Hemant Gupta, J.
1. M/s. Oswal Agro Furane Ltd. (hereinafter referred to as 'the company in liquidation') was ordered to be wound up by this Court on 4-5-2001, on the recommendations of the Board for Industrial and Financial Reconstruction. The Official Liquidator attached to this Court was appointed as liquidator of the said company.
2. The sale of assets of the company in liquidation was confirmed in favour of the highest bidder M/s. K.R.B.L. Ltd. for a total sum of Rs. 15.80 crores. C.A. No. 753 of 2003, was filed on behalf of the workers' union of the company in liquidation to keep the said amount of sale consideration in a fixed deposit. The entire amount of sale consideration along with interest accrued thereon was ordered to be kept in a fixed deposit vide order dated 16-1-2004, passed by this Court.
3. The workers' union filed application bearing C.A. No. 432 of 2004 on or about 6-7-2004, that in view of Section 529A of the Companies Act, 1956 (for short 'the Act'), the claims of the workers have to be satisfied in full. It may be noticed that prior thereto the Official Liquidator has invited claims from the creditors and workers by publishing the claim notice in the newspapers on 20-3-2004. It was pointed out in the application that the workers have lodged their claims with the Official Liquidator but no action has been taken by the Official Liquidator to settle the claims of the workmen. In reply to such application, the Official Liquidator stated that for the purposes of settlement of such claims, the Official Liquidator has to appoint a chartered accountant for the scrutiny of the claims of the workers as well as the creditors. It was pointed out that quotations from various chartered accountants were called and 13 chartered accountants have given their offers. Keeping in view the said stand of the Official Liquidator, this Court passed the following order on 26-8-2004:
This is an application filed by the workers of Oswal Agro Furane Ltd. with the prayer that the Official Liquidator be directed to settle their claim expeditiously.
In reply to the application, the Official Liquidator has stated that the chartered accountants for the scrutiny of claim of the workers as well as other creditors has to be appointed and in this connection quotations from various chartered accountants who are on panel of the Official Liquidator were called on 12-7-2004. The Official Liquidator has received as many as 13 quotations. It has been prayed on his behalf that two weeks time be given to finalise the appointment and the rates of payment of the chartered accountant and then the claim of the workers shall be taken up for final settlement.
In view of the above, the application is disposed of with a direction to the Official Liquidator to finalise the appointment and rates of payment of chartered accountant. Thereafter, on the basis of the report submitted by the approved chartered accountant, the claims of the workers and others be settled as early as possible.
4. M/s. A.K. Chadda and Company, the chartered accountants were assigned the task of scrutinizing the claims of the workers by the Official Liquidator. The said chartered accountant has given his report on 21-4-2005.
5. Learned chartered accountant classified the claim of the employees of the company in liquidation in three parts. Annexure A pertains to 395 workmen whose claims were accepted under Section 529A of the Act, annexure B contained the list of 33 employees whose claims were classified under Section 530 of the Act. Annexure C contained the names of 19 workmen as well as 17 employees whose claims were found to be defective or inadmissible for one or the other reason. The operative part of the report of the chartered accountant reads as under:
We hereby certify that subject to our comments stated here above and basis of calculations followed by us, the amount of claims calculated together with claim filed by workmen under Section 529A of the Companies Act, 1956, are given in annexure A under the column net amount payable.
The amount of claims calculated together with claim filed by workmen under Section 530 of the Companies Act, 1956, are given in annexure B under the column net amount payable.
There are some defective cases under different circumstances as specified against each case in annexure C. In our opinion, the release of payment of dues to respective cases under this section in annexure C should be made subject to clearance of defects to the satisfaction of your office. The amount of claims calculated together with claim filed by workmen under Sections 529A and 530 of the Companies Act, 1956, are given in annexure C under the column 'Net Amount Payable'. We had made the calculations but these are good cases subject to rectification of defects at claimant end and approval by your office.
6. After the said report was filed, the Official Liquidator vide his letter dated 17-5-2005, invited counsel for the workmen for a meeting on 18-5-2005, to settle the claims of workmen. Vide letter dated 18-5-2005, Shri Vivek Bhandari, learned Counsel for the workmen, conveyed acceptance to the report of the chartered accountant in respect of claims classified as annexure A. In respect of claims classified as annexures B and C, it was stated that necessary clarification or fresh claim on behalf of the clients shall be submitted to the office of the Official Liquidator and the discrepancies found in their claims would be removed. The said letter reads as under:
This is with reference to your letter dated 17-5-2005, calling for a meeting in connection with adjudication of the claims of the workmen on the basis of the report submitted by M/s. A.K. Chadda and Co.
I have gone through the report and found annexure A to the report whereby the claims submitted by my clients have been found to be in order and admissible under Section 529A of the Companies Act, 1956.
Regarding annexures B and C, necessary clarifications or fresh claims on behalf of my clients shall be submitted to your office and the discrepancies found in their claims shall be removed.
Meanwhile, the claims of the majority of the workmen, which have been found admissible in annexure A may kindly be settled, at the earliest, keeping in view the plight of the unemployed workmen.
