C.A. Nos.907-908 of 2008 (O&M) -1-
in C.P. No.226 of 2003
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
C.A. Nos.907-908 of 2008 (O&M)
in C.P. No.226 of 2003
Date of decision:22.01.2009
In the matter of :-
M/s Punjab Wireless Systems Ltd. (in Liqn).
And in the matter of:-
IFCI Ltd. .............. Applicant
Vs.
1. M/s Punjab Wireless System Ltd. (in liqn)
2. Stressed Assets Stabilization Fund .............Respondents
Present: Mr. K.K. Sharma, Advocate
Mr. Vivek Bhandari, Advocate.
Mr. Puneet Kansal, Advocate for O.L.
CORAM: HON'BLE MR. JUSTICE K. KANNAN
1. Whether Reporters of local papers may be allowed to see the
judgment ? Yes
2. To be referred to the Reporters or not ? Yes
3. Whether the judgment should be reported in the Digest ? Yes
-.-
K.KANNAN, J.
C.A. No.907 of 2008
Application allowed.
Exemption from filing certified copies of Annexures A-1 and A-2
and permission to place on record true copies of the same is granted.
C.A. No.908 of 2008
1. The application has been presented at the instance of one of the
secured creditors who has obtained a Recovery Certificate from the Debts
Recovery Tribunal for recovery of Rs.2745 lacs as on 29.09.2000 by the
C.A. Nos.907-908 of 2008 (O&M) -2-
in C.P. No.226 of 2003
decision of learned Tribunal dated 31.08.2001.
2. The cause of concern of the secured creditor for its inability to
recover an amount, which is legitimately due by the failure of Official
Liquidator to adjudicate the claims of all secured creditors including the
workmen and distribute the sale proceeds, is required to be done. On an
earlier occasion when the application has been moved before this Court, an
order was passed on 23.11.2006 directing the Official Liquidator to
apportion the sale proceeds of the assets of the company-in-liquidation after
settling the claims of the creditors at an early date, preferably within a
period of six months. The six months came and went passed and the sales
proceeds in the hands of the Official Liquidator were not disposed of.
Again there was an application filed, C.A. No.607 of 2007, in which similar
claim was made and Official Liquidator took up an objection that there was
no provision for making interim disbursals. An elaborate order was passed
on 28.07.2008 rejecting the contention of the Official Liquidator that the
Court could not make any interim disbursement within the reasonable limit
and noting that direction for interim disbursement would always be subject
to final adjudication of claims and court passed an order entitling the O.L. to
consider the issue of interim disbursement. The amount had not been
disposed of even subsequent to the order passed by this Court on 28.07.2008
and finding that there was undue delay in the conduct of O.L. in
adjudicating the claims of the workmen, the secured creditor has again
moved this application.
3. The workmen have filed C.A. No.49 of 2009 seeking for
impleadment of the Chartered Accounts who had been appointed by the O.L.
for adjudicating the claims and C.A. No.50 of 2009 for impleading the
Employees Union, as parties. The response of the applicant to these
applications were that a Chartered Accountant appointed through O.L. to
C.A. Nos.907-908 of 2008 (O&M) -3-
in C.P. No.226 of 2003
consider the claims of various persons was merely to be ministerial act and
there was no requirement for his impleadment. Similarly as regards the plea
for impleadment of the workmen since their claims were being adjudicated
before Official Liquidator, there was no necessity to implead the Employees
Union in the application for interim disbursement. Although the Employees
Union had not been impleaded since they were already parties before the
Official Liquidator. I had permitted the counsel appearing for the
employees also to make their submissions.
4. Applicant has objectors to the claim for interim disbursement or
the Official Liquidator who had sounded in unison that so long as the claim
of the workers have not been settled and the Chartered Accountant has not
finalised the report, it shall not be fair to accommodate the claims of the
applicant only. The learned counsel appearing for the employees points out
that the claims of workmen shall rank pari passu with the secured creditors
and refers to a decision in International Coach Builder Ltd. Vs. Karnataka
State Financial Corpn. (2003) 10 SCC 482 states that the term “pari
passu” would mean: “equal steps, equally, without preference” if the claims
of the workmen have not accommodated, there is no scope for only
entertaining the claims of the applicant.
