A scheme of arrangement for the revival of a company in liquidation requires the approval of all classes of persons whose support is indispensable, including the contributories, secured creditors, and unsecured creditors.

C.A.No.383 of 2007 is the first application in point of time made by some workers along with an alleged well-wisher of the company (in liquidation) invoking Sections 391, 394 and 466 of the Companies Act, 1956 in the same breath. The applicants in C.A.No.383 of 2007 expressed a pious wish to run the business of the company (in liquidation) and obtained an interim order on July 2, 2008. The order stayed the winding up of the company for a period of six months. Paragraph-4.2 of the order referred to a solitary applicant and recognized such solitary applicant to be an ex-worker and a contributory holding "35 per cent share" in the company (in liquidation). The order of July 2, 2008 also recorded as follows:-

"The ex-workers and the applicants have found a strategic partner in the applicant No. 6 who is ready and willing to invest sums for revival of the said company. From the viability report of the chartered accountant, the customers of the company (in liquidation), are prestigious organisation and, in the event, such customers give business to the company (in liquidation) its revival may be possible."

2. A committee of management was formed under the aegis of a special officer and the committee was directed to function for a period of six months. The order also required the views of the unsecured creditors of the company (in liquidation) to be ascertained at a meeting to be held under Section 391 (1) of the Companies Act. The order noticed that despite advertisements no secured creditor of the company had stepped forward to oppose the arrangement.

3. The order of temporary stay of winding up, probably made under Section 466 of the Act, has not been continued after the expiry of the six months following the order of July 2, 2008. The applicants have continued to run and manage the business of the company and have used all its assets without any sanction of law or leave of Court or any moral or equitable authority. This, by itself, would call for the applicants in C.A.No.383 of 2007 to be debarred from having anything to do with the assets of the company (in liquidation).

4. C.P.No.253 of 2009 has been made ostensibly in connection with C.A.No.383 of 2007. There is a mistake not only in procedure but in substance in the opening lines of C.P.No.253 of 2009. If C.A. No.383 of 2007 was filed in connection with C.P.No.577 of 2004, C.P. No.253 of 2007 could not have been filed as a sequel to C.A.No.383 of 2007.

5. The procedure needs to be referred to, to elucidate the point. C.P.No.577 of 2004 was obviously the petition on which the order of winding up was made on March 8, 2006. Upon an order of winding up being made, subsequent applications relating to the company (in liquidation) may be taken out at any stage subject to their permissibility under the Act and the rules, but all such subsequent applications need to bear the number of the petition on which the company was directed to be wound up. An application under Section 466 of the Companies Act, as every beginner at a company law class is aware, has to proceed by accepting the order of winding up and without questioning it. An application under Section 466 is generally made with an application number and is tied to the company petition number on which the order of winding up was made. In the company jurisdiction, almost invariably a petition precedes an application in the sense that there has to be a company petition before a company application can be filed because the petition is the main matter and the applications are the interlocutory or incidental proceedings therein.

6. There is one major exception. In case of a scheme of amalgamation or arrangement it is an application which precedes a petition with an underlying undertaking furnished by the applicant to Court that it would take out the petition. There is a basis for this reversal of the general order. An applicant in Section 391 proceedings ordinarily seeks leave to convene meetings, whether of share-holders or credi