Allowed

Mr.E.M.Abdul Rahman v. the Official Liquidator

Kerala HC22 Feb 2023CO.ADJ.APPEAL/45/2017

Case brief

AI extract

What is this about?

Company Adjudication Appeal against an impugned order of the Official Liquidator rejecting a claim. The High Court set aside the impugned order, relying on a previous 2011 judgment of its own court that admitted a larger claim amount from fixed deposits, and directed the liquidator to pay the total accepted claim within one month.

What did the court decide?

The impugned order dated 26.9.2017 is set aside; the claim is accepted up to Rs. 10,61,113/-; the Official Liquidator is directed to make the payment within one month from receipt of certified copy.

Mr.E.M.Abdul Rahman Vs the Official Liquidator — Company and Corporate | Kerala HC (2023)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE MR. JUSTICE AMIT RAWAL

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WEDNESDAY, THE 22^ND DAY OF FEBRUARY 2023 / 3RD PHALGUNA, 1944

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CO.ADJ.APPEAL NO. 45 OF 2017 IN CP NO.3 OF 2003

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(IN THE MATTER OF M/S VISHWAS CHITS AND INVESTMENTS PVT. LTD)

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(IN LIQUIDATION)

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APPELLANT/CLAIMANTS:

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1 MR.E.M.ABDUL REHMAN AGED 69 YEARS S/O.LATE MR.E.K.MOOSA

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2 MRS.JUMAILA REHMAN AGED 63 YEARS WIFE OF MR.ABDUL REHMAN BOTH APPELLANTS RESIDING AT JANNA,6A LINK HEIGHTS, PANAMPILLY NAGAR,KOCHI 682 036

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BY ADVS. SRI.ANIL S.RAJ SMT.ANILA PETER SMT.K.N.RAJANI SRI.RADHIKA RAJASEKHARAN P. SRI.S.SUDHEESH SRI.SAJEN THAMPAN

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RESPONDENT/S:

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THE OFFICIAL LIQUIDATOR HIGH COURT OF KERALA, COMPANY LAW BHAVAN,3RD FLOOR, BMC ROAD,THRIKKAKARA, KOCHI-21.

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BY ADV SRI.K.MONI

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THIS COMPANY ADJUDICATION APPEAL HAVING COME UP FOR ADMISSION ON 22.02.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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CO.ADJ.APPEAL NO. 45 OF 2017

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JUDGMENT

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The present Company Adjudication Appeal No.45 of 2017 in C.P No.3 of 2003 is directed against the order dated 26.9.2017 of the official liquidator rejecting the claim of the petitioner.

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Succinctly the facts in brief are that after the company was wound up, official liquidator had filed certain claim against the respondent who were subscribers of various chits conducted by the Company. After receipt of the records of the Company, official liquidator preferred six (6) claims for recovery of the following amount with 12% interest.

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Company Claim No.	Amount	From
2/2008	Rs.96,000/-	16.1.2004
58/2008	Rs.15,000/-	16.1.2004
103/2008	Rs.48,000/-	16.1.2004
120/2008	Rs.2,61,000/-	16.1.2004
121/2008	Rs.1,16,000/-	16.1.2004
1967/2008	Rs.63,000/-	16.1.2004

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Against the appellants, who were the respondents in the aforementioned company claim petition, Respondents did not dispute the claim and only contention was that in respect of the fixed deposits made with the company which they were entitled to from the Company litigation and the amount due from them should be set off against the amounts claimed in the Company claim. This Court vide order dated 24.10.2011, Annexure A5 closed claims of

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CO.ADJ.APPEAL NO. 45 OF 2017

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the liquidator by allowing the set off and in respect of the balance due to the respondents from the company in liquidation i.e. fixed deposit, it was ordered that the appellants/respondents therein would be at liberty to file proof of debt before the official liquidator as and when the claims are invited and as regards the fixed deposit is concerned, if it is found to be due to the respondents even after set off shall be returned to the respondent by the official liquidator.

