Telangana High Court
Lic Of India vs M/S. Allwyn Watches Ltd., ( In Liqn) on 26 March, 2026
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HONOURABLE SMT JUSTICE T.MADHAVI DEVI
COMPA NOS. 1212 OF 2014, 815 OF 2017 &
73 OF 2025
DATED: 26.03.2026
COMPA No. 1212 of 2014:
Between
LIC of India, Represented by its Secretary (Legal),
South Central Zone Office, Jeevan Bhagya Saifabad,
Hyderabad.
...Petitioner/Appellant
And
M/s.Allwyn Watches Limited (in Liquidation),
Rep., by the Official Liquidator, High Court of A.P.,
...Respondent/Respondent
COMPA No. 815 of 2017:
Between
Asset Reconstruction Company (India) Limited,
The Ruby, 10th Floor, 29, Senapati Bapat Marg,
Dadar (W), Mumbai - 400 028 and Another.
...Petitioners/ Appellants
And
M/s.Allwyn Watches Limited (in Liquidation),
Rep., by the Official Liquidator, High Court of A.P.,
...Respondent/Respondent
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COMPA No. 73 of 2025:
Between
M/s.Allwyn Watches Limited (in Liquidation),
Rep., by the Official Liquidator,
Attached to High Court of Telangana and
Andhra Pradesh, 1st floor, Corporate Bhawan,
Bandlaguda, Nagole, Hyderabad - 500 068.
...Petitioner/Appellant
And
The Deputy General Manager,
General Insurance Corporation of India,
'SURAKSHA', # 170, J.Tata Road, Chruchgate,
Mumbai - 400 020 & Seventeen Others
...Respondents/Respondents
COMMON ORDER
M/s.Allwyn Watches Limited (in Liquidation) is the respondent in COMPA Nos.1212 of 2014 and 815 of 2017 (for short, 'the respondent company') and the petitioner in COMPA No.73 of 2025 and the petitioners in COMPA Nos.1212 of 2014 and 815 of 2017 and the respondents in COMPA No.73 of 2025 are its secured creditors and these applications are filed seeking a direction to the Official Liquidator (OL) to make an interim disbursement of the balance sale proceeds lying to the credit of the respondent company account as against the claim of each of the first charge holders, pending final adjudication of the claims of workmen and others.
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2. Brief facts of the case are that vide orders dated 11.12.2006 in C.P.No.108 of 2001, this Court was pleased to direct the winding up of the respondent company M/s.Allwyn Watches Limited and appointed the official liquidator as its provisional liquidator. Thereafter, the land and buildings situated at Patancheru, Medak District and Plant & Machinery situated at Penukonda, Ananthapur District, were put to sale as per the directions of this Court and an amount of Rs.136,19,22,000/- was realized from the auction of the said assets. Thereafter, the official liquidator invited the claims of the creditors by publishing the same in the newspapers on 05.04.2011 and the last date of submission of claims was fixed as 04.05.2011. Some of the claims have been submitted by the creditors. However, since the official liquidator was not recognizing the creditors as the secured creditors of the company in liquidation, the secured creditors filed C.A.No.955 of 2012. This Court vide orders dated 15.02.2013 held that the petitioners therein are the secured creditors of the company in liquidation and accordingly, directed the official liquidator to adjudicate the claims of the petitioners therein expeditiously, 4 preferably within a period of two months. However, the official liquidator did not adjudicate the claims within the time granted by the Court, but filed C.A.No.757 of 2012 to grant additional time for adjudication of claims or alternatively to adjudicate the claims of secured creditors by the High Court itself. Thereafter, the secured creditors filed C.A.No.955 of 2012 seeking a direction to the official liquidator to adopt a simpler method of adjudication and also for interim disbursement pending adjudication. This Court, while holding that the petitioners are the secured creditors of the respondent company, had directed the official liquidator to adjudicate the claims expeditiously and pass appropriate orders preferably within a period of two months.
