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2013 (4) TMI 621 - HC - Companies LawApplication by former Director of SCL seeking directions to HLL to honour all the liabilities and commitments which arose during the period which SCL was under its management and control - first contention of Applicant that HLL has failed to settle various demands/liabilities appearing in the balance sheet - Held that:- Clause 5.1(c) of the Scheme clearly stated that HLL would take over the entire liabilities outstanding at the time of disposal to all the bank/institutions both existing and future, and “not any other additional liabilities (including sales tax, excise duty and dues to the railways) which shall be met out of the sale proceeds of the soap plant”. Only if HLL opted to purchase the soap plant including land, buildings and other facilities at Gajraula used by the soap plant. Clause 5.1(c) of the Scheme also envisaged that if that option was not exercised by HLL, then the above statutory liability was to be paid out of the processing charges paid by HLL to SCL. Further the debt would get enhanced to Rs. 6 crores only if HLL exercised its option to implement Phase-II of the soap manufacturing capacity. The conversion charges to SCL of Rs. 1,900 per tonne of soap packed was to be paid in terms of Clause 6.3(b)(i) after implementation of Phase-II of the project, i.e., after the manufacturing unit was set up. Neither did HLL opt for purchasing the soap plant nor did it proceed with Phase-II of the project. According to HLL it paid SCL conversion charges in excess of Rs. 3 crores per annum. This is not denied by SCL. Thus contention of the Applicant that SCL should have been paid enhanced conversion charges is untenable. HLL owes the Applicant arrears of conversion/processing charges - Held that:- It is seen that in a board meeting of SCL as attended by applicant that the Board was informed that the equipments in fact had got rusted and could not be used unless heavy expenditure was incurred. Quotations had been invited from two-three parties, including HLL for the sale of such equipment. In the meeting applicatant suggested that as the machines were idling it would be better to dispose them of to the highest bidder. As a result the plant and machinery was sold to HLL which was the highest bidder. The Court is unable to discern any malafides on the part of HLL. The allegations by the Applicant in this regard are unsubstantiated. HLL has charged an amount of Rs. 1,52,32,900 from SCL on account of salaries and wages payable to managers and supervisors stated to have been deputed to SCL’s factory for the period 1998-2002 - Held that:- HLL has denied charging Rs. 1,52,32,900 from SCL towards wages of the employees who were sent on deputation to SCL. It is stated that in the handing over docket, HLL had mentioned that Rs. 81,22,072 was payable to it towards balance part payment of salaries and wages of managers and supervisors on full time deputation to SCL factory. In the circumstances, the above plea of the Applicant is rejected. HLL was responsible for clearing the dues of UPSIDC - Held that:- As in a joint meeting held on 12th August 2004 the Applicant informed about a claim of Rs. 209 lakhs against SCL. It is seen that the land cost to the extent of Rs. 63 lakhs has been met by HLL and the responsibility of getting a no dues certificate from UPSIDC was that of SCL. Under the Scheme as approved by the Court, there appears to be no basis for fastening on to HLL the liability owing to UPSIDC. In terms of the Scheme HLL upon implementation of both the phases would have added plant and machinery and due to non-implementation of Phase-II, SCL was deprived of such assets that were to be left by the lessee and the loss on that score has been quantified as Rs. 718.18 lakhs - Held that:- As already noticed, there was no compulsion on HLL to proceed with Phase II of the Scheme. It was an option that HLL did not exercise. This submission of the Applicant is rejected as being misconceived. Tax liabilities - Held that:- HLL is right in contending that there was no obligation on it to pay the said dues. According to the Applicant since 1998-99 the ITD had been assessing SCL under Section 115J/JA of the Income Tax Act, 1961 on the basis of book profits, disregarding the fact that SCL is a sick company. HLL cannot be held liable for being responsible for the said losses. The full discharge of HLL has been certified by IDBI itself. Therefore, this submission of the Applicant is rejected.
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