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SUPREME COURT OF INDIA
R.S. Pathak, CJI., S. Natarajan, J.
Sajan K. Varghese - Petitioner
versus
State of Kerala and others - Respondents
Special Leave Petitions (Crl.) Nos. 1127-29 and 1148-49 of 1988
Decided on 15.2.1989
Advocates Appeared
Dr. Chitale, Sr. Advocate and M. N. Sukumaran Nair, Advocate- For the Petitioner.
Krishnamurthy Iyer and Subramanian, Sr. Advocates-For the Respondents.
Held, part of the order of the High Court which pertains to the selection of the 7th respondent as the best suited agency for completing the film and releasing it for exhibition and the acceptance of the terms offered by it, the High Court was influenced by several relevant considerations. We have already referred to the fact that the High Court had earlier afforded ample opportunity to the pal ties to offer a workable solution, which would safeguard the interests of all parties concerned, for completing the picture but eventually the High Court found that inspite of prolonged negotiations and several adjournments no meaningful results could be achieved and that the stalemate continued. It is only thereafter the High Court accepted the suggestion of the advocate for the Receiver and impleaded the 7th respondent as a party and examined the credentials of the 7th respondent and- its suitability for being entrusted with the task of completing the film and releasing the picture so that 1he net collections realised after reimbursing the 7th respondent the amounts invested by it, could be made available for the general body of creditors of the Finance Company. The High Court has ah 0 taken into consideration the fact that Shri M.C. Punnose alias Appachan, owning M/s. Navodaya had produced several films which were box-office hits and which bad won him National and State awards, and that he had all the facilities at his command including equipment and finances for completing the film. It may be that in certain aspect the terms offered by the 7th respondent were higher than the terms offered by Sajan K. Varghese and M/s. Super Films but in the larger perspective of the interests of the general body of creditors of the Finance Company which needs safeguarding the High Court has deemed it fit and proper to accept the terms of the 7th respondent and to entrust it with the task of completing the film and realising the collections. (Para 19)
JUDGMENT
Nataranjan, J. - The four Special Leave Petitions have been filed against a common order passed by the High Court of Kerala in Criminal M. C. Nos. 49/88 and 63/88 filed respectively by the petitioners in the two sets of special leave petitions. Counter affidavits have been filed by respondents Nos. 3 and 4.
For the sake of convenience, we will refer to the petitioner in S. L. P. Nos. 1127-28/88 as again K. Varghese and the petitioner in S.L.P. Nos. 1148-49/88 as M/s. Super Films.
2. Sajan K. Varghese is the Managing Partner of a film producing concern M/s. Saj Productions and also of a Finance Company known as the Oriental Exchange and Finance Company, Kottayam (for short the Finance Company). It would appear that the Finance Company offered very high rates of interest to investors and depositors and this led to a large number of people investing crores of rupees with the Finance Company and in the case of many, their entire savings. Taking advantage of his position as the Managing Partner of M/s. Saj Productions as well as the Finance Company, Sajan K. Varghese began to utilise considerable sums of money from out of the deposits with the Finance. Company for production of films by M/s. Saj Productions. The last film in the production of which Sajan K. Varghese engaged himself is a production-titled as "Kadathanadan Ambadi". The film is said to be based on the life of a legendary hero of Kerala folk lore. The film was produced on a very lavish and extravagant scale and according to Sajan K. Varghese himse1f, he had invested more than 82 lakhs of rupees in the production of the incomplete film. Inspite of such lavish spending only about 90% of the shooting of the film is over and the rest of the shooting has to be completed and thereafter the film has to be edited and colour prints taken for the film to be commercially screened in theatres. It is common ground that a major portion of the investment of 82 lakhs of rupees for shooting the incomplete film was met by utilisation of funds invested by the public in the Finance Company as deposits.
3. Besides the amount taken from the Finance Company, M/s. Saj Productions is also said to have borrowed an amount of Rs. 10 lakhs from M/s. Super Films under an agreement, dated December 12, 1986. As per the agreement M/s. Super Films is to have a charge over the film for the sum of Rs. 10 lakhs advanced by it. There is a further provision in the agreement that should the production of the film be not completed on (i); before 31-3-87, M/s. Super Films will be entitled to take over the negatives and complete the picture.
4. Smooth sailing of operations of the Finance Company came to face rough weather when several advertisements of allegedly questionable nature made by the Finance Company came to the adverse notice of the Monopolies and Restrictive Trade Practices Commission and the Commission passed an order restraining the Finance Company from publishing such advertisements. Thereafter the investments by the public in the Finance Company dwindled and the Company came to face a financial crisis when depositors clamoured for return of their deposited amounts. This lead to a total cessation of activity of the Finance Company. There was public uproar, and some of the depositors filed a police complaint which resulted in a criminal case being registered against Sajan K. Varghese and he was eventually arrested and remanded to custody.
5. Besides the criminal case filed against Sajan K. Varghese, an insolvency petition O.P.No. 10/87, also came to be filed against the Finance Company, Sajan K. Varghese and his parents and brothers in the Court of the Sub ordinate Judge of Kottayam. The Insolvency petition was filed by Shri V. K. Khruvilla the 4th respondent herein. Besides being a creditor himself the 4th respondent is also the President of the Association of the depositors in the Finance Company. It is stated that about 3,500 depositors of the Finance Company have formed themselves i
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