In the High Court for the States of Punjab Vs. State Bank of Patiala and ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/1042868
CourtPunjab and Haryana High Court
Decided OnFeb-01-2013
AppellantIn the High Court for the States of Punjab
RespondentState Bank of Patiala and ors.
Excerpt:
ca no.579 of 2010. ::-1-:: in the high court for the states of punjab and haryana at chandigarh. ca no.579 of 2010 date of decision:01. t february, 2013. m/s punjab spinning & weaving mills limited applicant through mr.parveen gupta, advocate with mr.d.p.ojha, ol. versus state bank of patiala & ors.respondents through mr.alok jagga, advocate for respondent no.2. mr.s.k.sharma budladhewala, advocate for the workmen. coram:hon'ble mr.justice surya kant.”1. whether reporters of local papers may be allowed to see the judgment?.”2. to be referred to the reporters or not?.”3. whether the judgment should be reported in the digest?. surya kant, j. [oral].this application moved by the official liquidator seeks declaration and payment of dividend to the creditors and workmen of m/s punjab spinning & weaving mills limited– company-in- liquidation. [2].the company was ordered to be wound-up by this court vide order dated 05.07.2001 passed ini cp no.34 of 2001 and the official liquidator attached to this court was appointed as its liquidator. it is averred that m/s ashok dahra & associates, a chartered accountant on the approved panel was assigned the job of verification of the claims of the workmen and other creditors of the company-in-liquidation vide order dated 17.01.2008 passed by this court in olr no.2 of 2008. the chartered accountant after verification of the claims of workmen and other creditors gave a ca no.579 of 2010. ::-2-:: report dated 16.03.2009, followed by another report dated 27.03.2009 in respect of the secured creditors comprising three banks, namely, indian bank, indian overseas bank and state bank of patiala. [3].the chartered accountant received 822 claims of workmen determinable under section 529-a of the companies act, 1956 besides 27 claims of employees, 18 claims of the government departments and 20 claims of the un-secured creditors.to be determined under sections 529 and 530 of the companies act,1956. the report further reveals that out of 849 workmen and 27 employees, the claims of 716 workmen aggregating to `2,09,38,076/- were accepted under section 529-a, whereas those of 27 employees aggregating to `9,23,263/- have been accepted under section 530[1].[b].and the remaining 62 claims were rejected due to non-availability of their names in the statement of affairs and settled records of the company. [4].it is further averred that as per the report of the chartered accountant, the secured creditors [three banks].were entitled to `18,23,13,622/- up to the date of winding-up order, out of which a sum of `13,40,00,000/- was disbursed to them on pari-pasu basis in the ratio of 27.78%, 41.40% and 30.82% respectively whereas the balance dividend of `4,83,13,622/- has also been disbursed to the three banks as per order dated 15.10.2009 passed by this court in ca no.22-23 of 2008 in ca no.214 of 2007 [annexure a-2].the official liquidator has, thus, prayed that `2,09,38,076/- are not required to be disbursed to 716 workers whose claims under section ca no.579 of 2010. ::-3-::529. a have been accepted. [5].notice of this application was issued to the secured creditors and in response thereto, the indian bank – respondent no.2 alone has filed its reply/affidavit-cum-objections. [6].the main objection taken by the indian bank and as urged before this court also is that the chartered accountant or the official liquidator have determined the claim of secured creditors [banks].on the basis of the concession made by these banks before the bifr when efforts were being made for the revival of the company. it is averred that the said concession was made conditionally subject to revival of the company and since the ex- management of the company was not found to be serious in its efforts and the bifr recommended to wind-up of the company, the concession made by the banks before the bifr became inconsequential and could not be relied upon to determine their preferential claims by the official liquidator. [7].on the other hand, mr.parveen gupta, learned counsel for the official liquidator as well as shri s.k.sharma budhladhewala, representing the workmen contend that the objection taken by the indian bank is wholly misconceived, misplaced and contrary to record. it is maintained that the three banks though raised a claim of `120,51,44,422/-, however, on adjudication by the chartered accountant/ official liquidator it was found, as a matter of fact, that the due claim of the three banks as on the date of winding-up of the company, i.e., 05.07.2001, was only to the tune of `18,23,13,622/- including interest accrued thereon upto the said date and the entire ca no.579 of 2010. ::-4-:: amount so determined has already been disbursed. [8].the question that arises for consideration is whether the claim of the secured creditors [banks].has been determined on the basis of the alleged concession made by them before the bifr or on the scrutiny of statement of affairs filed by the ex.-directors coupled with the audited balance-sheets for the last four years of the company-in-liquidation?. [9].the objection raised by the indian bank is founded upon the minutes of the meeting held by the official liquidator on 14.11.2005 [annexure r-3].wherein the official liquidator is said to have adjudicated the claim of three banks to the extent of `120,50,94,422/- in the proportion of 27.78% [indian bank]., 41.40% [indian overseas bank].and 30.82% [state bank of patiala].the verification report submitted by the chartered accountant to the official liquidator [annexure r-6].is also relied upon to urge that the reduced claim of the banks to the extent of `18,23,13,622/- was determined after taking into consideration the concession, especially with respect to the rate of interest, extended by the banks to the company when the matter was pending consideration before the bifr. [10].learned counsel for the official liquidator on the other hand refers to the contents of that very report of the chartered accountant, relevant part whereof reads as follows:- “on examination of statement of affairs and the last audited balance sheet