Law:

Section:

(a) Companies Ordinance (XLVII of 1984)---Ss. 284, 285, 286 & 287---Compromises, arrangements and reconstruction of companies---Power of court to enforce compromises and scheme of arrangements between companies under the Companies Ordinance, 1984---Provisions for facilitating reconstruction and amalgamation of companies---Sanction of the Court for such schemes of arrangements ---Jurisdiction of the Court under Ss.284, 285, 286 & 287 Companies Ordinance, 1984---Nature scope and limits, explained. Under sections 284' and 287 of the Companies Ordinance, 1984 the Court has to only ensure that the Scheme is made in good faith, is fair and reasonable, has commercial viability and is not adverse to the interest of the creditors or members or in any manner against the public interest. The Court is not to substitute its over the collective commercial wisdom of the members or the creditors but is to actually supervise the Scheme in general so that it doesn't offend the parameters prescribed. It is the commercial wisdom of the parties to the Scheme who have taken an informed decision about the usefulness and propriety of the Scheme by supporting it by the requisite majority vote that has to be kept in view by the Court. The Court certainly would not act as a Court of Appeal and sit in over the informed view of the concerned parties to the compromise, as the same would be in the realm of corporate and commercial wisdom of the concerned parties. The Court has neither the expertise nor the jurisdiction to delve deep into the commercial wisdom exercised by the creditors and members of the company who have ratified the Scheme by the requisite majority. Consequently the Company Court's jurisdiction to that extent is peripheral and supervisory and not appellate. The Court acts like an umpire in a game of cricket who has to see that both the teams play their game according to the rules and do not overstep the limits; and subject to that how best the game is to be played is left to the players and not to the umpire. If the Scheme as a whole is fair and reasonable, it is the duty of the Court not to launch an investigation upon the commercial merits or demerits of the case,…

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