Delhi High Court - Orders
Reserve Bank Of India vs M/S. Hoffland Finance Ltd. (In Liqd.) on 14 October, 2020
Author: C. Hari Shankar
Bench: C. Hari Shankar
$~C-3 (company side)
* IN THE HIGH COURT OF DELHI Ltd. NEW DELHI
+ C.A. 95/2020, C.A. NO. 586/2020 in CO.PET. 351/1999
RESERVE BANK OF INDIA ..... Petitioner
Through: Mr. Ramesh Babu, Standing
Counsel with Ms. Manisha Singh, Ms.
Nisha Sharma, Ms. Sanya Panjwani, Ms.
Tanya Chowdhary, and Ms. Jagriti Bharti,
Advs.
Versus
M/S. HOFFLAND FINANCE LTD. (IN LIQD.) ... Respondent
Through: Mr. Sanjeev Ralli and Mr. Atul
Verma, Advs. along with Col. Dubey, for the
Committee appointed by the Court
Ms. Ruchi Sindhwani, Senior Standing
Counsel for the Official Liquidator with Ms.
Meghna Bharara, Adv.
CORAM:
HON'BLE MR. JUSTICE C. HARI SHANKAR
ORDER
% 14.10.2020
(Video-Conferencing)
C.A. NO. 586/2020 in CO.PET. 351/1999
This application was disposed of on 5th October, 2020, and is wrongly shown in the list today.
C.A. 95/2020 in CO.PET. 351/1999
1. By this application, under Rule 9 of the Companies (Court) Rules, 1959, the Reserve Bank of India (RBI), as the petitioner in the CO.PET. 351/1999, seeks modification of the order, dated 1st Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI CO.PET. 351/1999 Page 1 of 5 Signing Date:16.10.2020 17:51:28 September, 2016, passed in the company petition.
2. The direction, of which modification is sought, as contained in the order, dated 1st September, 2016, reads as under:
"Looking to the overall circumstances, I am satisfied that the matter deserves further disbursal by the RBI of Rs. 10,00,000/- to the Committee as a lump sum towards salary and administration and the like. In addition, the RBI shall also disburse a sum of Rs.1,00,000/- per quarter towards fees for each member of the Committee, which comes to Rs.3,00,000/- per quarter. This amount shall also be paid to the Committee for disbursement accordingly. This fee shall be reckoned from February, 2015 onwards."
3. Even while thus directing disbursal, by the RBI, of the monies towards expenses of the committee, this Court, in the aforesaid order, dated 1st September, 2016, went on to clarify that "all disbursements made by the RBI are clearly subject to the provisions of Rule 292 of the Companies (Court) Rules, 1959".
4. In earlier orders, passed by this Court on 19th January, 2015, in C.A. 1209/2014, it was clarified that, as the Company Petition had been moved by the RBI, not as a creditor but in the exercise of its statutory duties, "all monies expended by the Reserve Bank of India towards the process of liquidation, whether the same are paid to the Official Liquidator or to the Committee, the same would be reimbursed to the Reserve Bank of India from the proceeds realized from the assets of the company (in liquidation) in priority to other debts of the company in terms of proviso to Rule 292 of the Companies (Court) Rules, 1959".
Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI CO.PET. 351/1999 Page 2 of 5 Signing Date:16.10.2020 17:51:285. By the present application, the RBI prays that, as a considerable amount has been realised in the accounts of the company under liquidation, from the sale of its assets by the Official Liquidator, the Official Liquidator should be directed to defray, henceforth, the expenses of the company.
6. This application had come up before this Court on 11 th March, 2020. On the said date, this Court recorded the submission of the learned Senior Standing Counsel of the Official Liquidator, that the Official Liquidator had no objection to allowing of the prayer in this application. Nevertheless, this Court directed the Official Liquidator to file an affidavit. Keeping in mind the fact that a similar request, by the RBI, had not been acceded to, by this Court, on 30 th July, 2019, the Official Liquidator was directed to state, in the affidavit, the amount realised from the sale of the properties of the company under liquidation, and the outstanding liabilities to the investors.
7. An affidavit has, in compliance with the said direction, been filed by the Official Liquidator. It is stated, therein, that ₹ 3,85,09,084/- has been realised by the sale of the assets of the company under liquidation. At the same time, the affidavit also states that an amount of ₹ 31,56,12,259/- is required to be paid to the creditors of the company.
8. It is true that an earlier request, by the RBI, for a direction to the Official Liquidator to defray future expenses of the committee, was not acceded to, by this Court, as is reflected by the order dated 30 th Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI CO.PET. 351/1999 Page 3 of 5 Signing Date:16.10.2020 17:51:28 July, 2019. That order directed the RBI to continue to defray the expenses of the committee for a further period of six months, stating that the position would reviewed thereafter.
9. The Official Liquidator has, even while setting out the amounts due to the creditors of the company, clearly stated, in the concluding paragraph, that it has no objection to the prayers in the application being allowed.
10. The RBI is the custodian of public monies. In my view, and especially in the backdrop of the specific observations, of this Court, in the order dated 19th January, 2015, that all monies expended by the RBI towards the expenses of the committee would ultimately have to be reimbursed by the Official Liquidator, from the monies in the accounts of the company, it does not appear appropriate, at this juncture, to continue to direct the RBI to defray the expenses of the committee, especially as the RBI has a first charge over the amounts realised by the sale of the assets of the company, even as per earlier orders passed by this Court, in preference to other creditors of the company.
11. In view thereof, and keeping in mind the fact that the Official Liquidator has stated that he has no objection to the prayer in the application being allowed, it is directed that, for a period of one year from today, the expenses of the committee would be defrayed by the Official Liquidator, out of the amounts realised in the accounts of the company under liquidation consequent to the disposal of its assets.
Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI CO.PET. 351/1999 Page 4 of 5 Signing Date:16.10.2020 17:51:2812. The matter would be reviewed after one year, keeping in view the position of the funds of the company, and the amounts remaining to be paid to the committee, along with other relevant factors. The Official Liquidator is directed to file, at the conclusion of one year from today, a report, setting out the latest position, so that this Court could deliberate on the modalities to be adopted, thereafter.
13. With the aforesaid directions, this application stands disposed of.
C. HARI SHANKAR, J.
OCTOBER 14, 2020 dsn Signature Not Verified Digitally Signed By:SUNIL SINGH NEGI CO.PET. 351/1999 Page 5 of 5 Signing Date:16.10.2020 17:51:28