Gujarat High Court
Navnitlal And Co. A Partnership Firm vs Official Liquidator Of Aps Star ... on 27 January, 2017
Author: Bela M. Trivedi
Bench: Bela M. Trivedi
O/COMA/490/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY APPLICATION NO. 490 of 2016
In
OFFICIAL LIQUDATOR REPORT NO. 69 of 2016
In
OFFICIAL LIQUDATOR REPORT NO. 71 of 2014
In
OFFICIAL LIQUDATOR REPORT NO. 6 of 2013
In
COMPANY PETITION NO. 190 of 2003
With
OFFICIAL LIQUDATOR REPORT NO. 69 of 2016
In
OFFICIAL LIQUDATOR REPORT NO. 71 of 2014
========================================================
NAVNITLAL AND CO. A PARTNERSHIP FIRM....Applicant(s)
Versus
OFFICIAL LIQUIDATOR OF APS STAR INDUSTRIES
LTD....Respondent(s)
========================================================
Appearance:
SR. ADVOCATE MR. K.S. NANAVATI, with MR HARDIK P MEHTA,
ADVOCATE for the Applicant(s) No. 1
MS AMEE YAJNIK, ADVOCATE for the Respondent(s) No. 1
OFFICIAL LIQUIDATOR for the Respondent(s) No. 1
========================================================
CORAM: HONOURABLE MS.JUSTICE BELA M. TRIVEDI
Date : 27/01/2017
ORAL ORDER
1. The Official Liquidator had submitted the Report being Official Liquidator Report No.69 of 2016 in Company Petition No.190 of 2003 seeking following relief as contained in Para No.7(a) thereof:
"(a) This Hon'ble Court may be pleased to permit the Official Liquidator to make the payment of Rs.92,50,450/- towards advertisement bill No.AD/00099/16-17 dated 05.08.2016 to Page 1 of 11 HC-NIC Page 1 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER M/s.Navnitlal & Co., Advertising Agency from the common pool fund of various company in liquidation as maintained by the Official Liquidator subject to adjustment in priority against the sale consideration to be received in Company account."
2. The applicant M/s. Navnitlal and Company has also moved an application being Company Application No.490 of 2016 seeking the following relief as contained in Para No.15(A) thereof:
"(A) Your Lordships may be pleased to direct the Official Liquidator attached to this Hon'ble Court (OL) to release the overdue payment of Rs.92,50,450/- (Rupees Ninety Two Lacs Fifty Thousand Four Hundred and Fifty Only) for the Invoice bearing No.AD/000992/16-17 dated 05.08.2016 raised for the advertisement published in various newspapers of Gujarat, Karnataka and Maharashtra within 7 days."
3. As per the Official Liquidator Report being No.69 of 2016, an advertisement was published by the Official Liquidator through M/s. Navnitlal and Co. an advertising agency, in all India editions of Times of India, in all Gujarat editions of Gujarat Samachar, in all Maharashtra editions of Lokmat, in all Karnataka editions of Vijayvani on 05.08.2016, inviting offers for the purchase of immovable properties of the company in Page 2 of 11 HC-NIC Page 2 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER liquidation, pursuant to the orders passed by the Court on 08.07.2016 and on 26.07.2016. Accordingly, the Official Liquidator had received the bill of Rs.92,50,450/ from M/s.Navnitlal & Co. the advertising agency. It is further stated in the said report that the said bill submitted by M/s.Navnitlal & Co. involved substantial amount and hence, the Official Liquidator be permitted to make payment of the said amount from the common pool fund of the company in liquidation.
4. The said M/s.Navnitlal & Co. in its application has also requested to release the said amount of bill stating inter alia, that the applicant was an advertising agency empaneled with the office of the Official Liquidator and the applicant having approached the Official Liquidator to publish the advertisement as per the order passed by the Court on 08.07.2016, the applicant firm was issued the work order on 03.08.2016, pursuant to which, the applicant had undertaken the work of publication. According to the applicant, the advertisement having been duly published as per the schedule, the applicant had raised the invoice for Rs.92,50,450/, which was duly acknowledged by Official Liquidator.
