2000-(001)-CLJ -0036 -MAD
GUJARAT HEAVY CHEMICALS LIMITED v. TAMIL NADU GLASS WORKS LIMITED. (COMPANY PETITION NO. 41 OF 1991) ICICI LIMITED v. OFFICIAL LIQUIDATOR, TANGLASS LTD. (C.A. NOS. 268 AND 269 OF 1999) ALLAHABAD BANK v. GUJARAT HEAVY CHEMICALS LTD. (C.A. NO. 400 OF 1999) INDIAN BANK v. GUJARAT HEAVY CHEMICALS LTD. (C.A. NO. 419 OF 1999)
Company Petition No. 41 of 1991, C.A. Nos. 268, 269, 400, 419 of 1999, decided on April 16, 1999.
IN THE HIGH COURT OF MADRAS
V. M. SIVAKUMAR, Advocate, for RANGARAJAN AND PRABHAKARAN, for applicant in Company Application Nos. 268 and 269 of 99, C. RAVICHANDRAN, Advocate, for applicant in Company Application No. 400/99, and JEYSH DOLIA, Advocate, for IYAR AND DOLIA, for applicant in C.A. No. 419 of 1999.
R. JAYASIMHA BABU, J. – Leave is sought by ICICI Ltd. as also by two banks for continuing the proceedings initiated by them against the company in liquidation. Even before the winding up order came to be made on 25.6.1996, ICICI Ltd. had instituted a suit in the High Court of Bombay in its capacity as secured creditor and had also secured from that court an order appointing the court receiver as receiver for the properties of the company in liquidation. It must be mentioned here that those properties are situated at the outskirts of the city of Chennai. Indian Bank and Allahabad Bank who also claim to be secured creditor of the company have filed their claim before the Debt Recovery Tribunal at Madras. It is stated that they are also parties to the proceedings initiated by ICICI at Bombay and, similarly, ICICI is also party to the proceedings initiated by them at Chennai. The company in liquidation is a party to all those proceedings.
2. All these secured creditors have expressed their desire to stand outside the winding up, and assert a right to realise their security.
3. It is not disputed by the applicants that the right of the secured creditors over the assets of the company is subject to section 529-A of the Companies Act, which provides inter alia that the workmen’s dues shall rank equally with debts due to secured creditors and that dues of the workmen as also of the secured creditors shall be, paid in priority and in full, unless the assets are insufficient to meet their claims in which case they shall abate in equal proportions.
4. The Supreme Court in the case of International Coach Builders v. Karnataka State Financial Corporation by its order made on 17.6.1993 [since reported in (1994) 4 Comp LJ 311 (Karn)] directed the secured creditors who were the respondents in that matter to sell the security by acting jointly with the official liquidator under the supervision and in accordance with the directions of the learned Company Judge of the High court and the sale proceeds be deposited in the court and then distribute them in accordance with the directions of the learned Company Judge.
5. In the case of Industrial Credit and Investment Corporation of India Ltd. v. Srinivas Agencies and others (1996) 2 Comp LJ 421 (SC) : (1996) 4 SCC 165 decided on 22.2.1996, the court observed that the approach to be adopted by the Company Court while granting or refusing leave to institute, or continue the proceedings against the company in liquidation and the conditions subject to which leave if granted is to be made subject, cannot be put in a straitjacket formula. The discretion to be exercised in this regard has to depend on the facts and circumstances of each case, subject, of course to the condition imposed being reasonable.
6. The amount claimed in the proceedings instituted against the company in liquidation by ICICI is said to be Rs. 4.59 crores, the claim by Indian Bank Rs. 8.74 crores and that by the Allahabad Bank Rs. 5.75 crores.
7. The official liquidator reports that he has not as yet called for the claims from creditors, as the directors have failed to file the statement of affairs and the financial position of the company is not known in full to the official liquidator.
8. The company in liquidation was a company which was engaged in the manufacture of glass and must have necessarily employed workmen. Claims from the workmen are likely/and suitable provisions has to be made to protect their interest.
9. Having regard to the circumstances of the case, the secured creditors who wish to stand outside the winding up, are permitted to continue the proceedings initiated by them against the company in liquidation in the forums in which such proceedings have been initiated subject, however, to the condition that the assets of the company in liquidation held by the applicants as security for the loans given by them shall not be sold without associating the official liquidator with the sale – the sale to be effected jointly with him; such sale to be held only after due publicity and in a fair manner. The proceeds of the sale shall be deposited in a nationalised bank and shall not be appropriated by the applicants except with the leave of this court. The sale will be subject to the supervision and direction of the Bombay High Court if the properties are brought to sale by the receiver already appointed by that court acting jointly with the official liquidator, of this company in liquidation.
10. The sale will be subject to the supervision and direction of this court in the cases of the claims of Indian Bank before the Debt Recovery Tribunal and the Tribunal shall not direct or permit the sale. After the banks obtain a decree against the company in liquidation, they may apply to this court for suitable directions.
11. The securities given by the applicants by the company in liquidation shall not be alienated or the possession of the same parted with, except in accordance with this order.