TaxTMI 
TaxTMI 
1977 (8) TMI 113
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 bona fide and, on the merits, no proper case had been made out. Mr. Mukherjee, learned counsel appearing in support of this appeal, has contende....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ended that the wishes of the creditors or contributories would be ignored. In our opinion, in the 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. 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. This identic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tter. All that is intended by the section is that the liquidators should also have the right to make the application. At any rate, this is the view taken by Palmer on the corresponding section of the English Act. In his book on Winding up {Palmer's Company Precedents, Part II, Winding up (15th edition), page 906), he observes thus : 'A proposal for an arrangement or compromise is not confined to the company or its liquidator (if any). It is open to any creditor or member to take the initiative. The Act expressly provides that the court may, on the application, in a summary way, of the company, or of any creditor or member of the company, or in the case of a company being wound up, of the liquidator, order a meeting, etc. ' I think tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y member or creditor of the company. Where the company is being wound up, the application may be made also by the official liquidator'." We are, therefore, of the opinion that the view expressed by the learned trial judge, that the contributories and the creditors have no right to make the application when the company is being wound up and the liquidator alone is competent to present the petition is not correct. This contention of Mr. Mukherjee, therefore, succeeds. Though this contention of Mr. Mukherjee succeeds, we are, however, of the opinion that on a proper consideration of the materials which were placed before the learned trial judge, the learned judge was right in rejecting the said application on merits. The learned judge ha....