NATHMAL LAL CHAND Vs. BHARAT JUTE MILLS LTD

JUDGEMENT

(1.) This is an application under Section 392(2) of the Companies Act, 1956, for further modification of the first scheme of compromise as sanctioned by the order dated 8th December, 1958, and a second scheme of compromise as sanctioned by the order dated 8th October, 1969, and for a suitable provision to be made for the payment of the dues of all the unsecured creditors of the respondent-company, being Bharat Jute Mills Ltd., by respondent No. 4, West Bengal State Textile Corporation Ltd., to the respondent-trustees, being respondents Nos. 2(a), (b) and (c), and for other consequential reliefs.

(2.) The relevant facts which are admitted for the purpose of this application are, that the company, Bharat Jute Mills Ltd., having its registered office at No. 29, Strand Road, Calcutta, was incorporated in or about 20th Dec. 1934, as a public limited company. The said jute mill was floated by Sri Ala Mohan Das and is one of the very old jute mills in the State of West Bengal. The company ran into financial difficulties and thereafter, in 1958, it proposed a scheme with the then unsecured creditors of the respondent-company and a scheme of compromise was sanctioned by this court on 8th December, 1958, which is hereinafter referred to as the first scheme. Under the said scheme, five persons were selected as trustees on behalf of the creditors and out of which only three being respondents Nos. 2(a), (b) and (c) are the surviving trustees, as the other two trustees resigned. As it appears, the company again suffered huge trading losses for the years 1966-67 and 1967-68, as a result of which the respondent-company proposed another scheme of arrangement between the respondent-company and its unsecured creditors and the said scheme was finally sanctioned by this court on 8th October, 1969, hereinafter referred to as the second scheme. Pursuant to the said two schemes payments were made -but there was a balance payable to the unsecured creditors under the said two schemes. Thereafter, due to further financial difficulties with other unsecured creditors the company made an application for another (third) scheme of compromise and by an order dated 12th September, 1977, under Section 391(1) of the Companies Act, 1956, separate meetings of the unsecured creditor's and the shareholders were directed. Pursuant to the said order, meetings of the unsecured creditors and the shareholders of the respondent-company were held on 15th of October, 1977, at its registered office but the said chairman of the company did not submit any report and the proposed scheme was allowed to be abandoned and not proceeded with by the company.

(3.) As no payment of the first or second scheme could be made in full, one of the creditors under the first scheme made an application before this court and by an order dated the 7th November, 1978, the trustees under the said scheme were directed to take possession of the jute mill and sell the same in terms of the said scheme. The said sale was fixed for 15th June, 1979. In the meantime, the respondent-company approached the Govt. of West Bengal for taking over the management of the jute mill through the West Bengal State Textile Corporation Ltd , respondent No. 4 herein, a Govt. of West Bengal undertaking. Further, to extend protection to the respondent-company, the Govt. of West Bengal in its Closed and Sick Industries Dept. hid considered it expedient in relation to the industrial undertaking that it should be permitted to run, and, further, as by way of providing relief against unemployment and in exercise of the power of the State Govt. under the provisions of the West Bengal Relief Undertakings (Special Provisions) Act, 1972, issued two notifications both dated 7th June, 1979, declaring the industrial undertaking of the respondent-company as a State Industrial Undertaking in the public interest. Further, protection has been extended to it by declaring it a "relief undertaking". Thereafter, on the application of the respondent-company the said sale, which was scheduled to be held on 15th June, 1979, was stayed by an order dated the 14th June, 1979.