Central Bank of India vs Rajkamal Ramavtar and Others

J.C. Upadhyaya, J.—The appeal u/s 483 of the Companies Act, 1956 is directed against the common oral order dated 7.7.2009 in Company Application No. 141 of 2006 with Company Application No. 59 of 2008 passed by learned company Judge of this Court. The Company Application No. 141 of 2006 was preferred by Respondent No. 1 Rajkamal Ramvatar, who was one of the members of the sale committee to direct the Official Liquidator (''OL'', for short) to pay the amount of workers'' dues proportionately as per the ratio determined earlier in the said proceedings. Company Application No. 59 of 2008 was preferred by the Appellant - Central Bank of India in capacity as secured creditor, directing the OL to pay the amount of expenses to the bank for securing the properties of the company, being the amount towards winding up expenses. Both the petitions came to be disposed of by the common oral order whereby so far as Company Application No. 141 of 2006 preferred by the Appellant - bank was concerned, it was directed that the OL shall reimburse at the initial stage the amount of Rs. 10,47,369/- to the Appellant - Central Bank of India towards security charges from 4.3.1998 to 18.2.2006 directly paid by the bank to the security agency and Rs. 2,38,172.73 which was claimed by the Appellant - bank to the OL and the OL was directed to disburse the said amount to the Appellant bank, upon the Appellant - bank supplying the letter from the office of the OL for disbursement to the OL and subject to verification by the OL of having received said amount or paid the amount either to the OL or on behalf of the OL by the bank. Accordingly, the Company Application No. 59 of 2008 preferred by the Appellant - company came to be disposed of by the learned company Judge.

However, so far the Company Application No. 141 of 2006 preferred by the Respondent No. 1 in capacity as one of the members of sale committee is concerned, in the impugned order it was directed that out of available fund of Rs. 1.51 Crore, since the OL has to retain Rs. 5 Lacs and also to disburse the amount of Rs. 13,42,000/-, the fund available with the OL approximately would be Rs. 1,19,60,000/- and out of which the OL shall disburse the amount of Rs. 1,19,50,000/- to the workers towards workers'' claim as per the percentage of ratio submitted in the report of the OL dated 15.9.2009. It was further observed in the impugned order that the OL has suggested the ratio for disbursement at 78.73% for the workers'' claim and 21.27% for the secured creditor viz. the Appellant - Central Bank of India. Feeling aggrieved and dissatisfied with the order of disbursement of the sum of Rs. 1,19,50,000/- towards the workers'' claim, the Appellant - Central Bank of India preferred this appeal.

Mr. S.S. Panesar, learned Counsel representing the Appellant submitted that the disbursement order passed by learned Company Judge is based upon the OL report dated 15.9.2006 and the OL report in turn is based upon the report of Chartered Accountant from Mr. K.K. Patel. It is submitted that during the course of liquidation proceedings of M/s. Shri Vivekanand Mills Ltd., initially M/s. Manoj, Fenil and Co. was appointed as Chartered Accountant by the OL but, report of said Chartered Accountant was not accepted by the OL and, therefore, K.K. Patel and company was appointed as second Chartered Accountant. If the report of the second Chartered Accountant appointed by the OL is considered, it is full of assumptions and presumptions and not based on any sound material. Even the report appears to have been prepared without verifying necessary supporting documentary evidence. It is submitted that even the number of workmen ascertained by the Chartered Accountant appears to be on random basis. The report of second Chartered Accountant contradicts the report of the first Chartered Accountant.

3.1 Mr. Panesar, learned Counsel asserted that while directing the OL to reimburse sum of Rs. 2,38,172/- to the Appellant bank, in the impugned order it was specifically directed that the bank shall produce supporting evidence before the OL and after verifying the claim, the OL shall disburse said amount to the Appellant - bank, but no such strict proof was required while disbursing the large sum of money by the OL to the workmen.

3.2 Mr. Panesar, learned Counsel for the Appellant submitted that except the Appellant - bank, there is no other secured creditor. Initially the ratio fixed for the disbursement of amount between the Appellant - bank and towards the claim of the workmen was 50%: 50%. Without any base, the OL in his report dated 15.9.2006 concluded the ratio at 78.73% qua the workers'' claim and 21.27% qua the claim of the Appellant - bank. That, therefore, the fixation of the ratio was arbitrary and perverse.

3.3 Mr. Panesar, learned Counsel further submitted that merely because the winding up order of Shri Vivekanand Mills Ltd. Came to be passed way back in 1991 that itself can never be the ground to throw overboard all the contentions and objections raised by the Appellant - bank. There was no delay whatsoever on the part of the Appellant - bank in raising its objections against the report of the OL.

3.4 Ultimately, Mr. Panesar, learned Counsel representing the Appellant - bank urged that the appeal may be allowed and the impugned order dated 7.7.2009 passed by the learned company Judge in Company Application No. 141 of 2006 in so far as the same pertains to release of sum of Rs. 1,19,50,000/- towards the workers'' claim be quashed and set-aside.

