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COMA/122/2010 19/ 21 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY
APPLICATION No. 122 of 2010
In
COMPANY
PETITION No. 169 of 2004
For
Approval and Signature:
HONOURABLE
MR.JUSTICE K.A.PUJ
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To
be referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ?
=========================================================
UNION
BANK OF INDIA - Applicant(s)
Versus
O
L OF GUJARAT PERSTORP ELECTRONICS LTD ( IN LIQUIDATION) & 2 -
Respondent(s)
=========================================================
Appearance
:
MS
NALINI S LODHA for
Applicant(s) : 1,
OFFICIAL LIQUIDATOR for Respondent(s) : 1,
MR
MRUGESH JANI for Respondent(s) : 1,
MR BD KARIA for Respondent(s)
: 2,
MR RM DESAI for Respondent(s) :
3,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
Date
: 29/09/2010
ORAL JUDGMENT
The applicant Union
Bank of India has taken out this Judges Summons praying for the
direction to the Official Liquidator to distribute the sale proceeds
of Rs.814 lacs with interest earned thereon lying with the office of
the Official Liquidator to the secured creditors subject to the
provisions of Section-529(A) of the Companies Act, 1956. The
applicant has also prayed for the direction for adhoc payments
towards its claim against the usual undertaking till the final
disbursement.
This Court has issued
notice on 13.5.2010 and directed the Official Liquidator to file
additional report pointing out fund position in the account of the
Company in liquidation. The Official Liquidator has initially filed
his report on 12.5.2010. Pursuant to the order passed by this Court
on 13.5.2010 the Official Liquidator has filed his additional report
on 10.6.2010. An affidavit-in-reply is filed on behalf of the
respondent No.3 i.e. IDBI Trusteeship Services Ltd., on 29.6.2010.
On behalf of the applicant, an affidavit-in-rejoinder is filed on
28.7.2010.
Since the pleadings of
the parties are completed the matter is taken up for hearing.
Ms.Nalini Lodha, learned
advocate appearing for the applicant has submitted that this Court
by an order dated 9.3.2005 passed in Company Petition No.169 of 2004
appointed the Official Liquidator attached to this Court as
Liquidator of Gujarat Perstorp Electronics Ltd., with direction to
take possession of the assets of the Company. By an order dated
12.9.2006 passed in OLR No.70 of 2006 the Court has appointed the
Sale Committee comprising of the Official Liquidator,
representatives of the secured creditors and workers union, as
members thereof for disposal of the assets and properties of the
company in liquidation. By an order dated 1.2.2008 passed by this
Court in OLR No.92 of 2007 the sale of the factory land, building,
plant, machinery and all other movables situated at GIDC Electronics
Estate, Sector-25, Gandhinagar was confirmed in favour of HPV
Developers for Rs.8.04 crores and the said HPV Developers made
payment of Rs.8.14 crores including interest for late payment.
Ms. Lodha has further
submitted that the applicant Bank in joint participation with Bank
of Baroda had granted various credit facilities to the company in
liquidation and the said credit facilities are secured by the
movable and immovable assets of the Company in liquidation. The
outstanding dues of the applicant Bank as on the date of winding up
of the Company in liquidation i.e. 9.3.2005 are to the tune of
Rs.1,24,54,004/-. The applicant Bank has filed Original Application
No.156 of 2005 against the Company in liquidation and others before
the Debt Recovery Tribunal, Ahmedabad for a sum of Rs.1,36,90,400/-
with future interest and costs and which has been allowed with
simple interest @ 7% thereon from 1.8.2005 until realization and
costs vide judgment and order dated 27.4.2009 holding inter alia
that the applicant Bank and respondent No.2 are having first pari
passu charge on the current assets i.e. stocks and book-debts and
the applicant bank and respondent No.3 have pari passu charge on the
properties being factory land, building plant and machinery of the
Company in liquidation. She has, therefore, submitted that the
applicant is a secured creditor having first charge on pari passu
basis on the assets of the Company-in-liquidation. She further
submitted that the amount Rs.814 lacs has been lying with the office
of Official Liquidator since August, 2008.
