A.N.Sen, J. - (1.) This appeal arises out of the judgment and order passed by Salil K. Roy Chowdhury, J. on the 13th day of July 1976 in an application by the contributories of Tatanagar Iron Foundry Co. Ltd. (In liquidation) u/s 391 (1), 392 and 393 of the Companies Act for framing of a Scheme and for convening separate meetings of the unsecured creditors and shareholders of the Company. The learned Judge dismissed the said application. It appears that the learned Judge dismissed the said application mainly on two grounds, Firstly, the learned Judge held that on a true construction of Section 391 (1), the said application by the contributories of the Company was not maintainable as the Company was in liquidation. It is the view of the learned Judge that when the Company is in liquidation, an application for sanction of a Scheme can only be made by the Official Liquidator. The second ground of dismissal of the said application by the learned Judge was that the said application was not bonafide and on the merits no proper case has been made out.
(2.) Mr. Mukherjee, learned Counsel appearing in support of this appeal has contended before us that the views expressed by the learned trial Judge are right. He has submitted that on a true construction of Section 391 (1), it cannot be said that if the Company is in liquidation, the Liquidator is the only person competent to make the application and the shareholders and the creditors do not have any right to make any application for sanction of a Scheme. In support of this submission Mr. Mukherjee has drawn our attention to the said Section itself, Rules 67 and 68 of the Companies (Court) Rules 1959 and the prescribed forms under the rules bearing From Nos. 33 and 34. Mr. Mukherjee has also relied on the decision of the Madras High Court in the case of in Re: Travancore National & Quilon Bank Ltd. vs. L. Raghuraja Bharathi & Ors. applicants, A.I.R. 1939 Madras 318, and also on the decision of the Travancore Cochin High Court in the case of Mohammed Abdulla & Ors. vs. Gopala Pillai & Ors. reported in A.I.R. 1952 Travancore Cochin 243. Mr. Mukherjee has also drawn our attention to a passage at p. 398 in the Indian Companies Act, 1913 by Sircar & Sen. The passage relied on by Mr. Mukherjee reads as follows :- The application for the holding of a meeting as contemplated in sub-section (1) may be made, either by the Company or by any member or creditor of the Company. Where the Company is being wound up, the application may be made also by the Official Liquidator.? The material portions of section 391 may be set out : 391. Power to compromise or make arrangements with creditors and members: (1) Where a compromise or arrangement is proposed - (a) between a Company and its creditors or any class of them; or (b) between a Company and its members or any class of them; The Court may, on the application of the Company or of any creditor or member of the Company, or, in the case of a company which is being wound up, of the liquidator, order a meeting of the creditors or class of creditors, or of the members or class of members, as the case may be, to be called, held and conducted in such manner as the Court directs. (2) If a majority in number representating three-fourths in value of the creditors, or class of creditors, or members, or class of members, as the case may be, present and voting either in person or, where proxies are allowed under the rules make under Section 643, by proxy, at the meeting agree to any compromise or arrangement, the compromise or arrangement shall, if sanctioned by the Court, be binding on all the creditors, all the creditors of the class, all the members, or all the members of the class, as the case may be, and also on the Company, or, in the case of a Company which is being wound up, on the liquidator and contributories of the Company : A plain reading of the section clearly indicates that the Legislature intended that if any compromise or arrangement is proposed, the company or any creditor or any member of the Company will be entitled to make the necessary application and in case where the Company will be entitled to make the necessary application and in case where the Company is being wound up, as the board has ceased to function and is no longer there and the Company is represented by the liquidator, the liquidator will also be entitled to make the necessary application. The right which is conferred on the contributories or the creditors is not intended to be taken away when the Company has gone into liquidation and in such a case an additional right is also conferred on the liquidator. The provisions contained in sub-section (2) which require the approval of the majority of the creditors or class of creditors or members or class of members in case of any compromise or arrangement for the same being sanctioned, even when the Company is in liquidation, clearly go to indicate that the Legislature never intended that the wishes of the creditors or contributories would be ignored. In our opinion, in case of a Company in liquidation apart from the rights which are conferred on the creditors or contributories of a Company an additional right is also conferred on the liquidator. The passage in Indian Companies Act by Sircar and Sen which we have earlier quoted, in our view, correctly represents the legal position.
(3.) The provisions contained in the Companies (Court) Rules, 1959 in rules 67 and 68 and the forms prescribed under the said Rules also clearly go to indicate that even in the case of a Company in liquidation the contributories and the creditors of the Company are entitled to make an application under Section 391.;