of company as on date of winding-up of the company, it has been observed that the secured loans from banks were calculated to ca no.579 of 2010. ::-5-:: `18,23,13,622/- including interest accrued and are due till date as compared to the claim of `120,51,44,422/- submitted by the banks. on further scrutinizing the audited balance sheets for the last 4 years from the date of winding up of the company, we have observed that secured loans from banks under schedule iii secured loan was shown to `17,82,94,882/- as on 31.12.2000, `17,02,57,402/- as on 31.12.1999, `16,22,19,922/- as on 31.12.1998 and `15,41,82,453/- as on 31.12.1997. the break up of principal amount and interest accrued and due on above is given as under:- dues 21.7.2001 31.12.2000 31.12.1999 31.12.1998 term loan 1,55,00,000 1,55,00,000 1,55,00,000 1,55,00,000 working 4,88,7231 4,88,7231 4,88,7231 4,88,7231 capital facility interest 11,79,36,391 113917651 105880171 97842691 accrued and due on above total 182313622 178294882 170257402 162219922”. [11].in respect of the revised claim lodged by the banks before the official liquidator, the report of the chartered accountant says:- “from the above statements, it is observed that banks are either not maintaining proper books of accounts which show the correct recovery from its borrower or they are not showing the correct amount due from the company for the reasons not known to us/reasons beyond our knowledge. whereas they have submitted their claims of `120,50,44,422/- with the official liquidator and fixed their ratio amongst the banks to avoid any misunderstanding in future and also got, the interim disbursement of `13,40,00,000/- in the same ratio, than why the new calculations are submitted to us. it shows ca no.579 of 2010. ::-6-:: that these banks have no such permanent ledger showing the year-wise balance outstanding, this seems that they are calculating the interest as and when required. all the bank statements were showing the year-wise transactions of outstanding amount from the suit filed date to 05.07.2001, the date of winding-up of company, but there were no such transactions reflected in the bank statements which were finalized in the meeting held in the hon'ble board of industrial & financial reconstruction up to the date when the rehabilitation scheme was failed [the period under company was under rehabilitation scheme during 1996 to 2000].”.[12].the contention of the banks that the official liquidator in the meeting held on 14.11.2005 admitted their claim of `120,50,94,422/- is totally baseless and contrary to the record for the reason that the very task of verifying the claims of workers and secured creditors was firs.time assigned by this court to the chartered accountant vide order dated 17.01.2008 passed in olr no.2 of 2008. in the absence of a report from the chartered accountant determining various claims received against the company, there could arise no occasion for the official liquidator to accept or admit the above mentioned estimated claim of the three banks. since the chartered accountant admittedly submitted his report on the claim of the secured creditors on 27.03.2009, hence acceptance of their claim by the official liquidator prior thereto, i.e., on 14.11.2005 did not arise. suffice it to mention that the minutes of the meeting dated 14.11.2005 merely take notice of the claim as lodged by the banks and not the adjudicated claims.ca no.579 of 2010. ::-7-:: [13].on the contrary, it is explicit from the report of the chartered accountant that the claim of the banks as on 05.07.2001 was not adjudicated on the basis of the alleged concession given before the bifr, rather its determination arises out of verification of the statement of affairs coupled with the audited balance-sheets of the company reflecting the due entries. the exorbitant claim subsequently raised by the banks has been found to be un- trustworthy by the chartered accountant for more than one good reasons noticed in the report, which need not be repeated. [14].the order dated 19.08.2004 passed by this court in ca no.256 of 2004 in cp no.34 of 2001 while confirming the sale of assets reveals that the sale proceeds to the tune of `19 crores were received by the official liquidator, out of which `18,23,13,622/- have already been disbursed to the secured creditors [three banks].the claims of 716 workers have been determined on pari-pasu basis in accordance with section 529-a of the companies act. the banks do not allege mis-application of the provisions of section 529-a or any other mistake in determination of the claims of 716 workers.on the other hand learned counsel representing the workers has accepted the determination of their respective claims made by the chartered accountant/official liquidator. [15].in this view of the matter and for the reasons afore-stated, i reject the objection of indian bank and while accepting the prayer made in this application, permit the official liquidator to disburs.the amount of `2,09,38,076/- to workers.the official liquidator is further allowed to make payment of `3,03,435/- and `11,030/-as balance ca no.579 of 2010. ::-8-:: professional fee payable to the chartered accountant. the official liquidator is also allowed to declare dividend as per rule 275 of the companies [court].rules, 1959 and publish dividend notice in the newspapers 'the tribune' [english].and punjab kesr.[hindi].and issue individual notices in form-138 of companies [court].rules, 1956 to the workers.addresses given in the claim forms.the official liquidator is also permitted to open separate dividend account in the name of the company-in-liquidation to make payment of the dividend to the workmen. he shall be at liberty to avail the services of the chartered accountant who has verified the claims of the workmen and make payment of his professional fee out of sale proceeds of the company. [16].at this stage, learned counsel for the workmen states that meanwhile some of the workers have unfortunately passed away. if that is so, liberty is granted to their legal heirs to produce the original death certificate[s].from the sarpanch or any other public authority along with indemnity bonds to the satisfaction of the official liquidator and on production thereof, due amount shall be released to them. [17].disposed of. dasti. february 01, 2013. ( surya kant ) dinesh judge
Judgment:

