Jagdish Sahai, J. - (1.) This First Appeal From Order under Section 202 of the Indian Companies Act, 1913 (hereinafter referred to as the Act) has been filed, by Srimati Salbha Devi Gupta against the order dated 28th May, 1963, passed by Sri R.N. Misra, District Judge, Varanasi, in Company Case No. 21 of 1954, Messrs Goverdhan Das Badri Prasad v. The Benares Cotton and Silk Mills, (In liquidation) dismissing the appellant's petition filed under Section 153 of the Act read with Sections 173 and 174 of the Act.
(2.) It would contribute to a clear understanding of the questions raised before us if the following facts are mentioned : The Benares Cotton and Silk Mills Ltd. (hereinafter referred to as the Company) came under liquidation under circumstances which need not be enumerated here. An Official Liquidator was appointed and so was a Committee of Inspection. Amongst other eight persons the Committee of Inspection included Sri Jagdish Singh Thapar, the Manager of Messrs Karam Chand Thapar and Bros. (Coal Sales) (hereinafter called Coal Sales), a public limited company which was one of the creditors of the Mills. In connection with the winding-up of the Company, its Mills were leased out to Messrs Ramlal Rajaram. When the lease was due to expire, an attempt was made by M/s. Ramlal Rajaram for the renewal of the lease for a further period of three years on the same terms and conditions on which the Mills had been originally leased out to them. The Committee of Inspection was, however, of the view that it would be in the interest of the share-holders as also all others concerned if instead of the Mills being leased out, the same were sold and resolved accordingly. Under the orders of the District Judge, to whom the case had been, transferred after an order of winding-up was passed by this Court, offers for the purchase of the Mills were invited. On 23rd December, 1960, Messrs. Karam Chand Thapar and Bros. (P) Ltd. (hereinafter called the Thapar Bros.) gave an offer for Rs. 24,00,000/-. Admittedly, The Thapar Bros, were share-holders in the Coal Sales. Some other persons also made offers. On 20th January, 1961, the Committee of Inspection accepted the offer of Thapar Bros, and on the succeeding 23rd the Official Liquidator submitted a report to the District Judge discussing the merits and demerits of each offer received and recommending the acceptance of the offer made by the Thapar Bros. On 28th January, 1961, the District Judge accepted the offer of the Thapar Bros. The operative portion of that order reads as follows: I, accordingly order that the Liquidators shall go ahead with Messrs Karara Chand Thapar and Bros. Ltd. and complete the transaction without delay on the terms and conditions already settled with them so that the Mills may be taken possession of by them as soon as possible." Two appeals were filed in this Court against this order of the District Judge, Varanasi, one by Jyoti Bhushan Gupta, the husband of Srimati Sulbha Devi, the appellant in the instant appeal and another by Gourdhan Das. These two appeals, which were numbered as 73 of 1961 and 183 of 1961 came up for hearing before a Bench consisting of Srivastava and Katju, JJ. who dismissed them by means of the order dated 25th April, 1962. Joti Bhushan then made an application under Article 133 of the Constitution of India to this Court for a certificate that the case was a fit one for appeal to the Supreme Court. That application was rejected. Thereafter, an application under Article 136 of the Constitution was made by Joti Bhushan Gupta in the Supreme Court where an affidavit was filed by Sri J. S. Thapar and another by Sri C.D. Parekh, the Official Liquidator. The Supreme Court, however, refused to grant leave for appeal and rejected the application on 10th October, 1962. Thereafter an application (No. 2150C) was made by Surajmal Nagarmal and Srimati Sulbha Devi who were share-holders in the Company purporting to be under Section 153 read with Sections 173 and 174 of the Act on 23/26th October, 1962. Several other applications were made including application No. 2288-C dated 16-5-1963 on behalf of Sulbha Devi Gupta and Messrs Surajmal Nagarmal. The necessity for making the application No. 2288C by the same parties was occasioned by the order passed by the District Judge, Varanasi, that the scheme given in the first application, i.e., the one dated 23rd/26th October 1962, was vague, In the application dated 16th May, 1963, the following three schemes were given: "Scheme No. 1(a) That the party may pay up to Rs. 21/2 to Rs. 3 lacs per year depending on the inspection of the machinery which will yield not less than 25 lacs and not more than 30 lacs being the lease amount for a period of ten years. The above lease amount may, however, be paid in equal instalments over a period of five years. (b) The proposed lessee may have the right to renew the lease for a further period of five years on the same terms. (c) The lessee will also have the right to bring in new machinery in order to improve the efficiency, which will be taken away by the lessee on the termination of the lease or which may be acquired on mutually agreed terms by the company if the Company so wishes. In this case the responsibility for storage of the machinery not required will be that of the company. (d) The lessee may have the right to effect improvements to the machinery which may be retained for working and will have the right to take away those additions for improvement at the end of the lease or to leave it with the company on mutually agreed terms if the company so desires. (e) The lessee may not mind the continuance of the present occupants of the Bungalows till their terms of office in the district is over. But the, bungalows should not be given to new occupants after they are vacated. The parties cannot assume any responsibility about any claims for damages by third parties, in any case not without knowing the nature and extent of the damages. Scheme No. 3. The party may pay Rs. 25 lacs in three or four instalments with which to pay off all the creditors of the company. No claims of creditors will remain thereafter. The parties may be allowed preference or equity shares of this value in the Company. So far as the existing shareholders are concerned, the Mills may be valued and to the extent of the excess amount of valuation over 25 lacs, the present share-holders may get shares, for example, if the valuation of the assets comes to 40 lacs, then the present share-holders may get shares of the value of Rs. 15 lacs divided pro rata amongst them according to their present holdings. If any share-holder does not want to keep the shares he can exchange the share for cash or alternatively the party may after full inspection, give a valuation for the consideration of the Court or the body of share-holders and creditors. Scheme No. 3. The party on mutually agreed basis pay off the creditors subject to a maximum of Rs. 25 lacs immediately within six months of the date of agreement and so far as the shareholders are concerned arrangements may be made on the basis of scheme No. 2." The learned District Judge held that the scheme No. 1 "is vague and not definite'', and the second one "appears to me a camouflage". With regard to third he found' that it was nothing but a reproduction of scheme No. 2, "with the only modification that a sum of Rs. 25 lacs shall be paid within six months". He also held that Section 153 of the Act was not applicable and the applications could not lie under that provision. With regard to the applicability of Section 174 of the Act, the learned Judge opined that the matter having already been considered by the District Court and the High Court, there was no occasion to reconsider the same. With these findings he dismissed the applications.
(3.) We have heard Mr. Rajeshwari Prasad for the appellant and Sarvasri Jagdish Swarup and Yashodanandan for the respondents.;