The court considered the financial crisis faced by the Finance Company, the disputed loan transaction, and the interests of the general body of creditors in deciding to hand over the negatives of the film to Shri M.C. Punnose alias Appachan of M/s. Navodaya.

1. 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 3 and 4.

2. For the sake of convenience, we will refer to the petitioner in S.L.P. Nos. 1127-28/88 as Sajan K. Varghese and the petitioner in S.L.P.Nos.1148-49/88 as M/s.Super Film.

3. Sajan K. Varghese is the Managing Partner of a film producing concern M/s.Saj Productions and also 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 himself, he had invested more than 82 lakhs of rupees in the production of the incomplete film. In spite 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.

4. 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 Film under an agreement, dated December 12,1986. As per the agreement M/s.Super Film is to have 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 or before 31-3-1987, M/s.Super Film will be entitled to take over the negatives and complete the. picture.

5. 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 deposit amounts. This led 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.

6. 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 Subordinate Judge of Kottayam. The Insolvency petition was filed by Shri.V.K.Kuruvilla 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 into an Association to safeguard their interests and i