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TMI Blog2004 (11) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... agement with the persons mentioned in the Scheme for revival of the Company in liquidation. An order was passed on the said application by the learned Company Judge on 15th September, 1988, appointing an ad hoc Committee of Management for the purpose of reopening the jute mill and to run the same in terms of the said Scheme. The Official Liquidator was directed to continue in possession of the mill but was also directed not to interfere with the management of the mill by the ad hoc Committee appointed by the Court for the purpose of running the mill. 2. Apart from the above application filed by Shri Raj Kumar Nemani, another application was filed by M/s. Shiva Company for considering another Scheme for revival of the company in liquidation. Having regard to the said two applications, one Mr. M.A. Latiff, Advocate, was appointed as Special Officer for calling a meeting of the unsecured creditors and to place the two schemes for revival of the company in liquidation before the said meeting. Being aggrieved by the order of 15th September, 1988, M/s. Shiva Company preferred an appeal in which an interim order was passed on 22nd September, 1988, replacing the ad hoc Commit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured creditors at the rate of 2 per cent in place of 1 per cent from 1st March, 1993. In default, the Appeal Court was given liberty to consider whether it would be proper to modify the order of stay in the light of any subsequent event. 8. On 17th December, 1993, the Supreme Court directed the Committee of Management to deposit a sum of Rs. 40 lakhs in two instalments and in case of default, the Committee of Management was to be replaced and an appropriate alternative arrangement of management was to be made. 9. On 11th March, 1994, the Supreme Court again indicated that payments to the unsecured creditors would be made at the rate of 2 per cent per month. A further direction was given to the Committee of Management to deposit in this Court a sum of Rs. 8 lakhs each month with effect from the month of April, 1994. The matter was sent back to the learned Company Judge of this Court for the purpose of issuing necessary directions for appropriation and distribution of the said sum of Rs. 40 lakhs in deposit and the sum of Rs. 8 lakhs to be deposited by the Committee of Management each month. The Hon ble Supreme Court also directed the sum of Rs. 40 lakhs deposited by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g payment were intended to be confined to those unsecured creditors as on the date of the winding up order. 14. In the order passed on 23rd December, 1996, the learned Company Judge observed that the various orders passed both by this Court and the Hon ble Supreme Court were in furtherance of the object of reviving the company, if possible. The Scheme of Management was framed and approved accordingly, and the management of the company was vested with a Committee of Management to run the jute mill. All the orders passed after the winding up order was made were in such perspective. It was also indicated that the Scheme of Management made it clear that the unsecured creditors would be those as existing on the date of the winding up order, namely, pre-scheme creditors who would be paid such amounts as were shown against their respective names in the list of unsecured creditors annexed to the company Application No. 63 of 1987 affirmed on 27th April, 1987. It was observed further that the post scheme creditors would be free to take such steps as they may be advised for realisation of their dues. 15. Pursuant to the orders passed by the learned company Judge, the Registrar, Origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he application filed by Laxmi Narayan Taparia. 17. It was also noted in the judgment of the learned Single Judge that C.A. No. 189 of 2002 had been filed by 8 applicants claiming to be various Workers Unions which supported the application of Laxmi Narayan Taparia and contended that the winding up order should be permanently stayed as the jute mill was being run properly and the workers were being given work and were earning their livelihood. All the 8 Unions in one voice prayed that the jute mill should be allowed to be run by those in management. The learned Judge reported that C.A. No. 109 of 2001 and C.A. No. 417 of 2001 had been filed by M/s. Steel Emporium, a post-scheme creditor of the company in liquidation, inter alia, for a direction upon the Official Liquidator to take control and possession of the mill of the company in liquidation and for a further direction to the Official Liquidator to prepare an inventory of all assets and for appropriate steps to be taken for revival of the company either by formulating a fresh scheme or by evolving an alternative mechanism. A prayer was also made to restrain Shri Chaitan Chowdhury (respondent No. 3) and Ridhkaran Rakhecha ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inding up of a foreign company by an order of a Court in India really means the winding up of its business in India since by such winding up order the business of the company outside India cannot be wound up. 23. Mr. Sen submitted that on or about 7th January, 2000, Mr. Nirmal Kumar Jalan resigned from the Committee of Management constituted by the order of the learned Company Judge on 13th December, 1994, on the ground of ill-health and the other members of the Committee allegedly abandoned the management of the Jute Mill. According to Mr. Sen, at the said point of time nobody was in control of the affairs of the Company. Consequently at the request of the workers, who wanted a permanent solution and were interested in ensuring that the jute mill continued to run, the Directors of the company and/or their representatives took over the control, running and management of the jute mill on and from 21st February, 2000, to ensure continuity in the employment of the workers. 24. Mr. Sen submitted that after taking over the running of the jute mill, the then Directors of the Company filed an application before the learned Company Judge, being C.A. No. 248 of 2000, explaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces the Company filed an application, being C.A. No. 191 of 2002, for stay of the winding up order dated 28th October, 1987. 