Delhi High Court
Citicorp International Limited vs Shiv Vani Oil & Gas Exploration Services ... on 25 July, 2023
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~C26
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 25th July, 2023
+ CO.PET. 446/2013 & CO.APPLs. 1053/2017, 128/2019, 382/2019,
95/2021, 617/2022, 629/2022, 17/2023, 131/2023, 267/2023,
268/2023, OLR 9/2022, OLR 61/2023
CITICORP INTERNATIONAL LIMITED ..... Petitioner
Through:
versus
SHIV-VANI OIL & GAS EXPLORATION SERVICES
LTD ..... Respondent
Through: Mr. Shaantanu Devansh, Mr. Shobhit
Narula & Ms. Priya Chhajer, Advs.
for Applicant.
Mr. Hashmat Nabi and Ms. Divya
Kaur, Advocates for PNB.
Ms. Ruchi Sindhwani, Sr. Standing
Counsel with Ms. Megha Bharara,
Adv. for OL.
Mr. Jeewesh Prakash, Mr. Sandeep
Aggarwal, Ms. Ritu Dubey, Mr.
Sankalp Srivastava, Advocates.
Mr. Bheem Sain Jain, Advocate for
Applicant in State Bank of India.
Mr. Vishal Kapoor & Mr. Harsha
Gollamudi, Advocates.
Mr. Dhruv Wadha, Advocate.
Mr. Arjun Nanda, Advocate.
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
1. This hearing has been done through hybrid mode.
CO. APPL.586/2022 in CO.PET. 446/2013
2. The present Application has been moved by Mr. Ramesh Aggarwal seeking impleadment on account of being a necessary party in the current Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 1 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 petition. It is the case of the Applicant that he is the sole and absolute owner of the following properties situated at:
(1) District - West Tripura, Sub- Division and Sub-Registry Sadar, Tehsil & Mouja - North Champamura, appertaining to Khatian No. 1383, Touji No. 1223/P, Sabek Dag No. 4186/P, 4185, 4184, Hal Plot No. 7024/P, 7025, 7026, measuring 0.74 acres classified as Viti (Tilla), Tilla by way Rayati Jote.
(2) District - West Tripura, Sub - Division and Sub - Registry Sadar, Tehsil & Mouja- Uttar Champamura, appertaining to Jote Khatian No. 2940, Sabek Dag No. 4204/P, Hal Plot No.7023/ 9156, measuring 0.16 acres classified as Tilla, by way of Rayati Jote.
(3) District- West Tripura, Sub.- Division and Sub-Registry Sadar, Tehsil & Mouja- Uttar Champamura, appertaining to Jote Khatian No. 5260, Sabek Dag No. 4183, Hal Plot No. 7014, measuring 0.39 acres classified as Bastu (Tilla), by way of Rayati Jote.
3. The Applicant claims to be engaged in the business of transportation in the name of Golden Logistics, having its registered office in Guwahati. A company named Natural Oil and Gas Services Ltd. approached the Applicant in April, 2017 by representing to the Applicant that it was involved in providing services of oil and gas extractions. As per the ld. Counsel for the Applicant, Natural Oil and Gas Services Ltd. is a subsidiary of the Company in liquidation. The land was given on lease for a sum of Rs.17,000/- per month. The amount is stated to have been paid from April, 2017 to October, 2017. However, for subsequent periods, the amount continued to remain due. A tenancy agreement dated 30th October, 2017 was again executed between the Applicant and Natural Oil and Gas Services Ltd. With effect from October, 2017 to 19th April, 2018, the newly agreed amount of Rs.20,000/- was paid. However, the claim of the Applicant is that Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 2 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 the Company failed to hand over the possession of the property to the Applicant.
4. Heard. The details of various movables, including the rigs which are located on the premises, have been placed on record. The OL took the land into possession on 1st January, 2018 when the property came to be sealed. The Applicant's struggles are well documented; these include approaching the OL's office and even filing RTI Applications, to finally come to know that Natural Oil and Gas Services Ltd. is a wholly owned subsidiary of the Company in liquidation. Under such circumstances, the Applicant has approached the Court seeking impleadment in the petition and release of the land.
5. The claim of the Applicant is that the land could fetch at least a sum of Rs.75,000/- per month, but the Applicant has been unable to put the same to use in light of the possession by the OL.
