Gujarat High Court
Official Liquidator Of Mahendra ... vs Bank Of Baroda - Arm Branch & 2 on 24 August, 2015
Author: Vipul M. Pancholi
Bench: Vipul M. Pancholi
O/OLR/45/2015 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
OFFICIAL LIQUDATOR REPORT NO. 45 of 2015
In OFFICIAL LIQUDATOR REPORT NO. 4 of 2012
In COMPANY PETITION NO. 150 of 1996
==============================================================
OFFICIAL LIQUIDATOR OF MAHENDRA PETROCHEMICALS
LTD....Applicant(s)
Versus
BANK OF BARODA - ARM BRANCH & 2....Respondent(s)
==============================================================
Appearance:
MR RM DESAI, ADVOCATE for the Applicant(s) No. 1
OFFICIAL LIQUIDATOR for the Applicant(s) No. 1
MR BHARAT T RAO, ADVOCATE for the Respondent(s) No. 1
MR CHINMAY M GANDHI, ADVOCATE for the Respondent(s) No. 2
MR MB GANDHI, ADVOCATE for the Respondent(s) No. 2
MR PRATIK Y JASANI, ADVOCATE for the Respondent(s) No. 3
NOTICE SERVED for the Respondent(s) No. 2
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CORAM: HONOURABLE MR.JUSTICE VIPUL M. PANCHOLI
Date : 24/08/2015
ORAL ORDER
1. By way of this report, the Official Liquidator of Mahendra Petrochemicals Ltd. (in liquidation) has prayed for the following relief/s:
"(A) This Hon'ble Court may be pleased to permit the Official Liquidator to invite offers for sale of assets of the company by publishing advertisement in "Times of India" English and "Gujarat Samachar"
Gujarati in all over Gujarat editions with upset price of Rs.2.75 crores and Rs.27.50 lacs being EMD (10% of the upset price) and direct the Official Liquidator to pay the advertisement bill from the funds available in the Company's account on receipt of the Bills.
(B) This Hon'ble Court may be pleased to approve the proposed sale schedule as Page 1 of 16 HC-NIC Page 1 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER stated in para 14 hereinabove."
This matter was heard on 19.08.2015 and was kept for passing orders today.
2. Heard learned advocate Mr.R.M.Desai for the applicant - Official Liquidator of Mahendra Petrochemicals Ltd., learned advocate Mr. B.T.Rao for respondent No.1, learned advocate Mr. M.B.Gandhi for respondent No.2 and learned advocate Mr. Navin K. Pahwa with learned advocate Mr. Pratik Jasani for respondent No.3.
3. Learned advocate Mr. R.M.Desai appearing for the applicant submitted that Mahendra Suitings Limited was a company incorporated under the provisions of the Companies Act. Thereafter, the said company changed its name to Mahendra Petrochemicals Ltd. This Court passed an order on 19.04.2010 in Company Petition No.150 of 1996, whereby Mahendra Suitings Limited was ordered to be wound up and the Official Liquidator attached with this Court was appointed as liquidator of the said company. This Court directed the Official Liquidator to take possession of the properties of the company along with its record. It is pointed out that it was not intimated to this Court that Mahendra Suitings Limited has changed its name to Mahendra Petrochemicals Ltd. and therefore this Court ordered Mahendra Suitings Limited to be wound up.
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O/OLR/45/2015 ORDER
4. It is further pointed out that respondent
No.3 herein filed O.J.Appeal No.42 of 2010,
whereby the order passed by the Company Judge was challenged. Initially, the Hon'ble Division Bench granted stay of the order of winding up. However, the said appeal was withdrawn on 12.08.2010.
