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TMI Blog2013 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... , CA No.1547 of 2012, Co.App. 2367-68 of 2012 and C.A. No.___(by CBL) (to be numbered) Background 1. The background to these applications is that, in 2003, 16 separate winding up petitions were filed by the creditors of Bakemans Industries Pvt. Ltd. ('BIPL') under Section 433(e) read with Section 433(f) and Sections 434 and 439 of the Companies Act, 1956 ('Companies Act'). By an order dated 6th April 2004, the petition filed by New Cawnpore Flour Mills Ltd. ('NCFML') was admitted and the citations were directed to be published. Prior to this, one of the secured creditors, State Industrial Corporation of Maharashtra Limited ('SICOM'), had issued notice under Section 29 of the State Financial Corporation Act, 1951 ('SFC Act') on 22nd January 2003. After the winding-up petitions were filed in this Court, a second notice was issued by SICOM on 6th June 2003 under Section 29 of the SFC Act. 2. The disputes between BIPL and one NRI lead Bank was referred to the arbitral Tribunal ('AT') pursuant to an agreement entered into by BIPL with the said Bank. An Award was rendered on 16th August 2003 in which SICOM, IDBI, IFCI and some other banks and State Financial Corporations were impleade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s emphasized that the auction should follow a proper valuation of the assets of BIPL, both movable and immovable. It was also left to the Company Court to consider the question of framing an appropriate scheme if it was found that there was a possibility of reviving the company. 6. In para 81 of the said order, it was directed by the Supreme Court as under: "81. Till, however, a final order is passed, Ceylon Biscuits Pvt. Ltd. would continue to function not as an auction-purchaser but as a Receiver of the Company Court. Ceylon Biscuits Pvt. Ltd. shall file all statements of accounts in regard to the amounts which it had invested and all other requisite statements including the valuation of machinery it had taken out of the country before the court. The court may appoint a chartered accountant to verify the said statements. The court, if it thinks fit and proper, may, apart from the provisional liquidator, appoint another person to supervise the works and functioning of Ceylon Biscuits Pvt. Ltd. as a Receiver of the court. As Ceylon Biscuits Pvt. Ltd. is being appointed as a Receiver, it goes without saying that it shall act strictly under the supervision of the court and abide by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstalled and made operational." 10. On the question of interest, the Court held that CBL should be paid simple interest @ 5% p.a. on the entire sum of Rs. 12.50 crores from the date of payment till 10th January 2011. It was held that the difference between interest on the FD of Rs.12.5 crores and Rs. 4.5 crores and the 5% interest awarded to CBL would enure to the benefit of BIPL/ex-management of BIPL. CBL was not entitled to any further charges/expenses on account of maintenance, upkeep etc. for restarting the factory for making it operational. 11. The following further directions were issued by the Court: "45. Rs. 8.5 Crores will be refunded by the financial institutions on or before 10th January, 2011 to CBL. The CBL will re-install the Lines 5 and 6 and other equipments, which were taken away to Sri Lanka, within a period of four months. The interest amount and Rs. 4 Crores will be paid to DBL after Lines 5 and 6 and other equipments are re-installed and the expert appointed by the Court has certified that Lines 5 and 6 and other equipments, are in operational condition/state. Till then the CBL will continue to act as a Receiver and maintain the plant and machinery a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ex-management of BIPL, a reference is made to Co. App. No. 1142 of 2009 filed by it seeking the return of sum of Rs.50 lakhs deposited by it in Court to demonstrate its bona fides at a time when it challenged the acceptance of CBL's bid. It is stated that the peaceful possession should be handed over by CBL to the OL after clearing and all statutory dues till date. 15. Co. App. No. 1280 of 2012 has been filed by the Punjab State Power Corporation Ltd. ('PSPC') claiming the electricity dues for the factory premises for the period from 30th December 2008 till 14th June 2012 for a total sum of Rs.63,77,374. Copies of the bills have been enclosed with the application. In response to this application, it is pointed out by CBL that the bills pertain to period subsequent to 12th December 2008 when the electricity to the premises was disconnected. It was only by an order dated 18th December 2008 this Court had directed restoration of electricity since the lack of electricity might "imperil the safety and security of the premises as well as the valuable machinery which is located therein". The stand of CBL is that it is not liable to pay the