TaxTMI 
TaxTMI 
2009 (5) TMI 544
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....hem at various sites of factories and industrial houses, which are in the process of liquidation are also not in dispute. The creditors have been drawing their feet and not expressing willingness to part with the payments. We have a piquant situation at hand, where the Official Liquidator himself has been supporting the causes of the secured creditors as if to suggest that the unwillingness or the non-payment of the watch and ward expenses called for from them in his application is unjustified. 2. This has resulted in the various security agencies filing the petitions/applications for direction for payment of the charges, for which it is represented that invoices have been raised on the Official Liquidator. The petitions/applications in respect of the claims made by the security agencies have been pending without being attended for several years. II. The terms of initial engagement of security services 3. In the minutes of the meeting held on 2-4-2002 at 11.30 A.M. in the office of the Official Liquidator, Punjab and Haryana High Court, Chandigarh for empanelment of the security agencies, names of 18 security agencies have been approved (Annexure R-8). (A written statement has b....
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....o make upfront payments for the charges of protecting the secured assets for their own benefit to ensure that their security is not lost and waiting till the assets themselves were sold by the Official Liquidator and financial resources had been garnered to make the payments of watch and ward expenses. The bills had been allowed to be accumulated over a period of time. What would have been manageable, if the periodical amounts had been made seem to obtain gigantic proportions running to several lacs and crores and on the presentation of such high volumes of claims emanating from the security agencies, the Official Liquidator himself has joined issues with the security agencies to doubt the genuineness of the claims. IV. Objections to the claims of Security Agencies enumerated (i) General 5. To the respective claims of the security agencies, the objections have come principally through the office of the Official Liquidator on the following lines: (i) the 7 per cent agency charges, which were supposed to be paid recorded an admission of liability of the security agencies to pay Provident Fund and ESI contributions, which also was to offer evidence of actual number of persons that ....
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....y and a copy of the resolution of the Board authorizing the particular person who was making the claim not before the Court. It was pointed out on behalf of the Official Liquidator that the power of attorney, which has been given by the Chairman only records the fact that he was a Director but it was not clearly indicated as to how, he was competent to sign and verify the pleadings put in Court. Pointing out to the signatures found in C.A. No. 130 of 2009 of Sh. Santosh Singh, learned counsel appearing on behalf of the Official Liquidator wanted to contend that even the signatures seemed suspicious. (ii) In respect of Chariot Security Services Private Limited, there had been already a direction issued by this Court on 18-3-2004 requiring M/s. Chariot Security Services Pvt. Ltd. to report about the status of security and payments, which they had made to the security personnel from time to time from the day when the services were invoked. There was a direction to supply copies of all the relevant documents to the secured creditors by a particular date. This Court by an order dated 10-9-2004 had directed the Managing Director of M/s. Chariot Security Services Pvt. Ltd. to give an aff....
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....es between what had stated in their balance sheets as amounts due from Official Liquidator and what are claimed in the petitions, they are only on account of the fact that only such amounts for which invoices had been made have alone been shown in the balance sheets and the whole of the amounts recoverable have not been shown only to lessen the tax incidence and the liability of service tax, which would be attracted on amounts declared as recoverable, if they had been shown in the account books. The alleged lack board resolutions for presentation of the petitions before this Court could not be a ground for rejecting the claims themselves, for even without such petitions before the court, the OL and the secured creditors are liable to make the payments as per the terms of initial engagement. VI. Rejection or delay in payments, unreasonable 8. I have given my thoughtful consideration to the entire case about the nature of objections that have been emanating from the office of the Official Liquidator and the secured creditors. It can be seen that all the claims of the watch and ward expenses raised by the security agencies are disputed by the Official Liquidator not out of any clear....
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....discrepancies in the statements are but unworthy attempts to explain their own laxity and lapses. 9. If any of these security agencies had not complied with the initial demands made by the Official Liquidator in their failure to give proof of payment of Provident Fund and ESI, they ought to have taken steps to de-panel them. Allowing them to continue and still denying to them at the end of the period when demand was made for recovery of the charges at the rates agreed upon is not tenable. Their entitlement cannot be denied by picking holes on the mode of proof. All the security agencies have stated in unison that all the details relating to the names of persons, who had been deployed as security personnel have been furnished to the Official Liquidator. All of them also contend that as and when discrepancies were pointed out they had always furnished the necessary clarifications. The objections relating to variance between the balance sheets that made reference to recoverables from Official Liquidator and their own claims in the respective petitions also, in my view, have no meaning in view of the explanations which have been given on behalf of the security agencies that they have ....
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.... of the security agencies shall be tested only on the authorized strength of the staff and deductions shall be made in relation to specific instances of specific dates when any staff was found to be missing or when it was found that the staff had not been really in their roll of employment. Nothing could come out of the earlier directions for requirement of proof of payment of Provident Fund or ESI contributions now. The only way of dealing with such situations is to discontinue such Security Agencies and not deny them their entitlements. In the absence of any specific condition in the terms of engagement that the claims would be entertained and amounts would be disbursed only on proof of payment of ESI or Provident Fund to particular number of staff in their employment, neither the Official Liquidator nor the secured creditors could make an issue out of non-furnishing of such proof for denial of the respective claims. The entire process of clarification of records in relation to each one of the security agencies shall be completed within a period of 30 days and the amounts as found on a proper reckoning shall be disbursed from out of the amounts available to the credit of the resp....