TMI Blog2013 (2) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 above. A representative of the exmanagement of BIPL is also permitted to remain present. Additionally, PSPC Punjab State Power Corporation Ltd claiming the electricity dues will also depute its representative to remain present in the premises and make an inventory of equipments belonging to it which are in the premises. CBL is permitted to take back such office equipment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (2) of the SARFAESI Act and other incidental proceedings are hereby set aside. - CO.PET. 204 of 2003 - - - Dated:- 8-1-2013 - S. MURALIDHAR, J Respondent Through: Mr. Vikas Pahwa, Sr. Advocate with Abhinit Das, Adv. for ex-Management of Respondent Mr. Rajiv K. Garg, Mr. Ashok Rana Ms. Kavita Rawat, Advs. for Applicant (CA No.1367 of 2005) Mr. P.S. Bindra Ms. Shweta Priyadarshini, Advs. for IFCI in CA No.1547 of 2012 Mr. Atul Sharma, Adv. for IDBI Mr. Jayant K. Sud, AAG, Punjb with Ms. Tara V. Ganju, Ms. Etti Sharma, Mr. Vishal Mr. Chigra Khurana, Advs. for PSPCL Ms. Rama Ahluwalia, Adv. for Sales Tax Department, State of Maharashtra Mr. Jay Salva Ms. Amrita Mishra, Advs. for SICOM Mr. C.A. Sundaram, Sr. Advocate with Ms. Rohini Musa, Ms. Aanchal Yadav Ms. Sara Sundaram, Advs. for Ceylon Biscuit Ltd. Mr. Anoop Bagai, Sr. Advocate with Mr. Amitesh Kumar, Adv. in CA No.1367 of 2005. JUSTICE S. MURALIDHAR O R D E R Co.App. No.1156 of 2012, 1280 of 2012, 1399 0f 2012, 1940 of 2012, 1547 of 2012, 1623 of 2012, Co.App. 105 of 2011, Co. App.1005 of 2011, CA No.1212 of 2010, CA No.1547 of 2012, Co.App. 2367-68 of 2012 and C.A. No.__ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preme Court 5. By a judgment dated 16th May 2008 in Bakemans Industries Private Limited v. New Cawnpore Flour Mills (2008) 15 SCC 1 the Supreme Court held that the Company Court erred in effecting the sale of the property in favour of CBL by treating SICOM as an agent. It was held that the Company Court was under a statutory obligation to comply with the provisions of the Companies Act and the rules framed thereunder before selling the property. It was held that the High Court could not have ignored the Official Liquidator ( OL ) only on the ground that the Provisional Liquidator ( PL ) had been appointed. The Court noted that in the meanwhile the factory had started operations and the Court had to take into consideration the fate of not only the workers, but also those who had claims against BIPL. While allowing the appeal, the Supreme Court requested the Company Judge to go into the question afresh in accordance with the provisions of the Companies Act and hold a fresh auction . It was further held that CBL s offers would also be considered and the Company Judge would consider the question of granting some preference to it. It was emphasized that the auction should follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory premises, two manufacturing lines, i.e., lines No.5 and 6, had been dismantled and taken by CBL to its factory in Sri Lanka. One of the issues that arose was what direction should be issued in respect of lines 5 and 6. The second issue was whether CBL was entitled to interest, and if so, at what rate. 9. By a detailed order dated 20th December 2010, this Court decided the first issue on the basis of the valuation undertaken by ITCOT Consultancy and Services Ltd., Chennai ( ITCOT ). However, the issue was not further examined since during the course of hearing CBL agreed that the entire plant and machinery, including lines 5 and 6, would be brought back and made operational by CBL at its cost and expense. The Court then ordered that this should be done under the supervision of an expert and further that till such time the plant and equipment including lines 5 and 6 were certified to have been properly installed, a sum of Rs. 4 crores would remain with the Court and kept in a Fixed Deposit ( FD ). The said amount was to be refunded to CBL after the expert has certified that the plant and equipment, including lines 5 and 6, have been installed and made operational. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the inspection of Lines 5 and 6 and other equipments that had been installed in the factory premises and permit CBL to handover possession of the property along with all the plant and machinery, equipment and furniture and fixtures after such certification from an expert and direct refund of a sum of Rs. 8,18,02,491.65, being the amount due to it, as set out in Annexure-E to the application. Replies to the said application have been filed by BIPL as well as SICOM. In the reply filed by SICOM it is only stated the equipment stated to have been reinstalled should be inspected by ITCOT which was appointed as an expert by this Court by an order dated 3rd October 2008. The OL has filed a reply on the same lines. It is stated that in terms of the order passed by this Court on 20th December 2012, CBL/BIPL would be liable to pay the statutory dues and liabilities for