TMI Blog2018 (5) TMI 2173X X X X Extracts X X X X X X X X Extracts X X X X ..... crores, the court ordered distribution of the fund to the secured creditors and workers on pari passu basis in terms of Sections 529 and 529A of the Act. In the rejoinder that was filed by the applicant to the reply of the OL, the applicant has attached a copy of a communication dated 18.06.2004 which was allegedly sent to the OL. Unfortunately this document has been filed alongwith the rejoinder and the OL has not been able to respond to the same. There is also nothing to show that this document was served on the OL. It is further stated in the letter that the dues are likely to the tune of Rs.50 lacs, which are pending and are not deposited by the respondent company. As already noted, this letter was not in response to claims invited by the OL. Even if such a letter had been received by the OL, it cannot be a substitute for the statutory procedure which exist for inviting claims from the creditors of the respondent company. A liquidator has to give notice inviting creditors, who have not proved their debts. As per Rule 151, the affidavit proving a debt shall contain or refer to a statement of account and shall be in Form 66. The applicant is only entitled to the amount that is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutinized from time to time. After distribution of the dividends, in 2010 the OL was left with balance of Rs.5,76,162.65 which this court had directed to be transferred to the Public Account of India. 4. Based on the above, it is pleaded relying upon section 474 of the Companies Act, 1956 (hereinafter referred to as 'the Act, 1956') read with Rule 178 of the Companies (Court) Rules that at best the applicant can claim the sum of Rs.5,76,162.65, which is lying with the OL and no more. It has been pleaded that distribution which have already been made to the different creditors cannot be recalled in view of section 474 of the Act read with Rule 178 of the Companies (Court) Rules. Reliance is also placed on judgments of the Rajasthan, Patna and Madras High Courts, in Ganeshilal Gupta v. Bharatpur Oil Mills, 1972 TAX LR 2363, Saroj Kumar Banarjee Ors. v. Gaya Sugar Mills Ltd., AIR 1964 Patna 352 and T.R.Rajkumari v. Motional Picture Producer Combine Ltd., AIR 1942 Mad 349 respectively. 5. I may look at the legal position. The Supreme Court in Maharashtra State Co-operative Bank Ltd. v. The Assistant P.F. Commissioner (supra), noted as follows: 20. We shall now consider the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the employer in relation to exempted establishment in respect of any contribution to the provident fund or any insurance fund in so far it relates to exempted employees under the rules of provident fund or any insurance fund, any contribution payable by him towards the Pension Fund under Section 17(6), damages recoverable under Section 14B or any charges payable by him to the appropriate Government under the Act or under any of the conditions specified in Section 17. This sub-section then lays down that such amount shall be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of the company being wound up. Sub-section (2) lays down that any amount due from the employer whether in respect of the employees' contribution deducted from the wages of the employee or the employer's contribution shall be deemed to be the first charge on the assets of the establishment, and shall be paid in priority to all other debts. The expression any amount due from an employer appearing in sub-section (2) of Section 11 has to be interpreted keeping in view the object of the Act and other provisions contained therein including sub- section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om an employer for the purpose of Section 11(2) of the Act. 6. Hence, there can be no dispute on the contention of the learned counsel for the applicant that the dues of the applicant have priority against the statutory as well non-statutory secured and non-secured debts including on assets subject to mortgage or pledge. 7. Reference may now be had to section 474 of the Companies Act, 1956 which reads as follows: 474. Power to exclude creditors not proving in time: The Court may fix a time or times within which creditors are to prove their debts or claims, or to be excluded from the benefit of any distribution made before those debts or claims are proved. 