Disposed

Subhash N. Salunke and 5 Others v. Official Liquidator of M/S. Navinon Ltd.

Bombay HC29 Jul 2013CA/658/2012

Case brief

AI extract

What is this about?

Workmen applied for release of dues from Official Liquidator in Navinon Ltd. winding up. Court passed workable arrangement on party consent to disburse 30% dividend to workmen and secured creditors, mandated banks to repay funds and invest remaining balances in fixed deposits, and disposed of the application.

What did the court decide?

Directed disbursement of 30% dividend to 2963 workmen and secured creditors; ordered banks to repay amounts and invest residuals in fixed deposits for six months.

Subhash N. Salunke and 5 Others Vs Official Liquidator… — Company and Corporate | Bombay HC (2013)

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ca-658.12.doc

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION

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COMPANY APPLICATION NO.658 OF 2012 IN

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COMPANY PETITION NO.1176 OF 2001

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Subhash N. Salunke & Ors.	.. Applicants
In the matter between
Indian Link Chain Manufacturers Ltd. Vs.	.. Petitioner
The Official Liquidator
High Court, Bombay (Navinon Ltd.)	.. Respondent

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ALONG WITH

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OFFICIAL LIQUIDATOR’S REPORT NO.427/2011/ ACCOUNT SECTION

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COMPANY PETITION NO.1176 OF 2001

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In the matter of M/s. Navinon Limited (In Liquidation)

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Mr. K.P. Anilkumar for the applicant.

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Mr. Shyam Mehta, Senior Advocate for the Official Liquidator. Ms. Rupa Sutar, Assistant Official Liquidator present. Mr. N.M. Ganguli for the workers.

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Mr.Rohit Gupta a/w Ms. Meenakshi Mhapankar i/by M/s. V. Deshpande & Co. for IARC & Kotak Mahindra Bank in OLR.

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Ms.Deepti Panda i/by M/s.Purnanand & Co. for Punjab and Maharashtra Co-operative Bank Limited in Company Application No.658 of 2012. Mr. Suresh Kumar, Provident Fund Commissioner, Thane & Kandivali.

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CORAM : N.M. JAMDAR, J. DATE : 29 JULY 2013

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P.C. :

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. This Company Application as well as Official Liquidator’s

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Report pertains to the dues to be paid to the workmen and the secured creditors of M/s. Navinon Limited which was ordered to be wound up.

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Company Application has been filed by the workmen of the Company under liquidation seeking directions to the Official Liquidator to release the balance payment of the workmen of M/s. Navinon Limited. By the Official Liquidator’s Reports dated 23 February 2012 and 28 March 2012, the Official Liquidator, inter alia, has prayed that the Official Liquidator be permitted to pay dividend to 2963 workmen and the secured creditors.

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The learned Counsel for the applicants submitted that despite finalising the account in the year 2009, the employees have not been paid full legal dues and due to extreme poverty, hardship and sickness, more than 600 workers have expired. The learned Counsel submitted that these workmen are senior citizens and delay in disbursing the amount is causing great hardship to the workmen. The learned Counsel submitted that this Court on 29 March 2012 by way of interim arrangement directed that 50% of the admitted claim be disbursed. The learned Counsel submitted that most of the employees have received that amount however, these amounts are not sufficient and liabilities are mounting.

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The learned Counsel for the Official Liquidator submitted that as on today, claims of 2963 workmen have been adjudicated and there are 9 secured creditors namely, i) PMC Bank, ii) UCO Bank, ii) IARC Assinee of BoB, iv) ARC Assinee of Dena Bank, v) K.M.B. Assinee State Bank of Saurashtra, vi) Canara Bank, vii) Barclays Bank, viii) A.R.C. Asinee of Union Bank and ix) ARCIL Assinee of SBI. The

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learned Counsel submitted that the claims of Provident Fund Commissioner Office, Thane and Provident Fund Commissioner Office, Kandivali have also been received. The learned Counsel submitted that the amount available for disbursement is approximately to the tune of Rs.100 crores. The learned Counsel for the Official Liquidator submitted that the Punjab and Maharashtra Co-operative Bank Limited has recoved an amount of Rs.91,80,18,198/- by sale of immovable property and UCO Bank an amount of Rs.7,42,39,350/-, by way of sale of movable assets. The learned Counsel submitted that both these banks were directed to invest the amounts as per the order dated 29 March 2012 and these two banks have not given particulars as the amounts are received by them by way of interest.

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The learned Counsel appearing for the Provident fund Commissioner submitted that the Provident Fund Commissioner’s Office Thane as well as Kandivali have lodged their claims. The learned Counsel submitted that the Official Liquidator out of Rs.30,26,37,317/claimed by the Commissioner, Thane has allowed the claim of Rs. 22,48,84,860/- and as far as the claim of the Commissioner, Kandivali is concerned, the Official Liquidator adjudicated the same claiming refund of excess amount of Rs.1,12,93,011/-. The learned Counsel submitted that the adjudication was done on 26 July 2013 and he had no opportunity to challenge the adjudication. The learned Counsel submitted that in view of the decision of the Apex Court in the case of Employees Provident Fund Commissioner Vs. Official Liquidator of Esskay Pharmaceuticals Limited reported in (2011) 10 Supreme Court Cases 727, the claim of the Provident Fund Commissioner has an overriding preference.

