Bombay High Court
Punjab National Bank vs Export Import Bank Of India And Anr on 11 August, 2025
2025:BHC-OS:13417
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.12394 OF 2023
IN
CONTEMPT PETITION CD (L) NO.756 OF 2014
Punjab National Bank ....Applicant
IN THE MATTER OF :
Export Import Bank of India ....Plaintiff
V/S
GOL Offshore Ltd. (in Liqn.) ....Defendant
_________
Ms. Janhavi Joshi and Mr. Fraser M. Alexander for the
Applicant-PNB.
Ms. Apurva Thipsay for the Official Liquidator.
__________
CORAM: SANDEEP V. MARNE, J.
DATE : 11 AUGUST 2025.
ORAL ORDER:
1. This Application is filed by the Applicant-Bank seeking following prayers:
"(a) That this Hon'ble Court be pleased to exercise powers under Section 457 (3) read with Section 536(2) of the Companies Act, 1956 and direct the Official Liquidator, Bombay High Court to handover the sale proceeds to the Applicant Bank as Applicant has decided to remain outside of winding up process.
(b) That this Hon'ble Court be pleased to direct the Ld. Official Liquidator to immediately disburse the sale proceeds of the Rig along with applicable interest that has accrued on the same to the Applicant;katkam Page No. 1 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 :::
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(c) for grant of ad interim and/or interim orders in terms of prayers (a) and (b) above;"
2. It is the case of the Applicant-Bank that it had sanctioned various credit facilities amounting to Rs.243 crores to GOL Offshore Ltd., which is a company in liquidation pursuant to the order passed by this Court on 5 May 2017. The Applicant-Bank claims that the vessel namely 'Badrinath' has been mortgaged by the Company in liquidation with the Applicant-Bank. Accordingly, the Applicant-Bank filed an application bearing Company Application No.637 of 2018 seeking permission for sale of the vessel. By order dated 13 December 2018 this Court permitted sale of the vessel however the sale proceeds of the vessel were directed to be invested in the interest bearing deposits. The Applicant-Bank has now filed the present Application seeking release of the sale proceeds arising out of sale of the vessel in its favour. The Application is filed by contending that the Applicant-Bank has now decided to remain outside the winding up the process. The Application is opposed by the Official Liquidator by filing Affidavit-in-Reply. The Respondent has filed Affidavit-in-Rejoinder.
3. I have heard Ms. Joshi, the learned counsel appearing for the Applicant-Bank, who submits that since the vessel in question was mortgaged exclusively in favour of the Applicant- Bank, it alone has right to receive sale proceeds of the said vessel. That the sale of the vessel has been caused at the katkam Page No. 2 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 ::: k 3/10 56 ial 12394.23 in cp os.doc instance of the Applicant-Bank and in this regard she relies on the order of this Court dated 18 December 2018. She would also invite my attention to the order dated 12 April 2019 in support of her contention that the Applicant-Bank is now no longer part of the winding up process. Even otherwise Ms. Joshi would make a specific statement, on taking instructions, that the Applicant- Bank has now decided to remain outside the winding up process. She would accordingly submit that since Applicant- Bank is no longer a part of winding up process, the entire sale proceeds arising out of sale of the vessel in question must be released in favour of the Applicant-Bank alone. She would also invite my attention to the averments made in paragraph 9 of the Interim Application under which the Applicant-Bank has given an undertaking to deposit the requisite amount on pari passu basis to satisfy claims of workmen of the Company in liquidation in accordance with provisions of Section 329A of the Companies Act, 1956 or Section 326 of the Companies Act, 2013 as and when an adjudication to that effect is made by the Official Liquidator.
4. The Application is opposed by Ms. Thipsay, the learned counsel appearing for the Official Liquidator. She would submit that the Applicant-Bank is still standing in queue in the winding up process and is expecting recovery of its claims from the Official Liquidator arising out of proceeds from sale of assets of the Company in liquidation. She would submit that there is ample material on record to demonstrate that the Applicant-
katkam Page No. 3 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 :::k 4/10 56 ial 12394.23 in cp os.doc Bank still continues to stand inside the liquidation process and that therefore it must stand in line with other unsecured creditors. She would submit that no priority can be given to the Applicant-Bank in respect of sale proceeds of the concerned vessel as there are several other dues/claims particularly the claims of salaries of workmen against the said vessel. She would therefore pray for dismissal of the Application.
5. I have considered the submissions canvassed by the learned counsel appearing for parties and have gone through the records of the case.