CA No.579 of 2010.

::-1-:: IN THE HIGH COURT FOR THE STATES OF PUNJAB AND HARYANA AT CHANDIGARH.

CA No.579 of 2010 Date of Decision:

01. t February, 2013.

M/s Punjab Spinning & Weaving Mills Limited Applicant through Mr.Parveen Gupta, Advocate with Mr.D.P.Ojha, OL.

Versus State Bank of Patiala & ORS.Respondents through Mr.Alok Jagga, Advocate for respondent No.2.

Mr.S.K.Sharma Budladhewala, Advocate for the Workmen.

CORAM:HON'BLE Mr.JUSTICE SURYA KANT.”

1. Whether Reporters of local papers may be allowed to see the judgment?.”

2. To be referred to the Reporters or not?.”

3. Whether the judgment should be reported in the Digest?.

SURYA KANT, J.

[ORAL].This application moved by the Official Liquidator seeks declaration and payment of dividend to the creditors and workmen of M/s Punjab Spinning & Weaving Mills Limited– Company-in- Liquidation.

[2].The Company was ordered to be wound-up by this Court vide order dated 05.07.2001 passed ini CP No.34 of 2001 and the Official Liquidator attached to this Court was appointed as its Liquidator.

It is averred that M/s Ashok Dahra & Associates, a Chartered Accountant on the approved panel was assigned the job of verification of the claims of the workmen and other creditors of the Company-in-Liquidation vide order dated 17.01.2008 passed by this Court in OLR No.2 of 2008.

The Chartered Accountant after verification of the claims of workmen and other Creditors gave a CA No.579 of 2010.

::-2-:: report dated 16.03.2009, followed by another report dated 27.03.2009 in respect of the Secured Creditors comprising three banks, namely, Indian Bank, Indian Overseas Bank and State Bank of Patiala.

[3].The Chartered Accountant received 822 claims of workmen determinable under Section 529-A of the Companies Act, 1956 besides 27 claims of employees, 18 claims of the Government Departments and 20 claims of the un-secured CreditORS.to be determined under Sections 529 and 530 of the Companies Act,1956.

The report further reveals that out of 849 workmen and 27 employees, the claims of 716 workmen aggregating to `2,09,38,076/- were accepted under Section 529-A, whereas those of 27 employees aggregating to `9,23,263/- have been accepted under Section 530[1].[b].and the remaining 62 claims were rejected due to non-availability of their names in the Statement of Affairs and settled records of the Company.