6. The OL was asked to verify the status of the Applicant. The OL has now filed the report being report no. OLR 61/2023. As per the said report, the OL in respect of this Applicant, states as under:
"8. That this office also received an application being CA No.587/2022, filed by Mr. Ramesh Aggarwal, seeking possession of the premises located at B.K. Road, Opp Women's College Police Compound, Agartala. Tripura West, after removal of all equipments, materials and components/machinery lying thereat and a direction for the Official Liquidator to compensate the Applicant for loss of rent since the date of sealing the said property. This Hon'ble Court, vide order 10.03.2023 directed the Applicant to appear before this office alongwith original documents to satisfy their title over the property in question.
9. That in compliance of the said order, the Applicant Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 3 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 in CA No.587/2022 appeared before this office on 21.03.2023. The original documents w.r.t. the said property were produced before. this office and the same were verified and returned and a copy of the same was retained. The Applicant had produced the Sale-Deed dated 06.09.2010 & Tenancy agreement dated 30.10.2017 with Natural Oil &. Gas Services Ltd."
7. In paragraph 8, the address has been wrongly mentioned. However, the OL has clarified that the documents of the Applicant have been checked and that the same are in order. The de-sealing would have to be effected. As per the OL, the only reason why the same has not been done is that equipment, material, and machinery are lying in the property. Accordingly, this Court observes that if the Applicant's title is not in question, the land would be liable to be released to the Applicant. In view thereof, the following directions are issued:
i) The OL's report no. 61/2023 as extracted above in respect of the Applicant is accepted.
ii) The NCLT shall pass appropriate orders in respect of the heavy machinery/parts of rigs.
iii) Upon the NCLT or the IRP/RP dealing with the disposal/sale of the heavy machinery and parts of the rigs, the land shall be returned to the Applicant herein.CO APPL. 725/2018
8. This is an application filed by M/s Natural Oil and Gas Services Ltd.. The ld. Counsel for the said Applicant disputes that the entity is a wholly owned subsidiary of the Company in liquidation. The said Company seeks the release of the machinery. Considering that a view would have to be Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 4 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 taken as to whether this Company is a wholly owned subsidiary and then appropriate orders would have to be passed, the application is kept pending. The same shall be considered by the NCLT comprehensively, along with the main matter itself.
CO. APPL. 128/20199. This is an application that has been filed by Mr. Dahyabhai Maneklal Patel, claiming to be the owner of land bearing Survey No. 4, Paiki-10, (Approx. 5000 sq. mtrs.) opposite Dantali Crossing, Mauje Jamiyatpura, Talluka Gandhi Nagar, District Gandhi Nagar (hereinafter 'subject property'). According to the Applicant, an agreement was entered into dated 9th September, 2016 with the Company in liquidation i.e., M/s Shiv-Vani Oil & Gas Exploration Services Ltd. As per the license agreement, the said Company was allowed to use the said property for a period of 11 months and 29 days on a monthly license fee of Rs.50,000/-. The Company was in arrears of license fee of more than Rs.5 lakhs. However, sometime in January, 2018, the subject property came to be attached. The land was an open land, and the Applicant, thus, prayed that the said land be disclaimed by the Official Liquidator (OL) and released.
10. Vide the last order dated 10th April, 2023, the OL was directed to verify the Applicant's documents. A report has been filed today being OLR 61/2023 in which it is stated as under:
"3. That an application being CA NO.128/2019 has been filed by Mr.Dayabhai Maneklal Patel, under section 535 read with section 457 of the Companies Act 1956, seeking a direction against the Official Liquidator to disclaim property bearing survey no. 4, Paiki-10, opposite Dantali Crossing, Mauje Jamiyatpura, Taluka Gandhi Nagar, District Gandhi Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 5 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 Nagar.
4. That in this regard it is submitted that, in compliance of order dated 10.04.2023, the representatives of the applicant/landlord appeared before this office on 26.04.2023. The original documents w.r.t. The said property were produced before this office and the same were verified and returned and a copy of the same was retained. The Applicant had produced the Sale-Deed of the property and Leave & License agreement entered between Mr. Dayabhai Maneklal Patel and the Company (In Liqn.). Documents provided by the Applicant are in order with respect of his claim over the property. It is however submitted. that there are moveable assets i.e. heavy machinery/parts of the rigs, of the Company (In Liqn.) lying on the said property. Copy of minutes dated 26.04.2023 are annexed as Annexure-A."
