TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 594
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....n 10th October, 2016 and 14th June, 2017 are void and seeks direction against the M/s. Arambhan Hospitality Services Limited to refund Rs. 4,07,99,612/- to the official liquidator. 2. Company Application (L) No. 89 of 2019 is filed by M/s. Arambhan Hospitality Services Limited inter-alia praying for an appropriate order and direction under Section 536(2) of the Companies Act, 1956 declaring that the consent terms dated 24th October, 2016 in Commercial Admiralty Suit (L) No. 69 of 2016 is valid, subsisting and binding on the parties in the suit and to ratify the same and also the payment of Rs. 4,07,99,612/- made by the M/s.GOL Offshore Limited (in liquidation) be ratified. By consent of parties, the official liquidator report and the company application filed by M/s. Arambhan Hospitality Services Limited were heard together and are being disposed off by a common order. Some of the relevant facts for the purpose of deciding these two proceedings are as under:- 3. It is the case of the M/s. Arambhan Hospitality Services Limited (for the sake of convenience referred to as "the Applicant") that on 27th July, 2009, the applicant and the company in liquidation entered into a contract f....
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.... that the said company in liquidation will pay an amount of upto Rs. 1,50,00,000 per month of which Rs. 1 crore would be disbursed through the letter of credit and balance would be paid by cheque. It is the case of the applicant that the respondent addressed emails dated 10th March, 2016 and 17th March, 2016 showing outstanding dues owed to the applicant. The applicant forwarded its statement of accounts evidencing the outstanding dues. The company in liquidation failed to clear the alleged dues of the applicant. The applicant continued to provide its services to the company in liquidation. Various emails were exchanged between the parties. 7. On 27th July, 2016, the applicant filed an Admiralty Suit against the company in liquidation being Commercial Admiralty Suit No. 15 of 2018. In the said said Comm. Admiralty Suit No. 15 of 2018, the applicant and the company in liquidation filed consent terms dated 24th October, 2016. The said Comm. Admiralty Suit was disposed off in terms of the consent terms. In clause 2 of the said consent terms, the respondent company in liquidation undertook to pay a sum of Rs. 5,34,00,000/- as per payment schedule mentioned in the consent terms. The re....
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....d an amount of Rs. 1,34,00,000/- remained unpaid. Official liquidator was served with a copy of the said Commercial Admiralty Suit No. 15 of 2018 on 11th July, 2018 and was subsequently served with a copy of the compilation of documents and evidencing payment of installments from the respondent to the said M/s. Arambhan Hospitality Services Ltd. On 27th August, 2018, the official liquidator filed his written statement in the said Admiralty Suit. On 7th December, 2018, the official liquidator filed its report seeking deposit of the amount received by M/s. Arambhan Hospitality Services Ltd., under consent terms dated 24th October, 2016. The official liquidator thereafter filed this report on 27th December, 2018. The applicant M/s. Arambhan Hospitality Services Ltd. filed Company Application (L) No. 89 of 2019 on 28th February, 2019. 11. Mr. Prathamesh Kamat, learned counsel for the official liquidator invited my attention to the consent terms dated 24th October, 2016 filed by the applicant and the respondent in the Commercial Admiralty Suit No. 15 of 2018. He submits that under the said consent terms, the respondent company in liquidation undertook to pay sum of Rs. 5,34,00,000/- as....
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....appointment of the official liquidator as provisional liquidator, the board of the respondent company was displaced. He submits that under Section 450 of the Companies Act, 1956, the powers of the provisional liquidator are identical to the powers i.e. of the official liquidator unless and otherwise specifically ordered by the Court. Under Section 456 of the Companies Act, 1956 all the assets of the company in liquidation vests in official liquidator or provisional liquidator as the case may be. All the properties and assets of the company in liquidation are deemed to be in custody of the Court under Section 456(2) of the Companies Act, 1956. 15. Learned counsel for the applicant also placed reliance on the judgment of this Court in case of Board of Industrial and Financial Reconstruction v/s. M/s. Hindustan Transmission Products Ltd., (2012) 5 Bom CR 631 and in particular paragraph nos. 3, 5, 18 to 24 and would submit that in case of the company in liquidation, a party seeking to validate of the transactions carried out after the date of commencement of winding up has not only to plead but also has to prove that such transfer was in the best interest of the company. The burden is....
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....ent were thus not illegal and were rightly approved by this Court in Comm. Admiralty Suit (L) No. 69 of 2016 on 24th October, 2016. 18. It is submitted by the learned counsel that the payments made by the respondent to the applicant were made under compelling circumstances. The official liquidator has not alleged any fraud against the applicant in entering into the consent terms with the respondent in the official liquidator's report. He submits that the substantial amount has been already paid by the respondent to the applicant under the said consent terms. It is submitted that the consent terms were executed in the ordinary course of business. The transactions were already completed before the date of commencement of winding up proceedings against the respondent and were bonafide. This Court has absolute discretion to validate a transaction under Section 536 (2) of the Companies Act, 1956. 19. It is submitted by the learned counsel that the bonafide transactions carried out by the applicant with the respondent were beneficial and in the interest of respondent company going and thus such transactions have to be ratified. There was outstanding amount of Rs. 8,11,02,041/- that was....