the period till the factory was in operation i.e. 15th September 2008 and workers dues till CBL leaves the premises. The OL s stand is that the expenditure of the expert s fees and insurance of plant and machinery for a sum of Rs. 15 lakhs should not be asked to be borne by the OL. 14. On behalf of the ex-management of BIPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awn to the Minutes of Inspection of 5th December 2012 in the presence of the OL, IFCI, CBIPL and CBL. An inventory prepared by ITCOT as on 2nd July 2009 is annexed to the said Minutes. It has been stated the machinery has been inspected and compared with the inventory by Mr. R.N. Kansal, from ex-management, Bakemans Industries (P) Ltd. The annexure to the Minutes is titled: Assets transferred to CBL group all machinery and other equipment. This includes all the equipments pertaining to Lines 5 and 6 as well as 5 nos. of Kadam on Edge packing machines. The approximate value of the said 5 machines as on 25th October 2005 is indicated as Rs. 10,00,000. 17. One of the conditionalities for accepting the prayer of CBL to be relieved as a Receiver is the satisfactory working of the reinstalled Lines 5 and 6. This has been fulfilled as evident from Minutes of inspection dated 13th September 2011 and 5th December 2012. In the affidavit dated 7th January 2013, CBL has stated that without prejudice to its contentions that the EPF Act and the ESI Act would not apply since CBL/CBIPL has been acting only as a Receiver for security and maintenance of premises, CBL is willing to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said application as Co. App. No.1623-24 of 2011. Consequently, BIPL has filed Co. App. No.2367 of 2012 to rectify the said order. There is no objection to the said application. It is clarified that what was disposed of on 4th May 2012 was Co. App. No.2482 of 2011 and not Co. App. No.1623-24 of 2011 which is pending and is being disposed of by the present order. Co. App. No. 2367 of 2012 is accordingly 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. The SARFAESI Act notice 20. The Court proposes to consider the submissions of learned counsel for the parties on the question of the applicability of the decision of this Court in the Kotak Mahindra Bank Ltd. case. At the outset, it must be noticed that in the said case, unlike in the present one, a notice under Section 13(2) of SARFAESI Act was issued by the Bank on 18th December 2008. Possession was taken over by the Bank pursuant thereto on 16th June 2010. On 23rd July 2011, the Bank published notices in the newspapers for auction and sale of the mortgaged p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Supreme Court in its judgment dated 16th May 2008. It was specifically held that since the sale in favour of CBL did not take place under Section 29 of the SFC Act, the said provision could not have any application. It was further held that the Company Judge could exercise its jurisdiction only in terms of the Companies Act and not in terms of Section 29 of the 1951 Act. It was noticed that SICOM had, by participating in the proceedings before the Company Judge, waived the option of invoking the statutory power under the SFC Act. It was only at the instance of SICOM that the auction was held by the Company Judge. With the attempt by SICOM having failed in its attempt at invoking the statutory power under the SFC Act in this very case, the invocation of the statutory power by IFCI under Section 13 (2) of the SARFAESI Act should also be held to be impermissible in law. Also, although the said power was available to be invoked even while the matter was pending in the Supreme Court, it appears that IFCI chose to wait till the conclusion of the proceedings before the Supreme Court and thereafter the order passed by this Court on 20th December 2010. In the circumstances, the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent Fund Commissioner, Mr. Sundaram has drawn the attention of the Court to a notice dated 11th August 2006 by the Regional Provident Fund Commissioner (Recovery), Chandigarh, which, inter alia, states that the establishment, Bakemans Industries Private Limited was in arrears to the tune of Rs. 1 Crore approx. as on 31-03-2006. CBL has filed Co. App. No.1054 of 2006, seeking stay of the said notice. An order was passed by this court in the said application on 1st September 2006, staying the said recovery notice. In its affidavit, as already mentioned earlier, dated 7th January 2013, CBL has stated that it is willing to pay its EPF dues amount to Rs. 11,91,190 without prejudice to its rights and contentions that as a Receiver appointed by this Court, it is not liable for those dues. Additionally, the Court notes that there is no dispute that CBL was given possession of the factory premises on 3rd March 2005 from SICOM. The factory remained operational only till 15th September 2008. The EPF dues prior to 3rd March 2005 or for the period subsequent to 15th September 2008 cannot obviously be fastened on to CBL. The affidavit of service filed by CBL on 12th October 2006 shows tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct PSPC to reduce the sanctioned load to the factory to 15 KVA with immediate effect. 