Company application seeking declaration of refund liability against consortium lenders was dismissed. Applicants failed to adduce documentary evidence proving the lenders received excess proceeds despite objections and lack of documentation in court.
Application dismissed as being devoid of merit due to failure to prove the case.
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COP No.137 of 2005
IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 17TH DAY OF NOVEMBER, 2023
BEFORE
THE HON'BLE MR JUSTICE C.M. POONACHA COMPANY APPLICATION NO. 122 OF 2009
In
COMPANY PETITION NO.137 OF 2005
BETWEEN:
Digitally signed by BHARATHI S Location: HIGH COURT OF KARNATAKA
NC: 2023:KHC:41290 CA No. 122 of 2009 IN COP No.137 of 2005
RMV EXTENSION, II STAGE, III BLOCK, BANGALORE-560094
…APPLICANTS
(BY SRI NIDHISHREE B V, ADVOCATE)
AND:
…RESPONDENTS
(BY SRI JAGADEESH GOUD PATIL, ADVOCATE FOR OL)
THIS COMPANY APPLICATION NO.122/2009 IS FILED UNDER SECTIONS 446(2), 458 & 460 OF THE COMPANIES ASCT, 1956 R/W RULES 6 & 9 OF THE COMPANIES (COURT) RULES, 1959, PRAYING TO DECLARE THAT RESPONDENTS 2 TO 6 ARE LIABLE TO REFUND A SUM OF RS. 5,29,63,090/- (RUPEES FIVE CRORES TWENTY NINE LAKHS SIXTY THREE THOUSAND AND NINETY RUPEES) WITH INTEREST AT THE RATE OF 18% P.A FROM 1.8.2005 TILL THE DATEOF PAYMENT TO THE 1ST RESPONDENT ON BEHALF OF THE COMPANY UNDER LIQUIDATION AND DIRECT THE 1ST RESPONDENT - OFFICIAL LIQUIDATOR TO REVIVE AND DISBURSE THE SAID SUM TO THE CREDITORS AND CONTRIBUTIONS/SHARE HOLDERS OF THE
COP No.137 of 2005
NC: 2023:KHC:41290 CA No. 122 of 2009 IN
COMPANY UNDER LIQUIDATIONM/S. HOTEL KRISHNA INTENATIONAL (INDIA) LTD, IN ACCORDANCE WITH LAW AND GRANT SUCH OTHER AND FURTHER RELIEFS AS ARE JUST.
THIS APPLICATION COMING ON FOR ARGUMENTS, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The present application is filed under Sections 446(2), 458 and 460 of the Companies Act, 1956 (hereinafter referred to as ‘the Act’) to declare respondent Nos.2 to 6 are liable to refund a sum of `5,29,63,090/- with interest at 18% p.a., from 1.8.2005 till date of payment on behalf of the company in liquidation.
710 lakhs from the consortium of financial institutions/banks i.e., respondent Nos.2 to 6 with the second respondent being the lead consortium. It is the further case of the applicants that owing to certain defaults by the company, proceedings under Section 29 of the State Financial Corporation Act, 1951, were initiated and the second respondent took over the assets of the company on 2.2.1999 and issued sale notification on 21.8.1989. Thereafter, the assets were sold on 1.8.2005 for a sum of 16 crores. It is the contention of the applicants thatCOP No.137 of 2005
sale is made unilaterally and the proceeds have been appropriated by the consortium members without any adjudication by any Tribunal or Court. Various allegations have been made by the applicants contending that prior to the date of winding up, the company having been declared as a Non Performing Asset (NPA) during the year 1999-2000, an appropriate decision with regard to one time settlement scheme that was prevailing was not taken despite a request made by the company for the same.
COP No.137 of 2005
various meetings having been taken place, there was no fruitful outcome to the attempts for one time settlement being made and the property was brought to sale towards the recovery of amounts due. It is further averred that the total secured dues of all the members of the consortium is 37,07,68,749/- and the amount realized by sale of the assets of the company is 16 crores and that there was short fall of 21,06,31,271/-. The manner in which the sale proceeds of 16 crores have been utilized for payment of the amounts due and outstanding amongst respondent Nos.2 to 6 has been placed on record in the statement of objections.
COP No.137 of 2005
evidence to prove the averments made by them in the application.
Sd/JUDGE
ND
List No.: 1 Sl No.: 50
2 issues framed by the court
Whether the applicants can succeed in declaring consortium members liable to refund sale proceeds of a liquidated company.
Whether the sale proceeds were appropriated without proper adjudication or if there was a shortfall necessitating refund.
Mr. S N Prasan Kumar
Mr. Shakeel P. Peters
Mrs. S.C. Peters
Mr. Malali Venkateshaiah Nagaraja
Mr. Malali Nagaraja Ravindra
Mrs. Malali Nagaraja Shantha
C.M. POONACHA
As recorded by the court registry
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