Advocates:
B.MOHAN, H.K.PURI, K.H.BHATT, K.R.Khaitan, P.R.MRIDUL, PRAMOD DAYAL, PRAVIN KUMAR, R.L.Roshan, R.M.Gupta, S.K.Gupta, Vijai K.Bahl, Y.S.Chitale

What is the scope of the High Court's power under Section 392 to modify or substitute sponsors in a sanctioned scheme of compromise/arrangement? How to determine locus standi of a non-member, non-creditor to move under Section 392 for modification or substitution of the scheme? What is the correct interpretation of the term "modify" and "modification" in Section 392 in light of the definition in Section 2(29) of the Companies Act?

Key Points: - The Court held that Section 392 confers wide, ongoing supervisory and modifying power to ensure proper working of a sanctioned scheme, including substitution of sponsors when fit (!) (!) (!) . - The appellants were found to have locus standi under Section 392(1) as "any person interested in the affairs of the company," not limited to members or creditors (!) (!) . - The definition in Section 2(29) (modify/modification include additions and omissions) governs the interpretation of Section 392, allowing additions/omissions to the scheme to make it workable (!) (!) . - The High Court’s view restricting modification to a minor change was rejected; substitution of a sponsor is within the meaning of "modification" for proper working of the scheme (!) (!) (!) . - The Division Bench’s rejection of substitution was overruled; substitution/modification in favor of appellants was allowed, restoring the Company Judge’s order (!) . - The Court affirmed the principle that the sponsor’s substitution is permissible where the sponsor is fit, competent, and capable of implementing the scheme, with the Court’s supervision (!) (!) . - The process may involve publishing notices and assessing bona fides, but lack of objections does not preclude substitution if warranted (!) . - Section 392(2) enables winding up if the sanctioned scheme cannot be satisfactorily worked with or without modifications, but the Court emphasized preserving life of the sick unit where possible (!) (!) . - The decision contrasts with UK practice, highlighting India’s broad court powers under Section 392 to ensure successful implementation (!) . - The judgment ultimately sets aside the Division Bench decision and restores the Company Judge’s order granting substitution/modification, with costs (!) .

What is the scope of the High Court's power under Section 392 to modify or substitute sponsors in a sanctioned scheme of compromise/arrangement?

How to determine locus standi of a non-member, non-creditor to move under Section 392 for modification or substitution of the scheme?

What is the correct interpretation of the term "modify" and "modification" in Section 392 in light of the definition in Section 2(29) of the Companies Act?