6. Though the Applicant-Bank initially expected recovery of amount due to it from the Company under liquidation by participating in the liquidation proceedings, now the Applicant- Bank has taken an enthetic stand that it no longer desires to remain a part of liquidation proceedings. This is clear from following averements made in paragraph 8 of the Interim Application:
"8) In view of the above, the Applicant was left with no other option but to approach this Hon'ble Court for appropriate directions to the Official Liquidator, Bombay High Court to disburse the amount received from the sale of the Rig along with applicable interest as may have accrued to the Applicant as the Applicant had exclusive charge on the said security of the Rig and same has not been relinquished by the applicant as being secured creditor, opted to enforce its respective securities by standing outside the winding-up proceedings of the Respondent Company."katkam Page No. 4 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 :::
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7. Even in prayer clause (a) the Applicant-Bank has specifically made it clear that it has decided to remain outside the winding up process. Prayer clause (a) of the Application is extracted below for facility of reference:
"(a) That this Hon'ble Court be pleased to exercise powers under Section 457 (3) read with Section 536(2) of the Companies Act, 1956 and direct the Official Liquidator, Bombay High Court to handover the sale proceeds to the Applicant Bank as Applicant has decided to remain outside of winding up process."
8. Once it is clear that the Applicant-Bank does not desire to a part of liquidation proceedings, the very objection raised on behalf of the Official Liquidator has no legs to stand. The Application is essentially opposed by the Official Liquidator by contending that the Applicant-Bank was selectively seeking to walk away with the sale proceeds of the vessel in question while continuing to remain as a part of liquidation proceedings. In this connection stand adopted by the Official Liquidator in paragraph 13 of its Affidavit-in-Reply is as under:
"13. Further, without prejudice to the above, assuming the Applicant has a charge registered with the ROC as required by law, even then, as a Secured Creditor, the Applicant had an option either to enforce its security interest standing outside of the winding up, or to relinquish its security in the liquidation process and stand in line with other Unsecured Creditors."
9. Thus the entire thrust of opposition of Official Liquidator was its belief that the Applicant-Bank still desires to be a part of katkam Page No. 5 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 ::: k 6/10 56 ial 12394.23 in cp os.doc liquidation proceedings and therefore the Official Liquidator demands that it must stand in queue alongwith other unsecured creditors. This belief on the part of the Official Liquidator is contrary to the pleadings of the Interim Application, which makes it crystal clear that the Applicant-Bank no longer remains to be a part of winding up process.
10. So far as the objection of dues of workers is concerned, the Applicant-Bank has clarified the position in paragraph 9 of its Application as under:
"9) Further Applicant undertakes to deposit such amount on pari passu basis as may be required to satisfy the claims of the workmen of the Respondent Company in a ccordance with Section 529A of the Companies Act, 1956 or Section 326 of the Companies Act, 2013 upon adjudication with the Official Liquidator as and when called upon by the Official Liquidator and/or when directed by this Hon'ble Court."
11. Thus the Applicant-Bank has given a specific undertaking to deposit the amount on pari passu basis as and when adjudicated by the Official Liquidator or by this Court to satisfy the claims of workmen of the Company under liquidation. This takes care of the second objection raised on behalf of the Official Liquidator.
12. Ms. Thipsay has relied on order passed by this Court in Export Import Bank of India vs. GOL Offshore Limited in Interim Application (L) No.4988 of 2020 decided on 2 January katkam Page No. 6 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 ::: k 7/10 56 ial 12394.23 in cp os.doc 2023 in which Single Judge of this Court has made following observations in paragraph 19 of the order:
"19. A conjoint reading of the provisions contained in Sections 529 and 529A, would indicate that the secured creditor has an option to realise his security or relinquish his security. If the secured creditor exercises the option to realise his security, he is entitled to do so in a proceeding other than the winding up proceeding. But he has to pay to the liquidator the costs of preservation of the security till he realises the security. The workmen of the company in winding up also acquire the status of secured creditor. Where a company is in liquidation, a statutory charge is created in favour of workmen in respect of dues over the security of every secured creditor and this charge is pari passu with that of the secured creditor. Such statutory charge is to the extent of workmen's portion in relation to the security held by the secured creditors of the company as illustrated by Section 529 of the Act."
13. Relying on the observations in paragraph 19 of the order it is sought to be contended by Ms. Thipsay that if the Applicant- Bank has exercised the option to realise its security it is entitled to do so in proceeding other than the present winding up proceedings. Ordinarily, what Ms. Thipsay has contended is correct. However, in the present case the sale of the vessel in question has been caused in the present winding up proceedings and the sale proceeds are with the Official Liquidator. Therefore, the Applicant-Bank is left with no option but to apply to this Court to get released the sale proceeds after change of its stance that it no longer remains to be a part of winding up process.
