GLOSTER LIMITED Vs. FORT GLOSTER INDUSTRIES LIMITED

JUDGEMENT

(1.) NEARLY two decades after the sanction of a scheme of arrangement, the transferee company has come to court complaining of a mistake on the court?s part in the drawn-up order sanctioning the scheme not specifically including a jute mill that it says stood transferred to and vested in it under the scheme. To boot, the applicant claims that it discovered such mistake consequent upon a recent order passed by this court on a request made by it for the constitution of an arbitral tribunal under Section 11 of the Arbitration and Conciliation Act, 1996.

(2.) THE transferor company is equivocal in its stand, but that may have little impact on how the application is decided. A non-party, which was not involved in the scheme and has not been impleaded by the applicant herein, had obtained leave to intervene in the present proceedings by an order made at an earlier stage. However, the order permitting such non-party to participate in the proceedings was not unreserved; it was made without prejudice to the applicant?s contention: the intention of the court at such stage being to postpone a decision on the desirability of the non-party being heard in course of the present application to the final stage. THE scheme of arrangement, sanctioned by an order of May 31, 1993 provided for, inter alia, certain properties of Fort Gloster Industries Limited being parked with Gloster Limited (then known as Gloster Jute Mills Limited). THE property which is relevant for the purpose of the present application is known as the North Mill and is referred to as such herein. At the time that the scheme was sanctioned, or even when the first application to ultimately obtain the sanction of the scheme of arrangement was lodged in court, possession of the North Mill had been made over by Fort Gloster to one Hooghly Mills Company Limited under an agreement for sale and a substantial part of the consideration received by Fort Gloster. THE agreement for sale required certain statutory formalities ? primarily, permission under the Urban Land (Ceiling and Regulation) Act, 1976 - being obtained. It is not in dispute that such formalities were not complied with within any reasonable time of the agreement for sale being executed, though Hooghly Mills is said to have transferred possession of the North Mill and its rights under the agreement for sale to Bowreah Jute Mill Limited. Bowreah Jute had obtained conditional leave to intervene in this application, but at the final hearing it was found that such non-party had no right to come in or be heard in course of these proceedings since, even if this application were to be allowed, its rights would not be compromised as Bowreah Jute would have a chance to have its say if the order allowing this application is made the basis for any future action against it. At any rate, even if this application were to be allowed, Bowreah Jute?s interest, if any, in the North Mill would remain unaffected since its alleged possession thereof and any interest therein does not fall within the ambit of the assessment that the court is called upon to make now. Bowreah Jute has already instituted a suit in this court against, inter alia, Hooghly Mills, Fort Gloster and the applicant herein, seeking specific performance of its agreement with Hooghly Mills.

(3.) IT is necessary that the order dated December 16, 2010 be referred to in some detail to ascertain whether it was permissible for the applicant herein to carry the present application upon its request under Section 11 of the 1996 Act having been dismissed on the premise that the North Mill did not pass to the applicant under the scheme. Such order recorded that it was the applicant?s case that it was a party to the agreement of March 24, 1988; that it invoked the arbitration clause therein by requiring the arbitrator named in the clause to take up the reference; that the named arbitrator refused to take up the matter; that the applicant called upon Hooghly Mills to concur in the appointment of one of the two names suggested by the applicant as the arbitrator; and, that Hooghly Mills? response thereto was that it was not a party to the arbitration agreement asserted by the applicant. The order of December 16, 2010 noted that the refusal of Hooghly Mills to submit to arbitration was more elaborately stated in its affidavit: the moot point urged by Hooghly Mills was that the scheme of demerger did not result in the North Mill being transferred to the applicant; that the schedule of assets accompanying the order sanctioning the scheme did not mention the North Mill or any right relating thereto vesting in the applicant; and, that Hooghly Mills had, in any event, assigned its rights under the agreement of March 24, 1988 in favour of Bowreah Jute on January 12, 2009. The issue that arose for consideration in the order of December 16, 2010 was framed as follows: "The only question in this application is whether the North Mill was transferred to the petitioner."