Clearing decks for the auction of the defunct Swadeshi Mills, which is spread across 48 acres in Sion area of Mumbai, the Bombay High Court on Wednesday dissolved or vacated the stay on winding up proceedings of the Swadeshi Mills Company Limited.
The HC revived the proceedings, which were in abeyance due to past court orders. The court directed the official liquidator to retake charge of the company’s affairs, its assets and properties. Swadeshi Mills stopped operations in 2000.
Winding up of the company involves selling its assets, paying off creditors and distributing remaining assets to shareholders.
A bench of Justices Mahesh S Sonak and Jitendra S Jain passed a judgement on an appeal by Bipin J Bagadia and Ashish Jagmohan Mooni, two shareholders of Swadeshi Mills company, argued through advocate Mohit Khanna.
The petitioners had challenged the orders of October 9, 2023 and December 21, 2022 of the HC that disposed of an application made by Grand View Estates Private Limited (a group company of Shapoorji Pallonji Group of Companies) under section 466 of Companies Act and had stayed the winding up proceedings
The real estate group holds 52 per cent stake in Swadeshi Mills through its two subsidiaries Forbes and Co Ltd (22.72 per cent) and Grand View Estates (29.29 per cent).
When the winding up proceedings under the HC’s September 2002 order was in progress, the two subsidiaries of the real estate group had sought a stay on the same, which was rejected by a single-judge bench of the HC in October 2011. In August 2013, a two-judge bench of the HC had dismissed an appeal against the single-judge bench order. The Supreme Court in February 2016 dismissed the special leave petition against the HC orders, noting it did not find any legal and valid grounds to interfere in the same.
After four years, in 2020 and later in 2021, the Grand View Estates and Rashtriya Mill Mazdoor Sangh entered into an agreement related to the settlement of dues of the company’s former workers.
Grand View Estates then filed another interim application in HC in 2022, seeking a stay on the winding up proceedings. The HC granted stay on this and also issued directions to distribute funds to creditors of the Swadeshi Mills after handing it over to Grand View Estates.
Aggrieved by the said October 9, 2023 order, the present petitioners approached HC.
Appearing for the petitioners, advocate Khanna claimed the objective of the respondent subsidiaries of Shapoorji Pallonji was to acquire the company’s properties for real estate purposes without facing any public auction, through which the best possible price could have been realised for the benefit of Swadeshi Mills’s shareholders.
Senior advocate Virag Tulzapurkar, representing Grand View, submitted that it had already deposited Rs 240 crore in court and the same had been disbursed to workers.
The bench noted that impugned orders of 2022 and 2023 deserved to be set aside “for failure to consider vital material’ including the earlier HC orders of 2011, 2013 and SC order of 2016.
It said that the amount to be disbursed to workers was subject to the final verdict in the present appeal, therefore, no equities could be claimed in that regard.
The HC refused the request to continue the stay on winding up proceedings. It also directed the two subsidiaries presently in control of company’s affairs, to desist from sell, or conveyance of its immovable properties without court’s permission.
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