*1* ca.178.10.cp.1048.08.902 kps IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION NO.178 OF 2010 IN COMPANY PETITION NO.1048 OF 2008 CONNECTED WITH COMPANY APPLICATION NO.228 OF 1987 AND COMPANY PETITION NO.735 OF 2004 AND BIFR NO.57 OF 1987 Dixin Gujarat Shramik Sabha. ..Applicant -Versus- The Official Liquidator of the Gaekwar Mills Ltd. (In Liqn.). ..Respondent -And- Homi Framroze Mehta. ..Orig. Petitioner No.1 K.K.Kotwal. ..Orig. Petitioner No.2 in CP/1048/2008 .......... Mr.P.M.Shah a/w M.B. Joshi, for the Applicant. Mr.Naushad Engineer, for the Official Liquidator/ Respondent No.1. Mr.J.P.Sen i/b P.V.Shah, for the Respondent Nos.2 and 3 (Original Petitioner Nos.1 and 2) .......... CORAM : S.C.DHARMADHIKARI, J. DATE : 21st January, 2011. P.C. 1 This Company Application has been filed by the Applicant Union praying that the order dated 10.09.2009 be recalled and set aside and the Scheme of Compromise and/or Arrangement be declared as not binding on the Applicant. 2 In the affidavit in support filed by the Secretary of Applicant Union, it is stated that the scheme is sanctioned by this Court on the basis of the Liquidator’s report dated 08.06.2009 and on the basis of resolution of the workers dated 26.08.2009, copy of which was tendered by *2* ca.178.10.cp.1048.08.902 Advocate I.A.Sayed appearing for the Action Committee of Workers. That resolution dated 26.08.2009, copy of which was filed before the Court declared that the workers have no objection to the scheme being implemented and sanctioned. 3 It is pointed out that the Company in liquidation M/s Gaekwar Mills Limited was making profits till 1974-75 where-after the Company went in losses and ultimately, approached the BIFR and was declared as a sick company. In the meanwhile, a winding up petition was filed and even the BIFR expressed opinion that it is just and equitable that the Company should be wound up and it is thereupon, the said letter of BIFR was treated as a petition for winding up. 4 In these circumstances that H.F.Mehta and another (original Petitioners) moved the subject Company Application, in which, the scheme was presented and this Court issued the notice. The Applicant does not dispute that pursuant to an order dated 25.10.2008, a meeting of the shareholders, secured creditors, unsecured creditors and the workers was held which was presided over by the Company Registrar as Chairman. In the said meeting it was represented by Advocate I.A. Sayed that he has filed the Company Application No.416/2009 for impleading the Workers’ Working Committee as Respondent in the Company Petition. Thereafter, there is reference made to the further meetings. 5 Mr.Shah, learned counsel appearing on behalf of the Applicant/ Union, submitted that it was falsely represented before this Court that the workers have no objection to the scheme being sanctioned. In fact there was correspondence with the Liquidator in which the workers filed individual affidavits pointing out as to how the scheme is not in their interest, yet, the Liquidator submitted a report stating that the scheme is not contrary to public policy and is in the interest of creditors and *3* ca.178.10.cp.1048.08.902 shareholders. Therefore, when a small number of workers purportedly approached this Court and engaged an Advocate, then, his act of stating that the workers have not opposed the scheme and have withdrawn their objection, is nothing but fraud on this Court. 6 Mr.Shah invited my attention to paragraph No.8 of the affidavit in support of this Company Application. For all these reasons and on account of contents of the individual affidavits, it is submitted that this Court should recall the order. It is pointed out as to how the Applicant Union represents 2500 workers and therefore, some Working Committee which is a fraction or a breakaway group thereof could not have represented the interest of all workers. 7 On the other hand, Mr.Sen, learned counsel appearing on behalf of the original Petitioners, pointed out that this Court has passed the order after it was satisfied that the scheme is not contrary to public policy and it is in the interest of shareholders and creditors of the Company. Prior thereto, affidavit in support of this Application itself would indicate that, this Court passed the order and direction for convening of meeting and at the said meeting, the creditors were present, so also, the workers. The said meeting was presided over by the Chairman appointed by this Court who was neutral and impartial individual. Mr.Sen submitted that the Scheme has been sanctioned because majority in number representing 3/4th in value of the shareholders, each class of creditors and workers present and voting either in person or by proxy at separate meetings, did not object to the scheme, therefore, this Court has passed the subject order. There is no merit in any of these contentions. Further steps have been taken to implement the scheme inasmuch as Rs. 28 crores have already been spent, out of which, Rs.9 crores have been earmarked for payment to the workers towards their dues. On *4* ca.178.10.cp.1048.08.902 instructions, Mr.Sen submits that if at all the workers have any rights and remedies in law to file an application for recovery of their dues, subject to legal rights of the original Petitioners and the Company, they will abide by all such orders as are passed in that behalf. In these circumstances, it is prayed that the application be dismissed. 