Gujarat High Court
Ol Of M/S Shree Hari-Raj Paper Mills Ltd ... vs Asst. General Manager, Idbi Bank on 6 January, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/OLR/145/2021 ORDER DATED: 06/01/2023
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/OFFICIAL LIQUIDATOR REPORT NO. 145 of 2021
In
R/COMPANY PETITION NO. 351 of 2013
==========================================================
OL OF M/S SHREE HARI-RAJ PAPER MILLS LTD (IN LIQN)
Versus
ASST. GENERAL MANAGER, IDBI BANK
==========================================================
Appearance:
BHOOMI M THAKORE(6237) for the Applicant(s) No. 1
MR AS ASTHAVADI(3698) for the Respondent(s) No. 3
MR AV NAIR(5602) for the Respondent(s) No. 6
MR MRUGESH JANI(1984) for the Respondent(s) No. 4
MR P C CHAUDHARI(5770) for the Respondent(s) No. 5
MR RD DAVE(264) for the Respondent(s) No. 2
MRS YOGINI V PARIKH(2163) for the Respondent(s) No. 1
MS KSHMA V SHETH(2051) for the Respondent(s) No. 1
MS NOOPUR V PARIKH(11248) for the Respondent(s) No. 1
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 06/01/2023
ORAL ORDER
1.The Official Liquidator has submitted this report with following prayers:
"a) This Hon'ble Court may be pleased to permit the Official Liquidator to pay an amount of Rs. 20,31,303/- to the Employees Provident Fund Organization (EPFO) as per recommendation of the Chartered Accountants claim verification report dated 21.09.2021.Page 1 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023
NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined
b) This Hon'ble Court may be pleased to permit the Oficial Liquidator to pay an amount of Rs. 8,96,30,954/- [9,18,00,000- 21,69,046(20,31,303+1,37,743)=8,96,30, 954] to the first charge holder secured creditors namely GSFC, GIIC, SASF and Workers' Union of Company in liquidation in proportionate as per the ratio recommended by the Chartered Accountant, through NEFT/RTGS in their bank accounts respectively.
c) That, this Hon'ble Court may be pleased to permit the Official Liquidator to pay advertisement bill of Rs. 1,37,743/- to M/s. Navnitlal & CO., Advertising Agency from fund available in the accounts of company in liquidation.
d) This Hon'ble Court may be pleased to direct the eligible secured creditors to submit usual undertaking in the office of the Official Liquidator that if it is found any excess payment have been made then same shall be refunded by them forthwith along with prevailing rate of interest.
e) This Hon'ble Court may be pleased to direct the Workers' Union of the Company in liquidation to file usual undertaking in the office of the Official Liquidator that in the event of any excess or duplicate payment is found to have been made then same shall be returned back to the office of the Official Liquidator forthwith. Page 2 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023
NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined
f) Any order/ orders as may be deem fit, and proper in the matter by this Hon'ble Court may be passed."
2.This Court, by order dated 01.12.2017, passed in Company Petition No. 351 of 2013 ordered to wind up Shree Hari-raj Paper Mills Ltd and Official Liquidator attached to this Court is appointed as Liquidator of the said Company with direction to take possession of the assets and properties of the Company (In Liquidation).
3.The Official Liquidator had taken the possession of the assets and properties of the Company (In Liquidation) situated at Survey Nos. 72,73,78,79 at Village-Punadara, Majra-Talod Road, Taluka-Prantij, District, Sabarkantha. This Court by order dated 12.02.2019, 01.10.2019 passed in Official Liquidator Report No. 6 of 2019 confirmed the sale of the aforesaid property for a Page 3 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined consideration of Rs. 8,77,15,000/- in favour of M/s. Shrijee Paper Mills Pvt. Ltd.
4.The Official Liquidator has handed over the possession of the above assets and properties of the Company (In Liquidation) to the auction purchaser on receipt of the full amount of sale consideration.
5.The Official Liquidator thereafter published advertisement in Gujarat Samachar and Times of India newspapers on 28.01.2020 to invite the claims of workers and secured creditors of the Company (In Liquidation) under sections 529 and 529A of the Companies Act, 1956. The Official Liquidator has also prayed for payment of the advertisement bill of Rs. 1,37,743/- to M/s. Navnitlal & Co., Advertising Agency for publishing said advertisement.
Page 4 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023
NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined
6.In response to the advertisement, Workers' Union and Secured Creditors/Consisting of banks and Employees Provident Fund Organization lodged their claims before the Official Liquidator as under:
Sr. Name of Institutions Claim Amount No (In Rs) 1 Employees Provident 20,31,303/-
Fund Organization(EPFO) 2 Gujarat State 30,89,69,407/-
Financial Corporation
(GSFC)
3 Gujarat Industrial 1,75,15,13,057/-
Investment Corporation
(GIIC)
4 Stressed Assets 2,04,98,95,264/-
Stabilization
Fund(SASF) Unit of
IDBI Bank Ltd
5 Central Bank of India 32,19,03,294/-
6 Akhil Gujarat General 8,53,04,288/-
Mazdoor Sangh
(Workers' Union)
7.On receipt of the above claims, the Official Liquidator appointed M/s. M.K.Shah and Co., Page 5 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined Chartered Accountant for verification of the claims by letter dated 04.03.2020.