5. Learned advocate Mr. Desai for the applicant thereafter submitted that the Official Liquidator came to know that all the properties of the company in liquidation were sold off by the secured creditors except the properties bearing plot Nos. 2112 and 2113 situated at GIDC phase 2, Chhatral. It was pointed out that because of the stay granted by the Hon'ble Division Bench in O.J.Appeal, the Official Liquidator could not take possession of the assets of the company in liquidation and Ex-directors of the company did not cooperate with the liquidator and supply the books of accounts and other records of the company. In the meantime, respondent No.3 preferred Company Application No.238 of 2010 wherein it was prayed that the Official Liquidator be directed not to take possession of the properties of the company in liquidation and permit respondent No.3 herein to carry on the production and continue the business. This Court passed an order on 17.08.2010 in the aforesaid matter whereby the liquidator was restrained from taking possession of the property held and possessed by respondent No.3 herein. At this stage, it is also pointed out that respondent Page 3 of 16 HC-NIC Page 3 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER No.3 preferred another Company Application No.346 of 2011 wherein it was prayed that the transaction entered into by the company in liquidation with respondent No.3 herein by Memorandum of Understanding dated 01.01.2004 be validated under Section 536(2) of the Companies Act. This Court passed a common order dated 16th December 2014, whereby both the aforesaid applications were rejected. The Official Liquidator was also directed to take possession of the assets of the company in liquidation. The respondent No.3, therefore, preferred O.J.Appeal Nos. 76 of 2014 and 77 of 2014. The Hon'ble Division Bench of this Court passed a detailed order on 24.12.2014, whereby, both the appeals were disposed of with certain observations and directions. Learned advocate Mr. Desai referred to the directions given by the Hon'ble Division Bench in para 15 of O.J.Appeal Nos. 76 of 2014 and allied matters, which read as under:
"15. In view of the aforesaid observation and discussion, we find that the following directions shall meet the ends of justice:
(1) The transaction of lease is not validated by the learned Company Judge in the impugned order and as the appellants have declared that the appellants are not agitating the merits in the present appeal, we find that the impugned order passed by the learned Company Judge calls for no interference. Hence the order passed by the learned Company Judge on merits would remain in operation in the Page 4 of 16 HC-NIC Page 4 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER present matter.
(2) Consequently, the appellants would be required to hand over the possession of the property but as the appellant is ready to submit the offer for Rs.2.75 crores and is also ready to deposit the amount of Rs.27,50,000.00, it is ordered that if the appellant deposits an amount of Rs.27,50,000.00 within three weeks from today with the Official Liquidator, the Official Liquidator shall take symbolic possession of the property in question and the physical possession of the property in question may continue with the appellant, subject to finalization of the sale, as may be made by the learned Company Judge in the respective winding up proceedings upon the report of the Official Liquidator. There shall be additional condition to abide by the undertaking to deposit the accrued rent as well as future rent from time to time at Rs.54,166.00 per month and such amount shall also be deposited within the aforesaid period of three weeks. It is observed that upon failure to deposit any of the aforesaid amount within the aforesaid period, the Official Liquidator shall be at liberty to take physical possession of the property in question from the appellants.
(3) In the event the amount of Rs.27,50,000.00 is deposited and further rental amount as per the earlier direction is also deposited by the appellants, the amount of Rs.27,50,000.00 shall remain as earnest money of the offer to purchase the property by the appellant at Rs.2.75 crores. Rental amount at the rate of Rs.54,166.00 shall be credited in the account by the Official Liquidator towards Page 5 of 16 HC-NIC Page 5 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER the rent of the property in question. The Official Liquidator shall get the valuation of the property in question done through its approved valuer within two weeks from the date of deposit of Rs.27,50,000.00 by the appellants.
(4) The Official Liquidator shall also issue advertisement within two weeks thereafter wherein the upset price shall be of Rs.2.75 crores of the property in question and the offers from the interested persons shall be invited by giving advertisement at least in two daily news paper, one English and one Gujarati having wide circular, I. e. the Times of India and the Gujarat Samachar. After the offers are received, within four weeks from the outer date of submitting the offer, the report shall be submitted by the Official Liquidator to the learned Company Judge together with the offer of the appellant as well as the valuation report through approved valuer to the Official Liquidator. The appellant shall be at liberty to raise the offer in the event any offer is received in response to the advertisement exceeding the amount of Rs.2.75 crores. The learned Company Judge shall further make attempt to realize the highest amount of the property in question and thereafter may decide the issue of finalization of the sale in accordance with law after hearing all concerned.