The applicant Bank had
earlier taken out Judge’s Summons seeking direction to the Official
Liquidator to distribute the sale proceeds to the secured creditors
subject to the provisions of Section-529A of the Companies Act, 1956
vide Company Application No.241 of 2009, when one of the secured
creditor IDBI Trusteeship Services Ltd., – respondent No.3 have
disputed the status of the applicant as secured creditor and alleged
that he is the only secured creditor and Union Bank of India and/or
Bank of Baroda are not the secured creditors of the Company in
liquidation. This Court by an order dated 11.9.2009 passed in
Company Application No.241 of 2009 permitted the Official Liquidator
to engage a Chartered Accountant for verification of claim of the
secured creditors and workers’ claim and to file appropriate report
for disbursement. Pursuant to the said order the Official Liquidator
engaged M/s.Talati & Talati Chartered Accountant for
verification of claim of the secured creditors. Since the Official
Liquidator has not filed any report for disbursement of the amount
in terms of the order dated 11.9.2009 passed in Company Application
No.241 of 2009 the applicant has taken out the present Judges
Summons praying for disbursement.
The Official Liquidator
has filed his report on 12.5.2010. Based on this report, Mr.Mrugesh
Jani, learned advocate appearing for the Official Liquidator has
submitted that as per the order of this Court the Official
Liquidator invited claims of the workers and other creditors of the
Company through an advertisement on 7.7.2009. He has further
submitted that the Official Liquidator was in receipt of following
claims against the Company in liquidation.
Sr.No.
Name
of the Creditor
Amount
Rs.
1.
Union
Bank of India
1,24,54,004/-
2.
IDBI
5,58,05,086/-
3.
Bank
of Baroda
2,84,49,584/-
4.
Workers
(84)
98,61,520/-
Total
10,65,70,194
The
aforesaid claim of the secured creditors of the Company and workers
was forwarded to M/s.Talati & Talati Chartered Accountant vide
Official Liquidator’s letter dated 18.9.2009. The said Chartered
Accountant has submitted his report on 1.5.2010 regarding
verification of claim of the secured creditors and workers of the
company and also ratio of disbursement amongst the secured creditors
and workers. He has further submitted that on perusal of the report
dated 1.5.2010 of the Chartered Accountant, the claim of the secured
creditors verified by him are as under :-
Bank
of Baroda:-
Amount
claimed on 29.9.2004 Rs.2,64,22,143/-
Amount ordered by DRT Rs.2,64,22,143/- with
simple interest @ 8% per annum until realization.
Union
Bank of India:-
Amount
claimed on 1.8.2005 Rs.1,36,90,400/-
Amount ordered by DRT Rs.2,64,22,143/- on 27.4.2009 with simple interest @ 8% per annum until realization. IDBI:- Amount claimed as on 18.3.2004 Rs.6,59,77,813/- From
the above, total claim of the secured creditors is as under:-
Particulars
Security
Amount
of Claim
Amount
admitted
Workers
claim
Preferential
74,62,197/-
74,62,197/-
BOB
First
Charge
2,67,74,438/-
2,67,74,438/-
UBI
First
Charge
1,30,51,515/-
1,30,51,515/-
IDBI
Second
Charge
6,59,77,813/-
6,59,77,813/-
TOTAL
11,32,65,963/-
11,32,65,963/-
Based on aforesaid amount
Chartered Accountant has worked out the ratio of disbursement of
sale proceeds under Section-529A as under :-
Secured
Creditors
93.41%
Workers
06.59%
TOTAL
100.00%
On the basis of aforesaid
ratio disbursement, taking into consideration the amount of Rs.8.00
crores to be disbursed amongst the secured creditors and worker, the
said Chartered Accountants have also worked out following amount to
be paid to the secured creditors and workers of the Company is as
under :-
Sr.No.
Particulars
Security
Amount(Rs.)
1
Bank
of Baroda
First
Charge
2,67,74,438/-
2
Union
Bank of India
First
Charge
1,30,51,515/-
3
IDBI
Second
Charge
3,49,02,047/-
4
Workers
52,72,000/-
TOTAL
8,00,00,000/-
The Official Liquidator
has filed his further report on 10.6.2010 wherein it is stated that
he is having total fund of Rs.8,49,41,226/- in the Company’s Account
as on 31.5.2010.