8.M/s. M.K.Shah and Co., Chartered Accountant submitted their claim verification report dated 21.09.2021 with following observations:
"i) The Chartered Accountant has adjudicated the amount of Rs.
20,31,303/- of Employees Provident Fund Organization Office in full. They also stated that amount of Rs. 20,31,303/- should be paid first to the Employees Provident Fund Organization Office before disbursing any amount to other creditors of the Company.
(ii) The Chartered Accountants has stated that GSFC, GIIC and SASF having first charge holder and Central Bank of India having second charge holder on the assets of the Company in liquidation. Therefore, the claim of Central Bank of India is not considered in eligible ratio.
(iii) The Chartered Accountant has considered the claims of 74 workers of the Company in Liquidation are eligible for payment on basis of documentary evidences of employments.
Page 6 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023
NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined
(iv) The claim of 13 workers are not considered are eligible for payment because as per EPFO records 7 workers are left their job before date of illegal closure of the Company in liquidation and names of 6 workers are not found in salary sheet of the company in liquidation."
9.The Chartered Accountant has adjudicated the eligible claims of the Workers' Union, Banks and Employees Provident Fund as under:
Sr. Name of Institutions Eligible Claim No Amount (In Rs) 1 Employees Provident Fund 20,31,303/-
Organization(EPFO) 2 Gujarat State Financial 8,82,31,180/-
Corporation (GSFC) 3 Gujarat Industrial 21,08,85,054/-
Investment Corporation
(GIIC)
4 Stressed Assets 30,76,44,670/-
Stabilization Fund(SASF) Unit of IDBI Bank Ltd 5 Central Bank of India 12,10,94,468/- 6 Akhil Gujarat General 3,81,70,224/-
Mazdoor Sangh (Workers' Union) Page 7 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined
10. According to the Official Liquidator, claim of GSFC, GIIC and Stressed Assets Stabilization Fund ('SASF' for short)-unit of IDBI Bank Ltd are having first charge holder and Central Bank of India having second charge holder on the assets of the Company (In Liquidation) and therefore, the claim of the Central Bank of India is not considered in the eligible ratio for payment which is worked out as under:
11. The Official Liquidator has reported that the balance in the account of the Company (In Liquidation) is approximately Rs. 9.18 crores as on 30.09.2021.
Sr Name of Eligible Claim Ratio
.N Institutions Amount (In
o. Rs.)
1 Gujarat State 8,82,31,180/- 13.28
Financial
Corporation (GSFC)
2 Gujarat Industrial 21,08,85,054/- 32.70
Investment
Page 8 of 17
Downloaded on : Sun Sep 17 20:31:14 IST 2023
NEUTRAL CITATION
C/OLR/145/2021 ORDER DATED: 06/01/2023
undefined
Corporation (GIIC)
3 Stressed Assets 30,76,44,670/- 47.70
Stabilization
Fund(SASF) Unit of
IDBI Bank Ltd
4 Akhil Gujarat 3,81,70,224/- 5.92
General Mazdoor
Sangh (Workers'
Union)
Total 64,49,31,128/- 100.00
12. After the report was filed, respondent No.1-SASF has filed affidavit-in-reply raising objection for not accepting the report submitted by the Chartered Accountant. It was submitted that SASF has filed claim of Rs. 204.99 lakh as of the date of liquidation i.e. on 01.12.2017 for adjudication, however, as per the report of the Chartered Accountant, claim to the tune of Rs. 30.76 lakhs is only accepted which is much below far the claim made by the respondent No.1. It was submitted by respondent No.1 that, by letters dated 06.12.2021 and 12.01.2022, clarification was sought from the office of Page 9 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined the Official Liquidator but the same has not been replied. It was contended by raising objection that the claim of Rs. 204.99 lakh comprises principal, interest, further interest and liquidated damages expenditure and other expenses as on 01.12.2017. However, the Chartered Accountant in the report has considered only the principal amount, interest and other expenses but did not consider the further interest and liquidated damages.
13. On receipt of the above objection, the Official Liquidator sought revised report from the Chartered Accountant which was submitted by the Chartered Accountant on 23.06.2022 which was forwarded by the Official Liquidator to the Workers Union and secured creditors. As per the said report, the revised payment eligible claim amount as on 01.12.2017 with distribution ratio is Page 10 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined worked out as under:
S Name Eligible Ratio
r of Claim (%)
N Institutions Amount
o (In Rs.)