7. On 23-5-2005, an application was filed by the Official Liquidator (C.A. No. 416 of 2005) to pay 100 paise in the rupee due to the workmen as dividend adjudicated as per the chartered accountant report. In the said application, it was averred that the Official Liquidator has received 464 claims of the workmen as preferential claim and 34 claims as ordinary creditors. It was averred that the representative of the workmen has consented without any objection to the settlement done by the Official Liquidator on the basis of the report of the chartered accountant. Paragraph Nos. 8 and 9 of the said application are relevant which read as under:
8. That in response to the advertisement, the Official Liquidator has received 464 Nos. of claims from workmen as preferential claim and 34 Nos. from ordinary creditors as per list submitted under rule 167 of the Companies (Court) Rules, 1959, with the hon'ble High Court on 25-5-2005, and under rule 169. The said list appears to be exhibited for inspection by registry. Till date no objection has been received by the Official Liquidator so far.
9. That the Official Liquidator since received numerous claims about 464 from the workmen, the chartered accountants M/s. A.K. Chadda and Company, has been appointed for investigation. The said firm of the chartered accountant submitted his report on 12-5-2005. The Official Liquidator thereafter called the meeting of the representative of the workmen in his office on 18-5-2005. The representative of the workmen has consented without any objection to the settlement done by the Official Liquidator on the basis of report of the chartered accountant. The copy of the letter of the workmen representative is enclosed and annexed as annexure Al. The chartered accountant has accordingly scrutinized the books, records of the company (in liqun.) along with the affidavits submitted by the workers and M/s. A.K. Chadda, chartered accountants, has reached to the conclusion vide its report dated 21 -4-2005, in which he stated that the total amount of the workmen is considered to the extent of Rs. 8,66,13,241.
8. It may be noticed that 464 workmen includes 395 workmen inannexure-A, 33 workmen in annexure B and 36 in annexure C.
9. On 24-5-2005, another application was filed by the workers union through Shri Vivek Bhandari, advocate, (C.A. No. 417 of 2005) to the effect that the claim of the workmen in annexure A of the report have to be satisfied in full, therefore, the Official Liquidator be directed to make the payment to the workers.
10. This Court on 26-5-2005, decided both the applications, i.e., C.A. No. 416 of 2005 filed on behalf of the Official Liquidator and C.A. No. 417 of 2005 filed by the workmen and permitted the Official Liquidator to pay the dues of the workmen as per the report of the chartered accountant by remitting the amounts to their respective bank accounts under the supervision of Shri Atul Gandhi, advocate. The order reads as under:
The Official Liquidator is allowed to pay dues of the workmen as per the report of the chartered accountants by remitting the amounts to their respective bank accounts. The workers will sign the dividend notices. To ensure that the amounts reach the workers, Mr. Atul Gandhi, advocate, present in court, is requested to oversee the arrangement as Commissioner of the court. He will be paid a sum of Rs. 20,000 as his charges by the Official Liquidator, who is also allowed to pay chartered accountants' fees and charges for preparing of dividend notices. The dividend notices will be collected by Mr. Bhandari for the workmen. Advertisement for the purpose is dispensed with. The filing of succession certificates, of the workmen who have died, is dispensed with, subject to the condition that Mr. Gandhi, Commissioner appointed by the court is satisfied about the genuineness of the claim. If such satisfaction is not possible for any reason, succession certificate will be required to be filed.
Liberty to work out a viable arrangement for signatures of the workers for discharging the dividend notices, in consultation with the Court Commissioner. For disbursing the amount liberty to encash fixed deposit prematurely.
Official Liquidator is allowed to open a bank account for this purpose with the Oriental Bank of Commerce at Dhuri.
11. In pursuance of such order passed, the learned Official Liquidator has opened a bank account with Oriental Bank of Commerce, Dhuri, and transferred a sum of Rs. 10,80,14,047 for the payment to the workers as dividend. Though in C.A. No. 416 of 2005, learned Official Liquidator has conveyed to the Court acceptance of claims of 464 workers amounting to Rs. 8,66,13,241 but factually 575 workmen have been paid by the Official Liquidator which is evident from paragraph 17 of C.A. No. 947 of 2005 filed by the Official Liquidator seeking condonation of delay in respect of claims of certain workmen. Paragraph No. 17 reads as under:
17. That the Official Liquidator has since paid to 575 workmen with the consent of the Court Commissioner appointed by order dated 26-5-2005. However, about six claims of workmen is yet to be paid for want of clarification/compliance on workmen's part and as on date Rs. 35 lakhs (approximately) is still lying with OBC, Dhuri.
12. Another thing which needs to be noticed is that in terms of Rule 167 of the Companies (Court) Rules, 1959 (hereinafter to be referred as 'the Rules'), the Official Liquidator is to file in the court a certificate in Form No. 71 containing the list of creditors whose claims have been admitted wholly, proofs admitted or rejected in part and the proofs wholly rejected. Such certificate was not filed before this Court though an averment has been made in paragraph No. 8 of C.A. No. 416 of 2005 filed on 24-5-2005, to the effect that such list of creditors has been displayed on the notice board on 25-5-2005. Paragraph No. 8 of the said application has been reproduced above.
13. It may be clarified that the 'workmen' referred to above and hereinafter are the workmen entitled to wages along with secured creditors in terms of Section 529A of the Act and falling within the definition of Section 2(s) of the Industrial Disputes Act, 1947. The 'employees' referred hereinbefore and after are the employees of the company in liquidation other than the workmen who are entitled to preferential payment along with other creditors in terms of Section 530 of the Act.