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Learned counsel appearing on behalf of the appellant submitted that the petitioner had preferred the claim by producing receipts and fixed deposit receipts issued by the Company and letters reflecting the claim of Rs. Ten (10) lakh over and above the amount admitted by the liquidator to the extent of Rs.61,113/-. However, the Official liquidator vide impugned order dated 26.9.2017 admitted the claim to an extent of Rs.61,113/- but rejected the claim for Rs.10,00,000/- based on the receipts. The said order is totally contrary to the reply statement filed by the official liquidator to the additional objections submitted by the respondents in the claim cases above which was decided by the order of this Court referred to above dated 24.10.2011.

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Attention of this Court was drawn to paragraph 5 to 8 of the reply statement filed by the official liquidator that official liquidator cannot be permitted to blow hot and cold and wriggle out

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CO.ADJ.APPEAL NO. 45 OF 2017

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of the admission with regard to honouring of the claim of Rs.10,0000/- and requested the court to return to the appellants at the time of invitation of the claim from the creditors of the company by the official liquidator.

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On the other hand, learned official liquidator supported the order and submitted that the list of creditors maintained by the company in the custody of the liquidator did not reflect the name as per the receipts produced the appellants and therefore the claim of Rs.10,0000/- was rightly rejected. Official liquidator requested the claimants to produce additional documents and securities pledged by the company while taking a temporary loan of Rs.6 lakhs and accepting the fixed deposit for the amount of Rs.4,00000/-. But the record was not produced. The company balance sheet as on 31.3.1997, filed immediately after acceptance of temporary loan and fixed deposits was verified. It was found that neither it was under the head of 'loan funds' nor current liabilities.

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I have heard the learned counsel for the parties and appraised the paper book.

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It would be expedient to extract the relevant portion of the order dated 24.10.2011, A5 as well as paragraphs 5 to 8 of the reply of official liquidator filed to the additional objection on behalf of the petitioners who were respondents in the claim preferred by

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CO.ADJ.APPEAL NO. 45 OF 2017

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the official liquidator, A7.

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Annexure A5 dated 24.10.2011

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These company claims are filed by the Official Liquidator for recovery the following amounts from the respondents with 12% interest

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Company Claim No.	Amount	From
2/2008	Rs.96,000/-	16.1.2004
58/2008	Rs.15,000/-	16.1.2004
103/2008	Rs.48,000/-	16.1.2004
120/2008	Rs.2,61,000/-	16.1.2004
121/2008	Rs.1,16,000/-	16.1.2004
1967/2008	Rs.63,000/-	16.1.2004

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The respondents do not dispute the claim. Their only contention is that in respect of fixed deposits made by them with the company, they are entitled to amounts from the company in liquidation and, therefore, such amounts should be set off against the amounts claimed in the company claims. I directed the Official Liquidator to examine the fixed deposit receipts and to file a statement. Today a statement has been filed stating that the respondents are entitled to set off and, in fact, after setting off of the amounts claimed in these company claims, amounts are actually due from the company in liquidation to the respondents. Accordingly, these company claims are closed allowing the set off. In respect of the balance due to the respondents from the company in liquidation in respect of fixed deposits, it would be open to the respondents to file proof of debt before the Official Liquidator as and when the Official Liquidator invites claims. Those of the fixed deposit receipts in respect of which amounts are still due to the respondents even after set off, shall be returned to the respondents by the Official Liquidator.

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Annexure A7 dated 14.10.2011:

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In the light of the averment made in the objection that a sum of Rs.4,31,158/- is due to the respondent, verification of the records pertaining to the above said chits furnished to the Official Liquidator by the former Executive Director of the company has been made. It is revealed that no entry as claimed by the respondents regarding the item No. 1,2,5,9 and 10 are in the records. However, the claim against the

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CO.ADJ.APPEAL NO. 45 OF 2017

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item No.4, 6, 7, and 8 are found absolutely correct. The remaining claim in item No.3, only a sum of Rs. 39,107/- is due to the respondent instead of Rs.89,107/- shown in the objection by the respondents. Hence as per the records, a sum of Rs. 2,70,113/- is due to the respondent instead of Rs.43,11,158/claimed by the respondents.