8 From perusal of the entire material including the affidavits on record, I am of the opinion that there is no merit in this Company Application. This Court has in accordance with the provisions of Sections 391 to 394 of the Companies Act, 1956 and the Company Court Rules, 1959, directed convening of meeting at which opportunity was directed to be given to all creditors and shareholders. That such meetings have been convened is undisputed, that such meetings have been presided over by the Chairman appointed by this Court is further undisputed, and that at such meetings the voting was held and majority approved the scheme by voting in its favour, is also borne out from the record. In these circumstances and when complete precaution was taken and the parties were given full opportunity to object to the scheme, before passing the final order, then, it cannot be said, at any stretch of imagination, that the Court’s order is vitiated. The allegation of fraud being perpetuated, is not attributed to any illegality or irregularity in the procedure adopted by this Court but to an act of Advocate appearing on behalf of some 135 workers, who initially filed an application raising objection to the scheme and later on withdrawn it. To my mind, it is clearly a dispute between a group of workers and it can safely be termed as a part of Union rivalry. There is nothing on record by which one could conclude that the original Petitioners or Official Liquidator brought about a situation wherein the workers were forced to withdraw their consent. The acts attributed to an Advocate, are matters of which the cognizance cannot be taken in these *5* ca.178.10.cp.1048.08.902 proceedings and it is for the Applicant to adopt such proceedings in that behalf as may be permissible in law. The Applicant being an authorized representative of the workers and being entitled to represent the workers for all the matters by itself and without anything more, cannot be a ground to recall the Court’s order after necessary satisfaction has been duly recorded therein. To my mind, if the workers’ interests have been compromised by some group/ working committee which passed the resolution and which was relied upon so as to make an application for withdrawal of the scheme, then, nothing prevents the Applicant from taking such action against the group in accordance with the Constitution of Union and relevant laws in the field. The Court cannot take cognizance of such dispute particularly because the workers in this case are not remedy-less. More particularly, because the Resolution cannot be challenged in these proceedings. That their was a Resolution is not denied but the argument is that it is not the opinion of the majority. However, the workers were given due notice of the meetings and they have attended and participated in the same is clear from the Chairman’s report. If they have any right in law to recover the dues from the Company, nothing prevent them from filing such application before the appropriate authorities/Courts / Tribunals. Needless to state that if at all such applications are filed, the original Petitioners who have propounded the scheme and the Company have equal right in law to oppose any relief being granted in favour of the workers. Subject to all such legal rights and remedies of both parties and without prejudice thereto, the scheme can be upheld, more particularly because steps have been taken in pursuance of the scheme and the Court has found as a matter of record that an attempt is being made to revive the Company in liquidation. 9 In such circumstances and applying the principles laid down *6* ca.178.10.cp.1048.08.902 in a decision of Miheer H. Mafatlal Vs. Mafatlal Industries Ltd. reported in 1997(1) SCC 579, I am of the opinion that there is no merit in the Company Application and it deserves to be dismissed. In a later decision reported in AIR 2007 SC 3079 (M/s Meghal Homes (P) Ltd. Vs. Shreenivas Girni Kamgar Kruti Samiti and others), the Hon’ble Supreme Court following Miheer H. Mafatlal (supra) further held that revival of a Company in liquidation is permissible by resorting to Section 391 of the Indian Companies Act, 1956 and members and contributories can make such an application. (see paras 16, 21, 22, 23, 24 and 25). Once the scheme is bonafide, fair, just and reasonable and is not contrary to any provision of law or public policy, then, the Court does not function as an Appellate Authority over the commercial wisdom of the majority expressed in the meeting convened pursuant to the directions of the Court, precisely, this is found in this case. 10 The Company Application is, therefore, dismissed but without any order as to costs. (S.C. Dharmadhikari, J)