14. Chartered Accountants A.K. Chadda and Company has furnished two other reports dated 22-11-2005, and 8-2-2006, on the basis of fresh communication sent by the office of the Official Liquidator on the claims submitted by the workmen. In his report dated 22-11-2005, and 8-2-2006, the learned chartered accountant has determined the claims of the workmen in the following manner:
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Report dated No. of workmen/ Claim under section Anne- Rs.
employees xure
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22-11-2005 46 22-11-2005 46 workmen 529A 3 12,365,928
16 employees 530 4 10,298,134
3 workmen 529A Discrepant claim 5 1,341,881
2 employees 530
8-2-2006 4 workmen 529A 1 1,027,143
2 employees 530 3 2,659,620
8 workmen 529A Discrepant claim 2 3,392,043
2 employees 530 2 8,50,908
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15. C.A. No. 723 of 2005 and C.A. No. 800 of 2005 were filed by certain workers for condonation of delay in filing of claims of the workmen. Another application was filed by the Official Liquidator (C.A. No. 947 of 2005) to seek the condonation of delay in filing of the workmen's claim. This Court on 16-2-2006, condoned the delay in filing of the claims of the workmen but requested Shri Atul Gandhi, advocate, also a chartered accountant, to examine the claim of each of the workmen with reference to records available with the Official Liquidator and other statutory records available and to furnish a detailed report. The order dated 16-2-2006, reads as under:
C.A. Nos. 723 and 800 of 2005 have been filed by the workmen of the company in liquidation for the settlement of their claims by the Official Liquidator, after condoning delay in filing of the claims, after the expiry of the period of limitation prescribed for lodging their claims.
C.A. No. 947 of 2005 has been filed by the Official Liquidator, wherein the Official Liquidator has sought the condonation of delay in filing of the workmen's claims pursuant to Rules 272 and 273 of the Companies (Court) Rules, 1959.
Since individual notices were not issued to the workmen and the notice inviting the claims of the workmen was published in English newspaper, i.e., 'Indian Express', I deem it appropriate to condone delay in filing of the claims of the workmen. However, it is directed that the claim of each of the workmen is required to be verified with the records available with the Official Liquidator as well as the other statutory record.
Shri Atul Gandhi, advocate, who is also a chartered accountant is requested to examine the claim of each of the workmen with reference to the records available with the Official Liquidator and other statutory record available and furnish a detailed report. The report should indicate the total number of workmen on the rolls of the company at the time of winding up and the number of the workmen, who have filed claims and the claims admitted/ rejected. Shri Gandhi would be at liberty to raise his bill for the services rendered. However, a sum of Rs. 50,000 be paid to Shri Gandhi, on account, forthwith.
The parties would be at liberty to file an appropriate application after the report is submitted by Shri Gandhi.
C.A. Nos. 723, 800 and 947 of 2005 stand disposed of.
16. In pursuance of the said order, Shri Atul Gandhi, learned Court Commissioner, has submitted his report dated 6-9-2006, which is herein referred to as interim report' pointing out that the employees have been classified by the learned chartered accountant in his report dated 22-11-2005, and 8-2-2006, in three categories, i.e., (i) workmen entitled to preferential payment under Section 529A of the Act, (if) workmen/ employees entitled to payment under Section 530 of the Act and (Hi) employees seeking preferential payments under Sections 529A/530 of the Act but their claims are not treated admissible on account of discrepancies pointed out by the learned chartered accountant. It is pointed out that in respect of the employees classified to payment under Section 530 of the Act, there is restriction on payment of sum exceeding Rs. 20,000 to each employee in terms of Section 530(2) read with Section 530(1) of the Act in terms of Central Government notification dated 17-2-1997. Therefore, it was pointed out that claims of Rs. 1,30,85,070 and of Rs. 26,59,620 in the reports dated 22-11 -2005, and 8-2-2006, in respect of the employees falling under Section 530 of the Act are not correct. On the basis of the said interim report, a show-cause notice was ordered to be issued to 33 employees vide order dated 7-9-2006, who claims appeared in annexure B of the report of the chartered accountant dated 21-4-2005, as to why the amount of Rs. 99,49,264 disbursed to them be not refunded. The claims of such 33 employees could not be discharged in its entirety as there was a ceiling of Rs. 20,000 in respect of each employee.
17. Admittedly, the claims of Shiv Kailash Saini and other 33 employees classified for payment under Section 530 of the Act were not accepted by learned Counsel appearing for them vide letter dated 18-5-2005, but the Official Liquidator without any additional affidavit or document or inquiry approached this Court by filing C.A. No. 416 of 2005 that claims of 464 workmen including 33 employees in annexure B has been accepted to pay Rs. 8,66,13,241 as dividend.
18. In view of the above factual background, the pertinent question which requires to be examined is whether the Official Liquidator was competent to make payment to 33 employees as per the list contained in annexure B and whether the learned Official Liquidator has misled this Court in respect of the payment to workmen/employees of the company in liquidation and whether the payment has been made over and above the approvals sought from this Court. Still further, whether the action of the Official Liquidator in making such payment was with the intention to cause loss to the company in liquidation and to misappropriate the funds of the company in liquidation with the help and connivance of the beneficiaries of receiving such payment.
