The contributories and creditors have the right to make an application for a scheme under Section 391 of the Companies Act when the company is in liquidation.

( 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) under Sections 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 bona fide and, on the merits, no proper case had 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 not 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 Forms 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 and Quilon Bank Ltd. [1939] 9 Comp Cas 14 and also on the decision of the Travancore-Cochin High Court in the case of Mohammed Abdulla Tharaganar v. Off,. Liq. , Cape Comorin General Traffic Co. Ltd. [1953] 23 Comp Cas 161 (TC ). Mr. Mukherjee has also drawn our attention to a passage at page 398 in the Indian Companies Act, 1913, by Sircar and Sen. The passage relied on by Mr. Mukherjee reads as follows :" The application for the holding of a meeting as contemplated in subsection (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 made 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 :. . . . . "

( 3 ) A plain reading of the section clearly indicates that the legislature intended that if any compromise or arra