[4].It is further averred that as per the report of the Chartered Accountant, the Secured Creditors [three Banks].were entitled to `18,23,13,622/- up to the date of winding-up order, out of which a sum of `13,40,00,000/- was disbursed to them on pari-pasu basis in the ratio of 27.78%, 41.40% and 30.82% respectively whereas the balance dividend of `4,83,13,622/- has also been disbursed to the three Banks as per order dated 15.10.2009 passed by this Court in CA No.22-23 of 2008 in CA No.214 of 2007 [Annexure A-2].The Official Liquidator has, thus, prayed that `2,09,38,076/- are not required to be disbursed to 716 workers whose claims under Section CA No.579 of 2010.

::-3-::

529. A have been accepted.

[5].Notice of this application was issued to the Secured Creditors and in response thereto, the Indian Bank – respondent No.2 alone has filed its reply/affidavit-cum-objections.

[6].The main objection taken by the Indian Bank and as urged before this Court also is that the Chartered Accountant or the Official Liquidator have determined the claim of Secured Creditors [Banks].on the basis of the concession made by these Banks before the BIFR when efforts were being made for the revival of the Company.

It is averred that the said concession was made conditionally subject to revival of the Company and since the ex- Management of the Company was not found to be serious in its efforts and the BIFR recommended to wind-up of the Company, the concession made by the Banks before the BIFR became inconsequential and could not be relied upon to determine their preferential claims by the Official Liquidator.

[7].On the other hand, Mr.Parveen Gupta, learned counsel for the Official Liquidator as well as Shri S.K.Sharma Budhladhewala, representing the workmen contend that the objection taken by the Indian Bank is wholly misconceived, misplaced and contrary to record.

It is maintained that the three Banks though raised a claim of `120,51,44,422/-, however, on adjudication by the Chartered Accountant/ Official Liquidator it was found, as a matter of fact, that the due claim of the three Banks as on the date of winding-up of the Company, i.e., 05.07.2001, was only to the tune of `18,23,13,622/- including interest accrued thereon upto the said date and the entire CA No.579 of 2010.

::-4-:: amount so determined has already been disbursed.

[8].The question that arises for consideration is whether the claim of the Secured Creditors [Banks].has been determined on the basis of the alleged concession made by them before the BIFR or on the scrutiny of Statement of Affairs filed by the Ex.-Directors coupled with the audited balance-sheets for the last four years of the Company-in-Liquidation?.

[9].The objection raised by the Indian Bank is founded upon the minutes of the meeting held by the Official Liquidator on 14.11.2005 [Annexure R-3].wherein the Official Liquidator is said to have adjudicated the claim of three Banks to the extent of `120,50,94,422/- in the proportion of 27.78% [Indian Bank]., 41.40% [Indian Overseas Bank].and 30.82% [State Bank of Patiala].The verification report submitted by the Chartered Accountant to the Official Liquidator [Annexure R-6].is also relied upon to urge that the reduced claim of the Banks to the extent of `18,23,13,622/- was determined after taking into consideration the concession, especially with respect to the rate of interest, extended by the Banks to the Company when the matter was pending consideration before the BIFR.

[10].Learned counsel for the Official Liquidator on the other hand refers to the contents of that very report of the Chartered Accountant, relevant part whereof reads as follows:- “On examination of statement of Affairs and the last Audited Balance Sheet of Company as on date of winding-up of the Company, it has been observed that the Secured Loans from banks were calculated to CA No.579 of 2010.

::-5-:: `18,23,13,622/- including interest accrued and are due till date as compared to the claim of `120,51,44,422/- submitted by the Banks.

On further scrutinizing the Audited Balance Sheets for the last 4 years from the date of winding up of the company, we have observed that secured loans from banks under Schedule III secured loan was shown to `17,82,94,882/- as on 31.12.2000, `17,02,57,402/- as on 31.12.1999, `16,22,19,922/- as on 31.12.1998 and `15,41,82,453/- as on 31.12.1997.

The break up of principal amount and interest accrued and due on above is given as under:- Dues 21.7.2001 31.12.2000 31.12.1999 31.12.1998 Term loan 1,55,00,000 1,55,00,000 1,55,00,000 1,55,00,000 Working 4,88,7231 4,88,7231 4,88,7231 4,88,7231 capital facility Interest 11,79,36,391 113917651 105880171 97842691 accrued and due on above Total 182313622 178294882 170257402 162219922”.

[11].In respect of the revised claim lodged by the Banks before the Official Liquidator, the report of the Chartered Accountant says:- “From the above statements, it is observed that banks are either not maintaining proper books of accounts which show the correct recovery from its borrower or they are not showing the correct amount due from the Company for the reasons not known to us/reasons beyond our knowledge.