Mr. T.R. Mishra, learned Counsel representing the Respondent No. 1 - the Petitioner of Company Application No. 141 of 2006 and Mr. J.S. Yadav, representing the Respondent No. 2 OL supported the impugned order passed by the learned company Judge and submitted that after the winding-up order of the mill came to be passed way back in 1991, four times periodical payments were made to the workers and no objection was ever raised by the secured creditor (Appellant - bank), but pursuant to the impugned order, when the OL started the process of disbursement, at very belated stage, the Appellant preferred this appeal and obtained stay order in Civil Application No. 410 of 2009 in the instant appeal and at that time, only 400 workers were left out, who were to get their legitimate dues. It is submitted that in the impugned order, learned company Judge has dealt with all the objections and contentions raised by the Appellant - bank and has assigned cogent reasons while coming to the conclusion that workmen were entitled to get their legitimate dues as ascertained by the OL.

Ms. Nisha M. Thakore, learned advocate representing the newly added Respondents No. 3 to 11 submitted that the newly added Respondents No. 3 to 11 were workers in Shri Vivekanand Mills (now in liquidation) but, these Respondents have not received their legitimate dues. It is submitted that however, she has no objection whatsoever against the amount being paid to the workmen so also the ratio fixed by the OL and accepted by the learned company Judge in the impugned order, but these Respondents apprehend that the Respondent No. 1 Rajkamal Ramavtar by making misstatement of facts has suppressed the actual number of workers and it is apprehended that the Respondent No. 1 fraudulently incorporated the names of non-existent and fictitious persons in order to misappropriate the funds of the workers. Ms. Thakore, learned Counsel for the Respondents No. 3 to 11 submitted that, therefore, the presence of these Respondents in this matter appear to be necessary and, therefore, they preferred OJCA No. 21 of 2010 for joining them in this appeal as co-Respondents and vide order dated 10.2.2010 passed by this Court, they came to be impleaded as co-Respondents. However, it is submitted that these Respondents are in the process of filing company application for seeking direction of this Court by holding inquiry with regard to the discrepancy in number of workers and other irregularities committed by the Respondent No. 1 herein.

We have given our thoughtful consideration to the submissions advanced on behalf of the rival sides. There is no dispute that the winding up order of the erstwhile Shri Vivekanand Mills Ltd. came to be passed way back in the year 1991 in Company Application No. 37 of 1987. The Appellant-Central Bank of India in Company Application No. 141 of 2006 filed by the Respondent No. 1 herein for disbursement of workers'' claim, raised various objections before the learned company Judge and as a matter of fact, requesting for almost de novo process. It is pertinent to note that the contentions which are raised on behalf of the Appellant in this appeal have been raised before the learned company Judge in Company Application No. 141 of 2006. The Company Application No. 141 of 2006 with Company Application No. 59 of 2008 came to be disposed of by the impugned common order. The Company Application No. 59 of 2008 was preferred by the Appellant - Central Bank of India to direct the OL to pay the amount of expense to the bank for securing the properties of the company being the amount towards the winding up expense. The Appellant - bank by preferring any substantial application did not challenge the winding up process undertaken by the OL.

Moreover, perusing the impugned order, it clearly transpires that before the learned company Judge, identical contentions were raised on behalf of the Appellant - bank as raised in this appeal. The main contention raised on behalf of the Appellant - bank is that the report of the Chartered Accountant Mr. Patel is based on assumptions and presumptions and, therefore, the OL who relied upon said report in turn, suffers from the said infirmities. The said contention came to be dealt with by the learned company Judge in the impugned order at length. On behalf of the Appellant, it was submitted that the number of workers ascertained by the OL is incorrect and based on mere presumptions. In paragraph 9 in the impugned order, the learned company Judge observed that so far as the CA report is concerned, in normal circumstances, the verification of the claim of the workers is to be undertaken by the OL with the help of Chartered Accountant and the opinion of the CA in normal circumstances on the aspect of admissibility of the claim is to be treated as an opinion of expert in the field and unless there is ex-facie glaring or apparent mistake, the same would be acted upon. It is pertinent to note that in the present case report of the CA has been accepted by the OL, and the OL, based on the report of the CA has suggested the disbursement as per the ratio worked out in his report. In that background, in the impugned order, it was observed that if the CA report is considered to be vulnerable as suggested by the bank, it would result into putting the whole clock back inasmuch as earlier the company Court vide order dated 2.3.2007 has ordered disbursement after considering the report of the OL read with the report of the CA. It was further observed that the bank appeared to have raised such objections without any material available to the bank. No authenticated record was produced by the Central Bank of India before this Court to show the contrary factual position than the one examined and found by the CA for working out the admissibility of the workers'' claim in his report. The learned company Judge ultimately observed that after 19 years of the winding up of the company and after 11 years from the report of the CA, the fresh inquiry for examination to the admissibility of the workers'' claim does not deserve to be ordered.

