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Judgment
Alok Aradhe, J
Heard on the question of admission.
This appeal under Section 483 of the Companies Act, 1956 has been filed against an order dated 09.06.2022 passed by learned Single Judge in a petition filed by former workman of the company under Rule 6 and 9 of the Companies (Court) Rules, 1959 (hereinafter referred to as 'the Rules' for short). The learned Single Judge by the aforesaid order dated 09.06.2022 has allowed the company application in part and has directed the company to make payment of interest at the rate of 4% per annum on the amount adjudicated by the Official Liquidator to be payable from date of relieving, till the date of payment within eight weeks. In order to appreciate the grievance of the appellant, relevant facts need mention.
M/s New Government Electricity Factory (NGEF) Ltd. is a company (hereinafter referred to as 'the Company' for short) which introduced voluntary retirement scheme in the year 2002. Except for 122 employees, all other employees of the company opted for voluntary retirement. The company after being declared sick was referred by the Board of Industrial and Financial Reconstruction (BIFR) under Sick Industries Companies (Special Provisions) Act, 1985 (hereinafter referred to as 'the Act' for short). The BIFR referred the matter to the High court.
Learned Single Judge of the court by an order dated 03.08.2004 directed the company to be wound up and appointed an Official Liquidator of the company to liquidate the assets of the company. The employees who had opted for voluntary retirement under the voluntary retirement scheme submitted their claims before the Official Liquidator. The Official Liquidator thereupon appointed a Chartered Accountant and adjudicated the claims and quantified the dues payable to the former workmen of the company viz., the respondents.
The ex-workmen of the company thereupon filed a petition under Rule 6 and 9 of the Rules in which inter alia it was pleaded that the former workmen have been relieved in the year 1999-2000, whereas, payment was made to them in the year 2015 and therefore, the workmen are entitled to interest. The learned Single Judge by an order dated 09.06.2022 allowed the company application in part and directed the company to make payment of interest at the rate of 4% per annum on the amount adjudicated by the Official Liquidator to be payable from date of relieving, till the date of payment within eight weeks. In the aforesaid factual background, this appeal has been filed.
Learned Senior Counsel for the appellant submitted that learned Single Judge erred in applying Rule 179 of the Rules to the facts of the instant case. It is further submitted that there is neither any order of winding up of the company nor any amount is surplus with the company. It is further submitted that the application filed by the ex-workmen of the company viz., respondents is pre-mature.
On the other hand, Learned counsel for the respondents has submitted that an order of winding up was passed on 03.08.2004, which has been stayed on 22.06.2017. It is further submitted that the company has surplus funds and the amounts due to the creditors have been paid.
We have considered the submissions made on both sides and have perused the record. Rule 179 of the Rules reads as under:
179.Payment of subsequent interest - In the event of there being a surplus after payment in full of all the claims admitted to proof, creditors whose proofs have been admitted shall be paid interest from the date of the winding up order or of the resolution as the case may be , up to the date of the declaration of the final dividend, at a rate not exceeding 4per cent per annum in the admitted amount of the claim , after adjusting against the said amount he dividends declared as on the date of the declaration of each dividend.
Thus from perusal of Rule 179, it is evident that in case, an amount is surplus after payment in full of all the claims, the creditors shall be paid interest from the date of winding up order or of resolution as the case may be upto the date of declaration of final dividend at the rate not exceeding 4% per annum.
In the instant case, an order of winding up of the company has been passed on 03.08.2004. A company application viz., C.A.No.184/2015 was filed seeking to recall the order of winding up dated 03.08.2004. In the aforesaid order, the submissions made on behalf of the company have been recorded. Relevant extracts of Para 4 and 6 as well as para 7 and 8 read as under:
The reasons stated in the said application and as canvassed before this court by Mr.K.G.Raghavan, learned Senior counsel appearing for the applicant State of Karnataka are that after passing of the said winding up order on 03.08.2004, the process of winding up, upon the sale of some of the assets of the company, now the process of paying back all the secured and unsecured creditors including the workmen has been completed and all the secured and unsecured creditors have been fully paid to their satisfaction barring the claim of a miniscule few of the ex-workmen, whose writ petitions were pending in this court for their claim for enhanced salary and wages and whoa re now represented by Mr.Rajesh, the learned counsel for the workmen.
