TaxTMI 
TaxTMI 
2008 (3) TMI 482
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....cial liquidator to file fresh detailed report pointing out the excess amount paid, if any, to the Central Bank of India and GSFC. The relevant facts for consideration of the issue involved in the present report are that by an order dated September 1,1992, passed by this court in Company Petition No. 85 of 1991, the company, namely, M/s. Gujarat Ministeel Ltd., was ordered to be wound up and the official liquidator attached to this court was appointed as its liquidator with all usual powers under the provisions of the Companies Act, 1956. The official liquidator has thereafter taken charge of the assets and properties of the company. The sale of the assets and properties of the company was confirmed in favour of M/s. Cincinnati Microns Ltd., for a purchaser consideration of Rs. 5.25 crores by this court vide order dated August 11,1997, in O.L.R. No. 82 of 1997. The official liquidator has appointed one M/s. Pankaj R. Shah, chartered accountant for the purpose of verification of claims submitted by the secured creditors of the company, namely, the Central Bank of India, GSFC and GIIC and the said chartered accountant vide his report dated January 16, 2000, submitted verification r....
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....reditors and workers of the company as per the directions of this court are as under: Sl No. Name of Organization Amount disbursed (Rs.) 1. Central Bank of India 3,31,02,715 2. GSFC 34,02,715 3. GIIC 84,02,715 4. Workers 81,11,698 Total 5,30,20,860 The official liquidator has also stated in his report that by an order dated July 29, 2003, passed in Company Application No. 87 of 1999, the official liquidator was directed to take steps to recover the excess payment made to respondent No. 1, i.e., the Central Bank of India and GSFC. The official liquidator has observed in his report that the total amount of Rs. 2,87,81,223 was payable to the secured creditors as per the report of the chartered accountant. As against this, the amount paid to the secured creditors was to the tune of Rs. 3,30,10,860. Thus, an excess amount paid to the secured creditors of the company by the official liquidator under various orders and directions of this court are recoverable from them and the amount recoverable is as under: SI. No. Name of organisation Amount found Recoverable (Rs.) 1. Central Bank of India 1,21,94,023 2....
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....ing the company in liquidation and other answerable parties to pay Rs. 1,80,50,991.88 with interest at 23.25 per cent, per annum. Thereafter, the Central Bank of India again approached this court seeking permission to execute the said certificate of recovery by filing Company Application No. 358 of 1999 and this court vide order dated June 29, 2000, granted the said company application and permitted the bank to recover its dues against the company in liquidation. It is further stated in the said affidavit that the recovery officer of the Debts Recovery Tribunal initiated recovery proceedings being R. P. No. 268 against the company in liquidation and other answerable parties. In the above premises, the recovery officer of the Debts Recovery Tribunal passed an order dated March 12, 2001 and directed the official liquidator to release forthwith an amount of Rs. 60 lakhs to the certificate holder bank on ad hoc basis subject to final settlement out of the sale proceeds lying in the custody and the said order has been complied with by the official liquidator. It is further stated in the reply affidavit that the bank has received aggregate sum of Rs. 3,31,32/274 from the official l....
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....the sanctity of the order passed by this court and also of the undertaking. The court was further of the view that as per the report of the chartered accountant, the loan transaction over the immovable property being the secured creditor is for Rs. 24,76,192 and the other amount to be recovered by the bank is towards the working capital and not as the secured creditor. Further, as per the order of the Debts Recovery Tribunal, since suit was for the composite loan amount, outstanding figure mentioned is of Rs. 1,80,50,991 and the order of the Tribunal is ex-parte order and though, the official liquidator had appeared, it has been mentioned that the defendant has not appeared. Even if the Debts Recovery Tribunal's order as it stands is accepted then also it is not in dispute that the amount paid is of Rs. 3,31,02,715. The court, therefore, has prima facie come to the conclusion that the amount has been paid in excess and hence the court has passed an interim order directing the bank to return the amount of Rs. 2,30,00,000 with interest at the rate of 10 per cent, per annum to the official liquidator within one month from the date of the said order. The above order of the learned s....
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.... exclusive. The RDB Act requires the Tribunal alone to decide applications for recovery of debts due to banks or financial institutions. Once the Tribunal passes an order that the debt is due, the Tribunal has to issue a certificate under section 19(22) to the recovery officer for recovery of the debt specified in the certificate. The court further held that basically the Tribunal is to adjudicate the liability of the defendant and then it has to issue a certificate under section 19(22). Under section 18, the jurisdiction of any other court or authority which would otherwise have had jurisdiction but for the provisions of the Act, is ousted and the power to adjudicate upon the liability is exclusively vested in the Tribunal. The court further observed that even in regard to "execution", the jurisdiction of the recovery officer is exclusive. It is not the intendment of the Act that while the basic liability of the defendant-company is to be decided by the Tribunal under section 17, the banks/financial institutions should go to the civil court or the company court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under section 1....
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.... But, where there is a surplus amount after satisfying the decree of secured creditors, including secured creditors who stood outside the winding up as well as those who are covered under section 529A read with rule 179, the secured creditors who obtained a decree with interest at a rate higher than 4 per cent, would be entitled to realise the said interest from the surplus amount. In such an event, even though there is a surplus, the secured creditors covered under section 529A would not be entitled to interest in excess of 4 per cent. Here in the present case, since respondent No. 1 bank has obtained the decree in its favour with interest at the rate higher than 4 per cent, it would be entitled to realise the said interest from the surplus amount. He has, therefore, submitted that the official liquidator is bound to honour the decree of the civil court obtained by the bank and pay the interest as ordered in the decree. Contributories and other shareholders would be entitled to the rest of the amount after the decree was so satisfied. As against this, Mr. J.S. Yadav, learned advocate appearing for the official liquidator has submitted that as per the undertaking given by respon....
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....ure that the distribution of the assets in terms of section 529A of the Companies Act takes place. The court further held that there is no inconsistency between the decisions in Allahabad Bank v. Canara Bank [2000] 101 Comp. Cas. 64; [2000] 4 SCC 406 and in International Coach Builders Ltd. v. Karnataka State Financial Corporation [2003] 114 Comp. Cas. 614 (SC), in respect of the applicability of sections 529 and 529A of the Companies Act in the matter of distribution among the creditors. The right to sell under the State Financial Corporations Act or under the Recovery of Debts Act by a creditor coming within those Acts and standing outside the winding up, is different from the distribution of the proceeds of the sale of the security. The distribution in a case where the debtor is a company in the process of being wound up can only be in terms of section 529A read with section 529 of the Companies Act. After all, the liquidator represents the entire body of creditors and also holds a right on behalf of the workers to have a distribution pari passu with the secured creditors and the duty for further distribution of the proceeds on the basis of the preferences contained in section 5....