The court emphasized that discretion under Section 466 of the Companies Act must consider public interest and prior judicial findings, not merely creditor consent.

JUDGMENT :

(M.S. Sonak J) :

1. Heard learned counsel for the parties.

2. By order dated 02 September 2024, this appeal was posted for final disposal at the admission stage, subject to any overnight part-heard matters.

3. Admit. Considering the orders made from time to time earlier and with the consent of the learned counsel for the parties, the appeal was heard finally.

4. This appeal questions the order of 09 October 2023, read with the order dated 21 December 2022, made by the Company Court disposing of the Interim Application No. 3663 of 2022 made by the first Respondent under Section 466 of the Company's Act, 1956, and staying the proceedings for the winding up of Swadeshi Mills Company Limited (in liquidation) (“said company”).

5. The first and second Appellants hold 5400 and 250 shares, respectively, in the said company. The first Respondent is a group company of the Shapoorji Pallonji Group of Companies and has 29.29% shares in the said company. The third Respondent is also a group company of Shapoorji Pallonji Group of Companies and holds 22.72% shares in the said company. Collectively, the first and third Respondents hold 52% of the shares in this said company. The fourth Respondent is a trade union of the erstwhile workers of the said company. The second respondent is the Official Liquidator.

6. Under a reference made by the said company to the Board for Industrial and Financial Reconstruction (BIFR), the BIFR declared the said company as a “sick company” under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985 and recommended the winding up of the said company. By a composite order dated 05 September 2002, this Court, ordered the said company to be wound up and directed the provisional liquidator to act as the Official Liquidator and exercise all the powers under the Companies Act.

7. When the winding up under this Court’s order dated 05 September 2002 was in progress, the first and third Respondents jointly filed Company Application No. 243 of 2011, seeking an order staying the winding up proceedings. By a detailed order dated 14 October 2011, the learned Company Judge (S C Dharmadhikari, J) rejected Company Application No. 243 of 2011. The Appeal No. 34 of 2012 instituted by the first and third Respondents before the Appeal Court comprising Dr D Y Chandrachud J., as his Lordship then was, and S C Gupte J. challenging the Company Court’s order dated 14 October 2011 was dismissed on 23 August 2013. The Special Leave Petition against the Appeal Court's judgment and order dated 23 August 2013 was dismissed by the Hon’ble Supreme Court on 23 February 2016, noting that the Court did not find any legal and valid grounds for interference.

8. After about four years, the first and fourth Respondents entered into an agreement dated 28 February 2020 and a supplementary agreement dated 29 June 2021 concerning the settlement of dues of the company's ex-workmen. This was possibly because the workmen represented by the fourth Respondent had opposed Company Application No. 243 of 2011, instituted by the first and third Respondents, for the stay of the winding-up proceedings.

9. Based on, inter alia, the above agreements, the first Respondent instituted yet another Interim Application No. 3663 of 2022 sometime in 2022 under Section 466 of the Companies Act, seeking a stay on the winding-up proceedings. The third and fourth Respondents supported the prayers in Interim Application No. 3663 of 2022.

10. On 21 December 2022, the learned Company Court (N J Jamadar, J) made an order and issued the following directions.

“(i) The Applicant in IA No.3663 of 2022 – Grand View, shall deposit an amount of Rs.240 Crores with the Official Liquidator within a period of six weeks from the date of uploading of this order.

(ii) The Applicant shall file undertakings to the effect :

(a) that in case the amount of Rs.240 Crores, to be deposited by the Applicant with the Official Liquidator, falls short to satisfy the liabilities of the Co