Intonations as to Compromise or Arrangement [Section 393]

Section 393 lays down the following rules regarding providing of information to the

affected persons under a scheme of compromise or arrangement:

1. Where a meeting of the creditors (or any class of creditors), or of members (or any class of members) js called under Section 391, the notice calling the meeting must be accompanied by a statement setting forth the terms of compromise or arrangement and explaining its effect. The statement must, in particular, state any material interest of the diredors, Managing Director or Manager and every trustee of debenture holders of the company, whether in their capacity as such or as members or creditors of the company or otherwise.

2. In case notice calling the meeting is given by advertisement, there must be included either such a statement as aforesaid or a notification of the place t

which and the manner in which creditors or members entitled to attend the meeting may obtain copies of such a statement as aforesaid. Such copies must be furnished by the company free of charge.

3. If default is made in complying with any of the above requirements, the company and every officer of the company who is in default, shall be punishable with fine, which may extend to Rs. 50,000”. The company and its officers can avoid liability if it can be proved that the default in sending the notice and the statement was caused by the refusal of a person responsible to supply the necessary particulars as to his material interests.