electricity dues for the period subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CBL is willing to pay the "EPF and ESI dues amounts to Rs. 11,91,190/- and Rs. 2,82,866/- for workers employed for security of the premises." Additionally, as regard 5 'Kadam on edge machines', which were not found at site, Mr. Sundaram, on instructions, states that any appropriate sum, less than Rs. 10,00,000 to account for depreciation, may be withheld from the amount payable to CBL in terms of order dated 20th December 2010 of this Court. Objections of SICOM and IFCI 18. One of the objections raised by both secured creditors, i.e., SICOM and IFCI to CBL's Co. App. No.1156 of 2012 is that during the pendency of the petition, IFCI had issued a notice under Section 13(2) of The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) on behalf of the secured creditors on 8th June 2011, calling upon BIPL to pay a sum of Rs. 4,55,9220 due as on 31st May 2011. It is averred that pursuant to the said notice, IFCI took 'symbolic possession' on 18th August 2011 for and on behalf of itself and other secured creditors and that the other secured creditors, including SICOM, had consented to the said action by filing Co. App. No.162 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. Thereafter on 3rd August 2011 Co. App. No. 62 of 2012 was filed by Magicon Impex Private Limited in which the OL was appointed as the PL. It is in those circumstances the question arose whether the sale of the property by the Bank way of an auction could have been effected without involving the OL. Relying on the judgment of the Punjab and Haryana High Court in Haryana State Industrial & Infrastructure Development Corporation (HSIDC) v. Haryana Concast Limited, Hisar (2010) ILR 2 P&H 284 ('HSIDC case') the Company Judge held that once the OL had been appointed as the PL, he should have been associated with the auction process and having not been so associated, the sale by the Bank on 24th August 2011, pursuant to the notice under the SARFAESI Act, was bad in law. Aggrieved by the above decision, the Bank appealed to the DB of this Court, which set aside the judgment of the learned Single Judge. The DB differed with the decision of the Punjab and Haryana High Court in the HSIDC case and took the view that the SARFAESI Act, and the Rules thereunder, constituted a complete code and that there was no need to associate the OL for the sale to be conducted pursuant to the actio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontinuation of proceedings under the SARFAESI Act would apart from being an abuse of the process of law, also lead to multiplicity of proceedings and render at naught the entire proceedings under the Companies Act for nearly a decade. With SICOM participating in the present proceedings throughout, there cannot be any question of there being an auction sale without intervention of the Court as envisaged under the SARFAESI Act. SICOM's claims, as well as the claims of the other secured creditors, if made, would be dealt with by the OL in accordance with law. Further, Mr. Rajiv Bahl, learned counsel for the OL, has stated that the OL would have no objection to security of the premises being provided in consultation with the secured creditors subjecting to their bearing the expenses thereof. The valuation of the property and the subsequent sale by way of public auction will be done by the OL under the under the supervision of the Court and to the knowledge of the secured creditors. There can be no cause for concern for the secured creditor by their not being associated with those steps. 22. Consequently, this Court sets aside the said notice dated 8th June 2011 issued by IFCI under S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice of the aforementioned application was served on the Office of the Regional Provident Fund Commissioner ('RPFC') in Chandigarh on 3rd October 2006. However, till date no reply has been filed by the RPFC. In the circumstances, the statement made by CBL in its affidavit dated 7th January 2013 is taken on record and an amount of Rs. 11,91,190 on account of EPF dues is directed to be retained with the OL from the sum payable to CBL. Likewise, as regards the workers' dues in terms of the said affidavit, a further sum of Rs. 2,82,866 is directed to be retained by the OL. The further disbursal of this sum would be subject to the further orders of the Court. It would be open to the OL to issue an appropriate notice to the RPFC to lodge any claim this regard with the OL. CBL will file an undertaking in this Court, as directed hereafter, that it will pay any further sums towards ESI and EPF dues or any other statutory dues if so found by the OL. Electricity Dues 25. The next issue concerns the electricity dues. In para 46 of the order dated 20th December 2010, this Court has held that "CBL/CBIPL will be liable to pay the statutory dues and liabilities for the period till the factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions governing the liquidation of companies and apply to the OL as regards its outstanding dues. Its claim will be processed and decided by the OL, just as it did in other claims filed before the Court in accordance with law. The decision in Rajasthan Housing Board case can have no application to the facts of the present case since it had not dealt with the dues of a company under liquidation. Moreover, the history of the litigation in the present case has witnessed several orders which limit the liability of CBL, particularly after 15th September 2008. 