2005 (8) TMI 394 - HC - Companies Law

Summary

Issues:
Claim for outstanding payment for security services provided by the applicant to the Company-in-Liquidation. Jurisdiction of the Court over the matter. Liability of Gujarat Maritime Board for payment. Claim by State Bank of India for payment based on assets' possession by Official Liquidator.

Analysis:
The applicant, a security agency, sought payment of outstanding bills amounting to Rs. 2,18,858 for security services provided to the Company-in-Liquidation. The applicant was appointed by the Official Liquidator to safeguard the assets and properties of the Company. Despite raising bills and reminders, no payment was made by the Official Liquidator, leading to the application seeking direction for payment.

The Official Liquidator, in a previous report, requested the Gujarat Maritime Board to deposit security charges. However, the Board contested the claim, stating no liability as there was no lease agreement with the applicant. The possession of the property was handed back to the Board, emphasizing the limited purpose of the plot for ship breaking activities.

State Bank of India claimed payment based on a recovery certificate issued by the Debt Recovery Tribunal. They argued that since the assets were in the custody of the Official Liquidator and later handed over to the Board, the Board should make the payment for security personnel.

The Court found the applicant's claim exaggerated, noting discrepancies in the deployment of security personnel without proper justification. It restricted the claim to one-fifth of the amount, directing the Official Liquidator to make payment only for one security guard per shift. The Court criticized the lack of details and justification for the excessive deployment of security personnel, highlighting a common practice in companies-in-liquidation.

In conclusion, the Court disposed of the application, granting partial payment for security services and emphasizing the need for proper justification and details in such matters. The order was to be placed in the relevant report regarding security charges for record-keeping purposes.