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It is submitted that the respondents have admitted the liability and prayed for set off of the amount due to the company from the amount due to them. The claimant has no objection in allowing set off. The amount due from the respondents in the above 7 cases is Rs.7,09,000/- and the amount due to the respondents is only Rs.2,70,113/-. Even if set off, is allowed there is a shortage of R4,38,887/

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In this connection, it is submitted that the respondents have furnished Original Fixed Deposit Receipts for a total sum of Rs.15,00,000 and those Fixed Deposit Receipts are with the claimant. The claimant is of the opinion that in order to cover up the entire amount of debt due from the respondents and to close the cases, the amount of Rs.5,00,000/- may also be adjusted from the Fixed Deposit Receipts, since the Fixed Receipts are in the denominations of Rs.2Lakhs and 3Lakhs. The amount required for setting off the case is Rs. 4,38,887/-. After allowing set off, there would be a balance of Rs.61,113/- and the respondents may be treated as creditors for the said amount and they may be directed to claim the same from the Official Liquidator when the claims from the creditors of the company are invited. The Fixed Deposit Receipt Dated 31.1.1997 for Rs. 2,00,000/- in the name of Smt. Jumaila Rahman and FDR dated 16.7.1998 for Rs.3,00,000/- in the name of Sri Abdul Rehman are annexed hereto and marked as Annexure "A" and 'B' respectively for the cancellation of the same, if set off is allowed by this Hon'ble Court.

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It is respectfully submitted that if this Hon'ble Court allow the set off to the respondents as stated above, the remaining 4 Fixed Deposit Receipts for a total sum of Rs.10,00,000/- held by the claimant may be ordered to be returned to the respondents for claiming the same at the time of invitation of claims from the creditors of the company by the Official Liquidator.

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CO.ADJ.APPEAL NO. 45 OF 2017

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On perusal of the same, official liquidator had candidly admitted the claim of Rs.10,00,000/- of four fixed deposits held by the claimants to be returned to them at the time of inviting the claim over and above the amount of Rs.61,113/-. The list of creditors maintained by the Company under liquidation wou ld not have any 100% correctness, for, certain loans taken by the Company as a term loa n or by issuing receipt viz-a-viz the fixed deposits are not intentionally reflected to avoid the rigors of income tax and other statutory dues. But the fact remains though FDR were duly signed and had not been denied in the previous round of litigation as noticed above. For the reason aforementioned impugned order is set aside. The claim of the appellants viz-a-viz Rs.10,00,000/- is accepted. The liquidator is directed to make the payment of claim of Rs.10,61,113/- within a period of one month from the date of receipt of a certified copy of this judgment.

Sd/-

sab

AMIT RAWAL JUDGE

CO.ADJ.APPEAL NO. 45 OF 2017

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APPELLANTS ANNEXURES:

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A1: TRUE COPY OF THE RECIEPT IN THE NAME OF THE 2ND APPELLANT DATED 17.6.1996

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A2: TRUE COPY OF THE RECEIPT IN THE NAME OF THE 1ST APPELLANT

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A3: TRUE COPY OF THE RECIEPT IN THE NAME OF THE 2ND APPELLANT DATED 13.12.1995

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A4: TRUE COPY OF THE RECIEPT IN THE NAME OF THE 1ST APPELLANT DATED 31.1.1997

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A5: TYPED COPY OF JUDGMENT OF THE HON'BLE HIGH COURT OF KERALA IN C.C NOS.2, 58, 103, 120, 121 AND 197/2008 IN C.P NO.3/2003 DATED 24.10.2011

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A6: TRUE COPY OF THE NOTICE BEARING NO.TS 1/C.P NO.3/2003/CL.NO.52.5646/2017 ISSUED BY THE RESPONDENT TO THE APPELLANTS DATED 26.9.2017

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A7: TRUE COPY OF THE REPLY STATEMENT DATED 14.10.2011 WITHOUT ANNEXURES

Mr.E.M.Abdul Rahman v. the Official Liquidator

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Mr.E.M.Abdul Rahman v. the Official Liquidator

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