It is pertinent to note that the Appellant - bank is a holder of a decree inasmuch as vide judgment and order dated 31.8.2006, Debts Recovery Tribunal passed award to the tune of Rs. 5,10,52,000/- with simple interest @ 6% p.a. From 1.5.1987 till realisation of the said amount against the mill in liquidation through the OL and its erstwhile directors. In that background, in the impugned order, the learned company Judge further observed that the secured creditor, namely, the Appellant - bank is holding the decree (the award) of the Tribunal not only against the properties of the company, but also against the ex-directors of the company, who were joined as parties in that proceeding. Similarly, the Appellant - bank objected to the ratio for disbursement at 78.73% for the workers'' claim and 21.27% for the secured creditor i.e. the percentage of ratio settled by the OL and in turn accepted by the learned company Judge. Mr. Panesar, learned Counsel for the Appellant submitted that admittedly when there are two set of claimants, namely, the workers and the Appellant - bank, the ration should have been 50%: 50% respectively. It is pertinent to note that the ratio fixed by the OL for disbursement, way back in the year 2006 in his report came to be challenged by the Appellant - bank not by way of any substantive application, but in the application filed by the Respondent No. 1 herein for disbursement of workers'' claim, by way of filing reply. In the impugned order, the learned company Judge has given reference to earlier order dated 2.3.2007 passed in this proceeding. The said order was passed in Company Application No. 141 of 2006 preferred by Respondent No. 1 herein for workers'' claim. Annexure C at page 66 is the copy of the order dated 2.3.2007 passed by learned company Judge. The said order was passed after hearing all the necessary parties including the Appellant - Central Bank of India. In the said order, it was observed that excess payment came to be made to the Appellant - bank to the tune of Rs. 65,85,396/- and, therefore, the Appellant - bank was directed to return the said amount and accordingly the said amount was in fact returned back by the bank, which was kept in form of fixed deposit in the name of OL. The pertinent aspect of the matter is that in the order dated 2.3.2007 in paragraph 3, the learned company Judge observed that the CA had verified the claim of the workers as well as the secured creditor (the Appellant - bank) and accordingly the percentage of ratio in favour of the workmen would be 78.73% and so far as the Central Bank of India is concerned, it would be 21.27%. The said order passed on 2.3.2007 has not been challenged by the Appellant - bank so far as the percentage of ratio is concerned. In the impugned order dated 7.7.2009, which came to be passed subsequently to 2.3.2007, the identical percentage of ratio for disbursement came to be followed.

On behalf of the Appellant so also on behalf of the newly added Respondents, namely, Respondents No. 3 to 11, apprehension was ventilated that under the pretext of the workers, fictitious persons are likely to receive the claims. To meet with such submissions, Mr. T.R. Mishra, learned Counsel for the Respondent No. 1 stated that in the past, four times, the exercise was undertaken to pay for the claim of the workers and when the claim of about 400 workers was to be satisfied, the Appellant - bank preferred this appeal and obtained the stay. Mr. Mishra, learned Counsel submitted that proper safeguards were taken by the OL while making payment and our attention was drawn at paragraph 11 in the impugned order wherein on behalf of the Appellant - bank almost identical contention was raised before the learned company Judge. In paragraph 11 in the impugned order, the learned company Judge has, in clear terms, directed the OL to disburse the amount by crediting the amount in the concerned bank account of the concerned workman upon production of proof of identity of such workman and also of the concerned bank account. It was further directed that the OL shall be at liberty to get the amount credited in the concerned bank of the concerned workers through electronic mode. In OJCA No. 21 of 2010 preferred by Respondents No. 3 to 11 for joining them as party, in paragraph 3 of said application, they have stated that they were in process of filing company application for seeking direction of this Court in this respect. Respondents No. 3 to 11 were not party either in CA No. 141 of 2006 or in CA No. 59 of 2008. They came to be impleaded in this appeal by order dated 10.2.2010 passed in OJCA No. 21 of 2010 wherein as stated above, the Respondents No. 3 to 11 in paragraph 3 has expressly stated that they are otherwise going to take separate action regarding their case. Under such circumstances, the said aspect is not required to be dealt with further on merits, but suffice it to say, as stated above in the impugned order, in paragraph 11, the learned company Judge has issued necessary directions so as to prevent malpractices, if any.

In the above view of the matters, we are of the considered opinion that no ground is made out by the Appellant - bank to interfere with the impugned order passed by the learned company Judge. The appeal, therefore, lacks merit and deserves dismissal. Consequently, the Civil Application being No. 410 of 2009, in turn, deserves dismissal.

For the foregoing reasons, the appeal is dismissed along with civil application without any order as to costs.

Upon pronouncement of the above judgment, learned Counsel Mr. Panesar submitted that, since the Appellant was enjoying interim relief during pendency of the appeal, it may be extended for a further period of eight weeks for the Appellant to approach the higher forum. We do not find any justification for granting such relief. Therefore, the request is rejected.