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2001 DIGILAW 332 (CAL)

Gouripur Co. Ltd. v. Official Liquidator

2001-06-15

ALOKE CHAKRABARTI

body2001
JUDGMENT 1. This application was filed seeking leave to be granted to the workers of Gouripur Jute Company Limited (in liquidation) through their authorised trade unions to find suitable financier/financiers and management experts to run the mill of the company (in liquidation) using the plant and machinery existing stock, finished goods etc. lying in the mill and for allotting the portion of the assets and properties of the company (in liquidation) including the mill to be allotted and handed over to the workers for running the mill and to grant leave to run the said mill under the supervision and control of the Receiver and Special Officer and not to proceed with sale of the assets. 2. The case made out in the affidavit in support of the applications are that the company (in liquidation) was declared a sick industrial company within the meaning of the Sick Industrial Companies (Special Provision) Act, 1985 (for short SICA 1985) and a reference was pending before the Board for Industrial and Financial Reconstruction (BIFR). Operating agent was appointed in the said reference. BIFR upon considering the report of the operating agency recommended on September 13, 1991, that the company be wound up and the records were forwarded to this Court. The appeal before the Appellate Authority also failed. In the year 1993, Allahabad Bank as a secured creditor instituted a suit against the company and the guarantors claiming a decree for Rs. 26 crores and odd with interest toward recovery of their dues. The suit filed by the Indian Bank against the company was decreed on compromise on May 2, 1994. The suit filed by Allahabad Bank on transfer to Debts Recovery Tribunal was decreed with interest. 3. In the year 1997, two applications for winding up of the company were filed by two creditors. The said applications for winding up were initially admitted and, thereafter, winding up orders were passed on November 26, 1997 and December 10, 1997. Several interested parties expressed their intention to run the mill. An application was also filed before this Court seeking permission to run the mill on ad hoc basis. In fact such permission was granted for sometime by order of the Court but ultimately none of them could run the mill smoothly to the satisfaction of the Court and all concerned parties and further liabilities were accrued. An application was also filed before this Court seeking permission to run the mill on ad hoc basis. In fact such permission was granted for sometime by order of the Court but ultimately none of them could run the mill smoothly to the satisfaction of the Court and all concerned parties and further liabilities were accrued. The matter was ultimately considered by the Appeal Court which ultimately directed the Official Liquidator to take possession or the company and to take necessary steps for sale of the assets by order dated September 5, 1998. The Official Liquidator took possession of the assets and properties of the company in terms of such direction. Referring to the total present liability of the sick company and more than 4000 employees of the company in distress, the present application has been filed seeking leave to run the mill on the conditions staled in the affidavit. 4. Mr. Kapoor, learned Counsel appearing for the workers, has contended that the claim of the workers is more than the value of the assets and properties of the company and, therefore, their demand to give a portion of the properties of the company along with its mill to the workers to enable them to run the mill, cannot be objected to by anybody. It is further contended that the workers' claim stand on a much higher level than the claim of any other creditor as decided by the Apex Court in the case of (1) Allahabad Bank v. Canara Bank reported in 2000 (4) SCC 406 . The learned Counsel also contended that the Company Court reserves its right to deal with the assets and properties of the company so long the winding up proceeding remains pending and specific reference was made to the provisions contained in Clauses (b) and (c) of sub-section (1) of Section 457 of the Companies Act. Reference was also made to the judgment in the case of (2) Workman of Rohtas Industries Ltd v. Rohtas Industries Ltd. reported in 62 Company Cases 872 and (3) National Textile Workers' Union v. P.R. Ramakrishnan reported in AIR 1983 SC 75 . 5. Mr. Reference was also made to the judgment in the case of (2) Workman of Rohtas Industries Ltd v. Rohtas Industries Ltd. reported in 62 Company Cases 872 and (3) National Textile Workers' Union v. P.R. Ramakrishnan reported in AIR 1983 SC 75 . 5. Mr. Joy Saha, learned Counsel appearing for the unsecured creditors on whose application winding up order was passed, contends that the Division Bench Judgment in respect of the present company in A.P.O.T. No. 523 of 1983 dated September 7, 1998 has recorded the findings that such claims are not contemplated under the provision of the Companies Act and, therefore, no such arrangement can be directed by the Company Judge. It is stated that such claims cannot even be considered for acceptance in such proceeding. 6. With regard to the preferential claim over and above the creditors under Sections 529A and 530 of the Companies Act, it is stated, that this aspect requires consideration at the stage of disbursement of the realisation on sale of assets or otherwise and not at the present stage when sale has not taken place nor money belonging to the said company has been recovered by the Official Liquidator. It is stated that even Section 466 referred to over and above Sections 529A and 530 mentioned in the cause title of the present application, does not provide for acceptance of any such scheme. It is further contended that the claim of the workers have not been yet adjudicated relying on the total amount of claim of the workers cannot be considered at this stage. It is also stared by Mr. Saha that the petitioner has not disclosed any documents showing that all the workmen of the company support the present petitioners or are represented by the present petitioner. In this connection, it has been stated that the contentions in another pending application show that at least 105 workmen are not represented by the present petitioners. 7. Mr. Saha, learned Counsel strongly contended that the present applicant does not come forward with any positive scheme nor any application has been filed under the relevant provision of the Companies Act. Requirement of publication of advertisement have also not been complied yet and, therefore, power under the said section relating to scheme cannot also be exercised by this Court in such circumstances. Requirement of publication of advertisement have also not been complied yet and, therefore, power under the said section relating to scheme cannot also be exercised by this Court in such circumstances. Proposal by the present petitioners does not show how the other claims are to be satisfied by the present proposed arrangement. 8. Objections have been also raised by the learned Counsel representing the Indian Bank as also the Provident Fund authorities. 9. After considering the aforesaid contentions, I find that in the judgment of the Division Bench challenging earlier order dated July 2, 1998 allowing similar arrangement for running this very mill by another company which had an agreement with the workmen of the mill dated June 16, 1998, considered the entire matter and set aside the order impugned disapproving such arrangement. Similar facts were involved therein also. Power of the Court to sanction such arrangement and the Court's power under the law was also considered there. 10. The proposal by the present petitioner is not a comprehensive one and neither it indicates the clear scheme for satisfying the claim of the other creditors nor it proposes to secure the assets of the company in the hands of the applicants. 11. The contention of the petitioner that the observations of the Division Bench relating to preferential claim of the workers, does not hold good any further in view of the judgment of the Apex Court in the case of Allahabad Bank v. Canara Bank (supra). With regard to this, I find that even if the claim of workers are to be treated as higher than other creditors, on the basis of an unadjudicated claim of workers, the bifurcation of the assets of the company and its handing over to the workers, cannot be directed. There is no provision in the Companies Act which permits distribution of the assets of the company amongst the creditors. This also goes against the principles of winding up and satisfaction of claim of different creditors proportionately as this proposal does not ensure best possible return. Moreover, the claim of other creditors including the decree-holders secured creditors, cannot be satisfied by the present arrangement. 12. In view of the aforesaid findings, the application is dismissed. Stay prayed for and refused. All parties are to act on a xeroxed signed copy of this judgment on the usual undertaking.