3. Against the said order, the petitioners in COMPA No.815 of 2017 preferred OSA, but the same was withdrawn subsequently as not pressed. Since there was inordinate delay in adjudicating the claims, the secured creditors once again approached this Court and filed C.A.No.409 of 2013 for a direction to the official liquidator to make interim disbursement of atleast 75% of the claim of each of the first charge holders, pending final 5 adjudication of the claims. A learned Single Judge of this Court, vide order dated 26.03.2013, was pleased to direct the official liquidator to disburse an amount of Rs.59,19,01,522/- and further directed the official liquidator to finalize the liquidation proceedings. Thereafter, vide orders dated 04.06.2013 in C.A.No.757 of 2012, this Court directed the official liquidator to complete the adjudication and file the report. The secured creditors once again approached this Court by filing C.A.No.312 of 2014 for a direction to the official liquidator to adjudicate the claims and disburse the balance sale proceeds lying to the credit of the company in liquidation. On 18.03.2014, the official liquidator filed its report stating that the claims of 15 secured creditors have been admitted and Form-69 have been issued to the secured creditors. By taking the same into consideration, on 19.03.2014 while disposing off C.A.No.312 of 2014, this Court has directed the official liquidator to finalize the claims, issue Form-71 in all the cases within a period of five weeks and make appropriate applications for permission for disbursement within one week thereafter. The official liquidator, thereafter, issued Form-71. 6
4. Aggrieved by the said orders dated 19.03.2014, the secured creditors filed OSA No.19 of 2014 and vide orders dated 27.03.2014, this Court directed the official liquidator to disburse an amount of Rs.12,19,55,087.56 paise on pro-rata basis against each of the claims admitted and the official liquidator accordingly disbursed the said amount amongst the secured creditors in respect of the admitted claims. It is submitted that in spite of repeated directions of this Court to complete the adjudication of claims, the official liquidator had not been adjudicating the claims. It is submitted that sale proceeds will not cover even 25% of the claims of the secured creditors even after considering the sale proceeds from the last lot i.e., the plant and machinery of Patancheru unit of Allwyn Watches Limited (AWL) which were sold for an amount of Rs.5 Crores. It is submitted that the maximum amount that may be available for distribution before the first interim disbursement by the official liquidator was only around Rs.150 Crores (including the sale proceeds already received, Rs.136.19 Crores and interest on the same), whereas the total claim of secured creditors admitted by official liquidator as per official liquidator's report dated 7 11.03.2014 was Rs.300.65 Crores. It is stated that after the interim disbursements are made from time to time, an amount of Rs.100 Crores (including interest) is lying with the official liquidator pending final adjudication. Therefore, a direction was sought to the official liquidator for interim disbursement pending adjudication of other secured/unsecured creditors and the workmen dues, failing which the applicants would put to irreparable loss and injury.
5. I.A.No.1 of 2024 was filed by the petitioner No.2 in COMPA No.815 of 2017 claiming to be one of the secured creditors and to be impleaded in the company application and enclosed therewith was the list of 8 secured creditors out of 16 secured creditors and at Serial No.1 was the implead petitioner. This Court, vide orders dated 09.01.2025, allowed the implead petition and the Petitioner No.2 was directed to be treated as a co- applicant in C.A.No.815 of 2017. Further in the COMPA Nos.1212 of 2014 and 815 of 2017, this Court has taken note of the fact that the official liquidator was in possession of 145 Crores in 2023 and therefore, the official liquidator was directed to make an appropriate application for disbursement of the amount in favour of 8 the secured creditors. Thereafter, on 08.04.2025, this Court has taken the note of the order dated 17.03.2025 in COMPA No.73 of 2025 in C.P.No.108 of 2001 appointing M/s.T.Badarinath and Associates, Chartered Accountants, who were in the panel of official liquidator, for the purpose of verification of various parameters involved in the affairs of company in liquidation and to give suggestions for disbursement of dividend to the eligible creditors including workmen of the company-in-liquidation as directed by this Court vide orders dated 09.01.2025 in COMPA Nos.1212 of 2024 and 815 of 2017. This Court also accorded permission to official liquidator to pay a sum of Rs.80,000/- + GST to the said Chartered Accountants/Auditor towards professional charges from out of the available funds of company-in-liquidation. This Court also noted that the petitioners in both the company applications are respondents in the COMPA No.73 of 2025. Therefore, they were directed to appear before the said Chartered Accountants/Auditor and cooperate with them. The official liquidator submitted the report of the Chartered 9 Accountants/Auditor on 17.06.2025 and the applicant No.1 has filed its objections to the Auditor's report on 17.02.2026.
