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2016 (7) TMI 643 - GUJARAT HIGH COURT

2016 (7) TMI 643 - GUJARAT HIGH COURT - TMI - Winding up - non-payment of dues - inclusion of outstanding debt as part of the advertisement for sale proclamation - notice of sale of the immovable properties of the Company (in liquidation - auction purchases - Held that:- Held that:- As far as the terms and conditions are concerned as quoted hereinabove, the purchaser is clearly informed that he would be liable for all the dues. As far as present applicants are concerned, it is an admitted positi .....

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n Electricity Act, 2003 and Supply Code has no bearing on the proceedings under the Companies Act and the same would apply to purchaser as and when he becomes consumer of the electricity Company. So on both the counts, the applicants are not entitled to say that in the advertisement itself, it is required to be mentioned that some amount is due and payable towards electricity charges to the applicants electricity Companies. - It is not the case of the applicants that they have any other ad .....

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erned, the same would be a case between intending purchaser and the electricity Company and therefore, the Official Liquidator is not duty bound to bring to the notice of the purchaser and/or auction purchaser of the Company (in liquidation) that there is outstanding dues of the electricity Company along with interest thereon at the rate of 15 % per annum and that unless and until such dues are paid, no connection would be provided by a special mention in the sale proclamation as prayed for by t .....

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icant of Company Application No.5 of 2011 is not entitled for any of the reliefs/claims as prayed for in the Judge's Summons. - COMPANY APPLICATION NO. 5 of 2011 IN COMPANY PETITION NO. 157 of 1995 With COMPANY APPLICATION NO. 146 of 2015 In COMPANY PETITION NO. 47 of 1992 - Dated:- 4-7-2016 - MR. R.M.CHHAYA, J. FOR THE APPLICANT : MR KB PUJARA, ADVOCATE, MR RITURAJ M MEENA, ADVOCATE FOR THE RESPONDENT : MS AMEE YAJNIK, ADVOCATE, MR HEMANG M SHAH, ADVOCATE, MR DS VASAVADA, ADVOCATE, MR VIMAL M P .....

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sers of the property of the Ahmedabad Manufacturing and Calilo Printing Mills Company Limited (in liquidation) of the outstanding dues of Torrent Power Ltd. And the GERC Notification dated 20.08.2010 and that Torrent Power Ltd. Would not provide electric connection at the same premises unless and until the said outstanding dues, together with interest thereon at the rate of 15 % per annum as on date of payment, are fully paid to Torrent Power Ltd.; (b) to direct the opponent herein to incorporat .....

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nterim directions in terms of paragraph 6(a) and 6(b) above, pending the hearing and final disposal of this application (d)***. 3. Whereas Company Application No.146 of 2015 is filed by the applicant viz. Paschim Gujarat Vij Company Ltd., wherein it has prayed as under:- A. Your Lordships be pleased to direct the Official Liquidator to lodge the claim of the applicant Company to the tune of ₹ 38,76,27,154/- crores. B. Your Lordships be pleased to direct the respondent Official Liquidator t .....

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arned counsel for respondent No.11 in Company Application No.5 of 2011. Though served, no one appears for other parties. 5. Learned counsel for the applicant in Company Application No.5 of 2011, contended that the applicant came to know on publication of newspaper that the Company viz. Ahmedabad Manufacturing and Calico Printing Mills Company Ltd. , is ordered to be wound up. Pursuant to such publication, the applicant vide communication dated 19.04.2010 informed the Official Liquidator that the .....

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ate of 15% per annum as on date of payment, are fully paid to the applicant Company. It was further contended that the Official Liquidator did not give reply to the same. 6. It was further contended that by Notification No.6 of 2010, Gujarat Electricity Regulatory Commission (hereinafter referred to as "G.E.R.C for short) amended clause 4.1.11. Relying upon clause 2 of Notification No.6/2010 dated 28.02.2010, it was submitted that as per the amended clause 4.1.11, the application for new co .....

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Liquidator gave further advertisement in Times of India dated 03.11.2010 for sale of the immovable properties of the Company (in liquidation), however, the Official Liquidator did not provide for notice to intending buyer as regards the dues of the applicant Company. 8. Learned counsel for the applicant further submitted that vide further communication dated 04.12.2010, the applicant requested the Official Liquidator to inform the intending purchaser/auction purchaser about the dues of two servi .....

