TaxTMI 
TaxTMI 
2017 (1) TMI 577
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.... the suit amount a sum of Rs. 29,83,57,444/- and/or any further and other amount (in respect of 4.31% of public holding of the debentures out of 100% debentures, for which the Plaintiffs act as trustee). (b) that this Hon'ble Court be pleased to direct the Court Receiver, High Court, Bombay, to pay an amount of Rs. 1,86,43,604/- towards the Trustees' remuneration and other consequential charges as per the decree dated 4th December 2006 till the date of the decree" 2. By Notice of Motion No. 613 of 2014, the Applicant -- Metropolitan Infra Housing Pvt. Ltd. (Metropolitan Housing) which holds the bulk of the debentures (95.69 per cent) in PPL has prayed for the following reliefs: "(a) That the Applicant being the secured creditor be permitted to intervene in the matter of distribution of sale proceeds in the above mentioned Suit; (b) That the Respondent [i.e Court Receiver] be directed to distribute the balance sale proceeds, after payment to the Plaintiff [ i.e ICICI Bank] of his costs, charges and expenses, to the Plaintiff and Applicant in proportion to the debentures held by the public and the Applicant in pari passu in satisfaction of decree dated 4th December, 2006;Alter....
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....6 The Official Liquidator filed an affidavit dated 1 December, 2006 giving his consent to the decree being passed in the said Suit against the Company in terms of the minutes of order. Para 4 of the said affidavit read as under: "4. The Official Liquidator however submits that the interest of the workers shall be protected at the time of distribution of sale proceeds as required under the provisions of section 529 A of the Companies act, 1956 and there is no objection for the decree being passed in terms of minutes handed over by the Plaintiff" 4.7 Thereafter Metropolitan Infrahousing (Applicant in Notice of Motion No. 613 of 2014) from time to time purchased some of the debentures under Orders of this Court dated 12 October, 2006, 12 December, 2006 and 13 January, 2011. In the circumstances, Metropolitan Infrahousing at present holds 95.69% of the debentures. 4.8 The said Suit was decreed in favour of ICICI Bank by a decree and Order dated 4th December, 2006, with the consent of the Official Liquidator duly recorded therein. Prayers (a) (i), (a) (ii), and (b) to (j) were granted, with the rate of interest being as per the Trust Deed dated 21st February, 1997. The period of red....
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....of Rs. 29,83, 57,744/- calculated as on the date of the decree. Metropolitan Infrahousing is entitled to receive Rs. 656,04,40,951/- towards redemption of 95.69 per cent debentures, calculated as on the date of the decree i.e. 4th December, 2006. As stated hereinabove, pursuant to the orders of this Court, Metropolitan Infrahousing was granted a set off in the sum of Rs. 547,28,34,538/- . The balance amount payable as on the date of the decree is Rs. 113,94,39,157/-. The surplus amount lying with the Court Receiver is Rs. 37,67,27,072.06 as on 4th February, 2015. 4.14 ICICI Bank and Metropolitan Infrahousing have therefore by the present Notices of Motion sought reliefs which are set out hereinabove and have submitted that the surplus amount must be directed to be paid to the debenture holders in proportion to their debenture holding or to the debenture trustee (ICICI Bank) for distribution to the debenture holders. It is submitted that no part of this amount can be paid to the unsecured creditors under Section 530 of the Companies Act, 1956 ("the Act") so long as there is an unpaid balance amount due to the secured creditors under the decree of this Court in the suit. 5. The Lea....
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....e of the winding up order only after payment of all claims by the Official Liquidator. 5.8 That ICICI Bank has been paid a sum of Rs. 24,65,03,468 being the amount due to it inclusive of interest upto the date of the winding up order. The sum of Rs. 1,86,43,604/- claimed by ICICI in its application does not appear to be covered by the decree on the basis of which the claim is made. Again, Metropolitan Infrahousing has been permitted to set off against the purchase price of the assets of the Company in liquidation the entire amount due to it on the date of the winding up order, namely a sum of Rs. 547,28,34,538 crores. As such, in the absence of all other claims (including claims of unsecured creditors) being met, no further interest beyond the date of the winding up order is liable to be paid to the secured creditors at present and the Company Applications are liable to be rejected. 6. The Learned Advocates appearing for the ICICI Bank and Metropolitan Infrahousing have submitted as follows: 6.1 That Rules 154 and 179 of the Company Court Rules relied upon by the Official Liquidator cannot apply to the facts of the present case as the Plaintiff stands outside winding up. Rule 15....
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....Court to be paid to ICICI Bank and Metropolitan Infrahousing. 7. In rejoinder, the learned Senior Advocate appearing for the Official Liquidator has submitted that the submissions advanced on behalf of ICICI and Metropolitan Infrahousing are misconceived. It is submitted that the right of the secured creditor to stand outside winding up does not entitle them to disregard the principles of the Act and Rules. This is clear from the judgment of the Hon'ble Supreme Court in International Coach Builders vs. Karnataka State Financial Corporation(2003) 10 SCC 482 pages 490-496 (paras 14-25) which fell for consideration by this Court in the case of Asha Bhosale (supra). It is submitted that the judgment in Indian Bank (supra) relied upon by Metropolitan Infrahousing is entirely inapplicable to the present case since the said judgment was rendered in a case where the Official Liquidator sought to challenge before the Company Court a mortgage decree to which he was a party. The Official Liquidator has made no such attempt in this case. It is submitted that the reliance on the judgment of the Hon'ble Supreme Court in Laxmi Fibres (supra) is also misconceived. The judgment merely lays down th....