11. A perusal of the above extract of the report would show that the title of the Applicant is not in dispute and now stands verified. However, as per the OL, since there is some heavy machinery, including parts of rigs located on the land- thus the subject property cannot be released to the Applicant until and unless appropriate orders are passed regarding the said heavy machinery.
12. Since today, the Court is transferring this matter of the Company to NCLT, the following directions are issued:
i) The OL's report no. 61/2023 as extracted above in respect of the Applicant, is accepted.
ii) The NCLT shall pass appropriate orders in respect of the heavy machinery/parts of rigs.
iii) Upon the NCLT or the IRP/RP dealing with the sale or disposal of the heavy machinery and parts of the rigs, the land shall be returned Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 6 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 to the Applicant herein.
13. The Applicant is permitted to appear before the NCLT on the next date of hearing and is also allowed to raise his claims of the arrears of license fee before the NCLT. Accordingly, the application is disposed of. CO.PET. 446/2013 & CO.APPLs. 1053/2017, 382/2019, 95/2021, 617/2022, 629/2022, 17/2023, 131/2023, 267/2023, 268/2023, OLRs 9/2022 & 61/2023
14. Two of the secured creditors, i.e. PNB and SBI, have moved the present applications CO.APPL.131/2023 & 382/2019 seeking transfer of this petition to the NCLT in terms of Section 434 of the Companies Act, 1956. The Company under liquidation in the present case is M/s Shiv-Vani Oil & Gas Exploration Services Ltd., This Court had passed the order of liquidation on 28th July, 2017.
15. The Company has movable and immovable assets. The movable assets of the Company included the assets within the office premises and machinery, rigs at various locations. The submission being made today by ld. Counsel for the PNB and SBI is that no action has taken place in respect of the movable assets in terms of the judgment of the Supreme Court in Action Ispat and Power Limited v. Shyam Metalics and Energy Limited ( 2021) 2 SCC 641. Even the winding up proceedings has not reached an advanced stage, therefore, the matter ought to be transferred to the NCLT.
16. The relevant extract of the said judgment in Action Ispat and Power Limited (supra) is extracted hereinbelow:
"25. ...................
So long as no actual sales of the immovable or movable properties have taken place, nothing irreversible is done which would warrant a Company Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 7 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings. It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the Company Court must proceed with the winding up, instead of transferring the proceedings to the NCLT to now be decided in accordance with the provisions of the Code. Whether this stage is reached would depend upon the facts and circumstances of each case"
17. The concerns expressed by both the Banks are that under the Insolvency and Bankruptcy Code, 2016, in view of the specific timelines, which are prescribed and the NCLT being an expert Tribunal, the process of liquidation would be considerably expedited. The Company, under liquidation, owns oil rigs and various other immovable and moveable properties of high value. In order to ensure that the value is not depreciated, the secured creditors seek transfer to the NCLT.
18. On behalf of the Official Liquidator, Ms. Sindhwani, ld. Counsel makes two submissions. Firstly, she submits that the winding up is not at an advanced stage & can be transferred to the NCLT in terms of the judgment of the Supreme Court in Action Ispat and Power Limited v. Shyam Metalics and Energy Limited ( 2021) 2 SCC 641. However, the concern that she raises relates to the security charges being incurred by the OL for securing the immovable assets of the Company, which is under liquidation. She submits that a total amount of over Rs.8.45 crores has been incurred by the OL as on 31st March, 2023 to safeguard the properties of the Company. In her submission, the secured creditors ought to reimburse the same to the OL so that the OL is not deprived of the amounts, which are fairly due.
Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 8 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23Secondly, she submits that an order ought to be passed by this Court securing the properties during the transfer process, especially when the IRP is yet to be appointed; once the properties are released from the OL and also after transfer to the NCLT.
19. Section 434 of the Companies Act, 1956 reads as under:
"434. Transfer of certain pending proceedings (1) On such date as may be notified by the Central Government in this behalf,-
(a) all matters, proceedings or cases pending before the Board of Company Law Administration (herein in this section referred to as the Company Law Board) constituted under sub-section (1) of section 10E of the Companies Act, 1956 (1 of 1956), immediately before such date shall stand transferred to the Tribunal and the Tribunal shall dispose of such matters, proceedings or cases in accordance with the provisions of this Act;
(b) any person aggrieved by any decision or order of the Company Law Board made before such date may file an appeal to the High Court within sixty days from the date of communication of the decision or order of the Company Law Board to him on any question of law arising out of such order:
Provided that the High Court may if it is satisfied that the appellant was prevented by sufficient cause from filing an appeal within the said period, allow it to be filed within a further period not exceeding sixty days; and
(c) all proceedings under the Companies Act, 1956 (1 of 1956), including proceedings relating to arbitration, compromise, arrangements and reconstruction and winding up of companies, pending immediately before such date before any District Court or High Court, shall stand transferred to the Tribunal and the Tribunal may proceed to deal with such proceedings from the stage before their transfer:
Provided that only such proceedings relating to the Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 9 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 winding up of companies shall be transferred to the Tribunal that are at a stage as may be prescribed by the Central Government.
