RAJENDRA PROSAD AGARWALLA Vs. OFFICIAL LIQUIDATOR HIGH COURT

JUDGEMENT

(1.) This appeal arises out of the judgment and order passed by Salil K. Roy Chowdhury, J. on the 13th day of July 1976 in an application by the contributories of Tatanagar Iron Foundry Co. Ltd. (In liquidation) u/s 391 (1), 392 and 393 of the Companies Act for framing of a Scheme and for convening separate meetings of the unsecured creditors and shareholders of the Company. The learned Judge dismissed the said application. It appears that the learned Judge dismissed the said application mainly on two grounds, Firstly, the learned Judge held that on a true construction of Section 391 (1), the said application by the contributories of the Company was not maintainable as the Company was in liquidation. It is the view of the learned Judge that when the Company is in liquidation, an application for sanction of a Scheme can only be made by the Official Liquidator. The second ground of dismissal of the said application by the learned Judge was that the said application was not bonafide and on the merits no proper case has been made out.

(2.) Mr. Mukherjee, learned Counsel appearing in support of this appeal has contended before us that the views expressed by the learned trial Judge are right. He has submitted that on a true construction of Section 391 (1), it cannot be said that if the Company is in liquidation, the Liquidator is the only person competent to make the application and the shareholders and the creditors do not have any right to make any application for sanction of a Scheme. In support of this submission Mr. Mukherjee has drawn our attention to the said Section itself, Rules 67 and 68 of the Companies (Court) Rules 1959 and the prescribed forms under the rules bearing From Nos. 33 and 34. Mr. Mukherjee has also relied on the decision of the Madras High Court in the case of in Re: Travancore National & Quilon Bank Ltd. vs. L. Raghuraja Bharathi & Ors. applicants, A.I.R. 1939 Madras 318, and also on the decision of the Travancore Cochin High Court in the case of Mohammed Abdulla & Ors. vs. Gopala Pillai & Ors. reported in A.I.R. 1952 Travancore Cochin 243. Mr. Mukherjee has also drawn our attention to a passage at p. 398 in the Indian Companies Act, 1913 by Sircar & Sen. The passage relied on by Mr. Mukherjee reads as follows :- The application for the holding of a meeting as contemplated in sub-section (1) may be made, either by the Company or by any member or creditor of the Company. Where the Company is being wound up, the application may be made also by the Official Liquidator.? The material portions of section 391 may be set out : 391. Power to compromise or make arrangements with creditors and members:

(3.) The provisions contained in the Companies (Court) Rules, 1959 in rules 67 and 68 and the forms prescribed under the said Rules also clearly go to indicate that even in the case of a Company in liquidation the contributories and the creditors of the Company are entitled to make an application under Section 391.