Court denies Liquidator's refund request from Secured Creditors. Verification of debts by Accountant ordered. Further relief possible.

The Court concluded that the Official Liquidator's prayers for refund of amounts by the Secured Creditors were not granted at this stage. The Court directed the Secured Creditors to provide proof of debt, if not already submitted, for verification by a Chartered Accountant to determine the final ratio between the Secured Creditors and workers. The Official Liquidator was instructed to file a report for further relief, including additional disbursement, after the Chartered Accountant's verification. The case was disposed of with these directions and observations.

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Issues Involved:

1. Refund of amounts by first charge holder Secured Creditors.
2. Distribution of funds among workers.
3. Consideration of second charge Secured Creditors for ratio determination.
4. Inclusion of interest in the debts due on the date of winding up.

Summary:

1. Refund of amounts by first charge holder Secured Creditors:

The Official Liquidator filed a report seeking a direction for the first charge holder Secured Creditors of the Company in liquidation to refund amounts already disbursed to them as per the order dated 29.08.2004 in Company Application No.302 of 2003. The amounts to be refunded were specified for ICICI Bank Limited, IDBI Bank Limited, IFCI Bank Limited, IIBI Bank Limited, and ICICI Debenture Trustee, totaling Rs. 2,82,59,800/-.

2. Distribution of funds among workers:

The Official Liquidator also sought permission to distribute Rs. 7,02,59,800/- among the workers of the Company as per their respective entitlements, after receiving the amount of Rs. 2,82,59,800/- from the Secured Creditors. The Court had previously directed the Official Liquidator to distribute Rs. 5 Crores each to ICICI Bank Limited for the first charge holder Secured Creditors and to the ex-workers of the Company on an adhoc basis.

3. Consideration of second charge Secured Creditors for ratio determination:

The Court examined whether the dues of the Secured Creditors having second charge should be considered for determining the ratio between the Secured Creditors and workers. The Court referred to its earlier decision in the case of IDBI V/s. Official Liquidator of M/s. Rustom Mills & Industries Limited, which held that all Secured Creditors, including those with second charge, should be considered for pari passu charge as per Section 529 read with Section 529-A of the Companies Act, 1956. The Court also agreed with the Delhi High Court's view that Secured Creditors having second charge should not be excluded while determining the ratio.

4. Inclusion of interest in the debts due on the date of winding up:

The Court addressed whether only the principal amount or the debts due on the date of winding up, including interest, should be considered. The Court held that the dues outstanding as on the date of winding up, which may include interest, are required to be taken into consideration.

Conclusion:

The Court concluded that the prayers made by the Official Liquidator for refund of amounts by the Secured Creditors could not be granted at this stage. The Court directed the Secured Creditors to submit proof of debt, if not already submitted, and for the Chartered Accountant to verify the claims and work out the final ratio between the Secured Creditors and workers. The Official Liquidator was instructed to file a report for appropriate relief, including further disbursement, after receiving the Chartered Accountant's verification. The report was disposed of with these directions and observations.

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