Exercise of discretion by the Court.

V. RAMASWAMI J.

O. S. A. No. 73 of 1985 has been filed against the order in Company Application No. 56 of 1985 dated March 29, 1985, in which the learned single judge directed the convening of three meetings (1) of the shareholders, (2) of unsecured creditors and (3) of preferential creditors on an application filed by one of the contributories under section 391 of the Companies Act. The other two appeals, OSA Nos. 120 and 121 of 1985, have been filed against the order in Company Applications Nos. 261 and 305 of 1985. Those two applications were filed by the lessee of the company, one praying for sale of the mill and the other for a direction to the official liquidator to continue the lease in his favour until further orders in the application filed for sale of the mill as a running unit. Both these applications were dismissed on the ground that Application No. 56 of 1985 filed by the contributory for a direction to call for a meeting has been ordered. Palani Sri Murugan Textiles Ltd., a company incorporated under the Companies Act, was ordered to be wound up by an order dated November 14, 1969, on a petition filed by a creditor on the ground that the company was unable to pay its creditors. The authorised capital of the company is Rs. 25, 00, 000. The issued, subscribed and paid up capital of the company is Rs. 6, 19, 100 inclusive of arrears of call money amounting to Rs. 24, 000 consisting of 12, 862 equity shares of Rs. 50 each. The first respondent is a contributory holding 100 shares of Rs. 50 each. He was one of the directors of the company before the order of winding up was made. Pending the winding up and in the winding up proceedings, the appellant took the company on lease on "as is where is" condition. The first lease was granted for a period of 5 years with effect from January 1, 1972. The lease was extended for a further period of 5 years in Company Application No. 427 of 1976 and later for a further period of 3 years. The lease period ended on March 31, 1985. However, since these applications could not be disposed of, the lease was further extended during the pendency of these proceedings.In the affidavit filed in support of the application for a direction to call for the meeting of the shareholders, secured creditors and unsecured creditors, it was stated that the preferential creditors had been paid in full and a dividend of 25% has been declared and paid to all the other ordinary creditors and that the dues to the Director of Handlooms, who is in the nature of a secured creditor, amounting to Rs. 4 lakhs as also the other creditors, can be paid from the amount with the official liquidator and the lease money and that, therefore, the company should be permitted to revive and the order of liquidation should be permanently kept under suspension. In that view, he proposed a scheme for the revival of the company and for that purpose he wanted to call for a meeting of the shareholders and creditors. The scheme or settlement proposed by the first respondent read as follows :

"(1) All creditors of the company who have proved their claim before the official liquidator and whose names are included in the list of creditors settled by the official liquidator as on the date of the scheme will be paid off in the manner set out hereunder ;

(a) 50% of the amount outstanding to the creditors as per the list of creditors settled by the official liquidator will be paid to them within three months from the date of approval of the scheme by the High Court, Madras.

(b) The balance 50% of such amount will be paid within 12 months from the date of payment of the first instalment together with interest at the rate of 12% per annum from the date of payment of the first instalment.

(2) All the permanent workers of the lessee, actually working in the leased mills belonging to the company in liquidation will be offered employment by the company in liquidation on the terms and conditions not in so (sic) favourable to those obtainin