29. Referring to the two applications filed on behalf of M/s. Steel Empo-rium, being C.A. No. 109 of 2001 and C.A. No. 417 of 2000, Mr. Sen submitted that when a positive attempt was being made to revive the jute mill and the present management had paid off a large portion of the dues of the secured and statutory creditors and had succeeded in providing employment to about 4000 workers, a concerted attempt was being made to prevent the present management from continuing to run the mill. Mr. Sen submitted that having failed to run the mill, Mr. Jagniwas Gupta, who was involved with the second Committee of Management and was also behind M/s. Steel Emporium, had wanted the learned company Judge to direct the Official Liquidator to take charge of the assets and properties of the company. Mr. Sen submitted that an alternative prayer had been made for the formulation of a fresh scheme to run the jute mill for obvious reasons. 30. Mr. Sen urged that M/s. Steel Emporium could not hope to establish that any amounts were due to it from Baranagar Jute Factory P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company and prayed that in view of the steps taken to revive the company in relation to its jute mill, the order of winding up was liable to be permanently stayed. 36. Mr. Kar reiterated the fact that ever since the present management had taken control of the affairs of the Jute mill there had been a turn around in the affairs of the Jute mill and not only had the majority of the workers been provided with employment, but positive steps have been taken to pay the dues of the statutory creditors, including the C.E.S.C. Ltd. Mr. Kar reiterated Mr. Sen s submissions that affidavits had been filed in these proceedings on behalf of the statutory creditors stating that their dues had been liquidated and what was most significant was the fact that the workers had unanimously supported the endeavours of the present management to revive the company. 37. Mr. Asok Banerjee, learned Senior Counsel, appearing for Shri Manmall Jain, endorsed the submissions made by Mr. Sen and Mr. Kar and quite frankly submitted that his client s interest lay in the revival of the company. 38. Mr. Bimal Chatterjee, learned Senior counsel, appearing for the various Worker s Unions, submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies and firms were set up by the Jalan and Gupta combine with the sole object of siphoning the funds of the company and at that stage the workers were compelled to approach the present management which took over the running of the mill with the intention of reviving the same. Mr. Chatterjee submitted that all the workers are fully co-operating with the present management and are perfectly satisfied with the way the present management is running the mill. Mr. Chatterjee submitted that the dues of the workers are being regularly paid and their past dues are also being cleared in a phased manner. The secured creditors have also been paid a large part of their dues and there is every chance that in the immediate future the production capacity of the mill will reach its optimum level as even the plant and machinery of the mill have been recently updated by the present management. 41. Mr. Chatterjee submitted that it is in the interest of all concerned that the jute mill should be allowed to function under the present management and the learned Single Judge had erred in directing the Official Liquidator to assume charge of the running mill which was trying to meet and was succe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed its responsibilities without informing the court the present management had as interlopers taken the control of the jute mill with the intention of siphoning out whatever was left in the mill to defeat the claims of genuine creditors who had come to the aid of the Committee of Management in supplying raw materials so that the mill could be run. Mr. Mitra submitted that it is only by selling of the goods, both finished and unfinished, that the present management had made certain payments mainly to the workers in order to win them over and to obtain their support in preventing the Official Liquidator from taking appropriate steps in terms of the winding up order passed as far back as in 1987. 46. Mr. Mitra submitted that the interlopers who had taken over the control of the mill without the sanction of the Court, should not be allowed to continue further with the management of the Company and the Official Liquidator should be allowed to take steps in accordance with law. 47. Mr. Mitra was supported in his submissions by Mr. Bhaskar Sen, learned Senior Counsel, appearing for some of the applicants before the learned Single Judge who had not, however, preferred separate appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout any helmsman at the oar since the Committee of Management appointed by the Court had abdicated its responsibilities without informing the Court and without obtaining the leave of the Court. In fact, the present management appears to have been taken control of the management of the mill at a rather inopportune moment at the request of the workers who would have had no alternative but to face unemployment and starvation. Although, we cannot approve the manner in which the present management has taken control of the mill, we can appreciate the circumstances which compelled them to do so. 52. It is to the credit of the present management that they have apparently succeeded in turning the company around and resurrecting the jute mill. While the workers have jointly supported the achievements of the present management, the statutory creditors have also come out in support of the present management. 53. However, the present management does not have any legitimate status before us which would enable us to allow their prayer for permanent stay of the winding up proceedings. For the said purpose it will have to be examined in some details as to whether the scheme has actually ..... X X X X Extracts X X X X X X X X Extracts X X X X
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