19.33 employees, whose names appear in the list annexure B, lodged their claims in Form No. 67 regarding the proof of debt of workmen even prior to the advertisement inserted by the Official Liquidator inviting the claims from the workmen. The claims lodged are almost in identical words. Since all the affidavits and proofs of debt are identical, for the facility of reference, an extract of documents produced by Shri Shiv Kailash Saini and attached as annexure A3 in reply submitted through Shri Vivek Bhandari, advocate, read as under:
FORM No. 67COMPANY PETITION No. 8214 OF 1997 OF OSWAL AGROFURANE LTD. PROOF OF DEBT OF WORKMANI, Shiv Kailash Saini, son of Ram Saroop, resident of Ambala city, Haryana, an asstt. of Oswal Agro Furane Ltd., village Basaur, tehsil Dhuri, district Sangroor, solemnly affirm and say:
That the above named company was on the 29th day of April, 2001 and still is justly and truly below indebted to me as per descriptions appear in the schedule below in sums set against my name in the column 12 of such schedule for wages, accrued holidays remuneration, gratuity, leave travel concession, notice period wages and compensations due to me as workman or others in the employment of the company in respect of services rendered by me to the company during such period as set out against my name in the column Nos. from 5 to 11 of such schedule for which paid sum or any part thereof, I say that I have not nor/had or received any manner of satisfaction or security whatsoever.------------------------------------------------------------------------------Name of employee: Shiv Kailash Saini Designation: Assistant------------------------------------------------------------------------------Father's Name Ram Saroop Code :04/011 Annexure------------------------------------------------------------------------------Month Basic HRA CA FA PF Total Bonus Interestonamount received------------------------------------------------------------------------------May, 2525.00 631.25 350.00 75.00 252.50 274.34 0.001996April, 4066.54 1016.63 350.00 75.00 406.65 5717.67 442.582001Total 2,81,825.67 21,881.81Gratuity 10,664.00Notice pay 15,138.203,07,627.87 21,881.81 68,342.06Total (salary + interest + bonus + gratuity + notice pay) 3,97,079.01Less amount received : 25,068.75Net Amount Payable: 3,72,010.26'------------------------------------------------------------------------------
20. In respect of said Shiv Kailash Saini, the following information in tabulated form details the claim raised by him and found admissible by the chartered accountant:
-------------------------------------------------------------------------Description Claimed Accepted-------------------------------------------------------------------------Salary 2,81,825.67 2,81,825.67Bonus 21,881.81 15,843Gratuity 10,664 30,499Notice Pay 15,138.20 26,433Interest 68,342.06 49,091Less amount adjusted 25,068.75 25,068.75-------------------------------------------------------------------------Total 3,72,010 3,68,732.62-------------------------------------------------------------------------
21. From the photocopies of the record produced by the Official Liquidator on record, it transpires that it was only after the order was passed on 26-5-2005, and during the course of disbursement of the dividend amount, two affidavits dated 22-8-2005, and 29-8-2005, were filed by Shiv Kailash Saini. These affidavits read as under:
Affidavit of Sh. Shiv Kailash dated 22-8-2005Affidavit of Sh. Shiv Kailash, s/o Ram Sarup, aged 43 years, about, r/o 5377/ 3 Punjabi Mohalla, Ambala Cantt. Distt., Ambala.
I, the above named deponent solemnly affirm and depose as under:
1. That I am a worker of Oswal Agro Furane Ltd. [in liquidation].
2. That I have already filed my claim in Form No. 67 which has been duly adjudicated at serial No. 20 of List B of the report prepared by you.
3. That my name has been erroneously written in the report as Shiv Kailash Saini whereas my name is Shiv Kailash, and may be noted as such.
4. That my claim as adjudicated may kindly be released without further delay.
Dhuri (Sd.) DeponentDated: VerificationVerified that the facts stated in paragraph 1 to paragraph 4 above are true and correct to my knowledge. No part of it is false and nothing has been concealed therefrom.
Dhuri (Sd.) Deponent.Dated:Affidavit of Sh. Shiv Kailash Saini dated 29-8-2005
Affidavit of Sh. Shiv Kailash Saini, s/o Ram Saroop, resident of House No. 5377/3, Punjabi Mohalla, Ambala Cantt., Distt. Ambala.
I, the above named deponent solemnly affirm and depose as under:
1. That I am a worker in the Oswal Agro Furane Ltd. (under liquidation) and was working in the factory at the time of closure of the factory. That when the factory was running my duty to procure and maintain the record of the purchase of spares, stationery and repair equipment and technical machinery, as such I am entitled to my claim under Section 529A of the Companies Act, 1956. This was directly related with the manufacturing activity in the factory. Regd. Office and Admn. Office was situated at New Delhi and Chandigarh.
2. That I have already filed my claim in Form No. 67 which has been duly adjudicated at serial No. 20 of List B of the report prepared by you.