Mr. R.M.Desai, learned
advocate appearing for IDBI Trusteeship Services Ltd., respondent
No.3 herein has disputed the claim of the applicant Bank to be the
first charge holder on the assets of the Company in liquidation and
also disputed the report of the Chartered Accountants considering
the respondent No.3 as the second charge holder. He has submitted
that the respondent No.3 is secured creditor of Company in
liquidation having first charge. The applicant Union Bank of India
and/or Bank of Baroda and/or any of the Financial Institutions are
second charge holders. He has further submitted that any amount to
be distributed to Union Bank of India and/or Bank of Baroda only
after dues of respondent No.3 are satisfied. The amount lying
with the Official Liquidator is required to be distributed between
the respondent No.3 and the workers as per provisions of law. He has
further submitted that dues of Banks and Financial Institutions in
respect of term loan facility are settled and as such assets which
are sold are secured in favour of the respondent No.3 as first
charge holders and Union Bank of India and/or Bank or Baroda are not
entitled to participate in the distribution. He has further
submitted that Union Bank had pari passu charge for their term loan
and not for working capital facilities. The pari-passu charge is
satisfied. The working capital facilities were secured by way of
second charge pari-passu with Bank of Baroda. The respondent No.3
had agreed for sharing of sale proceeds on pari-passu basis for term
loan and not for working capital facilities.
For working capital
facilities Union Bank of India has admitted second charge in the
application filed in the Debts Recovery tribunal being Original
Application No.156 of 2005. In Schedule-II of the application, the
Union Bank of India has clearly stated the description of movable
and immovable property of the Company in liquidation mortgaged by
way of second charge. It is specific statement and admission that
the Union Bank of India has second charge on the property of Company
in liquidation as described in Schedule-II of the said application.
He has further submitted that despite the aforesaid statement being
made by the Union Bank of India the Chartered Accountants, in their
report stated that Union Bank of India and Bank of Baroda are first
charge holder and the respondent No.3 is the second charge holder.
He has, therefore, submitted that the Chartered Account has given
his report without any application of mind and hence no disbursement
can be made on the basis of said report. He has further submitted
that as per provisions of Section-48 of Transfer of Property Act,
1982, where a person purports to create by transfer at different
times rights in or over the same immoveable property, and such
rights cannot all exist or be exercised to their full extent
together, each later created right, shall in the absence of a
special contract or reservation binding the earlier transferees, be
subject to rights previously created. The charge was created in
favour of the respondent No.3 on 24.4.1993 and in favour of Union
Bank of India on 27.4.1997 which is subsequent to the charge created
in favour of the respondent No.3. He has, therefore, submitted that
the respondent No.3 is required to be paid first and balance be paid
to Union Bank of India and/or Bank of Baroda.
Mr.B.D.Karia, learned
advocate appearing for Bank of Baroda respondent No.2 herein has
virtually adopted the arguments of Ms.Lodha and submitted that Bank
of Baroda is rightly treated as first charge holder and disbursement
be made accordingly.
Ms.Nalini Lodha, learned
advocate appearing for the applicant in rejoinder has submitted that
the attempt on the part of the respondent No.3 to claim that Union
Bank of India has second charge on properties of the Company in
liquidation on the basis of averments made in the Original
Application No.156 of 2005 is of no avail in view of the specific
finding given in para-3 of the operative part of the order dated
27.4.2009 passed by the Debt Recovery Tribunal, Ahmedabad wherein
respondent No.3 is a party. The said finding is based on the written
statement filed by the respondent No.3 before DRT in response to the
averments made by the applicant in the said Original Application.
She has, therefore, submitted that there is no substance in the
contention raised by the respondent No.3 that the respondent No.3
had agreed for sharing of sale proceeds on pari passu basis for term
loan and not for working capital facilities. She has further
submitted that the judgment and order passed by the DRT is binding
to the respondent No.3 and it is not open to the respondent No.3 to
dispute the rank on the basis of what is stated in the Original
Application ignoring the written statement filed in reply to the
memo of Original Application and judgment and order dated 27.4.2009
passed by the DRT. She has, therefore, submitted that the
disbursement be made on the basis of report submitted by the
Chartered Accountant.
