Bombay HC Clears Swadeshi Mills Revival, Approves Chunabhatti Redevelopment & ₹223 Crore Worker Settlement

Mumbai: The Bombay High Court has cleared the way for the revival of the iconic Swadeshi Mills Company Ltd, setting aside a single-judge order that had refused to halt the company’s winding-up and rejecting objections raised by minority shareholders.

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A division bench of Justices Ajey Gadkari and Kamal Khata, on September 2, permanently stayed the 2005 winding-up order, paving the way for a revival scheme backed by majority shareholders Grand View Estates Pvt Ltd and Forbes & Co Ltd, along with the Rashtriya Mill Mazdoor Sangh (RMMS).

The revival plan involves redevelopment of the company’s 48-acre land at Chunabhatti in Mumbai. The court said the proposal was in public interest and would benefit thousands of former workers who have suffered for more than two decades.

Under a settlement negotiated with the workers’ union, around 2,834 former workers are expected to receive about Rs223 crore in dues. The amount is substantially higher than the estimated Rs74 crore they could have received through normal liquidation proceedings. The scheme also covers badli (substitute) workers, technical staff and families of deceased workers.

About 800 families living on the mill land are also expected to receive free housing, while others would benefit from subsidised housing schemes.

The bench said the interests of workers deserved greater consideration. “At present, apart from the workmen, no other class of persons has endured tremendous loss and suffering for over two decades,” the court observed.

“It would be insensitive to disregard the entire settlement agreement arrived between the workers union, RMMS and the Appellants,” it added.

Grand View and Forbes together hold a 53.25% stake in the company. Grand View, which holds 30.55%, had deposited Rs240 crore with the Official Liquidator, of which Rs169 crore has already been distributed to nearly 2,000 workers.

Two minority shareholders, holding a combined 0.07321% stake, opposed the revival and argued that the mill land should instead be sold through a public auction. They also pointed out that an earlier revival proposal had been rejected in 2022.

The High Court, however, was not convinced. It noted that even if the land fetched Rs3,000 crore at auction, the minority shareholders' small stake would amount to no more than Rs 2.19 crore.

The court said their objections appeared to have more behind them “than what meets the eye” and observed that they were “in all probability, a front to someone with an eye on the Company’s land.”

Rejecting the argument that the textile mill should be restarted, the bench said operating a textile business in Mumbai was commercially unviable. The company’s shareholders had also amended its objects with a 99.85% majority to include real estate development.

“Two shareholders cannot dictate how the Company should be run,” the court said.

The bench also rejected the minority shareholders’ request to stay its judgment for three weeks to allow them to approach the Supreme Court.

Under the revival proposal, Grand View offered to make immediate payments of around Rs 252 crore, including about Rs 237 crore towards workers and other settlement claims. Separately, the company had deposited Rs 240 crore with the Official Liquidator, of which around Rs 169 crore has already been disbursed to nearly 2,000 workers. The court noted that the settlement would provide significantly greater benefits to workers than liquidation, under which they were estimated to receive a maximum of about Rs 74 crore. 

Timeline

SWADESHI MILLS REVIVAL

• Sept 13, 1886: Svadeshi Mills Co. Ltd. incorporated.

• Feb 5, 2001: BIFR recommends winding up due to sickness.

• Sept 5, 2005: High Court orders formal winding-up.

• May 14, 2024: EOGM amends object clause to real estate development.

• Jan 31, 2025: Supreme Court directs re-examination of workers/creditors dues settlement.

• Feb 23, 2026: Single Judge rejects revival proposal.

• Sept 2, 2026: Division Bench sets aside rejection, permanently stays winding-up, and clears revival.

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