3. That, in view of the above, my claim may be released as per Section 529A of the Companies Act, 1956.
4. That my claim may kindly be released without further delay.
Dhuri (Sd.) DeponentDated:VerificationVerified that the facts stated in paragraph 1 to paragraph 4 are true and correct. No part of it is false and nothing has been concealed therefrom.Dhuri (Sd.) Deponent.Dated:
22. Learned Counsel for the Official Liquidator could not refer to any office noting or order passed by the then Official Liquidator accepting the claims of 33 employees contained in annexure 3 as the one admissible under Section 529A of the Act. Even learned Counsel appearing for the said employees could not refer to any order passed by the learned Official Liquidator accepting the claims of such employees as workmen and, thus, entitled to wages under Section 529A of the Act. But still, it appears that notice of dividend in Form No. 138 was issued and received through Shri Vivek Bhandari, Advocate, on 29-8-2005. On that very day, dividend notices have been discharged by the workmen/employees after verification of the identity by the officials of the bank. Still further, the notice of dividend in Form No. 138 is not signed by the Official Liquidator or by any other person but is addressed to each worker/employee through Shri Vivek Bhandari, Advocate. The reverse side of such dividend notice contains the authority of delivery of dividend to the bearer Shri Vivek Bhandari, Advocate, and also a receipt in respect of the dividend. The dividend notice, authority of delivery and receipt are attested by Mrs. Anita Ahuja, Notary, Chandigarh, and signatures have been attested by the manager of Oriental Bank of Commerce, Dhuri. The dividend notice, authority of delivery and receipt are reproduced hereunder for ready reference:
FORM No. 138In the High Court of Punjab and Haryana atChd. In the Companies Act, 1956AndIn the matter of Oswal Agro Furane Ltd. (in liquidation)Company Petition No. 173 of 2000Notice of dividend (Please bring this dividend notice with you)(Dividend of 100 paise in the rupee) To
Shiv Kailash Saini, s/o Ram Sarup r/o...
Through Vivek Bhandari, Advocate, H. No. 1239, Sector 8C, Chandigarh.
Take notice that a first dividend of 100 paise in the rupee has been declared. The amount payable to you is Rs. 3,58,733 and the same will be payable at my office on the...day of...2005 and on the subsequent working days up to the...day of...2005 between the hours of....
Upon applying for payment this notice you must be produced entire with any bills of exchange, promissory notes or any other negotiable securities held by you. If you desire the dividend to be paid to some other person, you may sign and lodge with the Official Liquidator an authority in the prescribed form (Form No. 139). If you do not attend personally, you must fill up and sign the enclosed forms of receipt and authority.
Dated this...day of...2005.
'Insert here 'first' or 'second' or 'final' as the case may be.
Note: 1. The receipt and authority should, in the case of a firm's name and in the case of a limited company, by an officer of the company so described.
2. If you do not claim the dividend, declared and payable as above, within six months after the date when it became payable, the Official Liquidator shall pay the said amount in the companies liquidation account into the public account of India in the Reserve Bank of India, under Section 555(1) of the Companies Act, 1956.
Enclosures:
Authority of DeliveryIn the High Court of Punjab and Haryana at Chd.In the Companies Act, 1956AndIn the matter of Oswal Agro Furane Ltd. (in liquidation)Shiv Kailash Saini, s/o Ram Saroop r/o H.N. 5377/3,Punjabi Mohalla, Ambala Cantt., Distt. Ambala.Date:Sir,Please deliver to the bearer Shri Vivek Bhandari, advocate, H. No. 1239, Sector 8C, Chandigarh, the first dividend of Rs. 3,58,733 payable to me.
Rs. 3,58,733 (Sd.) Payee's SignatureTo
The Official Liquidator of Oswal Agro Furane Limited (in liquidation), Office of the Official Liquidator, SCO 9, Second Floor, Sector 26 MM, Chandigarh
Receipt
In the High Court of Punjab and Haryana at Chd. In the Companies Act, 1956
And
In the matter of Oswal Agro Furane Ltd. (In liquidation)
Shiv Kailash Saini, s/o Ram Saroop r/o H.N. 5377/3, Punjabi Mohalla, Ambala Cantt, Distt. Ambala.
Date:
Received from the Official Liquidator of the above company the sum of Rs. 3,58,733 being the amount payable to me in respect of the first dividend of 100 paise in the rupee.Rs. 3,58,733 (Sd.) Payee's Signature
23. In reply dated 22-11-2006, to the show-cause notice in terms of order dated 7-9-2006, filed on behalf of the Official Liquidator, reference is made to the order passed by this Court on 26-5-2005, appointing Shri Atul Gandhi as Commissioner of the court to oversee the arrangement for payment to the workmen and to ensure that the amount reach the workmen. Reference is also made to the minutes recorded by the Official Liquidator on 12-9-2005, wherein revised list of 66 employees was submitted by the learned chartered accountant on the basis of fresh affidavits filed therein.
24. Out of such 66 employees, it appears that two employees were out of list annexure B, whereas remaining employees were out of list annexure A.
25. A perusal of the reply shows that there is no averment regarding the passing of any order by the Official Liquidator on or after 18-5-2005, till the application was filed before this Court on 23-5-2005, wherein it was averred by the Official Liquidator that claim of 464 workmen had been found by the learned chartered accountant as admissible under Section 529A of the Act. In spite of pointed reference to learned Counsel representing the Official Liquidator and the Official Liquidator present in the Court, no such order was produced and it was stated that the relevant files are with the Central Bureau of Investigation. On 1-12-2006, learned standing counsel for the Central Bureau of Investigation was requested to produce the record for the perusal of the Court. Even the record produced does not contain any order but the noting shows that a cheque for Rs. 10,80,14,047 was approved for payment on 17-6-2005.