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s Summons are innocuous prayers and in view of the amendment made in supply code, learned counsel for the applicant submitted that, even if, the property is disposed of, new purchaser will have to clear all outstanding dues of the erstwhile owner, then and then only he would be granted new connection. 10. It was further submitted that the Official Liquidator has wrongly relied upon the order of this Court passed in Company Application No.11 of 2008 dated 03.03.2008 as the said order is prior to .....

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ainst erstwhile Company. Similarly, relying upon the judgment of the Apex Court passed in Civil Appeal No.7899 of 2012, more particularly paragraph No.18 to 20 thereof, it was further contended that the Apex Court has upheld the stand of the Electricity Company. 12. Learned counsel for the applicant has further contended that in light of the factual position, the Official Liquidator may incorporate it in the terms and conditions and in the advertisement about legal position and therefore, the pr .....

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ered in the case of TCI Distribution Centers Ltd., New Delhi Vs. The Official Liquidator & Ors., reported in [2009] 4 LW 681 and [2009] 8 MLJ 1238 and submitted that the present application deserves to be allowed as prayed for. 14. Per contra, Ms.Amee Yajnik and Mr.J.S.Yadav, learned counsel for the Official Liquidator have opposed the applications. Ms.Amee Yajnik, learned counsel for the Official Liquidator submitted that though the prayers appeared to be innocuous in reality they are not. .....

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s. It was thus contended that the applicants have no locus. 15. Mr.J.S.Yadav, learned counsel for the Official Liquidator has submitted that the present applications are unique applications made for the first time by the creditors and it is not filed as provided under the Act or the Companies (Court) Rules, 1959 (hereinafter referred to as "the Rules" for short) . It was further contended that the prayers prayed for in both applications are completely contrary to the provisions of the .....

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liquidation) and therefore, the judgments cited by learned counsel for the applicants would not be applicable in the present case. 16. Mr.J.S.Yadav, learned counsel for the Official Liquidator further contended that there is no cause of action described or made out by the applicants. In fact, the prayers which are sought for relate to future event of sale of assets of the Company (in liquidation), which is not going to hurt or affect the applicants and that the Official Liquidator is supposed to .....

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al Liquidator submitted that the Company Act is complete code and is not procedure code. No rule prescribes such situation as prayed for by the applicants. It was, therefore, submitted by learned counsel for the Official Liquidator that present applications deserve to be dismissed. 18. Mr.D.S.Vasavada, learned counsel for the Union has also opposed these applications and has contended that the applicants want to override the provisions of the Companies Act. It was submitted that the said Act pro .....

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pany Case 17 (SC)}, Employees' Provident Fund Commissioner Vs. Official Liquidator of Esskay Pharmaceuticals Ltd. {AIR 2012 SC 11}, and Governor General in Council Vs. Shiromani Sugar Mills Limited (in liquidation), [AIR (33) 1946 Federal Court 16], it was submitted that thus, the applications are misconceived and the same deserve to be dismissed. No other or further submissions are made by learned counsel for the respective parties. 19. Upon considering the submissions made by learned couns .....

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ct and the Rules. Section 457(2A) of the Act provides as under:- (a) The Official Liquidator shall appoint security guards to protect the property of the company taken into his custody and to make out an inventory or the assets in consultation with secured creditors after giving them notice; (b) appoint, as the case may be, valuer, chartered surveyors or chartered accountant to assess the value of company's assets within fifteen days after taking into custody of property, assets, referred to .....

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y Court - Unless the Court otherwise orders, no property belonging to company which is being wound-up by the Court shall be sold by the Official Liquidator without the previous sanction of the Court, and every sale shall be subject to confirmation by the Court. Rule 273 - Procedure at sale - Every sale shall be held by the Official Liquidator, or, if the Judge shall so direct, by an agent or an auctioneer approved by the Court, and subject to such terms and conditions, if any, as may be approved .....

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is where is basis and whatever there is basis . It is also provided that the purchaser will be liable to pay all local dues and taxes. The Official Liquidator has also produced on record the terms and conditions, which have been finalized by this Court, wherein condition No.10(c) provides as under:- Condition No.10(c): Shall obtain water, electricity, telephone connection and all other necessary amenities required by them at their cost. Similarly Condition Nos.14 and 23 provides as under:- Condi .....