5. The Official Liquidator also objects to any interim payment
especially when the Court has already granted six months more time to the
Chartered Accountant to give his report by its order dated 16.01.2009 and
any interim payment only to one secured creditor would give a privilege to
one person to utilise a portion of the amount due to it prematurely while
other persons similarly entitled are not being paid any amount. If any
amount shall be paid to one of the secured creditors at the time when a final
reckoning is made for distribution of the assets to all the secured creditors
who rank pari passu, the person that obtains some amount through interim
C.A. Nos.907-908 of 2008 (O&M) -4-
in C.P. No.226 of 2003
disbursals shall be liable to pay interest from the date when the amount is
disbursed till the date of the final adjudication of all claims of other persons.
The learned counsel appearing for the O.L. contended that the amount
realized through the sale proceeds are right now earning interest and the
premature disbursal of even a portion of the amount would deplete in sum
interest accruals at least for a portion of the amount and to that extent the
other persons like the workers who rank in their claims at par shall be
deprived of that benefit.
6. I see the weight of objections raised on behalf of the workmen
and the counsel for the Official Liquidator. The power of the O.L. to make
interim disbursals itself cannot be a matter of serious doubt. If all relevant
materials are available and a substantial body of creditors are identified, it
shall always be possible to make interim disbursals, which would subject to
the final outcome of the adjudication after entertaining claims from all
quarters. The gravity of the problem is seriously experienced only by the
fact that the sale processes have taken place even in the year 2006 and the
first direction of the Court for disbursement was made as early as on
23.11.2006, when it was expected that the claims would be disposed of, in
six months from 23.11.2006. The applicant has a particular reason to nudge
for its claims only because even after securing an award before the Debts
Recovery Tribunal, amounts are not still being disbursed. The difficulty
experienced by the O.L. in identifying all the creditors seems to be real
because the company itself had its operations not merely in Haryana but also
in the adjoining State of Rajasthan where it had another factory. Normally I
would have directed that no interim disbursal could be made without
definite data on the respective claims of the secured creditors and the
workmen. Since the adjudication regarding the entitlement of the workmen
have not been finalized owing to the inability of the O.L. to receive all the
C.A. Nos.907-908 of 2008 (O&M) -5-
in C.P. No.226 of 2003
claims and due to his experience of receiving more claims from several
persons with applications to condone the delay, it will be inappropriate to
kept it in a state of limbo endlessly and it will mean flouting of earlier
direction of this Court where it had specifically laid down that there was
justification for interim payment in favour of the applicant.
7. To set the scales even, I find that pending adjudication of all
claims, the applicant would be disbursed a portion of the amount and having
regard to the Award already passed by the Debts Recovery Tribunal, I direct
that 25% of the claim less expenses incurred for the conduct of sale could be
disbursed in favour of the applicant-company. This is wholly provisional
and the amount could be disbursed on securing an undertaking that if there
is any amount paid in excess than what the company financed, it shall
reimburse the same. There shall be also a further liability on the Company
to pay interest @ 9% from the date of disbursement till the date when
accounts are drawn finally after considering all the claims and when the
money is distributed to the workmen also. The direction for payment of
interest by the Company that obtains a premature withdrawal was approved
by a decision of a Division of the Madras High Court in ICCI Bank Ltd. Vs.
Official Liquidator High Court, Madras and others (2008) 142 Comp Cas
1(Mad). This direction is only to assuage the claims of the workmen whose
lis has not been finalised and whose claims have not been fully addressed
although they are equally entitled. Even at the time of disbursal, if the O.L.
has obtained a sizable number of claims from workmen, it shall be open to
the O.L. to determine a portion of the amount that would bear the same
proportion which the applicant-Company is being paid out of its total
entitlement with similar restrictions regarding the undertaking and payment
of interest as issued to the applicant-Company.
8. The above application is disposed of in the above terms. The
C.A. Nos.907-908 of 2008 (O&M) -6-
in C.P. No.226 of 2003
applications for impleadment in C.A. Nos.49 and 50 are disposed of as
unnecessary.
(K. KANNAN)
JUDGE
January 22, 2009
Pankaj*