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TMI Blog2012 (9) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... viving Shri Amruta Mills Ltd., a company in liquidation. 2. The attendant facts are that Shri Amruta Mills Ltd. came to be wound up by order dated 22.11.1991 of this Court in Company Petition No.72 of 1991. The Official Liquidator attached to the High Court was appointed as liquidator under the provisions of Companies Act, 1956. He thereafter caused a sale of movable properties and assets of the company by way of public auction, which realized approximately Rs. 4.13 crores. It is stated that what has now remained with the Official Liquidator are mainly the freehold and leasehold land admeasuring 1,22,742 sq. mtrs. whereon the unit of the company was situated, and also cash and bank balance with the Official Liquidator, as well as unrealized investments/dues of the company, if any. Because of the winding up of the company, about 3200 employees became jobless. It is given out that most of the land of the company in liquidation is leasehold land. 2.1 One of the lessor-landlord in the meantime filed an application before this Court seeking direction against the Official Liquidator to handover the land, which was dismissed by this Court on 23.10.2008. Against that order, a Special Lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has projected itself to be the sponsor for the revival of Shri Amruta Mills. 3.2 Appellants' case as set forth in the memo of appeal is that majority of creditors want to convene a meeting for revival of the company. It is their case that they want to convene such meeting with a view to implement the directions of the Hon'ble Supreme Court in true spirit. It is further their case that the proposed revival is to 'protect the interest of huge labour force, generate fresh employment, apply the assets of the Company to productive use', and for that purpose the present appellants-some of the erstwhile directors/shareholders of the company along with a co-sponsor i.e. respondent No.5 Dharnidhar Cotex have come together by way of presenting a scheme of revival of the company. According to the appellants, appellant No.5 would infuse funds necessary for revival. It is claimed that upon revival of the company, not only the dues of the creditors of all classes would be paid but the dues of workers would be settled. In the revival Scheme, in addition to textile unit, formation of new Information Technology division and logistic division is also contemplated, by the appellants. 4. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion to Chenbra Orchard Produce Ltd. v. Regional Director of Company Affairs (AIR 2009 SC 1278) for the proposition that an application seeking direction to convene a meeting to consider a Scheme of amalgamation (in that case) is required to be heard and decided ex-parte and that there is a clear dichotomy between the threshold stage of issuance of directions to convene a meeting which is different from the subsequent stage. Decision of learned Company Judge of this Court in Kotak Mahindra Bank Ltd. v. Balaram Cements Ltd {[2008] 146 Comp Cas 1 (Guj)} and in Essar Oil Limited v. State of Gujarat [2005 (0) GLHEL-HC 214313] were relied for reiterating the submission that at the stage of meeting, the objections in respect of proposed Scheme are not required to be considered and the Court would not go into the merits of the Scheme. A decision by learned Company Judge of this Court in Gujarat Kamdar Sahkari Mandli Ltd. v. The Ahmedabad Shree Ramkrishna Mills Company Ltd. [1995 (2) GLR 1619] was next relied on to submit that section 391 of the Companies Act, 1956 gives widest discretion to the court to approve any sort of arrangement and/or Scheme and that ordinarily and practicably the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the list of the directors produced by the appellants, one of the directors is appellant No.1, and as per learned senior counsel for the appellant, the date of incorporation of appellant No.5 company was not available, he fairly submitted that its existence is only recently. 5.1 The order dated 04.08.2011 passed by this Court in the present proceedings, which is extracted herein, deserves attention. "Mr. Choksi for M/s. Nanavati Associates, learned counsel for the appellants, states that the appellants are unable to deposit the amount of Rs. 60 crores with this Court so as to show the genuineness of the offer made for financial viability to pay up all the debts, which is stated to be approximately the debts of the company, including the workers' claim and he further states that time is required to address on merits of the matter. Hence, S.O. to 09.08.2011." 5.2 Another relevant factual aspect requiring mention is that the land which is subject matter of present appeal and in respect of which Official Liquidator submitted its report before learned Company Judge, does not include the leasehold land and the present subject matter is separate also from the subject matter o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount payable towards the dues of workers has been specifically earmarked and the association of workers namely the Textile Labour Association filed affidavit guaranteed the scheme for arrangement and compromise. Having taken notice of the facts of that matter it is found that they do not conform to the facts involved in this case. 6. In the conspectus of above facts and considering the submissions by the respective parties, what emerges, is that it is after a span of 20 years that the appellants have proposed a revival Scheme. Shri Amruta Mills went in liquidation in November 1991. Thereupon, its movable assets were sold. At that time nobody including the present appellants No.1 to 4, raised any objection. It further appears that the sale of immovable properties was finalized after negotiations amongst the representatives of the lead secured creditor IFCI Bank, the Official Liquidator and other members and valuation report was called for. The move on part of the appellants to call the meeting projecting a revival Scheme is being smacked by the opposing parties to be the attempt to thwart the process of sale of land. 6.1 As is rightly emphasized by learned Company Judge that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration why the sale of land should be effected so as to fetch maximum price and thereby to unburden the liabilities of the company in liquidation. 6.4 Having regard to the above circumstances, the bonafides in moving a revival proposal are too far to seek. Without going into the merits of the revival Scheme, on primary considerations it fails to inspire confidence and desirability of it. Even at the stage of considering application under section 391 for convening of meeting the court is not prevented from taking a prima facie overview of the worthiness of the scheme and accordingly, answer the question regarding acceptability of a request to convene a meeting. Given the context of such rationale, learned company Judge appropriately observed that it is to be borne in mind that parameters laid down in the case of Mihir H. Mafatlal v. Mafatlal Industries Limited [(1997) 1 SCC 579] and reiterated by the Apex Court in Sesa Industries Limited v. Krishna H. Bajaj [(2011) 3 SCC 218] prima facie need to be kept in view even while considering the application for convening a meeting of shareholders and other stakeholders for revival of the company in liquidation after 20 years. 6.5 Thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be accepted or not. There is no conflict in applying both the provisions and in harmoniously construing them and in finding that while the court will not sit in appeal over the commercial wisdom of the shareholders of a company, it will certainly consider whether there is a genuine attempt to revive the company that has gone into liquidation and whether such revival is in public interest and conforms to commercial morality." 6.8 In Gujarat Kamdhar Sahakari Mandali (supra), relied on by learned counsel for the appellants, the criteria applied was the interest of workers and the court was inclined to consider the revival proposal which was at the instance of workers themselves. It was observed by the court that the company in that case would be revived and thereby the workers participation in the management would be ensured. 7. The observations in Gujarat Kamdar Sahkari Mandali (supra) that "In fact balancing of views and adverse interests is the function which the court shall have to perform." is the real test to be applied. It may be true that while considering the application under section 391 of the Act for permission to convene a meeting, the court would normally be inclined ..... X X X X Extracts X X X X X X X X Extracts X X X X
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