Having heard the learned
counsels appearing for the parties and having considered their rival
submission in light of the documents produced on record, their
respective claims with proof of debts, creation of charge over the
assets of the Company in liquidation, proceedings before Debt
Recovery Tribunal and orders passed therein, verification of claims
made by the Chartered Accountants, the Court is of the view that
there does not appear to be any error or infirmity in the report of
the Chartered Accountant and disbursement can be made on that basis.
It is true that the
applicant Bank, in its Original Application No.156 of 2005 filed
before the Debt Recovery Tribunal, Ahmedabad has stated that the
Company in liquidation has mortgaged its movable plant and machinery
and immovable properties situate at B/1 to B/3, GIDC Electronics
Estate, Gandhinagar to the applicant Bank and Bank of Baroda to
secure the working capital facilities advanced to the Company in
liquidation by way of second charge on pari-passu basis with Bank of
Baroda subject to the first change of Industrial Development Bank
of India, Industrial Finance Corporation of India, Industrial Credit
and Investment Corporation of India Ltd., Bank of Baroda and the
applicant Bank for their respective term loans/foreign currency
loans. However, the said loans of the said Financial Institutions
appeared to have been repaid. It is equally true that the respondent
No.3 has filed its written statement in the said Original
Application No.156 of 2005, wherein, it is stated that the charges
and mortgages created by the Company in liquidation on all its fixed
assets, in favour of the present respondent No.3 for securing the
debentures are to be ranked as first charge in favour of the present
respondent No.3 and the applicant Bank, without any preference or
any priority of one over the other or others. It is also stated by
the respondent No.3 that whatever amounts paid and/or to be paid by
the Official Liquidator to the applicant after filing of the said
application, are required to be shared by the applicant with the
respondent No.3 on pro-rata basis.
Based on the above
pleadings of the parties the Debt Recovery Tribunal in its order
dated 27.4.2009 held that the applicant and respondent No.2 i.e.
Bank of Baroda have first pari-passu charge over the assets
described in Schedule-I of the application, which refers to
description of hypothecated movable properties of the Company in
liquidation. It is further held by the Debt Recovery Tribunal that
the applicant, respondent No.2 and respondent No.3 have first
pari-passu charge over the properties described in Schedule-II of
the application, which refers to the description of movable and
immovable properties of the Company in liquidation mortgaged by way
of second charge.
Even in the Debenture
Trust Deed dated 18.3.1994 executed by the Company in liquidation in
favour of the respondent No.3, it is clearly revealed that the
charge operates as security by way of second charge, inter alia, for
the redemption by the Company of the 15% secured partly convertible
debenture at the aggregate value of Rs.228 lacs, together with
interest liquidated damages and all other money’s payable by the
company to the trustees.
After considering the
various documents the Chartered Accountant arrived at the conclusion
that the applicant Bank and Bank of Baroda have first charge and the
respondent No.3 had executed Trust Deed and as per the agreement in
he Trust Deed and as per Form No.10 filled by the respondent No.3 it
stands as a second charge-holder. He has worked out the ratio of
secured creditors and workers at 93.41 : 06.59. Based on this ratio
and taking into account the available fund of Rs.8/- crores for
disbursement, he has determined the amount to be disbursed amongst
secured creditors and workers as under:-
Sr.No.
Name
of the Creditor
Amount
Rs.
1.
Bank
of Baroda
2,57,74,438/-
2.
Union
Bank of India
1,30,51,515/-
3.
IDBI
3,49,02,047/-
4.
Workers
(84)
52,72,000/-
Total
800,00,000/-
In view of the above
discussion, the Official Liquidator is hereby directed to disburse
the above amount in favour of the three secured creditors, after
obtaining an usual undertaking from them. The workers shall be paid
their dues as indicated above after proper verification and
identification, either by Account Payee Cheque / Bankers’ Cheque or
by availing E-Banking facilities. The secured creditors shall be
paid the amount on or before 15.10.2010 and the workers shall be
paid on or before 25.10.2010.
With this directions and
observations, the application is accordingly disposed off.
(K.
A. PUJ, J.)
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