9911796707
TMI Blog1980 (3) TMI 225X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , inter alia , by the petitioner-firm and other creditors and after hearing the parties on 8th August, 1979, the matter was disposed of by me by a judgment and order by which the said two schemes were modified under the terms and conditions set out in the said order. It was observed in the said judgment of mine that the counsel appearing for respondent No. 4, the West Bengal State Textile Corporation Ltd., had agreed that they will pay, out of the profits, to the creditors who are not covered by the said first and second schemes including the statutory creditors. It now appears that the creditors under the said first and second schemes have been fully paid in terms of the said modification directed by the said order dated 8th August, 1979, and the claims of the creditors under the said schemes being the first and second have been satisfied by 15th January, 1980. It is also an admitted fact that the said respondent-company is still a relief undertaking as per the last notification under sections 3 and 4 of the West Bengal Relief Undertakings (Special Provisions) Act, 1972, issued by the State of West Bengal. It is also an admitted fact that the petitioners being the creditors cov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even if the petitioner, who was one of the creditors, admitted by the company in respect of which a scheme application was made under section 391(1), which was approved at the meeting of the creditors, but the company did not apply for sanction of it, being the proposed third scheme, before this court, and, as such it remained suspended, in the first and second schemes which were sanctioned by this court and on modification thereof, the said order dated the 8th August, 1979, can also include the power of the court to deal with any matter relating to any scheme. Mr. Mukherjee also referred to paras. 21-23AIR 1979 SC 734; 49 Comp. Cas. 356 and submitted that the power under section 392 of the Companies Act, 1956, is very wide and by way of modification the court can make any order, if it thinks fit, which relates to a scheme sponsored by the company. Mr. Mukherjee submitted that admittedly the schemes in respect of the claims of the petitioner and other creditors were sponsored by the company and the meetings of the creditors were held pursuant to an order of this court, as hereinbefore stated by the creditors, but subsequently the company chose not to apply for sanction and the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been suspended during the period the respondent-company remains a relief undertaking. Admittedly, the respondent-company is a relief undertaking as the notification is still in force. He submitted and in my view, rightly that claims of price for goods supplied which arise out of contracts for sale, are debts in respect of a contract for sale of goods, and amount to the enforcement of a contract. Therefore, the present application is not maintainable as all proceedings are barred and the petitioner is not entitled to its claim arising out of its contract for sale of goods which remains suspended during the period the respondent-company is a relief undertaking. Secondly, Mr. Kar submitted that it is a social legislation which may cause hardship to certain sections of the public but the whole intention and object of the said Act will appear from the Statement of Objects and Reasons of the said Act which is set out in para. 16 of the said decision in National Iron Steel Co. v. Bank of India, AIR 1978 Cal. 379, at p. 384, from which it is quite clear that there is a moratorium and all the claims arising out of the contract remained suspended for giving effect to the said obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age, when it appears that both the first and second scheme creditors have been duly-paid after the said modification and it has worked out and respondent No. 4, the West Bengal State Textile Corporation Ltd., has financed a large amount for the purpose of re-starting the jute mill and earned profits out of its working, it is too early to grant any relief to any creditor at this stage. The next impediment on my way to give any relief to the petitioner is that the said scheme which was propounded was not sanctioned and, therefore, it cannot come under section 392 of the Companies Act, 1956, as interpreted by the Supreme Court in the said decision in 5. K. Gupta's case [1979] 49 Comp. Cas. 342; AIR 1979 SC 734, 739, para. 13. Further, it cannot be questioned that the petitioners' claim arises out of the contract for sale of goods in respect of which the goods had been supplied but the obligation of the company to pay for the same has not yet been discharged. Therefore, it is still in the realm of contract and cannot be said to have been fully performed and converted into a debt only, de hors the contract. Undoubtedly it is a debt which is admitted by the respondent-company in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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