Gujarat High Court
Kotak Mahindra Bank Limited vs Official Liquidator For M/S Aps Star ... on 6 January, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/COMA/31/2021 ORDER DATED: 06/01/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/COMPANY APPLICATION NO. 31 of 2021
In R/OFFICIAL LIQUDATOR REPORT NO. 43 of 2019
With
R/COMPANY APPLICATION NO. 21 of 2020
In OFFICIAL LIQUDATOR REPORT NO. 43 of 2019
With
R/COMPANY APPLICATION NO. 8 of 2021
In COMPANY PETITION NO. 190 of 2003
With
R/COMPANY APPLICATION NO. 14 of 2022
In OFFICIAL LIQUDATOR REPORT NO. 43 of 2019
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KOTAK MAHINDRA BANK LIMITED
Versus
OFFICIAL LIQUIDATOR FOR M/S APS STAR INDUSTRIES LTD.
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Appearance:
MR NAGESH C SOOD(1928) for the Applicant(s) No. 1
BHASKAR SHARMA(9209) for the Respondent(s) No. 5
BHOOMI M THAKORE(6237) for the Respondent(s) No. 1
DHRUVKUMAR S CHAUHAN(8138) for the Respondent(s) No. 7
MR MOHD.HANIF SHAIKH(3547) for the Respondent(s) No. 3
MR PY DIVYESHVAR(2482) for the Respondent(s) No. 2
MR SUBRAMANIAM IYER(2104) for the Respondent(s) No. 11
NOTICE SERVED for the Respondent(s) No. 10,12,13,8,9
NOTICE UNSERVED for the Respondent(s) No. 14,4
THAKKAR AND PAHWA ADVOCATES(1357) for the Respondent(s) No. 6
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 06/01/2023
ORAL ORDER
1. Heard learned advocate Mr.Nagesh C. Sood, learned advocate Ms.Sangeeta Pahwa for Thakkar and Pahwa Advocates, learned advocate Mr.Subramaniam Iyer, learned advocate Page 1 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined Mr.P.Y.Divyeshvar, learned advocate Ms.Bhoomi M. Thakore, learned advocate Mr.Bhaskar Sharma, learned advocate Mr.R.D.Dave, learned advocate Mr.Rajesh P. Mankad, learned advocate Mr.V.A.Pujara for learned advocate Mr.N.K.Majmudar and learned advocate Mr.Abhishek M. Mehta for the respective parties.
2. These applications are filed for disbursement of the amount realised on sale of the assets of M/s. APS Star Industries Limited (Company in liquidation).
3. The Official Liquidator has filed a detailed report dated 23rd March, 2022 in Company Application No.21 of 2020 for disbursement to EPFO, workers and secured creditors of the Company (in liquidation) Page 2 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined under Section 529 and 529A of the Companies Act, 1956.
4. As other applications are filed for the disbursement being Company Application Nos.14 of 2022 and 31 of 2021, the same were also heard with Company Application No.21 of 2020 by order dated 25th March, 2022. The Official Liquidator was also directed by order dated 25.03.2022 to prepare list of all companies which are in process of liquidation along with list of Company Applications filed by the Secured Creditors of such companies (in liquidation) which are pending before this Court. The Official Liquidator therefore, by report dated 12th April, 2022 filed in Company Application No.14 of 2022 with Company Application No.31 of 2021 has submitted the details.
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5. In view of the above facts, Company Application No.21 of 2020 is treated as a lead case for passing the orders with regard to disbursement amongst the outstanding dues of EPFO, Secured Creditors and Workers under Sections 529 and 529A of the Companies Act, 1956.
6. M/s.APS Star Industries Limited was ordered to be wound up by order dated 12.02.2008 passed by this Court in Company Petition No.190 of 2003 and Liquidator attached to this Court was appointed as Liquidator of the Company (in liquidation). The Official Liquidator after taking over the possession of various assets and properties situated at Vadodara, Dombiwali, Nashik and Dharwad conducted the sale of the same. Page 4 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023
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7. After following the due process of sale, plant and machineries situated at Vadodara was sold for Rs.2.77 Crores as per the terms of the order dated 09.12.2016 passed by this Court in Official Liquidator's Report No.70 of 2016. The land and building structure of Company (in liquidation) situated at Vadodara are yet to be sold by the Official Liquidator. The Official Liquidator has also sold the land of the Company situated at Dombiwali, Mumbai for Rs.67 Crores after following due procedure of sale as per the order dated 17.07.2019 passed by this Court in Official Liquidator's Report No.43 of 2019. The Official Liquidator has also filed a Official Liquidator Report No.20 of 2020 for taking permission for sale of the remaining assets and properties of the Company (in liquidation) situated at Vadodara, Page 5 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined Nashik and Dharwad before this Court.