26. In the reply filed on behalf of 30 workmen through Shri Vivek Bhandari to the show-cause notice issued, again there is no reference to any order passed by the Official Liquidator on or after 18-5-2005, till 23-5-2005, in respect of their assertion that their claims are admissible under Section 529A of the Act as proposed by them in the communication dated 18-5-2005, in respect of the employees classified as annexures 'B' and 'C'. It was stated that the work performed by these persons clearly fall within the definition of 'workmen' as defined in Section 2(s) of the Industrial Disputes Act, 1947, and they have been incorrectly classified in annexure B, the report of the chartered accountant. The affidavits have been filed before this Court spelling out the nature of work performed by them when the factory was in operation.
27. Affidavit dated 6-10-2006, of Shri Shiv Kailash Saini has been appended with the reply which reads as under:
1. That I restate and reaffirm the affidavit filed by me before the Official Liquidator at the time of discharging my dividend warrant, which describes the nature of duties performed by me when the factory was in operation.
2. That I was a workman employed in the Oswal Agro-Furane Ltd. (under liquidation) and was working in the factory at the time of closure of the factory. That when the factory was running my duty to procure and maintain the record of the purchase of spares, stationery and repair equipment and technical machinery, as such I am entitled to my claim under Section 529A of the Companies Act, 1956. The nature of my duties were directly related with the manufacturing activity in the factory.
3. That being a workman I had filed my claim in Form No. 67 which has been duly adjudicated at serial No. 20 of List B the report dated 21 -4-2005, prepared by the Official Liquidator, but was wrongly classified as being payable under Section 530.
4. That on 30-8-2005,1 appeared before the Official Liquidator and Court Commissioner Mr. Atul Gandhi, and bank manager, Oriental Bank of Commerce Mr. Joshi along with my documents of identification and discharged and submitted my dividend warrant, along with which 1 submitted an affidavit describing my nature of duties. The dividend warrant was attested by Mrs. Anita Ahuja, Notary, in the presence of the aforesaid persons.
5. That thereafter, the claim amount was remitted directly to my bank account No. 7290 in Oriental Bank of Commerce on 26-10-2005, as per procedure settled by the Court Commissioner Mr. Atul Gandhi and the Official Liquidator.
6. That my claim has been correctly disbursed under Section 529A of the Companies Act, 1956, as I am a workman as defined in Section 2(s) of the Industrial Disputes Act, 1947.
7. That I am ready and willing to face my inquiry or investigation with regard to the nature of my duties as stated in the affidavit before the Official Liquidator or with regard to the disbursal of the claim to me.
28. Reply on behalf of other three employees is verbatim same with some changes regarding the nature of work as those filed through Shri Vivek Bhandari, Advocate.
29. In the reply filed on behalf of learned chartered accountant, it has been pointed out that there was considerable divergence in the interpretation of Section 2(s) of the Industrial Disputes Act, 1947, and that the Official Liquidator was approached with this difficulty. After discussion, it was decided by way of abundant precaution to classify the workers and the staff on the basis of designation alone and any person who was described in the record of the company as supervisor, officer, manager and senior accounts officer should be categorized separately and claims of such claimants should be classified as payable under Section 530 of the Act. The chartered accountant was supplied with a copy of similar report in Punjab Anand Battery, company in liquidation, and was asked to follow the report as a precedent prevailing in the office of the Official Liquidator. It is pointed out that the Official Liquidator was fully aware regarding the legal consequences of classification of workers into annexures A, B and C. A meeting was held on 16-8-2005, wherein the Official Liquidator sought certain clarifications on the report regarding the claims falling into annexures B and C and requested the chartered accountant to prepare dividend warrants of those individuals. A letter dated 17-8-2005, was written to the Official Liquidator pointing out that switching category may not be correct and the same could be done if additional evidence is supplied by the claimants but the Official Liquidator took offence to the said letter and communicated back that since the claimants have submitted certain affidavits and that the chartered accountant was wrong in highlighting Section 530 of the Act and was directed to prepare the dividend warrants.
30. I have heard learned Counsel for the parties at length. The procedure for proof of debt provided in the Rules has not been followed by Shri Ashish Vajpayee, the then Official Liquidator, who joined as Official Liquidator attached to this Court on 16-10-2004. After inviting claims from the creditors, the Official Liquidator was required to examine the proof of debt lodged with him and to call upon the creditor to produce further evidence after sending a notice to such creditor. In terms of rule 163 of the Rules, the Official Liquidator was to record an order in writing admitting or rejecting the proof in whole or in part. Every decision of the Official Liquidator accepting or rejecting the proof either wholly or in part was required to be communicated to the creditor. It is further contemplated that in case of rejection, such communication was required to be sent to the concerned creditor by registered post with acknowledgement due and in the case of acceptance, it can be under certificate of posting. The decision of the Official Liquidator rejecting the claim is appealable in terms of rule 164 of the rules. Rule 167 of the Rules contemplates that the Official Liquidator was to file in the Court a certificate in Form No. 71 containing a list of creditors who submitted to him proofs of their claims in pursuance of the advertisement and the notices referred to in rule 148, the amounts of debts for which they claimed to be creditors, distinguishing in such list the proofs admitted wholly, the proofs admitted or rejected in part, and the proofs wholly rejected. The proofs along with the memorandum of admission or rejection of the same in whole or in part, as the case may be, was required to be filed in the court along with the certificate and such list of creditors could not be varied except under the orders of the Court in terms of rule 168 of the Rules. For the facility of reference, rules 163,167 and 168 of the Rules are reproduced hereunder:
163. Acceptance or rejection of proof to be communicated-After such investigation as he may think necessary, the liquidator shall in writing admit or reject the proof in whole or in part. Every decision of the liquidator accepting or rejecting a proof, either wholly or in part, shall be communicated to the creditor concerned by post under certificate of posting where the proof is admitted and by registered post with acknowledgement due where the proof is rejected wholly or in part provided that it shall not be necessary to give notice of the admission of a claim to a creditor who has appeared before the liquidator and the acceptance of whose claim has been communicated to him or his agent in writing at the time of acceptance. Where the liquidator rejects a proof, wholly or in part, he shall state the grounds of the rejection to the creditor in Form No. 69. Notice of admission of proof shall be in Form No. 70.