1 Gujarat State 27,92,61,146/- 9.00
Financial
Corporation (GSFC)
2 Gujarat Industrial 92,46,72,426/- 29.79
Investment
Corporation (GIIC)
3 Stressed Assets 186,19,93,503/- 59.9
Stabilization
Fund(SASF) Unit of
IDBI Bank Ltd
4 Akhil Gujarat 3,81,70,224/- 1.23
General Mazdoor
Sangh (Workers'
Union)
Total 310,40,97,300/- 100.0
0
14. The Official Liquidator has placed on
record revised report dated 23.06.2022 of the Chartered Accountant submitted by the Chartered Accountant along with further report dated 28.07.2022 and has prayed that the Official Liquidator be permitted to pay an amount of Rs. 20,31,303/- to the Employees Page 11 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined Provident Fund Organization first and balance amount of Rs. 8,96,30,954/- to the first charge holder secured creditors viz. GSFC, GIIC, SASF and Workers of the Company (In Liquidation) in proportionate as per the ratio recommended by the Chartered Accountant in the revised report dated 23.06.2022 as under:
Sr. Name of Ratio Amount
No Institutions (%) payable (Rs)
1 Gujarat State 9.00 80,63,678/-
Financial
Corporation
(GSFC)
2 Gujarat 29.79 2,66,99,960/-
Industrial
Investment
Corporation
(GIIC)
3 Stressed Assets 59.99 5,37,65,149/-
Stabilization
Fund(SASF) Unit
of IDBI Bank Ltd
4 Akhil Gujarat 1.23 11,02,167/-
General Mazdoor
Sangh (Workers'
Union)
Total 100.00 8,96,30,954
Page 12 of 17
Downloaded on : Sun Sep 17 20:31:14 IST 2023
NEUTRAL CITATION
C/OLR/145/2021 ORDER DATED: 06/01/2023
undefined
15. Respondent No.1 has filed an additional affidavit-in-reply raising objections to the revised report of the Chartered Accountant along with loan agreement between the Company (In Liquidation) and the IDBI Bank to point out that though the claim initially sanctioned by the Chartered Accountant is enhanced from Rs. 30.76 lakh to Rs. 1.86 crores, however, the Chartered Accountant did not consider the claim made by respondent No.1 in Form No. 66 and has ignored the documents place on record by the respondent no.1. It was submitted that the legal expenses of Rs. 6,59,077/- is also not considered by the Chartered Accountant and as such the entire claim of 204.99 lakh is required to paid to the respondent No.1.
16. Learned advocate Ms. Yogini Parikh for the respondent No.1 submitted that as per the objection raised by the respondent No.1, the Page 13 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined liquidated damages, to which respondent No.1 is entitled, is not included in the eligible claim by the Chartered Accountant. It was submitted that as per the agreement of the loan, liquidated damages are required to be paid for non-payment outstanding dues in time and therefore, amount claimed by respondent No.1 including liquidated damages and expenses ought to have been considered by the Chartered Accountant.
17. Other learned advocates on behalf of the workers and other secured creditors submitted that the amount as calculated by the Official Liquidator in the further report dated 28.07.2022 can be ordered to be disbursed at present and the objections raised by respondent No.1 should not be considered at this stage.
18. Having heard learned advocates for the Page 14 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined respective parties and having considered the facts of the case the Official Liquidator is permitted to disburse the amount of Rs. 1,37,743/- to M/s. Navnitlal & Co., the advertising agency and Rs. 20,31,303/- to the Employees Provident Fund Organization first and thereafter, disburse the amount of Rs. 8,96,30,954/- as per the revised report dated 23.06.2022 submitted by the Chartered Accountant as under:
S Name Ratio Amount r of (%) payable (Rs) N Institutions o 1 Gujarat State 9.00 80,63,678/- Financial Corporation (GSFC) 2 Gujarat 29.79 2,66,99,960/- Industrial Investment Corporation (GIIC) 3 Stressed 59.99 5,37,65,149/- Assets Stabilization Fund(SASF) Unit of IDBI Page 15 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined Bank Ltd 4 Akhil Gujarat 1.23 11,02,167/- General Mazdoor Sangh (Workers' Union) Total 100.00 8,96,30,954/-
19. The objections raised by the respondent No.1 shall be considered by the Official Liquidator at the time of further disbursement, if any.
20. The Official Liquidator is directed to complete disbursement process within a period of four weeks after receipt of usual undertaking to be submitted by the secured creditors to the effect that if it is found any excess payment have been made, then the same shall be refunded by them forthwith along with prevailing rate of interest. The Workers Union of the Company (In Liquidation) are also directed to file usual undertaking in the office of the Official Liquidator that Page 16 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023 NEUTRAL CITATION C/OLR/145/2021 ORDER DATED: 06/01/2023 undefined in the event of any excess or duplicate payment is found to have been made, the same shall be returned back to the office of the Official Liquidator forthwith. The Official Liquidator Report is accordingly disposed of with the aforesaid directions.
(BHARGAV D. KARIA, J) JYOTI V. JANI Page 17 of 17 Downloaded on : Sun Sep 17 20:31:14 IST 2023