8. Similarly, Rule 178 of the Companies (Court) Rules, 1959 reads as follows: 178. Right of creditor who has not proved debt before declaration of dividend- Any creditor who has not proved his debt before the declaration of any dividend or dividends shall be entitled to be paid out of any money for the time being in the hands of the Liquidator available for distribution of dividend, any dividend or dividends which he may have failed to receive before that money is applied to the payment of any future dividend or dividends, but he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he was entitled to do so without disturbing the previous dividends. I am in respectful agreement with that view. A similar point arose for consideration in In re Metcalfe 1879 (13) Ch. D. 236 and it was held that a creditor may come in as long as there are undistributed assets still available. That decision has been followed In re Kit Hill Tunnel 1880 (16) Ch. D. 590. The position of the law on the point is thus quite clear and has been stated as follows in Buckley on the Companies Acts, thirteenth edition, page 544: A creditor may come in and prove at any time before the company is dissolved; the penalty of not coming in before the day fixed by the Court is not exclusion altogether, but exclusion from the benefit of any distribution made before proof. 4. The same view has been expressed in Palmer's Company Law, twenty-first edition, at Page 761. Reference may also be made to the decisions in Isack Jesudasen Pillai v. Divan Bahadur Ramsamy Chhetty ILR 1904 Mad. 496 which appears to have been based on the decision in In re General Rolling Stock Company 1871 (7) Ch. Appeal 646, and to T.R. Rajakumari v. Motion Picture Producers Combine Ltd. AIR 1942 Mad. 349. It is thus a well se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntitled to participate in the assets and that the statute of limitation does not run against this claim, but as long 3S assets remain unadministered he is at liberty to come in and prove his claim, not disturbing any former dividend. In view of the principle laid down in these authorities we hold that this appeal under the Letters Patent should be allowed and the order of the learned Judge dated the 3rd May, 1960, should be set aside, and we direct that the claims of the appellants should be entertained by the Official Liquidator and disposed of according to law. 12. Reference may also be had to the judgment of the Madras High Court in T.R.Rajkumari v. Motional Picture Producer Combine Ltd.(supra) where the court held as follows: ..... by the Act the assets are impressed with a trust in favour of all the creditors, the Court will make no difficulty in admitting proofs after the expiration of the time fixed. No mischief can be done to other creditors by reason of the delay or laches of any creditor, since, if he delays beyond the proper time, he must take his chance of what assets he can find for payment of his debt, not disturbing any former dividend. Of course the difficulty will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and if he has funds enough in his hands...... 13. Reference may also be had to A.Ramaiya Guide to Companies Act, Seventeenth Edition, where in respect of Section 474 of the Companies Act, the learned Author notes: The object of the section is that the assets of a company in liquidation should be realized and distributed pari passu among the creditors as expeditiously as possible. It is, therefore, only proper that creditors who want to claim the benefit of any distribution of the assets should prove their debts and claims as soon as possible. The section provides for the court fixing a time or times within which the creditors are to send their proofs. The fixing of a date does not mean that a creditor who fails to prove within the time is excluded altogether. He may come in and prove at any time, before the company is dissolved. The only penalty is that he disentitles himself from participating in any dividend declared before he comes in. That is to say, he will not be allowed to disturb or reopen dividends already declared. 14. What emerges from the catenae of judgments above is that it was for the applicant to have approached the OL to have his claim settled within the stipula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and the workers would be in the following manner: Canara Bank = Rs.172.27 lacs - 44.63% HFC = Rs. 55.28 lacs - 14.32% Essenda Finanze Pvt.Ltd. = Rs.1.82 lacs - .48% Workers = Rs. 156.60 lacs - 44.57% 16. The applicant have woken up for the first time in 2010/2011 and have moved an application seeking payment of the dues of the applicant of Rs.39,09,032.00 as payable upto 15.04.2005. This is now sought to be increased to Rs.1,41,81,446/- upto 31.01.2015 in the second application. 17. I may however mention here that in the rejoinder that was filed by the applicant to the reply of the OL, the applicant has attached a copy of a communication dated 18.06.2004 which was allegedly sent to the OL. Unfortunately this document has been filed alongwith the rejoinder and the OL has not been able to respond to the same. There is also nothing to show that this document was served on the OL. It is further stated in the letter that the dues are likely to the tune of Rs.50 lacs, which are pending and are not deposited by the respondent company. As already noted above, this letter was not in response to claims invited by the OL. Even if such a letter had been received by the OL, it cannot be a su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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