(5) It is also observed and directed that in the event the offer of the appellant is not accepted, the learned Company Judge shall be at liberty to pass appropriate order for refund of the amount.Page 6 of 16
HC-NIC Page 6 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER (6) it is also observed and directed that if the offer of the appellant is not accepted by the learned Company Judge and the sale is finalized in favour of any other party who has offered higher amount, the physical possession of the property in question shall be handed over by the appellant within six weeks as per the undertaking failing which the official liquidator shall be at liberty to take possession of the property with the help of the police.
(7) It is observed and directed that the rights and contentions of both the sides on the aspects of assignment of debt and the consequential aspects thereto before the appropriate forum shall remain open and shall not be prejudiced in any manner by the present order.
All the parties shall cooperate in finalization of the sale proceedings.
(8) Present order is also without prejudice to the rights and contentions of the appellants to get refund of the amount of Rs.70 lacs, if otherwise permissible in law. However, it is observed that in the event such aspect is not finalized at any stage, the appellants shall not be relieved from the undertaking given to this court for the offer of Rs.2.75 crores and the other aspects relating to for the sale of the property in question.
(9) It is also observed and clarified that until the physical possession is retained by the appellants as per the above referred arrangement, the appellants shall comply with the order passed for rental payment and for submitting of the Page 7 of 16 HC-NIC Page 7 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER accounts. If the accounts are not submitted or the rental payment is not made, the amount of rental payment shall be made as directed earlier but the accounts shall be submitted within three weeks with the Official Liquidator in future from time to time.
6. Learned advocate Mr. Desai, thereafter, contended that respondent No.3 deposited an amount of Rs.27,50,000/- as per the direction given by the Hon'ble Division Bench of this Court. The Official Liquidator has also taken symbolic possession of the property in question on 30.01.2015 after preparing Panchnama/Rojkam.
7. Learned advocate thereafter pointed out that as per the directions given by the Hon'ble Division Bench in para 15(4), the Official Liquidator has to issue advertisement for sale of the property in question. The respondent No.3 herein is also permitted to participate in the said auction proceedings. He, therefore, submitted that this Court may permit the Official Liquidator to invite offers for the sale of the assets of the company in liquidation by publishing advertisement in the concerned newspapers by fixing the upset price of Rs.2.75 crores and permit the Official Liquidator to pay the advertisement bills from the funds available in the account of the company in liquidation on receipt of the bills. The schedule of the proposed auction process is given in para 14 of Page 8 of 16 HC-NIC Page 8 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER the report. However, the said period is over and therefore at the time of hearing of this report the Official Liquidator has now tendered the proposed schedule for the sale of the assets.
8. Learned advocate Mr. M.B.Gandhi for respondent No.2 - GIDC has submitted that plot No. 2112 situated at phase No.2, Chhatral was allotted to the company in liquidation. However, in the record of GIDC, Plot No. 2113 does not exist. Even in Chhatral Industrial Estate there are four phases where different numbers are given but nowhere plot No.2113 exists. Therefore, GIDC has informed about the said aspect to the Official Liquidator. It is further pointed out that dues of Rs.16,84,121/- was outstanding up to the date of liquidation i.e. up to 2010 which are liable to be paid under the contract with the GIDC by the company in liquidation. Even thereafter from April 2010 up to 31st March 2015 an amount of Rs.5,73,493/- is outstanding and is required to be recovered by GIDC from the company in liquidation. He submitted that GIDC being the lessor is above the secured creditors and landlord is not required to stand in queue. Learned advocate Mr. Gandhi contended that the Official Liquidator be directed that at the time when the advertisement was given he may inform about the dues of the GIDC in the advertisement itself and auction purchaser be imposed with the condition that the total dues of the GIDC before Page 9 of 16 HC-NIC Page 9 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER the order of liquidation and after the order of liquidation be paid by the auction purchaser and the said dues be paid first to GIDC. He further contended that when there is a change in the constitution in the name of the company, it is the duty of the party concerned to deposit the transfer fee. In the present case, such fee is not paid to GIDC and the concerned party never informed about the change of name. Therefore, the additional transfer fee is also required to be paid to the GIDC.
