Delhi High Court - Orders
Surinder Singh Marwah & Anr vs Aerens Entertainment Zone Limited on 6 February, 2024
Author: Dharmesh Sharma
Bench: Dharmesh Sharma
$~C13
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CO.PET. 482/2009 & CO.APPL. 123/2017, CO.APPL.
1280/2018,CO.APPL.1281/2018,CO.APPL.38/2021,CO.APPL.
696/2022, CO.APPL. 847/2023, OLR 306/2019, OLR 18/2022
SURINDER SINGH MARWAH & ANR. ..... Petitioners
Through:
versus
AERENS ENTERTAINMENT ZONE LIMITED
..... Respondents
Through: Mr. Siddharth Bhatli and Mr.
Diwaker Lohia, Advs. for
applicant in CA-788/2017
Mr. Raghav Sharma and Mr.
Rajat M. Dwivedi, Advs. for
respondent.
Mr. Varun Maheshwari, Adv.
for respondent in CA 696/22
Mr. Arjun Nanda, Adv. for
applicant in CA 575/2018
Mr. Neeraj, Adv. for applicants
in CA Nos. 2917/16.3196/16,
3198/16 and 3200/2016.
Mr. Suresh Dutt Dobhal, Adv.
for Phoenix ARC P. Ltd.
CORAM:
HON'BLE MR. JUSTICE DHARMESH SHARMA
ORDER
% 06.02.2024 CO.APPL. 2598/2016, CO.APPL. 118/2017, CO.APPL. 119/2017, CO.APPL. 120/2017, CO.APPL. 122/2017, CO.APPL. 200/2017, CO.APPL. 924/2019, CO.APPL. 1552/2017
1. These applications have been moved by the respective applicants apparently seeking permission under Section 446(1) of the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:35 Companies Act, 1956 to proceed with their suits/legal proceedings which are pending in different Courts against the respondent company (in liquidation). Learned Senior Standing Counsel for the Official Liquidator has alluded to the previous order dated 21.02.2019.
2. Suffice to state that it is urged that since there are hardly any assets left with the respondent company (in liquidation), no useful purpose would be served by allowing such applications. In view of the previous order passed by this Court and considering that pursuing litigations as against the respondent company (in liquidation) would be an exercise in futility, the said applications are dismissed. However, the applicants shall be at liberty to file their respective claims before the OL within four weeks from today. These applications stand disposed of accordingly.
3. The Registry is directed to ensure that these applications shall not be listed in the future for hearing.
4. However, it is clarified that in three applications i.e. CO. APPl. 119/2017, CO. APPL. 120/2017 & CO. APPL. 924/2019, the applicants are proceeding against the Ex-Directors in their personal capacity, this order shall not come in the way of such legal proceedings.
CO.APPL. 2917/2016, CO.APPL. 3196/2016, CO.APPL. 3198/2016, CO.APPL. 3200/2016
5. Learned counsel for the applicant is present. He has strong objections to the dismissal of these applications and inter alia, it has been urged that 70% of the property in question had been mortgaged and 30% remained intact. It is requested that the applicant may be granted the liberty to pursue and seek their legal remedies in respect of the remaining 30% of the property, which was not mortgaged.
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:35
6. Written submissions have already been filed on behalf of the applicants. Learned Senior Counsel for the Official Liquidator has pointed out that permission was given by this Court vide order dated 03.12.2018, whereby the possession of the mortgaged property had been handed over to the secured creditor and the said property has already been sold.
7. Having heard the learned counsel for the applicants and learned Senior Standing Counsel for the Official Liquidator and on perusal of the record, this Court proceeds to decide the aforesaid applications.
8. It is borne out from the record that CO.PET. 482/2009 was filed under Section 433(e), 438 and 439 of the Act and an order for winding up of the company has been passed vide order dated 18.03.2016 and the Official Liquidator attached to this Court has been appointed for the conduct of the winding up proceedings in respect of the respondent company (in liquidation) viz., M/s. Arens Entertainment Zone Limited.
9. The aforesaid applications have been moved on behalf of respective applicants seeking permission under Section 446 and 457 of the Act for allowing them to proceed with the Civil Suit and other legal proceedings, apparently preferred against the respondent company (in liquidation) prior to the passing of the winding up order dated 18.03.2016.
