Board of Industrial and Financial Reconstruction (B.I.F.R.) vs UMI Steel Limited

R.K. Merathia, J.—Learned Counsel appearing for the secured creditors, submitted that in terms of the order dated 18/02/2011, 3.4 % of the admitted claim of the secured creditors has not been disbursed as yet.

The Official Liquidator informs that Mr. B.R. Prasad, learned Counsel appearing for the workmen produced a copy of the Status quo order passed by the Hon''ble Supreme Court on 28/02/2011 and, therefore, he stayed his hands.

On this, counsel for the secured creditors submitted that the order of statuesque has been passed in SLP (Civil) no 4104/2011, which was filed against the order dated 30/09/2010, passed in C.A. No. 10/2008 in which the amount of about Rs. 8.50 crores, recovered from some of the properties of the company was in dispute and, therefore, the order of statuesque will only relate to the said amount and moreover after considering this position, the order of disbursement was passed on 18/02/2011 only with regard to undisputed amount, which is not pending in any litigation.

The relevant portion of the order dated 18/02/2011 reads as follows:

The said interlocutory applications have been filed by UCO Bank, IFCI, SASFIDBI and Bank of India respectively.

The said report has been filed by the Official Liquidator regarding the fund position. The said counter affidavit has been filed on behalf of the workmen to the said interlocutory applications.

Mr. B.R. Prasad, learned Counsel appearing for the workmen submitted that this counter affidavit will cover the I. As filed by the Bank of India also, i.e. I.A. No. 479 of 2011.

Heard the parties.

Counsel appearing for secured creditors submitted that some further amount may be disbursed to them as per the fund position.

Mr. Prasad, submitted that the other claim of about Rs. 8.50 crores recovered from some of the properties of the company, is pending in the Supreme Court vide SLP (C) No. 4104/2011.

The Official Liquidator submitted that one LPA and some other applications/claims of workmen are pending and, therefore, the fund position stands reduced to Rs. 5,44,29,231/excluding the said amount of Rs. 8.50 crores, and also the claims of the workmen of Rs. 55,70,769/, which will be considered at the time of final disbursement. He submitted that accordingly, 3.4% of the admitted claims of secured creditors may be paid as interim payment (as detailed in statement B, filed today), subject to undertaking to refund the excess amount if found recoverable from them at the time of final payment.

Accordingly, the Official Liquidator is permitted to disburse the amount as per the statement "B", to the secured creditors by 15th March 2011 after opening a separate dividend account in Punjab National Bank, S.N. Ganguly Road Branch, Ranchi. The Official Liquidator is also permitted to get the F. Ds encashed prematurely for the said purpose. The said disbursement will be made only after the undertaking is given by the secured creditors to the Official Liquidator that the excess disbursed amount, if any, will be refunded as per the order of the Court.

All the aforesaid interlocutory applications, report of the Official Liquidator and the counter affidavit stand disposed of.

It was pointed out that the other claims of the workmen was also kept aside while passing the said order and, in fact Mr. Prasad had said on 18/02/2011 that he had no objection for disbursement of the amount to the secured creditors to the tune of 3.4%.

On this, Mr. Prasad, learned Counsel appearing for the workmen submitted that in view of the order of statuesque he cannot say anything.

I am satisfied that the submissions of the secured creditors are correct. The SLP (C) No. 4104/2011, in which the order of statuesque has been passed on 28/02/2011 arises out of C.A. No. 10/2008 in which the claim of the workmen on some of the properties of the company to the tune of Rs. 8.50 crores is involved. This amount and the other claims of the workmen were kept aside while passing the order on 18/02/2011.

Moreover, Mr. Prasad, learned Counsel for the workmen fairly admitted that the order dated 18/02/2011 was not brought to the notice of the Supreme Court when the order of status quo was passed.

In the circumstances, it is clear that the order of status quo is not applicable to the order dated 18/02/2011. It further appears that while passing the said order of disbursement, the secured creditors have been asked to give undertaking to return the amount, if any, found in excess.

Accordingly, the Official Liquidator is directed to proceed in disbursing the amount to the secured creditors in terms of the order dated 18/02/2011 as early as possible and preferably by 31st March 2011.

Report of the Official Liquidator dated 16/03/2011

The Official Liquidator submitted that he has been informed by the counsel for the workmen that in the said SLP, notices have been issued and, therefore, he may be permitted to engage an advocate on record and a counsel to represent him in the Supreme Court in the said SLP, and pay the professional fee and other charges at their usual rates, and also permit him to incur expenses for visiting New Delhi in connection with the SLP No. 4104/2011, out of the funds of the company in liquidation.

He is permitted to do so.

This report stands disposed of.

I.A. No. 893 of 2011

Mr. Prasad, learned Counsel appearing for the workmen submitted that he may be supplied true/certified copies of the claims filed by the Banks/Financial Institutions before the Official Liquidator.

Official Liquidator informs that such claims runs in about 2000 pages and it will be better if Mr. Prasad inspect them and then true copy of required documents can be supplied to him on payment of costs.

Mr. Prasad has got no objection to this.

Accordingly, he is permitted to inspect the claims filed by the Banks/Financial Institutions before the Official Liquidator and indicate him the required copies and deposit the cost and, thereafter, the Official Liquidator will supply true copies of the same to him.

I.A. No. 853 of 2011 stands disposed of.

Let a copy of the order be handed over to the Official Liquidator.