9. Learned advocate Mr. Navin K. Pahwa for respondent No.3 has submitted that the Official Liquidator has filed this report as per the directions given by the Hon'ble Division Bench in the order dated 24.12.2014 passed in O.J.Appeal No.76 of 2014 and other allied matters and therefore this Court may consider the same. Learned advocate Mr. Pahwa submitted that if GIDC has any grievance with regard to its dues, it can file a separate application before this Court seeking appropriate reliefs which are urged before this Court. However, with regard to submission canvassed by learned advocate Mr. Gandhi appearing for GIDC is concerned, learned advocate Mr. Pahwa submitted that the respondent No.3 is making regular payments towards rent to the Official Liquidator as per the direction issued by the Hon'ble Division Bench in the aforesaid order and therefore GIDC has to recover Page 10 of 16 HC-NIC Page 10 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER the said dues from the Official Liquidator out of the sale proceeds of the assets of the company in liquidation. Respondent No.3 cannot be saddled with any extra burden of making payments of dues of the company in liquidation because respondent No.3 is making regular payment of rent to the Official Liquidator as per the order passed by the Division Bench of this Court. Learned advocate, therefore, submitted that the Official Liquidator be permitted to issue advertisement as per the directions given by the Hon'ble Division Bench and respondent No.3 be permitted to participate in the said auction process.
10. Learned advocate Mr. B.T.Rao appearing for respondent No.1 submitted that since the Hon'ble Division Bench of this Court has given directions to the Official Liquidator to issue an advertisement for the sale of the assets of the company in liquidation, this Court may consider the relief prayed for in this report.
11. I have considered the arguments canvassed by the learned advocates for the parties. I have also considered the material placed on record.
13. From the record, following broad facts emerge:
(a) That this Court passed an order on 19.04.2010 in Company Petition No.150 of 1996, whereby Mahendra Suitings Limited was ordered to Page 11 of 16 HC-NIC Page 11 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER be wound up. In fact Mahendra Suitings Limited had changed its name from Mahendra Suitings Limited to Mahendra Petrochemicals Ltd.
(b) O.J.Appeal was preferred by respondent No.3 against the order of winding up passed by this Court. However, the said appeal was withdrawn on 12.08.2010 reserving liberty to respondent No.3 to take appropriate remedial action in accordance with law.
(c) Respondent No.3 filed Company Application Nos.238 of 2010 and 346 of 2011 wherein different reliefs were prayed for. This Court passed a common order on 16.12.2014 by which both the aforesaid applications were dismissed.
(d) Respondent No.3 therefore filed O.J.Appeal Nos. 76 of 2014 and 77 of 2014. The Hon'ble Division Bench of this Court disposed of the said appeals by common order dated 16.12.2014, whereby certain directions were given. The said order is annexed at Annexure-A with the Official Liquidator's Report.
(e) Respondent No.3 has deposited an amount of Rs.27,50,000/- by way of EMD before the Official Liquidator on 12.01.2015. Symbolic possession of the property in question was taken over by the Official Liquidator on 30.01.2015. However, respondent No.3 is in physical possession of the Page 12 of 16 HC-NIC Page 12 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER property of the company in liquidation. As per the direction given by the Hon'ble Division Bench, respondent No.3 has paid the rent at the rate of Rs.54,166/- to the Official Liquidator from the date of order of winding up and till date respondent No.3 is regularly making payment of rent.
(f) The Official Liquidator has therefore filed this report as per the directions issued by the Hon'ble Division Bench in the aforesaid appeals.