8. As per the order dated 10.05.2018 passed by this Court in Official Liquidator Report No.53 of 2017, an advertisement was published in Newspaper on 08.06.2018 inviting the claims of the workers and secured creditors of the Company (in liquidation) under Sections 529 and 529A of the Companies Act, 1956.
9. Pursuant to the advertisement inviting claims, the Official Liquidator received the following claims from the Worker's Unions, Secured Creditors, Banks, Financial Institutions and Employees Provident Fund Organization which reads as under :
Secured Creditor/Banks/F.I. Claims Amounts (In Rs.) LIC 33,499 694 Bank of India 106,150,532 PNB (erstwhile United Bank of India) 72,730,117 Page 6 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined IDBI 8,151,904,484 Syndicate Bank 5,981,847,564 KSIDC 109,866,538 ISARC (assignee of IFCI) 48,067,565 Canara Bank 312,168,385 KOTAK (assignee of ICICI) 124,224,834 Bank of Baroda 1,185,825,251 TOTAL 16,126,284,964 Workers/ Workers Union Sundar Hiralal Shah & 14 others (Staff 92,137,889 Union) (Baroda) Gujarat Engineering & General Kamdar 73,874,176 Union (Baroda) Engineering Majdoor Sangh (Baroda) 374,005,408 Star Textile Employees Union 113,151,703 (Dombiwali) Dharwad Union (Dharwad) 93,222,195 Nasik Union (Nashik) 60,970,732 VP. Inamdar (29+9 workers) 4,604,339 Dhanraj Mahadev Khurkhta & others 4,321,514 TOTAL 816,287,956 PF Claim EPFO (Hubli, Karnataka) 4,006,175 EPFO Baroda 11,270,259 TOTAL 15,276,434
10. The Official Liquidator thereafter appointed M/s.Talati & Talati LLP, Chartered Accountants on 07.12.2018 for verification of the above claims. As the Worker's Union and Page 7 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined the Secured Creditors were not providing details to verify the claims made by them to the Chartered Accountant, the Official Liquidator by letter dated 11.03.2020 requested the Worker's Union and Financial Institutions to provide the details to the Chartered Accountant followed by letters dated 13.07.2020, 01.12.2020, 16.12.2020, 17.03.22021, 18.06.2021 and 10.08.2021 to conclude the claim verification work of workers and secured creditors of the Company (in liquidation).
11. The Official Liquidator thereafter, by letter dated 06.12.2021 called meeting of Workers Unions and Secured Creditors of the Company (in liquidation) on 21.12.2021 and 04.01.2022 wherein it was decided that the worker's union and the secured creditors of Page 8 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined the company would furnish required details and documents to the Chartered Accountants for verification of the claim.
12. Thereafter on further follow up from the Office of the Official Liquidator to furnish the verification report, M/s. Talati & Talati Chartered Accountant ultimately furnished the verification report on 21st March, 2022 with regard to the claims payable to the Worker's Union, Employees Provident Fund Organization and the Secured Creditors. The Official Liquidator has filed the report dated 23rd March, 2022 placing on record the verification report submitted by the Chartered Accountant.
13. As per the report of the Chartered Accountants, the eligible claim amounts and the ration for payment are calculated as Page 9 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined under:
Sr.No. Particular Total amount of Claim Ratio claim upto 12-02- Amount % 2008 Allowed (Rs.) 1 Bank of India 10,61,44,532 5,67,01,987 1.62 2 Gujarat Lease 1,72,44,000 - -
Financing LTD.
3 ISARC 4,80,67,565 2,39,90,932 0.68 4 Kotak Mahindra Bank 11,15,36,120 7,77,54,602 2.22 5 Life Insurance 3,34,99,694 2,26,13,310 0.64 Corporation of India 6 PNB (earstwhile 7,54,77,107 7,54,77,107 2.15 United Bank of India) 7 KSIIDC 10,73,15,611 10,73,15,611 3.06 8 Canara Bank 63,85,05,366 63,85,05,366 18.20 9 Syndicate Bank 66,57,28,598 52,96,81,994 15.10 10 Bank of Baroda 102,70,42,726 95,87,11,564 27.33 11 IDBI 86,96,44,673 10,79,95,400 3.08 12 Gujarat Engineering & 5,85,74,102 5,85,74,102 1.67 General Kamdar Union 13 APS Star Ind. Ltd. 6,31,72,838 5,64,75,936 1.61 Vadodra Ex-
Employees Union 14 Engineering Majdoor 35,54,57,159 35,54,57,159 10.13 Sangh 15 APS Star Industries 4,97,16,704 4,97,16,704 1.42 Ltd. Employees Union 16 Star Textile 8,53,26,282 8,53,26,282 2.43 Employees Staff Union 17 Star Textile 29,41,05,367 29,41,05,367 8.38 Engineering Employees Union 18 Star Textile 99,36,290 99,36,290 0.28 Engineering Employees Union Total 461,64,94,734 350,83,39,713 100.00 Page 10 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined
14. The Official Liquidator has further stated in the aforesaid report that the Chartered Accountant has not considered the claim of the Gujarat Lease Financing Limited under Section 529 of the Companies Act, 1956 which is to be considered under Section 530 of the Companies Act, 1956.