27. It is urged by PSPC, on the strength of the decision in Rajasthan Housing Board v. Krishna Kumari (2005) 13 SCC 151, that since the electricity connection was restored to the factory premises in terms of the order dated 18th December 2008 of the Court, the dues of PSPC ought to be directed to be paid straightway by CBL and PSPC should not be relegated to the OL for its dues. The above submission is untenable for more than one reason. As far as CBL is concerned, the order of the Supreme Court makes it clear that it is asked to continue only as a Receiver of the property in question. There was no production or operation of the plant after 15th September 2008. Para 46 of the order dated 20th December 2010 passed by this Court, which has attained finality, also clearly states that CBL/CBIPL would be liable to pay the statutory dues and liabilities for the period till the factory was in operation, i.e., 15th September 2008. The Court, at this stage, is not called upon to decide any claim that PSPC may have. Since the Respondent is under winding-up, PSPC is to necessarily abide by the scheme of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are reflected in its Balance Sheet and Profit and Loss Account. 31. Mr. Pahwa submitted that the estimated value of the said five machines, as on date, is Rs.15,00,000. However, no document is placed on record to substantiate it. It will be open to the ex-management of BIPL to place its submission in this regard before the OL as and when the valuation report is available. Past dues of ITCOT 32. An issue has been raised by Mr. Bahl as regards the arrears of fees payable to ITCOT for the earlier valuation done by it and according to him, a sum of Rs. 3,35,209, constituting the CBL shares of the said dues, should be directed to be paid by CBL. He further refers to an order dated 13th April 2009 passed by the Company Judge. 33. In response, it is submitted by Mr. Sundaram that the order dated 30th April 2009 was appealed against by CBL in Co. App. No. 20 of 2009 in which an order was passed on 16th September 2009 by the DB, stating that the Company Judge should first dispose of CA No.900 of 2008 and other issues may be considered after the disposal of this application. Subsequently, the Company Judge disposed of CA No.900 of 2008 filed by CBL by a detailed order dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit of CBL. In any event, a Valuer had to be appointed pursuant to the directions of the Supreme Court in its judgment dated 28th May 2008. CBL was in possession of the property only as a Receiver and was not going to benefit from the valuation. Consequently, CBL cannot be asked to pay any amount towards the fees of the Valuer. 37. In the circumstances, the past 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 accordingly. Sales Tax dues 38. It is submitted by counsel for the applicant in CA No. 1399 of 2012, Sales Tax Department, State of Maharashtra that by an order dated 17th September 2012 this Court had permitted it to file its claim for Rs.95,55,924 with the OL. It is submitted that the said claim would have precedence and the sales tax dues would constitute a first charge on the assets of BIPL and therefore those dues should be settled first from the sale proceeds of the land of the company. The said submission can be considered at the appropriate stage by the OL in accordance with law. It is premature for the Court to express a view on these su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... final bill is received from the Valuer. (v) The OL will engage a security agency in consultation with the secured creditors for providing security to the factory premises and also retain the minimum number of workers and for upkeep of the plant and machinery. The expenses thereof will be reimbursed by the secured creditors. It will be open to the OL to engage a technically qualified person in consultation with the ex-management of BIPL for the upkeep of the plant and machinery. (vi) CBL will file an undertaking in this Court by way of an affidavit, within two weeks, stating that in the event that the OL finds that any further statutory dues is found payable for the period between 3rd March 2005 and 15th September 2008 the said dues will be cleared by CBL forthwith upon intimation to that effect by the OL. (vii) The application filed by PSPC is disposed of by directing the OL to decide the claim of PSPCL in accordance with law as and when it is lodged before the OL. The load sanctioned for the factory will be reduced to 15 KVA by PSPC at the earliest and not later than 21st January 2013. The OL will settle all the current bills raised by PSPC after such reduction of the load t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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