9911796707
TMI Blog2008 (5) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... permission sought for by the Official Liquidator in the present report, if granted, will affect large number of Secured Creditors and workers, the Court was of the view that all concerned parties are required to be heard before passing any order on this report. Accordingly, this Court vide order dated 29-1-2008 directed the office to place a notice of hearing on the notice board informing all those learned advocates appearing for the Secured Creditors and Workers about this report and requesting them to collect the copy of the report from the Official Liquidator and to make their submissions before the Court on 5-2-2008. Pursuant to the notice placed on the notice board, inviting objections from the affected parties, Mr. Sandeep Singhi, learned advocate appeared on behalf of one of the Secured Creditors, namely, ICICI Bank Limited. He has raised a preliminary issue to the effect that no details are furnished by the Official Liquidator as to how the amount has been calculated by him. Despite the notice placed on the notice board, only one Secured Creditor has come forward. The Court, therefore, directed the Official Liquidator to issue notice to all Secured Creditors and Workers Uni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll realizations brought to the credit of the Company (In Liquidation) by the Official Liquidator. It is further stated in the said report that as and when assets of a particular Company are put at sale by issuing advertisement in the Newspapers, a date is specified in the advertisement on which the properties of the Company are kept open for inspection of the intending buyers before giving their offer. No fee for such inspection was charged by the Official Liquidator. However, as and when any particular intending buyer makes a specific request to the Official Liquidator, requiring inspection of properties of any Company for any purpose, a fee of Rs. 1,000 is charged if the assets are situated at Ahmedabad and fee of Rs. 2,000 is charged if the assets are situated outside Ahmedabad. Such realizations or collections are debited by the Official Liquidator under the head "Inspection charges" which are in the nature of realizations and collections on which Central Government fee is required to be deducted in accordance with rule 291(2)(i). 5. As far as interest on investment is concerned, rule 293 of the Companies (Court) Rules, 1959 prescribes that all such money for the time being st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount". 7. As far as sale proceeds are concerned, the Official Liquidator has stated in his report that on sale of the assets of a particular Company, the Official Liquidator realizes sale proceeds on which Central Government fee is required to be deducted under rule 291(2)(i). But the Central Government fee is required to be deducted out of the realizations made by the Official Liquidator by way of sale of assets under rule 291(4) at the rate prescribed therein. He has, therefore, submitted that the Central Government fee has been calculated by him under rule 291(4) on all realizations made by him by way of sale of assets of the Company and the same is mentioned as sale proceeds in the calculations already placed on record. 8. Lastly, he has stated in his report with regard to misc. receipts. Sometimes, the Creditors, contributories and others are requiring inspection of files of the Official Liquidator under rule 360 of the Companies (Court) Rules, 1959. The Official Liquidator is charging inspection fee from them under rule 360. Sometimes, they are requiring abstracts or copies of files and records also. He is charging fee for providing copies and abstracts as per rule 360. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Companies (Court) Rules. Since the secured creditors having remained outside the winding up proceedings, the fees may not be chargeable as required under rule 291(4) but in the matter where the property is realized by the Official Liquidator and when even secured creditors have remained outside the winding up, net effect is the realization of properties of the company in liquidation by Official Liquidator and as the benefit is also to be derived consequently by the secured creditors by remaining outside the winding up proceedings, it cannot be validly contended that no fee whatsoever is required to be paid since the Official Liquidator has not discharged any duty or has not performed any duty for realisation of the property of the company in liquidation. Further, as observed earlier, even if the quantification is to be made, it should be as provided under rule 291(2)(i) of the Companies (Court) Rules. 11. Mr. Shah has further relied on the decision of the Karnataka High Court in the case of Titan Springs Ltd. In re [2005] 57 SCL 403 wherein it is held that a perusal of sub-section (2) to section 451 indicates that the fee payable to the Central Government out of the assets of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule. The words 'Preferential Creditors' used here are in relation to the Preferential Creditors within the meaning of section 530 of the Companies Act, 1956. He has further submitted that under sub-rule (4) of rule 291, the Official Liquidator is entitled to collect fees only when he realizes property for Secured Creditors other than debenture holders. Simply because Sale Committee is constituted and the Secured Creditors and the Workers' Union become the members of the said Sale Committee wherein the Official Liquidator is also a Member or Chairman of that Committee, it cannot be said that he realizes the property for Secured Creditors. Hence, he cannot charge any fees under sub-rule (4) of rule 291. He has, therefore, submitted that the Official Liquidator cannot charge any fees beyond the scope of rule 291 of the Rules. 14. Mr. Shalin Mehta and Mr. D.S. Vasavada, learned advocates appearing for the workers Union have also adopted the arguments of Mr. Sandeep Singhi and submitted that the fees charged by the Official Liquidator are not in accordance with the provisions of the Rules and hence, the prayer made by him in this report cannot be granted. 15. The Court has heard at l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here the Official Liquidator realizes property for secured creditors other than debenture holders. On the first Rs. 10,000 or fraction thereof 4% On the next Rs. 40,000 or fraction thereof 2½% On the next Rs. 50,000 or fraction thereof 2% Above Rs. 1,00,000 1½%" 16. The above Rule deals with the fees to be paid on account of the work done by the Official Liquidator. The Rule states that if the Official Liquidator becomes the liquidator of a Company, certain amounts as specified in the Rule have to be paid into the public account of India in the Reserve Bank of India to the credit of the Central Government from out of the assets of the Company in liquidation. In case, the Official Liquidator acts as a Provisional Liquidator, then either the Company or the petitioner as the Court may direct, have to pay such fees as the Court may consider reasonably for the service of the Official Liquidator. In case of a winding up order is made and the Official Liquidator acts as a liquidator, then on all realizations made, certain percentage as prescribed in the Rule has to be paid on each year's collection. Similarly, there is a commission to be paid for the realizations of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Official Liquidator on the investment of sale proceeds made in fixed deposit, such fees are required to be excluded. 17. So far as clause ( ii ) of rule 291(2) is concerned, the fees are to be charged on the total amount distributed in dividend or paid to contributories, Preferential Creditors and Debenture Holders by the Official Liquidator. Secured Creditors covered under sections 529 and 529A of the Act do not fall in any of these categories and hence, the Official Liquidator cannot charge any fees on such distribution under rule 291(2)(ii) of the Rules. 18. Sub-rule (4) of rule 291 certainly empowers the Official Liquidator to charge fees on the amount realized by him on sale of the property for Secured Creditors, at the rate prescribed therein. The Court does not accept the argument of Mr. Sandeep Singhi that the Official Liquidator has not realized any amount when the property is sold by the Sale Committee through Court auction. When the property is sold after constituting the Sale Committee, under the supervision of the Court, the Official Liquidator renders services to the Secured Creditors. However, it cannot be said that the Official Liquidator performs any special du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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