14. In view of the aforesaid broad facts of the present case, the submissions canvassed by learned advocates for the parties are required to be considered. The Hon'ble Division Bench has given the direction to the Official Liquidator that he shall issue advertisement within stipulated period wherein upset price shall be fixed at Rs.2.75 crores of the property in question and the offers from the interested person shall be invited by giving advertisement in the concerned newspapers having wide circular i.e. 'Times of India', English daily and 'Gujarat Samachar', Gujarati daily. After the offers are received, the report shall be submitted by the Official Liquidator to the learned Company Judge together with the offer of respondent No.3 as well as the valuation report through approved valuer in the panel of the Official Liquidator. It is also observed by the Hon'ble Division Bench Page 13 of 16 HC-NIC Page 13 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER that respondent No.3 herein shall be at liberty to raise the offer in the event any offer is received in response to the advertisement exceeding the amount of Rs.2.75 crores.
15. From the aforesaid broad facts and the aforesaid observations made by the Hon'ble Division Bench, now the question which is required to be considered by this Court is whether respondent No.2 - GIDC can seek direction in these proceedings filed by the Official Liquidator that the Official Liquidator shall be directed to pay the outstanding charges of the company in liquidation to GIDC? In my opinion, GIDC has to lodge its claim before the Official Liquidator and as and when such claim is lodged by GIDC before the Official Liquidator, the Official Liquidator has to consider and decide the same in accordance with the provisions contained in Companies Act, 1956. Thus, at this stage, it is not necessary for the Official Liquidator to mention in the advertisement about the outstanding dues of GIDC. Thus, when the Hon'ble Division Bench has specifically given the direction to the Official Liquidator to issue an advertisement in the concerned newspapers for the sale of the assets in question of the company in liquidation, I am of the opinion that the relief prayed for by the Official Liquidator is required to be granted and the Official Liquidator is required to be permitted to issue an Page 14 of 16 HC-NIC Page 14 of 16 Created On Wed Aug 26 02:21:20 IST 2015 O/OLR/45/2015 ORDER advertisement in the concerned newspapers as stated hereinabove.
16. In view of the aforesaid discussions and in the facts of the present case, the Official Liquidator is permitted to invite offers for sale of the assets of the company in liquidation by publishing advertisement in "Times of India"
English daily and "Gujarat Samachar" Gujarati daily in all over Gujarat editions by fixing upset price of Rs.2.75 crores and EMD of Rs.27.50 lacs (10% of the upset price) as per the direction given by the Hon'ble Division Bench in O.J.Appeal Nos. 76 of 2014 and 77 of 2014. The schedule for the sale of the assets is as under:
Schedule for sale of assets:-
Sr. Description Date
No.
1 Issuance of sale proclamation 02/09/15
in newspapers
2 Issuance of Tender Forms to 04/09/15
the intending purchaser
3 Inspection to the intending 12/09/15
purchasers
4 Last date of receipt of Tender 24/09/15
5 Opening of Tender and 30/09/15
Auction/inter-se-bidding
before the Hon'ble High Court
of Gujarat on the same date or
such other day and time as may
be convenient of the Hon'ble
Court.
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17. So far as the payment of advertisement
charges is concerned, it is open for the Official Liquidator to file a separate report after the bills are received from the concerned newspaper agency. As and when such report is filed, the same will be considered in accordance with law.
18. It is once again clarified that in the meantime it is open for respondent No.2 -GIDC to lodge its claim before the applicant - Official Liquidator and the Official Liquidator is also directed to consider the claim of respondent No.2
- GIDC, if lodged, in accordance with the provisions contained in Companies Act, 1956.
19. Thus, the issue whether respondent No.3 is liable to make payment of dues of GIDC or Official Liquidator is required to make payment of dues of GIDC is not decided at this stage in this report. Contentions of all the parties are kept open.
20. With the aforesaid observations and directions, this O.L.R. is partly allowed and accordingly disposed of.
(VIPUL M. PANCHOLI, J.) Jani Page 16 of 16 HC-NIC Page 16 of 16 Created On Wed Aug 26 02:21:20 IST 2015