision of the Presidency Act should not be made generally applicable to all the courts.
3. This clause is based on section 28(1) to (4) of the Presidency Act, and section 38(1) to (3) of the Provincial Act.
4. In sub-clause (4), the words "a majority" have been preferred to "the majority" occurring in the Presidency Act. Compare Article 368 of the Constitution.
5. Portion dealing with approval has been placed after the portion dealing with amendment, for the reason that approval is with reference to the proposal as amended.
6. The words "legal practitioner" have been preferred to "pleader".
1. Clauses 34 to 36.
2. See clause 88.