28. In that view of the matter, the application filed by PSPC is disposed of by directing the OL to decide the claim of PSPC in accordance with law as and when it is lodged before the OL. However, since the Court has directed by this order that the load sanctioned for the factory would be reduced to 15 KVA consistent with the present requirement for the upkeep and maintenance of the factory and equipment, it is further directed that the OL will settle all the current bills raised by PSPC after reduction of the load to 15 KVA as and when the bills are raised. For the past dues, however, the claim will be lodged by PSPC before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2008 was filed by CBL soon after the judgment of the Supreme Court seeking return of the sum of Rs. 12.5 crore paid by it. Notice was issued on the said application on 15th September 2008 by the Company Judge. On 1st October 2008, the Company Judge took note of the directions of the Supreme Court and on 3rd October 2008 ITCOT was appointed as a Valuer. In the circumstances, the stand of CBL, throughout, has been that it cannot be made liable for the fees of the Valuer, which exercise which had anyway to be carried out pursuant to the directions of the Supreme Court. 34. It is contended by Mr. Vikas Pahwa, learned counsel representing the ex-management of BIPL, that the Supreme Court had given CBL the chance of participating in the fresh auction and, therefore, the valuation ordered would also benefit CBL. As rightly pointed out by Mr. Sundaram, by filing Co. App. No.900 of 2008 CBL sought return of the sum of Rs. 12.5 crores thus making it clear that it was not going to participate in the auction as and when it took place. It is for this reason that against the order dated 30th April 2009, CBL filed an appeal before the DB in which an order as noticed before was passed. 35. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the circumstances, the above applications are disposed of in terms of the above and the following directions: (i) On or before 21st January 2013 CBL will be paid a sum equal to Rs. 8,18,02,491.65 minus Rs. 10,00,000 minus Rs. 11,91,190 minus Rs. 2,82,866 collectively by SICOM, IDBI and IFCI, simultaneous with the handing over of the possession of the factory premises by CBL to the OL, subject to the OL being satisfied about the inventory of the plant and machinery tallying with the report of ITCOT annexed to the Minutes of Inspection dated 5th December 2012 (except the five Kadam-on-edge packing machines in respect of which orders have already been passed hereinabove). IFCI and SICOM will pay their respective shares of the aforementioned amount to IDBI which, in turn, will pay the same along with its share to CBL in ACU. (ii) It will be open to the OL as well as SICOM and IFCI, to have one expert each of their choice present at the factory premises for verifying that the assets taken over tallies completely with ITCOT report as directed in (i) above. A representative of the exmanagement of BIPL is also permitted to remain present. Additionally, PSPC will also depute its repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dues of ITCOT in the sum of Rs. 3,35,209 will now be paid to it by the OL out of the Common Pool Fund within a period of four weeks. CA No.1005 of 2011 is disposed of. (ix) The notice dated 8th June 2011 issued by IFCI under Section 13 (2) of the SARFAESI Act and other incidental proceedings are hereby set aside. C.A. No.1623 of 2011 is allowed. (x) Co. App. No. 2367 of 2012 is allowed and the necessary correction is carried out in the order dated 4th May 2012 to the effect that the number of the application that was disposed of by the said order should read as Co. Appl. No. 2482 of 2011. Co.App. No.1996 of 2010 40. This is an application by Bakemans Workers Union, praying for direction to the OL to settle the claims of the workmen as per the claim petition filed on 20th April 2005 before the OL. The said claim petition will be disposed of by the OL in accordance with law. The application is disposed of. CA No.881 of 2009, Co.App. 47-48 of 2009, CA No.656 of 2012, Co.App. 1268 of 2009 41. These applications are disposed of as having become infructuous. It will be open to the applicants to lodge their claims if any in accordance with law before the OL. The OL will issue a fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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