10. Suffice to state that the applicant in CA No. 2917/2016 is M/s. Anajli Leasing Limited, applicant in CA No. 3196/2016 is Drak Probuild Private Limited, applicant in CA No. 3198/2016 is Drak Homebuild Private Limited and the applicant in CA No. 3200/2016 is Emboss Real Estate Private Limited. Learned Senior Standing Counsel for the Official Liquidator, during the course of arguments, This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 alluded to the order dated 21.02.2019, whereby CA No. 1552/2017 filed by the applicant Ahluwalia Contracts (India) Limited, seeking permission/leave for proceeding in arbitration proceedings against the respondent company (in liquidation) was disallowed, and reads as follows:
"By this application, the applicant seeks permission to continue with the arbitration proceedings pending before the learned Arbitrator.
Learned counsel for the OL points out that presently there no known assets of the respondent company and there are various litigations pending against the respondent company. It would be an exercise in futility to allow the present application and to let the applicant continue with the arbitration proceedings. He submits it would be appropriate, if the applicant were to file its claim before the OL who will adjudicate on the claim. Keeping in view the averment of the learned counsel for the OL, let the applicant file its claim before the OL within six weeks from today. The OL will deal with the same as per law.
The application stands disposed of."
11. Learned counsel for the applicants have disputed that the company (in liquidation) has been left with no assets and it is vehemently urged that the auction sale by Phoenix ARC Private Limited would ultimately be held to be null and void since only 70% of the Festival City Mall, which was the property in question had been mortgaged with the bankers, who assigned their legal rights in respect of the property in favour of the auction purchaser-Phoenix ARC Private Limited; and rest of the 30% of the property was not mortgaged. It is vehemently urged that they are pursuing legal remedies for recovery of the amounts invested in the remaining 30% portion of the said property.
12. Evidently, the respective applicants are not secured creditors as such. The OLR No. 18/2022 as well as OLR No. 8/2023 filed on behalf of the Official Liquidator bring to the fore that sale of the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 mortgaged property had already been effected in favour of Phoenix ARC Private Limited for realization of dues of the secured creditors and the respondent company (in liquidation) has been left with no assets or properties from which any recovery could be effected. There is no reason for this Court to pass different order on the said applications in view of the previous order dated 21.02.2019 and the order passed today on CA Nos. 2598/2016, 1189/2017, 119/2017, 120/2017, 122/2017, 123/2017 and 200/2017, whereby said applications have been disallowed.
13. It is also apparent that the property in question has been sold as a whole and cannot be subject to any piecemeal distribution or allocation so as to satisfy the outstanding dues of the operations/unsecured creditors. It is but apparent that when the respondent company has been left with no assets and the property has already been sold to the auction purchaser as per law by the secured creditors i.e., the bankers, allowing proceedings against the respondent company (in liquidation) in various Courts, shall be an exercise in futility resulting in wastage of time, costs as also efforts on the part of the stake holders. There is no compelling legal requirement to direct the Official Liquidator to represent the respondent company (in liquidation) in other pending litigations. At this juncture, it may also be pointed out that the learned counsel for the applicants referred to a decision by the Supreme Court in the case titled M/s. Phoenix ARC P. Ltd. v. Sunil Gupta & Ors.1 I am afraid on a careful reading of the aforesaid order, it does not help the cause of applicants either. In a nutshell some of the claimants, who were similarly placed as the applicants in the present matter, filed CS (OS) 1214/2011 in the High This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 Court of Delhi, claiming that by virtue of the agreement to sell dated 29.12.2007, some portion in the property in question i.e. Mega Mall, Village Quadian and Fugguwal, GT Road (NH-1), Ludhiana, Punjab measuring 70000 Sq. Feet was not part and parcel of the mortgage/ charge over the assets of the company (in liquidation). The High Court passed a restraining order dated 18.05.2011, whereby ad interim injunction was granted against the defendants including M/s. Phoenix ARC P. Ltd., thereby directing the defendants to maintain status quo with regard to title and possession of the whole property. Said order dated 18.05.2011 was assailed before the Supreme Court and it was held that since the proceedings under Section 13(4) of the SARAFESI Act2 read with Rule 4 and 9 of the SARFAESI Rules had been initiated, the only remedy available to the respondents/claimants was to approach the DRT3 for redressal of their grievances.
14. Accordingly, the aforesaid applications are dismissed. However, the applicants shall be at liberty to file their claims before the Official Liquidator within four weeks from today, which needless to state shall be decided by the Official Liquidator as per law.
