Gujarat High Court
Assets Reconstruction Company (India) ... vs Official Liquidator Of La-Bel ... on 21 November, 2014
Author: N.V.Anjaria
Bench: N.V.Anjaria
O/COMA/243/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY APPLICATION NO. 243 of 2014
In COMPANY PETITION NO. 55 of 2007
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ASSETS RECONSTRUCTION COMPANY (INDIA) LIMITED....Applicant(s)
Versus
OFFICIAL LIQUIDATOR OF LA-BEL LAMINATES PVT. LTD. &
3....Respondent(s)
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Appearance:
MR ANIP A GANDHI, ADVOCATE for the Applicant(s) No. 1
MR HARSHAD K PATEL, ADVOCATE for the Respondent(s) No. 4
MR JS YADAV, ADVOCATE for the Respondent(s) No. 1
MRS MAUNA M BHATT, ADVOCATE for the Respondent(s) No. 2
MS E.SHAILAJA, ADVOCATE for the Respondent(s) No. 3
OFFICIAL LIQUIDATOR for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE N.V.ANJARIA
Date : 21/11/2014
ORAL ORDER
The applicant Assets Reconstruction Company (India) Limited (ARCIL), which is a secured creditor of the Learned advocate-Bel Laminates Private Limited- company in liquidation, has taken out Judges' Summons praying for a direction for disbursement of Rs.02,30,00,000/- together with interest accrued.
2. The company in liquidation was wound up by order dated 07th February, 2008 in Company Petition No.55 of 2007. Upon sale of assets confirmed, the Official Liquidator realised Rs.08,01,00,000/- towards Page 1 of 6 O/COMA/243/2014 ORDER sale consideration. The Official Liquidator invited claims from the creditors and the workers, and upon receipt of the various claims, the same were forwarded to the Chartered Accountant. The Chartered Accountants submitted verification report dated 21st December, 2011.
3. Official Liquidator filed Report No.58 of 2012 praying regarding the claim of the Income Tax Department that its claim may be considered vis-à-vis the priority of payments amongst the secured creditors. It was secondly prayed to permit the Official Liquidator to disburse amount of Rs.04,29,99,000/- to the applicant-ARCIL, and the workers of the company as per the ratio fixed by the Chartered Accountant in the verification report. It was given out by the Official Liquidator in the said Report that Income Tax Department had raised claim of Rs.44,04,735/- and similarly the Assistant Commissioner of Commercial Tax raised claim to the tune of Rs.31,87,022/-. The total funds available in the account of the company was declared to be Rs.06,79,99,238/-.
3.1 This Court as per order dated 13th December, 2012 passed in the aforesaid Report of the Official Liquidator permitted disbursement of the amount as per the following directions-(i) Rs.2,30,00,000/- be kept separately for provisions of the incometax liability;
(ii) Rs.20,00,000/- for future expenses; (iii) Rs.35,052/- be payable to the Employees Provident Fund Organization, Rajkot; (iv) Rs.22,70,669/-
Page 2 of 6O/COMA/243/2014 ORDER towards full and final payment to 27 individual
workers as per the conditions mentioned hereinbelow and (v) Rs.4,06,93,527/- to respondent No.1-ARCIL as adhoc payment.
3.2 It appears that at the relevant time the question was pending for consideration of the Court about the priority of payment of dues to the Income Tax Department vis-à-vis the secured creditors and whether the dues of the Income Tax Department would classify under Section 529-A of the Companies Act, 1956. In that view amount of Rs.02,30,00,000/- which was kept aside for income tax liability, was ordered to be kept in a fixed deposit. In paragraph 11 of the order, the Court while so directing clarified that it would be open for the either party to approach the Court after the said issue is decided at an appropriate stage.
3.3 It is in the aforesaid background of facts that the applicant-Asset Reconstruction Company (India) Limited has prayed for disbursement of said amount of Rs.02,30,00,000/- with interest.
