High Court Upholds Order for ONGC to Pay Mathews, Dismisses Appeal

The High Court upheld the Company Judge's order dated 26th April, 2018, directing ONGC to make payments to Mathews for the completion of the ONGC project. The appeal was dismissed, and the Company Judge and Official Liquidator were instructed to proceed with the disbursements. ONGC's request for a stay of the High Court's order was rejected.

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Issues Involved:
1. Challenge to the order dated 26th April, 2018, passed by the Company Judge.
2. Performance guarantees and completion of the ONGC contract by GOL Offshore Ltd.
3. Appointment of Official Liquidator and winding up of GOL Offshore Ltd.
4. Payment to vendors and completion of the remaining contract work.
5. Objections and compliance by ONGC regarding the payment orders.
6. Subsequent appeal and stay orders.

Issue-wise Detailed Analysis:

1. Challenge to the order dated 26th April, 2018:
The appeal challenges the order dated 26th April, 2018, passed by the Company Judge, which directed the completion of the remaining work of the ONGC contract by appointing M/s Mathew Associates Hook-Up & Weld Services (Mathews) as Project Management Consultants (PMC). The order included directions for ONGC to pay Rs. 12.66 crores towards 75% of the outstanding dues of the vendors.

2. Performance guarantees and completion of the ONGC contract by GOL Offshore Ltd:
GOL Offshore Ltd was awarded a contract by ONGC for laying sub-sea pipelines. Axis Bank and ICICI Bank provided performance guarantees for the completion of this work. Due to the incomplete project, these banks faced the threat of encashment of their guarantees.

3. Appointment of Official Liquidator and winding up of GOL Offshore Ltd:
The Export and Import Bank of India filed a Company Petition for recovering past dues from GOL Offshore Ltd. The Company Judge appointed an Official Liquidator on 6th March, 2017, to take charge of the company's assets and directed the winding up of the company on 4th December, 2017.

4. Payment to vendors and completion of the remaining contract work:
Due to the incomplete work, the Official Liquidator held meetings with ONGC, sub-contractors, and ex-directors of the company to assess the possibilities of completing the remaining work. The sub-contractors communicated that they required payment of past dues to commence and complete the balance work. The Company Judge found that an outstanding amount of Rs. 16.88 crores was payable to various vendors and directed ONGC to pay Rs. 12.66 crores to Mathews for the completion of the project.

5. Objections and compliance by ONGC regarding the payment orders:
ONGC expressed apprehension about making advance payments to vendors and requested to charge interest on such payments. The Company Judge clarified that the payments were part of past dues and not advance payments, thus rejecting ONGC's request to charge interest. ONGC was directed to make payments to Mathews, who would then pay the vendors.

6. Subsequent appeal and stay orders:
Following the Company Judge's order on 26th April, 2018, ONGC did not make the required payments, leading Mathews to file another application. The Company Judge ordered ONGC to deposit Rs. 30 crores with the court. ONGC filed appeals against both the 26th April and 29th October orders. The Division Bench stayed the 29th October order, subject to ONGC depositing Rs. 12.66 crores. The High Court dismissed ONGC's appeal against the 26th April order, citing ONGC's conduct and the broad acceptance of the arrangement by all stakeholders.

Conclusion:
The High Court upheld the Company Judge's order dated 26th April, 2018, directing ONGC to make payments to Mathews for the completion of the ONGC project. The appeal was dismissed, and the Company Judge and Official Liquidator were instructed to proceed with the disbursements. ONGC's request for a stay of the High Court's order was rejected.

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