15. The applications stand disposed of accordingly.
CO.APPL. 575/201816. This is an application moved on behalf of the applicant M/s. Manasvi Security Services under Rule 6 and 9 of the Companies (Court) Rules, 1959 seeking release of a sum of Rs. 1,22,00,000/- to the applicant, against the outstanding bills for the period April, 2016 to December, 2017.
1Civil Appeal No. 11480 of 2014 Arising out of SLP (C) No. 724 of 2012 decided on 16.12.2014 2 Secutrization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36
17. Learned counsel for Phoenix ARC Private Limited as well as Energy Ventures & Reality Private Limited are present through video conferencing and have been heard as well.
18. Learned Senior Standing Counsel for the Official Liquidator has alluded to OLR No. 18/2022 dated 02.09.2022 and the long and short of the arguments which have been advanced is that the possession of the property at Festival City, Village Phagguval, NH-I, G.T. Road (Jalandhar Bye Pass), Ludhiana, Punjab has been handed over to Phoenix ARC Private Limited, which has thereafter been sold as well, subject to the reimbursement of expenses incurred by the Official Liquidator's office including the amount outstanding to the applicant security agency, which was supposedly guarding and protecting the assets of the company (in liquidation).
19. In the earlier proceedings in the present winding up matter, while considering OLR No. 288/2019, a direction was given to the secured creditors, Phoenix ARC Private Limited as well as Energy Ventures & Reality Private Limited to deposit the outstanding security dues with respect to the said property and the order dated 13.11.2019 was passed to the following effect:
"Ms. Sindhwani, learned counsel appearing for the Official Liquidator submits that the dues towards the security charges payable by Phoenix ARC (P) Ltd. and Energy Ventures & Reality Pvt. Ltd. is to the tune of Rs. 2.36 Crores for the period from April 2016 to December, 2018.
Mr. Sodhi, learned counsel appearing for Manasvi Security Services submits that dues as per their record is Rs. 2.14 Crores for the same period.
Mr. Suresh Dutt Dobhal, learned counsel appearing for Phoenix ARC (P) Ltd. submits that while he disputes the amount which is alleged to be payable, he is tendering a Demand Draft bearing No. 782681 dated 11.11.2019 drawn on Kotak Mahindra Bank for an amount of Rs. 68.60 Lacs to the learned counsel for the Official 3 Debt Recovery Tribunal This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 Liquidator. Photocopy of the Demand Draft has been handed over in Court and will be retained in the Court record. He, however, submits that this is without prejudice to the rights and contentions of his clients wherein M/s. Phoenix ARC (P) Ltd. is disputing the liability alleged by the Official Liquidator. Ms. Sindhwani submits that she is accepting the Demand Draft on behalf of the Official Liquidator without prejudice to the rights and contentions of the Official Liquidator as the amount payable is far in excess of Rs.68.60 Lacs.
In the meantime, learned counsel for all the four parties agree that they shall have a joint meeting inter se between the Official Liquidator, the two secured creditors i.e. M/s. Phoenix ARC (P) Ltd. and M/s. Energy Ventures & Reality Pvt. Ltd. and the Security Agency, on 27.11.2019 at 12 p.m., where the quantum of amount payable towards the security charges will be discussed and an attempt will be made to resolve the dispute."
20. Pursuant to such directions, the OLR No. 18/2022 brings to the fore that a meeting had taken place in the office of Official Liquidator on 05.03.2020 and whereas Mr. Mahesh Malunjkar appeared on behalf of Phoenix ARC Private Limited and Mr. Sanjay Raghuvanshi appeared on behalf of the applicant, no one represented Energy Ventures & Reality Private Limited.
21. It appears that a resolution was reached at the instance of Phoenix ARC Private Limited that the security dues shall be cleared in the ratio of 65:35 as per the loan agreements and the amount payable by Phoenix ARC Private Limited was calculated at Rs. 1,38,54,000/- whereas Rs. 74,55,000/- was stipulated to be paid by the Energy Ventures & Reality Private Limited. It was also resolved that in case there is any dispute as between the aforesaid two parties, the same shall be settled and payment would be made in such ratio to the applicant security agency.
22. Pursuant to the aforesaid meeting Phoenix ARC Private Limited deposited a sum of Rs. 68,60,000/-, Rs. 50,96,000/- and Rs. 2,75,800- with the OL but the balance amount has not been paid over the years This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 by the Energy Ventures & Reality Private Limited and there appears to be an amount of Rs. 74,51,000/- still outstanding from Energy Ventures & Reality Private Limited.