5. When the matter was placed before this Court, the Court was not satisfied with the manner in which the work of publication was assigned to the Page 3 of 11 HC-NIC Page 3 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER applicant. The Court therefore had orally directed the Official Liquidator to file specific affidavit as to how the work came to be allotted to M/s.Navnitlal & Co. without obtaining the orders from the Court. Thereafter, though sufficient time was granted, the affidavit was not filed. The Court therefore, had passed the order on 11.01.2017 specifically directing the Official Liquidator to file report as to whether the panel constituted pursuant to the order dated 04.04.2008 passed by this Court in Official Liquidator Report No.34 of 2008 in Company Petition No.94 of 1996 was renewed or continued by any order either of the Court or of the Official Liquidator or not, and also to specify as to whether before assigning the work of publication in question to the present applicant, any offer was made to the other panelists. Pursuant to the said order, the Official Liquidator has filed additional report stating inter alia that the panel constituted pursuant to the order passed by the High Court was not renewed. However, out of three agencies two agencies viz. Giriraj Advertising and Marketing and S.P. Gandhi and Company were not ready to accept the work of publishing of the office of the Official Liquidator due to nonpayment of the advertising bills in time. It is further submitted that Official Liquidator had not approached the said two agencies for the work in question and the work was assigned to the Page 4 of 11 HC-NIC Page 4 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER applicant M/s.Navnitlal & Co. as the applicant had accepted the work.
6. Before adverting to the submissions made by learned Advocates for the parties, it may be stated that this Court vide order dated 04.04.2008 passed in Official Liquidator Report No.34 of 2008 in Company Petition NO.94 of 1996 had shortlisted three advertising agencies for the purpose of assigning work of publishing on behalf of the Official Liquidator. The said three agencies were: (1) M/s.Giriraj Advertising and Marketing, (2) M/s. S.P.Gandhi & Co.and (3) M/s.Navnitlal & Co. The Court vide the said order had directed the Official Liquidator to make panel of these three advertising agencies and entrust the work of publishing to the said three parties on rotation basis considering the rates and discounts etc. It was also stated that term of the said firm was of one year and the same would be renewed thereafter. A copy of the said order dated 04.04.2008 has been annexure as AnnexureA (Colly) by the applicant alongwith its affidavit filed in Company Application No.490 of 2016.
7. So far as the assignment of present work of publishing advertisement in various newspapers is concerned, the Court had passed the order dated 08.07.2016 in Official Liquidator Report No.71 of 2014 in Official Liquidator Report No.6 of 2013 in Company Petition No.190 of 2003 at Page 5 of 11 HC-NIC Page 5 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER AnnexureB, whereby the Court had directed the Official Liquidator to publish the advertisements for sale of the properties of the company in liquidation, which were situated in different States. It appears that pursuant to the said order passed by the Court, the Official Liquidator had engaged the applicant M/s.Navnitlal & Co. for issuing the advertisements in the newspapers as directed by the Court. The applicant M/s. Navnitlal & Co. after publishing the said advertisements has raised the bill of Rs.92,52,450/.
8. It is sought to be submitted by learned Senior Counsel Shri K.S.Nanavaty for the applicant M/s.Navnitlal & Co. that the applicant having been empanelled in the panel constituted pursuant to the order passed by the Court and it having approached the Official Liquidator, the work in question was assigned to the applicant. It is submitted that the other two panelists were not willing to work for the office of the Official Liquidator and therefore, the work was assigned to the applicant. He also submitted that the advertisements having been duly published in the concerned newspapers, the applicant is entitled to be paid the amount of bill as raised by it. On the query put by the Court, he submitted that it was difficult for him to give breakup as to how much commission the applicant had received from each newspaper agency, but normally the applicant Page 6 of 11 HC-NIC Page 6 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER would get about 7 to 8% commission. In the alternative, he submitted that he has no objection if the applicant is paid the amount of bill after deducting the said amount of commission.