14. There is no doubt to the position that the vessel was mortgaged in favour of the Applicant-Bank and the Applicant- Bank was actually spending money on its upkeep and katkam Page No. 7 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 ::: k 8/10 56 ial 12394.23 in cp os.doc maintenance. It is at the instance of the Applicant-Bank that the sale of the vessel in question has been caused. Here it would be relevant to extract the order dated 13 December 2018 passed in Company Application No.637 of 2018 filed by the Applicant-Bank seeking sale of the vessel. The order reads thus:
"The Advocate for the Applicant present and seeks for sale of the Rig.
1. The Official Liquidator is directed to appoint Ericsion and Richards Surveyors Pvt. Ltd. (E&R) to inspect the Rig "Badrinath" and submit a valuation report indicating the fair realistic price, if the vessels were sold for scrapping/breaking and for trading.
2. Meeting of concerned Advocates and parties for settling the terms and conditions of auction sale and issue of public advertisement of auction in the newspapers, the Free Press Journal, Navshakti and the online edition of trade wings to be held by 31.12.2018.
3. Inspection by intending bidders from 31.12.2018 to 07.01.2019.
4. Valuation report to be submitted by E&R on or before 07.01.2019.
5. Last date for submission of bids to the Official Liquidator is 09.01.2019.
6. Opening of bids and confirmation of the offer by the highest bidder by the Court 16.01.2018 at 3.00 p.m.
7. The valuation report to be given in a sealed envelope and contents thereof should not be disclosed to anybody.
8. Parties interested in bidding will give earnest money deposit of Rs.1 crore for vessel they bid for.
9. The costs and expenses of valuation, publication and sale as mentioned above, shall be initially borne by Applicant. Applicant shall deposit sum of Rs.15 lakhs (Rupees Fifteen Lakhs only) with the Official Liquidator. If there is a shortfall, the difference will be paid by Applicant within one week of receiving communication from the Official Liquidator. The amount paid for the cost and expenses of valuation, publication katkam Page No. 8 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 ::: k 9/10 56 ial 12394.23 in cp os.doc and sale will be paid over to Applicant by the Official Liquidator immediately upon receiving the entire sale proceeds as first priority.
10. Stand over to 16.01.2019.
11. The Official Liquidator is permitted to utilize the amount of Rs.15 lakhs to defray the expenses for valuation, publication and sale.
12. Official Liquidator shall invest this amount in fixed deposit and if necessary, break the fixed deposit at the appropriate time to pay the fees of the valuers and their expenses."
15. Thus the Applicant-Bank not only secured an order from this Court for sale of the vessel but also deposited amount with the Official Liquidator towards expenditure involved in sale of the vessel. Now that the Company has decided to remain outside the winding up process and wants to secure amounts due to it without participating in the liquidation process. I do not see any reason why the prayer of the Applicant-Bank cannot be allowed.
16. I accordingly proceed to pass the following order:
i) Interim Application is made absolute in terms of prayer clauses (a) and (b) which read thus:
"(a) That this Hon'ble Court be pleased to exercise powers under Section 457 (3) read with Section 536(2) of the Companies Act, 1956 and direct the Official Liquidator, Bombay High Court to handover the sale proceeds to the Applicant Bank as Applicant has decided to remain outside of winding up process.
(b) That this Hon'ble Court be pleased to direct the Ld. Official Liquidator to immediately disburse the sale katkam Page No. 9 of 10 ::: Uploaded on - 13/08/2025 ::: Downloaded on - 22/08/2025 22:32:30 ::: k 10/10 56 ial 12394.23 in cp os.doc proceeds of the Rig along with applicable interest that has accrued on the same to the Applicant;"
ii) The Applicant-Bank shall file an undertaking in this Court within a period of three weeks from today in terms of para 9 of the Interim Application;
iii) The Official Liquidator shall release the entire sale proceeds of the vessel in question in favour of the Applicant- Bank alongwith accrued interest within a period of six weeks from today.
17. With the above order, the Interim Application is disposed of.
(SANDEEP V. MARNE, J.)
Digitally signed
by SUDARSHAN
SUDARSHAN RAJALINGAM
RAJALINGAM KATKAM
KATKAM Date:
2025.08.13
19:22:21 +0530
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