23. However, during the course of arguments it was pointed out by the learned Senior Standing Counsel for the Official Liquidator that the property had been handed over to Phoenix ARC Private Limited, which conducted a sale and realized the sale proceedings and evidently there is some long pending dispute as between Phoenix ARC Private Limited and Energy Ventures & Reality Private Limited, which remains unresolved.
24. Faced with the said situation, learned counsel for Phoenix ARC Private Limited appearing through video conferencing submitted that since the sale proceedings hang in balance due to other interim orders passed by this Court, although they are willing to pay the balance amount towards the outstanding dues, the applicant M/s. Manasvi Security Services may be called upon to execute a bank guarantee so that in case ultimately their company is not held to be the beneficiary of the sale proceeds, they may pursue other legal remedies against the applicant M/s. Manasvi Security Services for refund of the amount payable.
25. To my mind, such conditions can not be imposed. M/S Phoenix ARC Private Limited have been vested with rights to claim sale proceeds on the sale of the property in question subject to whatever may be the claim of Energy Ventures & Reality Private Limited to such amount, and both the parties are duty bound to make payment to the applicant security agencies towards the services provided for securing and protecting the assets of the company (in liquidation).
This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36
26. Accordingly, it is directed that balance amount of Rs. 74,55,000/- be immediately paid by Phoenix ARC Private Limited to the applicant security agencies without prejudice to the rights and contentions of the parties within four weeks from today. Any claim for interest that may be moved by the applicant M/s. Manasvi Security Services shall be subject to further directions of this Court. Needless to state, such amount when paid shall be recoverable or be subject to adjustment from the funds that are to be ultimately realized in favour of Energy Ventures & Reality Private Limited.
27. The application is disposed of accordingly. The balance amount of Rs. 74,55,000/- be paid within four weeks from today, failing which, this Court shall be constrained to pass necessary coercive orders for payment of such amount with penal interest.
CO.APPL. 615/201728. This application has become infructuous as it was merely for seeking an early hearing.
29. The application stands disposed of.
CO.APPL. 788/2017 & CO. APPL. 848/2023
30. CO.APPL. 788/2017 has been moved on behalf of the petitioner, the original petitioner who had filed the present winding up petition and inter alia seeking directions to the Serious Fraud Investigation Office (SFIO) to investigate certain aspects of the affairs of the respondent company (in liquidation).
31. While this application was pending for consideration, in the interregnum, CO. APPL. 848/2023 has been filed on behalf of the applicant/Developers Group India Private Limited on 21.12.2023. Learned Senior Counsel for the applicant in CO.APPL. 848/2023 has drawn the attention of this Court to the directions dated 25.01.2023, This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 whereby the Supreme Court has passed certain directions and inter alia it has been provided that the pending applications with regard to the property in question, which is claimed by respondent No.4/present applicant, be decided within a year.
32. Learned Standing Counsel for the Official Liquidator submits that although OLR 8/2024 dated 19.01.2024 has been filed on the record inter alia showing that an exercise has been conducted by the empanelled auditors. However, they wish to go through the same and come forth with an appropriate response, whether the audit is to be accepted or not.
33. Learned counsel on behalf of the OL requests for some time to file a reply to the CO.APPL. 848/2023. Learned counsel for the petitioner also requests some time to file a reply. Let the replies be filed within four weeks from today.
34. Appropriate response/status report be filed by the OL with regard to the final report submitted by the empanelled auditor with the office of the Official Liquidator. It is made clear that in view of the directions of the Supreme Court dated 25.01.2023, no further adjournment shall be granted.
35. The parties shall be at liberty to file written submissions before the next date of hearing, if not already filed.
OLR 8/202436. Learned Standing Counsel for the Official Liquidator has submitted that they are seeking another direction to Rajesh Aerens/Ex- Director to submit an affidavit along with the relevant documents regarding some loans and advances. Learned counsel for the Ex- Director submits that a reply has been filed on 22.01.2024. However, the same is not on the record. Let the matter be sorted out with the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36 Registry to ensure that the same is also filed on the record.
37. Hard copies as well as soft copies be supplied to the Standing Counsel for the Official Liquidator.
38. Re-notify on 28.03.2024 and 02.04.2024.
DHARMESH SHARMA, J.
FEBRUARY 6, 2024/sm/sa This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 09/02/2024 at 22:28:36