The applicant- State of Karnataka in para 17 of the said company application has categorically stated before this court that part of the said chunk of land, which belonged to the company has already been acquired by State and utilized for public projects like that of BMTC, KSRTC and Metro Rail projects etc and upon acquisition of ht that part of the land, for which the compensation payable to the company has been received to the extent of Rs.59 Crores, out of the total compensation awarded by the competent authority to the extent of Rs.116,32,62,740/- a sum of Rs.59,50,52,640/- has been received and the balance sum of Rs.67,15,52,335/- is yet to be received.
The OLR No.85/17 is filed in the present C.A.No.184/2015 on 26.05.2017 and paragraphs 7 and 8 thereof indicates that a sum of Rs.113.42 Crores is lying deposited in the banks and small amount of Rs.4,605/- as cash-in-hand.
That as on 07.05.2-17 the fund position of the company (in Liqn) is as below:
Cash in hand: Rs.
4,605/-
Bank
:Rs. 7,05,40,810/-
Fixed Deposits
:Rs.1,06,36,91,638/-
:Rs.1,13,42,32,448/-
The Learned Senior Counsel for the applicant State has specifically submitted that after about 13 years of passing of the winding up order dated 03.08.2004, the Company (in Liquidation) is now seeking revival and in the circumstances of the case now obtaining, the said winding up order deserves to be recalled or stayed permanently, so that, the remaining land of 119.665 acres and some other minor assets still in the possession of the Official Liquidator can be utilized for the larger public interest and the company deserved to be revived, since all the creditors stand paid and there is no objection to its revival and recall of the winding up order except from the side of the minority shareholder, the German Company, which has no locus or reason to object to it nor its objection is valid on merits.
Thus, from perusal of the aforesaid stand taken in the aforesaid Company application, it is evident that all the creditors have been paid and the company seems to be in possession of surplus amount. The company in this proceeding cannot be permitted to resile from the stand taken by it in an earlier proceeding. The aforesaid fact is also evident from e-auction notice dated 11.12.2019 issued by the company wherein tenders have been invited to deposit the surplus funds for a period of one year. Similarly, another e-auction notice dated 03.02.2023 has also been issued by the company, by which bids have been invited to deposit the surplus funds of the company. It is noteworthy that even though, an affidavit has been filed on behalf of the company stating that statement made by the workmen that company has surplus amount of Rs.400 Crores is false. The aforesaid statement made in the affidavit is not supported by any documents and the same is vague. Thus, from the aforesaid facts, it can be gathered that the company had surplus funds.
Admittedly, an order of winding up was passed on 03.08.2004, which has been stayed on 22.06.2017. It is settled in law that despite order of stay, an order continues to exist in law. [See: 'SHREE CHAMUNDI MOPEDS LTD. VS. CHURCH OF SOUTH INDIA TRUST ASSOCIATION CSI CINOD SECRETARIRAT, MADRAS', (1992) 3 SCC 1]. The claims of the creditors as per the version of the company itself have been settled, therefore, the application filed by workmen cannot be said to be pre-mature.
Thus, for the aforementioned reasons, it is evident that condition precedent for invocation of Rule 179 of the Rules has been fulfilled. Therefore, the contention that Rule 179 of the Rules cannot be invoked does not deserve acceptance.
However, Rule 179 of the rules permits the grant of interest from the date of winding up order or of the resolution as the case may be. Therefore, the order dated 09.06.2022 passed by learned Single Judge is modified and its is directed that the company shall make payment of interest at the rate of 4 per cent from the amount adjudicated by the Official Liquidator which shall be payable from the date of winding up of the company till the date of payment. The aforesaid amount shall be paid to the respondents within a period of eight weeks from the date of receipt of copy of this order. To the aforesaid extent, the order passed by learned Single Judge is modified.
In the result, the appeal is disposed of.