9. Learned Advocate Ms. Amee Yajnik appearing for the Official Liquidator also supporting the said submissions made by Mr.Nanavaty, further submitted that the other two agencies were not willing to work with the office of the Official Liquidator as their bills were not paid in time on the earlier occasions. She has fairly submitted that before assigning the work to the applicant M/s.Navnitlal & Co., the Official Liquidator had not called for the offers from the said two agencies nor had tried to ascertain their willingness to do the work in question. She also fairly submitted that the Official Liquidator had not obtained the order from the Court before assigning the work to the applicant, which otherwise should have been obtained, however the amount involved being very huge, the Official Liquidator has to seek permission of the Court before making payment to the applicant.
10. From the aforestated state of affairs, it appears that though the panel was constituted for assigning the work of publishing pursuant to the order dated 04.04.2008 passed in Official Liquidator Report No.34 of 2008 in Company Page 7 of 11 HC-NIC Page 7 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER Petition No.94 of 1996 and though the Court had directed the Official Liquidator to entrust the work of advertisement to the said three agencies on rotation basis considering their rates and discounts etc., the Official Liquidator assigned the work in question to the applicant M/s.Navnitlal & Co. without calling for the offers from the other two agencies. The said assignment was entrusted to the applicant in utter disregard of the orders passed by this Court. When the Court after following the detailed procedure had passed the order and shortlisted three agencies for making the panel to assign work of publication by rotation considering their rates and discounts offered by them, it was incumbent upon the Official Liquidator to call for the offers from all the three agencies before assigning the work to the present applicant, or to obtain fresh orders from the Court.
11. Though, it has been submitted by learned Advocate Ms.Yajnik for the Official Liquidator that the other two agencies were not willing to work with the office of the Official Liquidator, and therefore, the work was assigned to the applicant, the said submission cannot be accepted. There is nothing on the record except the bare averment to suggest that the said two agencies were not willing to work with the office of the Official Liquidator. Admittedly, when the offers were not invited from the said two Page 8 of 11 HC-NIC Page 8 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER agencies, who were on the panel constituted by the Court, the question of their being not willing to work would not arise. Even otherwise, if the said two agencies had shown their unwillingness to work with the office of the Official Liquidator, then also it was the duty of the Official Liquidator to seek orders from the Court, for constituting fresh panel or to bring to the notice of the Court that the other two agencies were not ready to work with the Official Liquidator. No such procedure has been followed and straightway the work involving such a huge amount has been assigned to the applicant M/s. Navnitlal and Co., which action deserves to be strongly deprecated. It is only at the stage of making payment, the Official Liquidator Report has been filed seeking permission to make payment to the applicant.
12. In the opinion of the Court, when no such procedure as directed by the Court earlier for assigning the work of advertising to the three agencies by rotation was followed and when no orders for assigning the work to the said agency i.e. the applicant was obtained by the Official Liquidator, the prayer for releasing the payment of such a huge amount to the said applicant cannot be granted. It is needless to say that the office of the Official Liquidator is a public office and is accountable for every penny spent by the said office, much less for assigning the Page 9 of 11 HC-NIC Page 9 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER work of advertising involving huge amount. No public office can be permitted to act arbitrarily or in disregard of the orders passed by the Court.
13. In that view of the matter, the Court is of the opinion that the prayers sought in the Official Liquidator Report filed by the Official Liquidator and in the Company Application filed by the applicant as prayed for cannot be granted. However, the learned Senior Counsel Mr.Nanavaty has submitted that the applicant normally receives about 7 to 8% commission from the newspaper agencies for the publication of advertisements and he has no objection if the payment is made after deducting the amount of commission.
14. Having regard to the said submission made by the learned Senior Counsel Mr. Nanavaty and regard to the fact that the work of publication has already been carried out by the applicant, though no procedure was followed by the Official Liquidator, the Official Liquidator is permitted to release the payment towards the said bill raised by the applicant, after deducting the amount of commission calculated at 10% of the said bill amount. It is expected that in future, the Official Liquidator shall not assign any such work of publication without obtaining necessary permission from the Court and without following Page 10 of 11 HC-NIC Page 10 of 11 Created On Sat Aug 12 05:19:15 IST 2017 O/COMA/490/2016 ORDER the due process of law.
15. In view of the above terms, the present Company Application and Official Liquidator Report stand disposed of.
(BELA M. TRIVEDI, J.) Tuvar Page 11 of 11 HC-NIC Page 11 of 11 Created On Sat Aug 12 05:19:15 IST 2017