167. Proof and list of creditors to be filed in Court.-In a winding up by the Court, the Official Liquidator shall, within three months from the date fixed for the submission of proofs under rule 147 of these Rules or such further time as the Court may allow, file in Court a certificate in Form No. 71 containing a list of the creditors who submitted to him proofs of their claims in pursuance of the advertisement and the notices referred to in rule 148, the amounts of debts for which they claimed to be creditors, distinguishing in such list the proofs admitted wholly, the proofs admitted or rejected in part, and the proof s wholly rejected. The proofs, with the memorandum of admission or rejection of the same in whole or in part, as the case may be, endorsed thereon, shall be filed along with the certificate.
168. List of creditors not to be varied.-The list certified by the Official Liquidator and filed in Court shall be the list of the creditors of the company, and shall not be added to or varied except under orders of Court and in accordance with such orders. Where an order is made adding to or varying the list of creditors, the Official Liquidator shall amend the list in accordance with such order.
31. On the basis of said Rules, the chartered accountant, as per his report, has found the claims of employees falling in annexure B as admissible under Section 530 of the Act and in respect of employees in annexure C as inadmissible for one or the other reason. The Official Liquidator could have sought further evidence in terms of rule 159 of the Rules and then to pass an order admitting or rejecting the claim in terms of rule 163 of the Rules but on 23-5-2005, an application was filed before this Court without accepting the claims of the employees in annexures B and C. In the said application, it was conveyed as if the claims of 464 workmen have been accepted under Section 529A of the Act. Such representation is factually incorrect and was made to mislead this Court. Still further, learned chartered accountant in his report dated 21-4-2005, has given names of 395 workmen in annexure A, 33 employees in annexure B and 36 employees and workmen in annexure C but during the course of hearing Shri Chadda, chartered accountant, has pointed out that the total wages of workmen in annexures A and B amounts to Rs. 8,72,55,256.68 and Rs. 1,08,50,409.87 respectively and the total wages of the workmen in annexure C amounts to Rs. 45,10,368.19 and employees in annexure C amounts to Rs. 68,09,386.32, total amounting to Rs. 10,94,25,421.06. As against the said amount in respect of 464 workmen as per report of the chartered accountant, Shri Ashish Vajpayee has sought approval of this Court for payment of Rs. 8,66,13,241 in respect of such 464 employees of the company in liquidation. Actually 575 workmen have been paid after transferring a sum of Rs. 10,80,14,047. It is, thus, apparent that the learned Official Liquidator has not only misled this Court in respect to existence of claims of 33 employees and 36 employees/workmen falling within annexures B and C of the report of the chartered accountant but also disbursed more than two crores over and above the amount communicated to this Court in the miscellaneous application. The Official Liquidator also paid 575 employees though approval was sought in respect of 464 employees.
32. There is no order of acceptance or rejection of proof contemplated under rule 163 of the Rules but still payment has been made to 33 employees and 36 employees/workmen on the basis of affidavits taken on the date of issuance of dividend notices and the amount disbursed. The dividend notice reproduced above is blank in respect of signatures, date of appearance, etc. Still further, the proof and list of creditors in terms of rule 167 of the Rules has not been filed in the court though in C.A. No. 416 of 2005 it is averred that the list has been displayed on the notice board on 25-5-2005, in an application filed a day earlier, ie., 24-5-2005. One cannot understand how in respect of the list displayed on 25-5-2005, on the notice board, it could be so averred in the miscellaneous application filed on 24-5-2005.
33. The dividend notice in Form No. 138 is, in fact, the notice required to be served not less than one month prior to the date fixed for payment thereof. In terms of rule 276 of the Rules, the authority to deliver and receipt are required to be executed by the creditor only if the creditor is not to attend personally. This Court on 26-5-2005, has only permitted the dividend notices to be collected by Shri Vivek Bhandari, advocate, but the dividend notices were to be signed by the workers. It goes without comprehension as to how and why the authority of delivery was executed by the creditors in favour of Shri Vivek Bhandari, Advocate. The amount due to the workmen was to be remitted to their respective bank accounts. Shri Atul Gandhi, Advocate, was requested to oversee the arrangement as Commissioner of the Court to ensure that the amount reaches the workers. Shri Gandhi was also to satisfy the genuineness of the claims in respect of the workmen who had died while dispensing with the requirement of obtaining succession certificate.