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The learned Counsel appearing for the I.A.R.C. and Kotak Mahindra Bank submitted that the calculation of Provident Fund’s dues is not correct, as according to him, no adjudication can be made by the Official Liquidator as an employer after the last salary was drawn. The learned Counsel submitted that the Bank will take appropriate proceedings or will address the Court as and when the application /appeal made by the Provident Fund Commissioner against the adjudication of the said claim comes up for hearing.

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The learned Counsel for the I.A.R.C. and Kotak Mahindra Bank and the learned Counsel for the Punjab and Maharashtra Cooperative Bank Limited state that they have no objection if the order on the similar line of the order dated 29 March 2012 is passed by fixing 30% dividend. None appears on behalf of other secured creditors inspite of notice.

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It does appear that after the amount was disbursed pursuant to the order dated 29 March 2012, the workmen have not received their dues. It is informed by the learned Counsel for the Official Liquidator that approximately Rs.100 crores would be available for disbursement to both, the workmen as well as the secured creditors. The claim of the Provident Fund Commissioner is to the tune of Rs.31 crores. According to the learned Counsel for the Official Liquidator, if the 30% dividend is declared, then the balance amount will be approximately Rs.40 crores which will safeguard the claim of the Provident Fund Commissioner. It is no doubt true that the claim of the Provident Fund has an overriding charge but it appears that the amount adjudicated by the Official Liquidator is being disputed by the Provident Fund

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Commissioner as well as the secured creditors and those proceedings will take some time. If the claim of the Provident Fund is safeguarded, then the remaining amounts can be disbursed. Since there is consensus between the parties that an order on the similar lines as that the order passed on 29 March 2012 can be passed, and considering the fact that the claim of the Provident Fund Commissioner is safeguarded, it will be appropriate in the interest of justice to pass an order on the similar lines with that of the order passed on 29 March 2012.

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Accordingly, by consent of the parties, the following workable arrangement is made till the decision of other larger issues :- i) The Official Liquidator shall disburse 0.939 paise in a rupee (i.e. 30% of the dividend proposed to be paid at the rate of 3.13 paise in a rupee) of the amount admitted by the Official Liquidator to the 2963 workers and the various secured creditors of the movable properties listed in prayer (c) of the Official Liquidator’s Report dated 23 February 2012 after obtaining an undertaking from the Bank that it will bring back the money along with interest as and when demanded by the Official Liquidator and the sanctioned by this Court in case any future liability arises in this regard.

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ii) The Official Liquidator shall disburse 15.384 paise in a rupee (i.e. 30% of the dividend proposed to be paid at the rate of 51.28 paise in a rupee) of the amount admitted by the Official Liquidator to the 2963 workers and the only secured creditor of the immovable properties viz. Punjab and Maharashtra Co-operative Bank Limited after obtaining an undertaking from the Bank that it will bring back the money along with interest as and when demanded by the Official

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Liquidator and the sanctioned by this Court in case any future liability arises in this regard.

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iii) Punjab and Maharashtra Co-operative Bank Limited and UCO Bank shall pay the Official Liquidator such amounts as demanded by the Official Liquidator within two weeks from the date of receipt of the notice from the Official Liquidator in this regard to enable the Official Liquidator to disburse the above amounts.

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iv) The balance amounts remaining with Punjab and Maharashtra Co-operative Bank Limited and UCO Bank shall be forthwith invested by the banks in fixed deposits so as to enable the said deposits to earn the maximum rate of interest available for a period of six months.

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v) Prayer clause (e) of the Official Liquidator’s Report dated 23 February 2012 is granted as prayed for.

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vii) Prayer clause (f) of the Official Liquidator’s Report dated 23 February 2012 is granted as prayed for save and except that the figure of Rs.180,49,50,551/- will stand substituted with the figure of Rs.51,73,03,371/-.

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At this stage, it is pointed out by the learned Counsel for the Official Liquidator that if the amounts are invested in a fixed deposits then it will not be in the interest of the parties to break the fixed deposits as the substantial amount of interest will be lost. The learned Counsel for the workmen submits that if the period of expiry of the fixed deposits is

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unduly longer then it will cause hardship to the workmen. After obtaining necessary information from the Bank, the Official Liquidator will move a report in that regard. The report shall be filed on 1 August 2013.

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The Company Application No.658 of 2012 stands disposed of. The present Official Liquidator’s Reports will be taken up for hearing on 20 August 2013 at 3.00 p.m. along with proceedings filed by the Provident Fund Commissioner, if any. It will be open to the concerned Banks to file affidavit placing on record the position as regards the interest accrues after giving advance copies thereof to the learned Counsel appearing for the concerned parties.

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N.M. JAMDAR, J.

Subhash N. Salunke and 5 Others v. Official Liquidator of M/S. Navinon Ltd.

Case brief

What is this about?

What did the court decide?

Subhash N. Salunke and 5 Others v. Official Liquidator of M/S. Navinon Ltd.

Case brief

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What did the court decide?

What the court decided

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