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s and conditions as the Hon'ble High Court may deem, fir and proper, as in the circumstances of the case, may arise and said terms and conditions already specified above will be binding on all the parties concerned. 21. Though at first blush, the prayers prayed for by the applicants appear to be innocuous, the question which arise is that whether such condition is necessary to be provided or not. Upon considering the terms and conditions, which are provided by the Official Liquidator while d .....

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any contravention to the provisions of the Act. 23. This Court (Coram : Hon'ble Mr.Justice V.M.Pancholi) in Company Application No.193 of 2014, while considering the issue of preferential payment, has observed thus - 16. Now, it would be appropriate to consider the relevant provisions of the Companies Act, 1956. Clause (a) of sub-section (1) of Section 530 of the Companies Act provides that: 530. Preferential payments.- (1) In a winding up [subject to the provisions of section 529A, there s .....

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e relevant date and having become due and payable within the twelve months next before that date shall be paid in priority to all other dues in a winding up proceedings subject to provisions of Section 529A of the Act and the same shall be paid in priority to all other dues. Clause (c) of sub-section (8) of Section 530 provides that: (c) the expression the relevant date means- (i) in the case of a company ordered to be wound up compulsorily, the date of the appointment (or first appointment) of .....

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can be said that the State has priority over debts, liability and obligation of which was borne within the time frame of those 12 months and as such due and becoming due and payable within those 12 months next before the relevant date, ascertainable it necessary later, if not already ascertained. The words having become due and payable within 12 months next before the relevant date need to be understood to mean putting a restriction or cordoning of the amount for which priority is claimable and .....

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nt has already lodged the claim before the Official Liquidator in the year 1995. The Official Liquidator would consider the same in accordance with the provisions of Section 530 of the Companies Act. 19. Thus, merely because this Court has observed in condition No.7 of the terms and conditions that the purchaser is required to pay all the taxes in relation to the property levied/leviable by the State Government or any local authority in relation to the company in liquidation, it does not mean th .....

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conditions are concerned as quoted hereinabove, the purchaser is clearly informed that he would be liable for all the dues. As far as present applicants are concerned, it is an admitted position that the electricity Companies under the provisions of the regulations and/or supply code as applicable have already disconnected the electricity connections of the Company (in liquidation) in the instant case and therefore, there is no question of reconnection. As regards the contention raised by learne .....

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o be mentioned that some amount is due and payable towards electricity charges to the applicants - electricity Companies. 25. The Apex Court in the case of Special Officer, Commerce, North Eastern Electricity Company of Orrisa (NESCO) Vs. Raghunath Paper Mills Private Limited [2012 (8) SC 1], has interpreted Regulation 13(10) of the Orissa Electricity Regulatory Commissions Distribution (conditions of supply) Code, 2004 and has observed thus:- 20.In light of the above discussion, specific factua .....

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greement with the decision arrived by learned Single Judge as affirmed by the Division Bench of the High Court. 26. In the instant case also, as observed hereinabove, the electricity Companies have already disconnected the earlier connections and therefore, it would not be case of reconnection, but a fresh connection. However, at the same time, it is not at all necessary to provide in the advertisement that some amount is due and payable towards electricity charges from erstwhile consumer. In fa .....

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ourt has held that the Official Liquidator is required to disclose all material facts within his knowledge and should not suppress any information regarding nature, description, extent of the property, non-availability of the title deeds, interest of the Company (in liquidation) in the properties and also any encumbrances if any, with respect the same would not apply to the facts of the present case. What has been considered by the Madras High Court is totally different issue relating to Notific .....

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has to be in accordance with the provisions of the Act and the Rules and the terms and conditions which are prescribed by the Official Liquidator are well prescribed by the order of this Court, which is as per provisions of the Act, more particularly Section 457(2)(f) of the Act read with Rules 272 and 273 of the Rules. Therefore, the judgments relied upon by learned counsel for the applicants, have no application in the instant case and amendment in the supply code would not take the case of th .....

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se of Commissioner of Income Tax (supra), the applicants cannot be permitted to bypass the priority which is prescribed under the Act and cannot be paid the dues of workers or secured creditors. 28. An identical view is also taken by the Division Bench of this Court in case of State Bank of India Vs. Official Liquidator of Commercial Ahmedabad Mills Co & Ors. Over and above the properties which are prescribed under Sections 429, 429A and 530 of the Act, as held by the Apex Court in the case .....

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