Provided further that only such proceedings relating to cases other than winding-up, for which orders for allowing or otherwise of the proceedings are not reserved by the High Courts shall be transferred to the Tribunal [Provided also that]-
(i) all proceedings under the Companies Act, 1956 other than the cases relating to winding up of companies that are reserved for orders for allowing or otherwise such proceedings; or
(ii) the proceedings relating to winding up of companies which have not been transferred from the High Courts;
shall be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959.] Provided also that proceedings relating to cases of voluntary winding up of a company where notice of the resolution by advertisement has been given under sub- section (1) of section 485 of the Companies Act, 1956 but the Company has not been dissolved before the 1st April, 2017 shall continue to be dealt with in accordance with provisions of the Companies Act, 1956 and the Companies (Court) Rules, 1959."
20. As per the proviso highlighted above, upon the application being filed by any of the parties to the proceedings, the transfer may be made by the Court in terms of the second proviso of Section 434 (1) of the Companies Act, 1956. In Action Ispat (supra), if the winding up is not at an advanced stage, the High Court may transfer the matter to the NCLT. The relevant portion of the said judgement is set out below:
"31. Given the aforesaid scheme of winding up under Chapter XX of the Companies Act, 2013, it is clear that Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 10 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 several stages are contemplated, with the Tribunal retaining the power to control the proceedings in a winding up petition even after it is admitted. Thus, in a winding up proceeding where the petition has not been served in terms of Rule 26 of the Companies (Court) Rules, 1959 at a pre-admission stage, given the beneficial result of the application of the Code, such winding up proceeding is compulsorily transferable to the NCLT to be resolved under the Code. Even post issue of notice and pre admission, the same result would ensue. However, post admission of a winding up petition and after the assets of the company sought to be wound up become in custodia legis and are taken over by the Company Liquidator, section 290 of the Companies Act, 2013 would indicate that the Company Liquidator may carry on the business of the company, so far as may be necessary, for the beneficial winding up of the company, and may even sell the company as a going concern. So long as no actual sales of the immovable or movable properties have taken place, nothing irreversible is done which would warrant a Company Court staying its hands on a transfer application made to it by a creditor or any party to the proceedings. It is only where the winding up proceedings have reached a stage where it would be irreversible, making it impossible to set the clock back that the Company Court must proceed with the winding up, instead of transferring the proceedings to the NCLT to now be decided in accordance with the provisions of the Code. Whether this stage is reached would depend upon the facts and circumstances of each case."
21. In the present case, the Provisional Liquidator was appointed in 2017. However, the winding up is not at an advanced stage. No auction has been conducted, no claims have been invited. Clearly the winding up process could consume considerable time. Accordingly, the present company petition is transferred to the NCLT. The entire record of the present petition Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 11 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23 shall also be remitted in the electronic form to the Registrar, NCLT, and the same shall be listed before the NCLT. All the parties appearing before the Court are also permitted to appear before the NCLT on 3rd August, 2023. The OL shall continue to exercise the control over all the properties of the Company under liquidation, subject to any orders that the NCLT may pass in future.
22. All the remaining applications shall now be considered before the NCLT.
23. Insofar as the securing of assets is concerned, the expenses incurred till 1st August, 2023 shall be paid by the OL. The same shall be reimbursed by SBI, and PNB by 14th August, 2023. SBI and PNB are free to claim the same as part of the debt against the Company. The NCLT shall pass appropriate orders to secure the assets. Until the NCLT passes appropriate orders regarding securing the assets, SBI and PNB shall bear the expenses of the security agencies.
24. List before the NCLT 3rd August, 2023.
25. All further dates shall stand cancelled.
PRATHIBA M. SINGH, J JULY 25, 2023 Rahl/am Signature Not Verified Digitally Signed CO.PET. 446/2013 Page 12 of 12 By:RAHUL Signing Date:28.07.2023 17:53:23