4. Heard learned advocates appearing for the parties.
5. It may be stated at the outset that the Employees' Provident Fund Organisation, Rajkot has already been paid its dues of Rs.35,052/-. This was confirmed by learned advocate Ms.E. Shailaja appearing for the Organisation. Similarly the dues of 27 workers represented by learned advocate Mr.Harshad K. Patel, Page 3 of 6 O/COMA/243/2014 ORDER to the tune of Rs.22,17,669/- has also been disbursed and paid. The applicant is the only secured creditor whose claim is Rs.08,39,11,468.53 Ps.; out of which as per order dated 13th December, 2012 mentioned above of this Court, it was allowed ad-hoc payment of Rs.04,06,93,527/-. Rs.02,30,00,000/- was kept aside by the Court as per the aforesaid details and the observations.
5.1 Learned advocate for the Official Liquidator Mr.J.S. Yadav invited attention of the Court to the Report of the Official Liquidator dated 20th September, 2014 filed in the proceedings, pointing out inter alia that the ratio of secured creditors and workers of the company in liquidation is decided to be 97.37 and 2.63 respectively as per the verification report. As regards disbursement made, the Official Liquidator has further stated that he has having funds of Rs.03,19,10,426/- and has confirmed the disbursement made as per the aforesaid order dated 13th December, 2012, by stating as under:
".... the Official Liquidator has complied the aforesaid order dated 13.12.2012 and disbursed an amount of Rs.4,06,93,527/- to the applicant. Earlier, the Official Liquidator has already disbursed an amount of Rs.1,43,38,287/- to the applicant on adhoc basis in terms of the order dated 4.2.2011 passed by this Hon'ble Court in Company Application No.415 of 2010. Thus, the Official Liquidator has already disbursed total amount of Rs.5,50,31,814/- to the applicant namely ARCIL against their claim of Rs.8,39,11,468/- as verified by the Chartered Accountants."Page 4 of 6
O/COMA/243/2014 ORDER 6. Learned advocate Mr.Anip Gandhi submitted
that this Court in Company Application No.245 of 2012 and cognate matters decided by judgment dated 30th June, 2014 has held that the dues of the Income Tax Department would classify under Section 530 of the Companies Act and payment of income tax dues has to succeed to the process of disbursement and payment to the secured creditors falling under Section 529-A of the Act. Learned advocate further relied on decision of this Court in Company Application No.235 of 2005 decided on 13th June, 2006 as well as decision of the Bombay High Court in Starit India Limited (in liquidation) in Reference, which considered the Section 178(2) of the Income Tax Act vis-à-vis Section 529, 529-A and 530 of the Companies Act, and held upon interpretation that dues under Section 529-A would have a precedence.
6.1 It may be stated at this stage that despite several opportunities being granted to the respondent No.2-Income Tax Department, it did not file any affidavit-in-reply to put-forth the details of dues it may be claiming. The said dues, in any case, as per the law above would rank below the dues of the secured creditors for the purpose of praying them. The entitlement of the secured creditor would precede over the claim of the Income Tax Department.
7. As per the above facts noted in paragraph 5 and 5.1 above, out of the total dues of applicant- ARCIL, part disbursement is made on ad-hoc basis.
Amount of Rs.02,88,79,654/- remains to be payable
Page 5 of 6
O/COMA/243/2014 ORDER
which are the dues qualifying under Section 529-A of the Companies Act. These dues as per the position of law emanating from the afore-mentioned decisions, would rank in priority against the dues of the income tax. The dues of the applicant being a secured creditor has to be given priority in payment.
8. Therefore amount of Rs.02,30,00,000/- kept aside as per order dated 13th December, 2012 of this Court has ripened to be disbursed to the applicant- secured creditor. Though the Income Tax Department has not chosen to give details of its future claims towards tax despite opportunities granted, in any case, these dues would qualify for payment only after the entire dues of applicant-secured creditor is paid out of the funds available.
9. In the aforesaid circumstances the prayers deserves to be granted. It is, however, directed that applicant may be paid Rs.02,30,00,000/- and the Official Liquidator shall disburse the said amount lying presently in the fixed deposit. The interest accrued on the said fixed deposit shall however for the time being not paid to the applicant and shall be reinvested in fixed deposit for one year renewable. It will abide by the orders of the Court which may be passed in the subsequent stages.
10. The present Application is allowed to the extent and in terms above, and stands disposed of.
(N.V.ANJARIA, J.) Anup Page 6 of 6