Allowed

Vidyodaya Trust(Regd) v. Official Liquidator

Kerala HC1 Mar 2023CO.ADJ.APPEAL/5/2019

Case brief

AI extract

What is this about?

This appeal was preferred against the re-adjudication order of the Official Liquidator rejecting the appellant's claim. The court set aside the impugned order, allowing the claim as the liquidator ignored facts showing the Managing Director acted in his capacity and the funds were trust investments. The appeal is allowed and the liquidator is directed to entertain the claim.

What did the court decide?

Order set aside; Appeal allowed; Official liquidator directed to entertain the claim of the appellants.

Vidyodaya Trust(Regd) Vs Official Liquidator — Company and Corporate | Kerala HC (2023)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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(Original Jurisdiction)

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In the matter of the Companies Act, 1956 and

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In the matter of M/s.Walk-in-Financial Services Ltd. (In Provisional Liquidation)

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Co.Adj. Appeal.No.5/2019 in C.P.No.9/2002

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Before:

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The Honourable Mr.Justice AMIT RAWAL Wednesday, the 1st day of March 2023/10 h Phalguna, 1944

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Appellant/Claimant-Creditor

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Vidyodaya Trust (Regd.), Represented by its Executive Trustee. Having its registered office at 1^st Floor, Pattarumadam, PRRA-1, Peyoli Road, Kacheripady, Ernakulam – 682 018

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Respondent/Respondent

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Official Liquidator, High Court of Kerala, Representing M/s.Walk-in-Financial Services Ltd. (In Liquidation), Company Law Bhavan, BMC Road, Thrikkakara, Ernakulam – 682 021

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Company Adjudication Appeal under Rule 164 of the Companies (Court) Rules, 1959 filed by the appellant above named prayed that this Hon'ble Court may be pleased to set aside the order No.TSII/C.P.No.9/2002/I.No.162/2602/2019 dated 13.06.2019 passed by the Official Liquidator and allow the claim in full of the Appellant herein.

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This Company Adjudication Appeal coming on for orders on this day upon hearing Sri.Philip Mathew, Advocate for the appellant and Sri.K.Moni, Standing Counsel for the Official Liquidator, the Court passed the following:

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Co.Adj. Appeal.No.5/2019 in C.P No.9/2002

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AMIT RAWAL, J.

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=================

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Company Adjudication Appeal No.5 of 2019

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Wednesday, the 1^st day of March 2023/10^h Phalguna, 1944

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J U D G M E N T

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Present appeal has been preferred against the re-adjudication order of the Official liquidator dated 13.6.2019 whereby claim of the appellant has been rejected.

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This Court on 25^th October 2018 in Company Appeal No.46 of 2017 remanded the claim of the appellant for fresh adjudication by the official liquidator on certain ground. The case of the appellants are that there are already numerous documents like sale deed executed by the Managing Director of the Company as security in lieu of the loan extended to the tune of Rs.40,00,000/and three additional documents in addition to the documents already placed on record before the official liquidator ie., common judgment in C.C No.701/2002 and 702/2002 dated 17.8.2006 passed by the Chief Judicial Magistrate's Court, copy of the judgment dated 30.6.2007 of the IVth Additional Sessions Judge, confirming the finding in C.C No.701/2002 and 702/2002 and copy of the judgment dated 28^th September, 2005 in O.S No.255/2004 of the 1^st Additional Sub Court, Ernakulam with copy of the decree passed therein.

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Co.Adj. Appeal.No.5/2019 in C.P No.9/2002

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The amount of claim has been admitted by the Ex-managing Director Sri. Arun Varma. There is no guarantee given by the Company in liquidation and the power of attorney was executed by the Company on 18.8.2001 though subsequent to the siphoning off the funds during 2000-01. It was not a document discharging the personal liability of the Ex-Managing director on behalf of the company. There was no reason for the Ex-Managing Director to deposit title deeds of the company if at all the facility of loan or receipt of the amount was personal.

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On the other hand, learned official liquidator submitted that the documents placed on record did not reflect that the facility of Rs.40,00,000/- was availed by the company. Execution of irrevocable power of attorney would not be equivalent to registered corporate guarantee. The balance sheet submitted by the petitioner did not reflect the liability of the company but of Arun Varma in his personal capacity. Additional documents placed on record also do not connect the liability of the Company but of Arun Varma in his individual capacity.

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I have heard the learned counsel for the parties and appraised the paperbook and of the view that the order is not sustainable for the reason that the irrevocable warranty was not executed by Arun Varma in his personal capacity but as the

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Co.Adj. Appeal.No.5/2019 in C.P No.9/2002

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Managing Director of the Company.

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Sri.Arun varma was also the co-trustee and treasurer and siphoned off the money of the trust divided to the funds of the Company. In fact it was a case of investment made by the Trust. In the statement of affairs though the appellant has not been shown to the creditor of the company but that was an intentional act of person in charge. However in the reply, Arun Varma had submitted that the transactions of Rs.9,25,000/- were related to Walk-in Financial Services Limited (company under liquidation). Even the fixed deposit receipts are also bore the stamp of the company. These facts have totally been ignored. Thus, order is set aside. Appeal is allowed. Official liquidator is directed to entertain the claim of the appellants.

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Sd/-

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AMIT RAWAL, JUDGE

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sab

Vidyodaya Trust(Regd) v. Official Liquidator

Case brief

What is this about?

What did the court decide?

Vidyodaya Trust(Regd) v. Official Liquidator

Case brief

What is this about?

What did the court decide?

What the court decided

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