Whereas they have submitted their claims of `120,50,44,422/- with the Official Liquidator and fixed their ratio amongst the banks to avoid any misunderstanding in future and also got, the interim disbursement of `13,40,00,000/- in the same ratio, than why the new calculations are submitted to us.

It shows CA No.579 of 2010.

::-6-:: that these banks have no such permanent ledger showing the year-wise balance outstanding, this seems that they are calculating the interest as and when required.

All the bank statements were showing the year-wise transactions of outstanding amount from the suit filed date to 05.07.2001, the date of winding-up of company, but there were no such transactions reflected in the bank statements which were finalized in the meeting held in the Hon'ble Board of Industrial & Financial Reconstruction up to the date when the rehabilitation Scheme was failed [the period under Company was under rehabilitation scheme during 1996 to 2000].”.[12].The contention of the Banks that the Official Liquidator in the meeting held on 14.11.2005 admitted their claim of `120,50,94,422/- is totally baseless and contrary to the record for the reason that the very task of verifying the claims of workers and Secured Creditors was fiRs.time assigned by this Court to the Chartered Accountant vide order dated 17.01.2008 passed in OLR No.2 of 2008.

In the absence of a report from the Chartered Accountant determining various claims received against the Company, there could arise no occasion for the Official Liquidator to accept or admit the above mentioned estimated claim of the three Banks.

Since the Chartered Accountant admittedly submitted his report on the claim of the Secured Creditors on 27.03.2009, hence acceptance of their claim by the Official Liquidator prior thereto, i.e., on 14.11.2005 did not arise.

Suffice it to mention that the minutes of the meeting dated 14.11.2005 merely take notice of the claim as lodged by the Banks and not the adjudicated claiMs.CA No.579 of 2010.

::-7-:: [13].On the contrary, it is explicit from the report of the Chartered Accountant that the claim of the Banks as on 05.07.2001 was not adjudicated on the basis of the alleged concession given before the BIFR, rather its determination arises out of verification of the Statement of Affairs coupled with the audited balance-sheets of the Company reflecting the due entries.

The exorbitant claim subsequently raised by the Banks has been found to be un- trustworthy by the Chartered Accountant for more than one good reasons noticed in the report, which need not be repeated.

[14].The order dated 19.08.2004 passed by this Court in CA No.256 of 2004 in CP No.34 of 2001 while confirming the sale of assets reveals that the sale proceeds to the tune of `19 Crores were received by the Official Liquidator, out of which `18,23,13,622/- have already been disbursed to the Secured Creditors [three Banks].The claims of 716 workers have been determined on pari-pasu basis in accordance with Section 529-A of the Companies Act.

The Banks do not allege mis-application of the provisions of Section 529-A or any other mistake in determination of the claims of 716 workeRs.On the other hand learned counsel representing the workers has accepted the determination of their respective claims made by the Chartered Accountant/Official Liquidator.

[15].In this view of the matter and for the reasons afore-stated, I reject the objection of Indian Bank and while accepting the prayer made in this application, permit the Official Liquidator to disbuRs.the amount of `2,09,38,076/- to workeRs.The Official Liquidator is further allowed to make payment of `3,03,435/- and `11,030/-as balance CA No.579 of 2010.

::-8-:: professional fee payable to the Chartered Accountant.

The Official Liquidator is also allowed to declare dividend as per Rule 275 of the Companies [Court].Rules, 1959 and publish dividend notice in the newspapers 'The Tribune' [English].and Punjab KeSr.[Hindi].and issue individual notices in Form-138 of Companies [Court].Rules, 1956 to the workeRs.addresses given in the claim forMs.The Official Liquidator is also permitted to open separate dividend account in the name of the Company-in-Liquidation to make payment of the dividend to the workmen.

He shall be at liberty to avail the services of the Chartered Accountant who has verified the claims of the workmen and make payment of his professional fee out of sale proceeds of the Company.

[16].At this stage, learned counsel for the workmen states that meanwhile some of the workers have unfortunately passed away.

If that is so, liberty is granted to their legal heirs to produce the original death certificate[s].from the Sarpanch or any other public authority along with indemnity bonds to the satisfaction of the Official Liquidator and on production thereof, due amount shall be released to them.

[17].Disposed of.

Dasti.

February 01, 2013.

( SURYA KANT ) dinesh JUDGE