15. The Official Liquidator further submitted that the claim of Rs.1,12,70,529/- and Rs.38,06,817/- of the Employees Provident Fund Organization Baroda and Dharwad Office are also not considered by the Chartered Accountant for want of detailed information of workmen. The Official Liquidator has however submitted that as the Employees Provident Fund Organization has priorities over the dues of the Secured Creditors as per the judgment dated 08.11.2011 passed in Civil Appeal Page 11 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined No.9630 of 2011 of the Hon'ble Supreme Court, the payment of the aforesaid sum are required to be considered for payment on priority to the Employees Provident Fund Organization. The Official Liquidator submitted that the Chartered Accountant has not calculated the property wise ratio in his report in the report dated 21.03.2022 but an over all ratio is worked out for disbursement on the basis of the amount claimed up to the date of winding up i.e. 12.02.2008 supported by a charge documents submitted by secured creditor of the Company (in liquidation).
16. The Official Liquidator submitted that the Official Liquidator is having fund of Rs.75 Crore which is available in the account of the Company. The Official Liquidator has therefore submitted that amount of Page 12 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined Rs.1,12,70,259/- and Rs.38,06,817/- may be permitted to be disbursed to the Employees Provident Fund Organization, Baroda and only of his priority has full and final in view of the decision of the Apex Court and thereafter, further permit to disburse Rs.73.50 Crore to the workers and secured creditors of the Company (in liquidation) under Sections 529 and 529A of the Companies Act, 1956 as per the ratio proposed by the Chartered Accountant as stated in the aforesaid table.
17. The Official Liquidator has also prayed for directing the concerned workers/ employees union who represent the workers of the Company (in liquidation) to submit the list of workers along with claims forms showing bank details whose claims have been approved and allowed by the Charted Accountant under Section 529A of Page 13 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined the Companies Act, 1956 along with an undertaking that in the event of any excess or duplicate or wrong payment is found to have been made to the worker/employee of the said company (in liquidation), then the same shall be returned back to the Office of Official Liquidator. The Official Liquidator has also prayed for protection under Section 635A of the Companies Act, 1956 as the payment is to be made on the basis of the verification of the claims by the Chartered Accountants as per the list provided by the concerned workers unions and workers/employee. After the aforesaid report was filed, the Official Liquidator filed a report dated 12th April, 2022 to pass appropriate order as per the earlier report dated 23rd March, 2022.
18. It appears that the Official Liquidator Page 14 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined thereafter called for property vise ratio report from the Chartered Accountants vide letter dated 11.04.2022.
19. M/s. Talati and Talati LLP Chartered Accountant submitted report dated 17.06.2022 in which loan and charge documents furnished by Secured Creditors of the Company (in liquidation) was verified. After verification of the documents, it was pointed out by the Chartered Accountant that in absence of necessary documents specifying the property charged against each individual loan account to be considered that the particular loan account secured for purpose of section 529 of the Companies Act, 1956, Chartered Accountant was unable to provide the property vise ratio considering the charge on property of the secured creditors and concerned workers union Page 15 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined of the Company (in liquidation) and as agreed in the meeting of the workers and secured creditors called by the Official Liquidator on 21st December, 2021 and 4th January, 2022. Interim Report dated 21st March, 2022 was provided on verification of the claim of workers and secured creditors determining the ration in terms of Section 529A of the Companies Act, 1956 showing claim ration based on total amount allowed as against total amount claimed up to the date of liquidation for each claim of workers and secured creditors as agreed by them.
20. The Official Liquidator therefore, by report dated 13th July, 2022 submitted that M/ s. Talati and Talati LLP Chartered Accountants could not calculate the property vise ratio in absence of the necessary documents specifying Page 16 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined the property charged against each individual loan account by the Secured Creditor.
21. Learned advocates appearing for the workers and the secured creditors agreed for disbursement of the amount as per the verification report dated 21.03.2022 of M/s. Talati and Talati LLP Chartered Accountants except the respondent No.6-IDBI Bank in Company Application No.21 of 2020 raising objection with regard to the amount calculated by the Chartered Accountant on the basis of the averments made in the affidavit-in-reply filed by the IDBI Bank. It is contended in the affidavit-in-reply that the respondent No.6 is still in process of obtaining charge documents from RoC, Gujarat in respect of charge created on assets referred in all the loan agreements mentioned in paragraph No.6 of the Page 17 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined affidavit-in-reply.