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....next succeeding Rule, on or before which the creditors of the company are to prove their debts or claims and to establish any title they may have to priority under section 530, or to be excluded from the benefit of any distribution made before such debts or claims are proved, or, as the case may be, from objecting to such distribution. R. 148. Notice to creditors - (1) The liquidator shall give not less than 14 days' notice of the date so fixed by advertisement in one issue of a daily newspaper in the English language and one issue of a daily newspaper in the regional language circulating in the State or Union Territory concerned, as he shall consider suitable. Such advertisements shall be in Form No. 63. (2) The Liquidator shall also give not less than 14 days' notice of the date fixed, in a winding-up by the Court, to every person mentioned in the statement of affairs, as a creditor, who has not proved his debt and to every person mentioned in the statement of affairs as a preferential creditor, whose claim to be a preferential creditor has not been established or is not admitted, or where there is no statement of affairs, to the creditors as ascertained from the bo....
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....e amounts severally due to them. Any proof made in compliance with this Rule shall have the same effect as if separate proofs had been made by each of the said workmen and others. R.153. Production of bills of exchange and promissory notes -Where a creditor seeks to prove in respect of a bill of exchange, promissory note or other negotiable instrument or security of a like nature on which the company is liable, such bill of exchange, note, instrument or security shall be produced before the Liquidator and be marked by him before the proof is admitted. R. 154. Value of debts- The value of all debts and claims against the Company shall, as far as is possible, be estimated according to the value thereof at the date of the order of the winding up of the Company nor where before the presentation of the petition for winding up, a resolution has been passed by the Company for voluntary winding-up, at the date of the passing of such resolution." R. 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 o....
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....d Karnataka High Court on the ground that those were cases of secured creditors standing outside winding up. In paragraph 2 of the said judgment of the Kerala High Court, the Court has said that "it is made clear that in the said case the Applicant has preferred a claim before the Official Liquidator." Thus the judgment of Kerala High Court in fact assists the Plaintiff inasmuch as it suggest that a secured creditor standing outside the winding up stands on a different footing and Rule 179 would not be applicable to such a creditor. 12. However, the rights of a secured creditor who stands outside the winding up and opts to realise his security are subject to the provisions of Section 529 A of the Act, which places the rights of the workers pari passu with the secured creditor/s. Section 529 (A) is reproduced hereunder: " (1) Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company - (a) workmen's dues; and (b) debts due to secured creditors to the extent such debts rank under clause (c ) of the proviso to sub-section (1) of Section 529 pari passu with such dues shall be paid in prior....
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....54 page 2051 of the said Judgment, it is held inter alia that ".. The claims of the secured creditors are thus required to be considered giving priority over unsecured creditors but their claims would be pari passu with the workmen." 15. However, the limited impediment created under the statute, i.e. to allow the secured creditors to realise their claim subject to the right of the workmen to receive their wages on a pari passu basis with the date of winding up to be treated as the relevant date for the determination and payment of the pari passu amounts does not affect the rights of the secured creditors to realize their security and receive their full dues, once the provisions of Section 529A have a full play. The control of the Company Judge and the Official Liquidator, under given circumstances, extends only to ensure that the aforesaid purpose of Section 529A is effectively achieved. 16. The Hon'ble Apex Court in the matter of Laxmi Fibres Ltd. Vs. A.P. Industrial Dev. Corpn. Ltd. & Ors. (supra) noticed its previous judgments including the judgment in International Coach Builders Ltd, and laid down the law as under: "7. In International Coach Builders Ltd. this Court not onl....
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....the proviso added to Section 529(1) and Section 529A, only to a limited extent and for the limited purpose of securing the right of the workers for distribution of their wages as pari passu charge. But such limited impediment to their rights under the SFC Act will not alter the status of State financial corporations as secured creditors and they will not be required to prove their debt which they are entitled to realize under the provisions of the SFC Act subject to right of the workers to receive their wages also as secured creditors on pari passu basis. The control of the Company Judge and the Official Liquidator if authorized, can extend only to ensure that the aforesaid purpose of Section 529A is effectively achieved. Like any other affected person, if the Company represented by the Official Liquidator has reasons to be aggrieved by claims made by a financial corporation under the SFC Act, its remedy would be to initiate appropriate civil proceedings to challenge such claim or debt of a State financial corporation before an appropriate forum and not to assume jurisdiction to sit in adjudication and decide entitlement of the financial corporation when it has opted to stand outsi....
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....tor's Report, which, in turn considers the question of set off to be granted to the purchaser of the property, who is himself the secured creditor in respect of the property and who wants to realize his security outside winding up. The Official Liquidator is concerned with this security only to the extent of the workmens dues which rank pari passu with the secured creditor's claim. It is an admitted position in law, as I have noted above, that for working out this pari passu charge and determining the sharing ratio between them both the workmen's dues and the claim of the secured creditor must be rekoned as of the date of the winding up order. The Official Liquidator, accordingly, had to merely consider the claim of ICICI Bank Ltd. and Metropolitan Infrahousing upto the date of the winding up order and accordingly grant set off for the claims payable to the latter after considering the pari passu charge towards the workmens dues. The Official Liquidator thus calculated the claim and granted the set off in his report. It was this report which came up for orders before Dharkadhikari, J. and which was accepted by the Learned Judge. In that context, the Judgment of Dharmadh....