34. During the course of hearing, it was pointed out that out of 13 death claims, Shri Atul Gandhi, Commissioner of Court, accepted the genuineness of 9 claims including the one of Smt. Krishna Devi, w/o Late Shri S.R. Verma, falling within the list of annexure B of the report of the chartered accountant. It is also explained that since all the workmen and employees of the company in liquidation have opened their bank accounts with Oriental Bank of Commerce, Dhuri, and such bank accounts were opened after obtaining the photographs and introduction, the process of identification of the workmen would be earned out by the officials of the bank. It was pointed out during the course of hearing that the identification process of the workmen was carried out by comparison of signatures, photographs and other data available with the bank by the bank officials. In case of discrepancy, the bank has refused to identify the workman and certain payments were withheld. In fact, the Commissioner of Court vide communication dated 3-10-2005, addressed to the Official Liquidator has suggested that the matter be brought to the notice of this Court for appropriate clarification, direction but to such direction or clarification was sought by the learned Official Liquidator.
35. Another factor which requires to be noticed is that the Official Liquidator has sought reports from the learned chartered accountant without permission or direction of this Court in respect of which learned chartered accountant has given supplementary reports on 22-11-2005, and 8-2-2006. The action to seek further reports from the learned chartered accountant without the intervention of this Court is highly improper if not illegal.
36. Shri Vivek Bhandari, Advocate, who has put in appearance on behalf of the workers and the employees, has asserted that the classification made by the chartered accountant by way of annexures A, B and C was never accepted by the employees. The employees are the workmen within the meaning of Section 2(s) of the Industrial Disputes Act, 1947, and, therefore, payment has been rightly made to them in terms of Section 529A of the Act Reliance is placed on few Supreme Court judgments to contend that the nomenclature of the post is not relevant. The nature of duties have to be taken into consideration on which basis alone it can be found whether such employees are the workmen within the meaning of Section 2(s) of the Industrial Disputes Act, 1947. However, learned Counsel could not refer to any order passed by the Official Liquidator in respect of switching of category from Section 530 to that under Section 529A of the Act. In fact, learned chartered accountant in the communication dated 17-8-2005, annexure A-17 has suggested that the office may call for additional evidence to ensure switching of employees falling in annexure B from the said category. It appears that on the basis of the said communication learned Official Liquidator sought affidavits from the employees falling in annexure B which were filed on 29-8-2005, and the payments made on the very same date. It may be noticed that the learned chartered accountant in his reply has averred that faced with difficulty to classify the workers within the meaning of Section 2(s) of the Industrial Disputes Act, 1947, the learned chartered accountant approached the Official Liquidator. It has been averred in paragraph No. 15 of the reply that after discussion with the Official Liquidator it was decided by way of abundant precaution to classify the claimants as workers and staff on the basis of designation alone. It is, thus, apparent that the claims of 33 employees falling in annexure B of the report of the chartered accountant dated 21 -4-2005, have been paid without any acceptance of claims by the Official Liquidator and on the basis of misrepresentation by the Official Liquidator to this Court. Though Shri Vivek Bhandari, Advocate, has communicated to the Official Liquidator on 18-5-2005, to file additional documents to admit the claims of the employees in annexure B treating them under Section 529A of the Act but no such documents were filed before the applications were filed before this Court to seek approval of the payment.
37. The Official Liquidator has accepted the report of the chartered accountant in its entirety as there is no averment in the application that such report is not acceptable, therefore, the disbursement made to 33 employees in annexure B is wholly unjustified, illegal and without jurisdiction. 7
38. In view of the above, I deem it appropriate to issue the following directions:
(i) That the Official Liquidator shall consider and pass appropriate order adjudicating the claims of the employees classified under Section 530 of the Act in terms of the report of the chartered accountant dated 21-4-2005, 22-11-2005, and 8-2-2006.
(ii) That the employees falling in annexure B of the report of the chartered accountant dated 21-4-2005, shall refund the amount to the Official Liquidator within one month pending adjudication of their claims so as to restore the position as it existed prior to disbursement of the amount.
(iii) That the Central Bureau of Investigation to investigate the entire gamut of payment of dividend from the stage of invitation of claims, settlement and payment to find out any misappropriation of funds of the company in liquidation by the Official Liquidator, employees or workmen or any other person who has connived or colluded with the officials. The Central Bureau of Investigation shall furnish the report, preferably within six months, on the investigation carried out before this Court in a sealed cover before the same is presented to the competent Court for appropriate action, if any.
(iv) Shri Atul Gandhi, Advocate, shall prepare another report after examining the calculations of the amount payable to the workmen into list annexure A of the report dated 21-4-2005, as well as to examine the correctness of the calculations made by the chartered accountant in his reports dated 22-11-2005 and 8-2-2006. Shri Atul Gandhi is permitted to raise the bill of his fees and expenses keeping in view the nature of the work involved.
(v) The Official Liquidator and M/s. A.K. Chadda and Co., chartered accountants, shall forward the entire record forthwith for scrutiny by Shri Atul Gandhi, Advocate. The Central Bureau of Investigation shall also make the record available for perusal by Shri Atul Gandhi, Advocate, from time to time, Shri Atul Gandhi, Advocate, to submit such interim or final report, as he may consider necessary, from time to time.
(vi) That show-cause notices be issued to the employees and the workmen contained in annexure C of the report dated 21-4-2005, of the chartered accountant as to why refund of the amount paid by the Official Liquidator be not ordered, for 22-2-2007. The manager, Oriental Bank of Commerce, Dhuri, is also directed to serve show-cause notices upon the employees and the workmen as per list annexure C for the date fixed in addition to ordinary process.