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TMI Blog1991 (3) TMI 315X X X X Extracts X X X X X X X X Extracts X X X X ..... miscellaneous scrap, stores items, plant and machinery and excess stock at Rs. 2,00,23,975. After the receipt of the report on August 2, 1989, this court (A.S. Qureshi J.) directed the official liquidator to invite offers for taking over the assets of the company on lease with a view to re-start it and run it on a regular basis so as to generate employment for the workers who have been out of job for several years. At that time, the court took into consideration the fact that, in the interest of the company in liquidation as well as of the creditors and the workers, a party which is ready and willing to take the mill company on leave and licence for re-starting and who is in a position to invest money and is having expertise to re-start may apply. Thereafter, the matter was adjourned from time to time. On October 25, 1989, the offers received were considered and it was decided to give a fresh advertisement for inviting fresh offers with certain modifications, as stated in the said order. After the fresh advertisement, five offers were received by the official liquidator. Out of the five offerers, three offerers had withdrawn their offers. During that time, one of the offerers, Ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... modification indicated in the resolution at annexure 'B' hereto. 28.3 The rest of the statutory creditors, namely, Collector of Central Excise and Customs, Chief Commissioner of Income-tax, Regional Provident Fund Commissioner and Commissioner of Sales Tax did not attend the meetings of the statutory creditors of the company. 28.4 The Ahmedabad Electricity Company Ltd. voted in favour of the scheme subject to what is stated in its letter dated November 26, 1990, at annexure 'D-2' hereto. 28.5 The meeting of the Ahmedabad Municipal Corporation stands adjourned to January 21, 1991, as submitted hereinabove. 28.6 The Government of Gujarat voted in favour of the scheme. 28.7 The unsecured creditors of the company who attended the meeting voted in favour of the scheme. 28.8 The employees of the company who attended the meeting voted in favour of the scheme". Thereafter, this petition is filed for sanctioning the scheme as modified and approved by all concerned. It has been pointed out in the balance-sheet as on April 14, 1986, i.e , the date of winding-up order that the financial liabilities of the company were as under : (Rs. in lakhs) "1.S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny (Rajiv Cotton Traders), Ahmedabad, for revival of Kamla Spinning and Manufacturing Mills Pvt. Ltd., Ahmedabad, from liquidation. 6. The Government is pleased to grant the following concessions : Nature of benefit Extent of benefit Extended to Exemption/payment from the payment of sales tax, purchase tax, sales tax on electricity and electricity duty payable in the State of Gujarat. 90% of the amount of fixed capital emplo-yed for revival of the closed undertaking, i.e , Kamla Spinning and Manufacturing Mills Pvt. Ltd., Ahmedabad ( a ) Kamla Spinning and Manufacturing Mills Pvt. Ltd., Ahmedabad, would be eligible for availing of these incentives at their option for their own activities to the extent of 90% of the investment made by Neptune Trading Co. (Rajiv Cotton Traders), Ahme-dabad, for revival of the closed under-taking or for the purchase of assets of the closed under-taking, i.e , Kamla Spinning and Manu-facturing Mills Pvt. Ltd., Ahmedabad, from the liquidator. Explanation : Fixed capital employed would be defined as follows : "Eligible fixed capital investm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted that as Kamla Spinning Mills was a private limited company, the applicant has already arranged with the shareholders for purchasing all the shares held by the previous management. The next question which would require consideration is whether the scheme is fair and reasonable and propounded in good faith by the applicant. One fact should be taken into consideration that Neptune Trading Company is in business since the year 1940. It is also having more than 350 powerlooms and a process house in the name and style of Neptune Textile Mills Limited and it employs 300 workers. The following are the activities mentioned by the applicant in its affidavit in support of the judge's summons in Company Application No. 218 of 1990 : "7. Neptune Trading Company is also a partnership firm and it was established in the year 1940. The names of the partners of the firm are as under :- (1)Shri Jashvantlal Popatlal Shah. (2)Shri Nareshchandra Popatlal Shah. 7.1. This firm is one of the units of the Neptune group of industries. The necessary details of various units of the group and the group activities are as under : (1)Distribution of yarn annual turnover Rs. 40 crores. (2)Manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be Rs. 3,33,000 shall be paid by the society in monthly instalments of Rs. 27,750 along with the amount of compensation of Rs. 1,11,000 for the period of 12 months. The other conditions provide that Ahmedabad Electricity Company should be directed to supply power without insisting on payment of any past dues and/or any extra cost for connecting the power and that the Government of Gujarat should be directed to give benefits as are given to sick units for a period of five years or up to the extended lease period. With regard to its experience, it has been stated that the society is financially very sound and that it has undertaken the following projects :- ( a )Flower project. ( b )Seeds multiplication and vegetable project. ( c )Deep-sea fishery project. From the aforesaid facts, it is apparent that the applicant society is not having any experience of doing business in textile industry. Having a flower project or a seed multiplication and vegetable project or deep-sea fishery project with the aid of the Government subsidy would not mean that the applicant is having any experience in running the textile mill. Apart from their experience, it seems that their intention to op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant has in challenging the impugned order. All that we are told is that on a microscopic examination of the relevant provisions (sections 391 and 392 of the Companies Act) in the light of the interpretation canvassed by the appellant the learned company judge had no jurisdiction to order substitution of its rival in the place of the appellant (notwithstanding the law laid down by the Supreme Court in S.K. Gupta v. K.P. Jain [1979] 49 Comp. Cas. 342) as sponsor of the scheme to resurrect the company whereby life is being infused into a dead industrial unit and hundreds of workers will get employment, consumers will get more consumer goods and the State will get more revenue. We are not prepared to do it, but our rivals cannot be allowed to do it in view of the hair-splitting technical pleas we have at our command say the appellants. That is the crux of the question. So far as the legal contentions are concerned, we see no substance in the same for reasons we shall presently indicate". The aforesaid observations will apply mutatis mutandis to the contentions, raised in the present case. Apart from the aforesaid aspect, it should be noted that the client of learned advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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