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....rried out after commencement of winding up proceedings should be declared as void. The Court can in appropriate cases protect and save bonafide transactions. He submits that since the respondent had got the vessel released by making payment of the reduced amount against the larger claim of the applicant, such transaction cannot be declared as null and void, which was for the benefit of the company and its creditors. 23. It is submitted by the learned counsel that there was 36 years business relation between the applicant and the respondent and thus the consent terms entered into between the applicant and the respondent were in ordinary course of business and thus deserves to be validated. The respondent had already admitted its liability under those transaction entered into between the applicant and the respondent. The claim of the applicant was more than Rs. 8 crores which was settled for substantially reduced amount. On the date of filing consent terms by the parties, there was no appointment of provisional liquidator. There was no arrest of vessel. 24. In so far as the submission of the learned counsel for the official liquidator that not only there should be pleadings but als....
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....that if the respondent would not have settled the alleged dues of the applicant by entering into the consent terms after the date of commencement of winding up proceedings, that amount would have been made available to the respondent for the benefit of payment of the secured creditors and for payment to the other creditors required to be given priority under Section 529A of the Companies Act, 1956. It is not the case of the applicant that the applicant could not have recovered more than amount agreed to be received under the said consent terms. 27. Learned counsel placed reliance on the judgment of this Court in case of Board of Industrial and Financial Reconstruction v/s. Modi Stone Ltd. (In. Liqn.), (2017) 202 Comp Cas 551 and in particular paragraphs 64, 78, 102 to 106, 108, 110, 112 and 148 to 150. Mr. Bharucha, learned counsel for the applicant distinguished the judgment of this Court in case of Board of Industrial and Financial Reconstruction (supra) and would submit that the facts before this Court in the said judgment were totally different. There were antedated transactions carried by the ex-directors of the company in liquidation with the third parties. REASONS AND CONC....
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....at under Section 441(2) of the Companies Act, 1956, the winding up of the respondent company shall be deemed to commence on the date of presentation of the petition for winding up i.e. 28th August, 2014. The applicant does not dispute that all the payments received by the applicant from the respondent under the said consent terms dated 24th October, 2016 were received after the date of commencement of the winding up proceedings against the respondent company in liquidation. The applicant also does not dispute that the payment of Rs. 49,97,357 and Rs. 50,00,059/- were received by the applicant on 12th May, 2017 and 14th May, 2017 respectively after the appointment of the official liquidator as the provisional liquidator of this Court i.e. on 5th May, 2017. Consent terms itself were filed after commencement of winding up proceedings. 31. In paragraphs 33, 35 and 38 of the Company Application (Lodging) No. 89 of 2019 filed by the applicant inter-alia praying for declaration that the consent terms dated 24th October, 2016 in Comm. Admiralty Suit No. 15 of 2018 between the applicant and the respondent are valid, subsisting and binding. It is averred by the applicant that the applicant ....
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....d. The question of any burden cast on the liquidator cannot possible arise. The principles of law laid down by this Court in the said judgment squarely applies to the facts of this case. 35. The applicant who seeks validation of the transaction carried out after the date of commencement of winding up proceedings in view of Section 441(2) of the Companies Act, 1956 has to not only plead but also has to prove that such transactions were carried out in ordinary course of business and were in the benefit of the company in liquidation. A perusal of the averments made in the company application filed by the applicant seeking validation of the consent terms does not indicate that there is sufficient pleadings of the applicant in this regard. Be that as it may, the applicant has not proved before this Court that the said consent terms arrived at between the applicant and the respondent were in ordinary course of business and were for the benefit of the respondent company in liquidation. Most of the invoices produced on record by the applicant arising out of various agreements between the parties are for the period after commencement of the winding up proceedings against the respondent. It....
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....that under Section 536(2) of the Companies Act, 1956 Court has to decide whether the transactions in question were entered into after commencement of the winding up proceedings or not. It is held that under the provisions of the Companies Act, 1956, the official liquidator is a trustee of the secured and unsecured creditors, the workers and the contributories. The rights of the companies in the liquidation are subordinate to the powers of the official liquidator under the provisions of the Companies Act, 1956. It is the duty of the official liquidator to gather all the assets of the company in liquidation for the purpose of distribution of those assets, amongst secured or unsecured creditors, workers, contributories and others prescribed under the provisions of Companies Act, 1956. 39. In so far as the judgment of Supreme Court in case of Pankaj Mehra and another (supra) relied upon by the learned counsel for the applicant is concerned, this Court in the said judgment in case of Board of Industrial and Financial Reconstruction v/s. Modi Stone Ltd. (In. Liqn.) (supra) has adverted to the said judgment of Supreme Court in case of Pankaj Mehra and another (supra). In the said judgmen....