22. Learned advocate Ms.Pahwa for the respondent No.6 pointed out that the respondent No.6-IDBI Bank is also entitled to get the reimbursement of the expenditure incurred by it for obtaining the DILR Report for fixation of boundaries of the land sold by the Official Liquidator. It was pointed out that the respondent No.6 was not able to furnish the documents referred by the Chartered Accountants as the respondent No.6 has never been informed to provide such documents. It was therefore prayed that some time may be granted to submit the documents before the Chartered Accountant to verify the claim. Reliance was also placed on the averments made in the additional affidavit filed on behalf of the respondent No.6-IDBI Page 18 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined Bank in Company Application No.21 of 2020 relying upon the Equipment Lease Scheme of the IDBI Bank to submit that the Liquidator is required to consider the claim of Rs.79,11,63,672/- of the IDBI Bank as secured creditor.
23. Considering the above facts and the submissions made by the learned advocates for the respective parties, the Official Liquidator is hereby directed to disburse the amount as calculated by the Chartered Accountants as under :
PARTICULAR CLAIM RATIO AMOUNT ALLOWED PAYABLE (In Rs.) (In Rs.) Bank of India 5,67,01,987 1.62 1,19,07,000 Gujarat Lease Financing - - -
Ltd.
ISARK 2,39,90,932 0.68 49,98,000 Kotak Mahindra Bank 7,77,54,602 2.22 1,63,17,000 Life Insurance 2,26,13,310 0.64 47,04,000 Corporation of India Page 19 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined PNB (erstwhile United 7,54,77,107 2.15 1,58,02,500 Bank of India) KSIIDC 10,73,15,611 3.06 2,24,91,000 Canara Bank 63,85,05,366 18.2 13,37,70,000 Syndicate Bank 52,96,81,994 15.1 11,09,85,000 Bank of Baroda 95,87,11,564 27.33 20,08,75,500 IDBI 10,79,95,400 3.08 2,26,38,000 Gujarat Engineering & 5,85,74,102 1.67 1,22,74,500 General Kamdar Union (Baroda) APS Star Ind. Ltd. 5,64,75,963 1.61 1,18,33,500 Vadodara, Ex-Employee Union (Baroda) Engineering Majdoor 35,54,57,159 10.13 7,44,55,500 Sangh (Baroda) APS Star Industries Ltd. 4,97,16,704 1.42 1,04,37,000 Employees Union (Dharwad) Star Textile Employees 8,53,26,282 2.43 1,78,60,500 Staff Union (Dombiwalil) Star Textile Employees 29,41,05,367 8.38 6,15,93,000 Staff Union (Dombiwalil) Star Textile Engineering 99,36,290 0.28 20,58,000 Employees Union (Nashik) Total 350,83,39,713 100.00 73,50,00,000
24. The Official Liquidator is also permitted to disburse the amount of Rs.1,12,70,529/- and Rs.38,06,817/- to the Employee's Provident Fund Organization.
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25. It is made clear that the above disbursement is by way of an interim disbursement keeping all the contentions of the respondent No.6, all the secured creditors and workers open to be considered at the time of further and final disbursement in future on sale of the assets of the Company (in liquidation) and getting the requisite fund available with the Official Liquidator.
26. The Official Liquidator shall complete the exercise of disbursement within a period of four weeks from the date of receipt of this order. The concerned Workers/Employees Union who represent the workers of the said Company (in liquidation) are also directed to submit the list of workers along with the claim forms showing Bank details whose claims have been approved and allowed by the Chartered Page 21 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined Accountants under Section 529A of the Companies Act, 1956 in order to disburse the eligible claim amount through RTGS/NEFT mode within a period of two weeks from the date of receipt of this order along with an undertaking to be filed in the Office of the Official Liquidator that in event of any excess or duplicate or wrong payment is found to have been made to the worker/employee of the Company (in liquidation), the same shall be returned back to the Office of the Official Liquidator. Similar undertaking shall also be filed by all the secured creditors to whom the amount is to be disbursed as stated hereinabove as per the interim report dated 21.03.2022 of the Chartered Accountant.
27. Official Liquidator, his Officers and Staff Members are also granted protection under Section 635A of the Companies Act, 1956 Page 22 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023 NEUTRAL CITATION C/COMA/31/2021 ORDER DATED: 06/01/2023 undefined as the payment to workers/employees are to be made on the basis of the verification of the claims by the Chartered Accountants and as per the list provided by the concerned worker's union and workers/employees. This Applications are accordingly disposed of.
(BHARGAV D. KARIA, J) PALAK Page 23 of 23 Downloaded on : Sun Sep 17 20:31:00 IST 2023