6. The COMPA No.1212 of 2014 was filed by LIC of India, one of the secured creditors, who was not paid any interim disbursement. The COMPA No.73 of 2025 was filed by the official liquidator representing the company-in-liquidation (i) to take the application on record; (ii) to direct the respondents No.1, 4, 5, 6, 8 and 11 to return the excess payment of Rs.22,55,39,676/- together with interest @ 8% per annum from the date of order of second interim payment i.e., 27.03.2014 till the date of realization; (iii) to appoint M/s.T.Badarinath & Associates, Chartered Accountants or any other Chartered Accountant to give suggestion for disbursement of dividend to the eligible creditors including workmen of the company as ordered by this Court vide orders dated 09.01.2025 in C.A.Nos.1212 of 2014 and 815 of 2017 and also to permit the official liquidator to pay an amount of Rs.80,000/- + GST; (iv) to permit the official liquidator to file company application before this Court to vary Form No.71 i.e., list of creditors of the company-in-liquidation as well as proposal for 10 declaration of dividend to the eligible creditors of the company-in- liquidation basing on the report to be submitted by the Auditor appointed by this Court; (v) to order that the costs of the application to come out of the available funds of the company-in- liquidation and (vi) to pass such other order or orders.
7. As already observed above, this Court vide orders dated 08.04.2025 has appointed the Chartered Accountant proposed by the official liquidator for the purpose of verification of various parameters involved in the affairs of company-in- liquidation and to give suggestions for disbursement of dividend to the eligible creditors including the workmen of the company-in- liquidation and also accorded permission to the official liquidator to pay a sum of Rs.80,000/- + GST to the said Chartered Accountants/Auditor towards professional charges from out of the available funds of company-in-liquidation.
8. The report of the Chartered Accountants/Auditor has been filed into this Court by the official liquidator. According to the said report, a sum of Rs.53,02,22,989/- was realized on sale of 11 charged assets and a sum of Rs.88,86,99,011/- was realized on sale of freehold assets i.e., no creditor is having any charge and the total sale realization was Rs.141,89,22,000/-. It is stated that in response to the invitation by the official liquidator from the creditors of the company-in-liquidation, the official liquidator has received total claims from 165 various class of creditors of the company-in- liquidation, out of which 155 claims (including 128 workmen claims) have been adjudicated and necessary claim adjudication orders have been issued to the concerned creditors and the remaining 10 belated claims are pending for adjudication with the official liquidator due to non-submission of condonation of delay orders of the Hon'ble High Court including the claims of two workmen in which they have obtained condonation of delay orders from the Hon'ble High Court, but have not yet submitted required information to complete the adjudication of their claims.
9. The list of 155 creditors together with details of their claims adjudication is enclosed as Annexure-I and the total amount admitted was Rs.3,24,02,70,064.49/-, whereas amount rejected was Rs.9,15,77,08,089.67. The list of cases pending before this Hon'ble 12 High Court i.e., 8 companies, to whom interim disbursement was made as per the orders of this Court is given as Annexure-II and the total amount paid to them was Rs.71,38,56,609/- against the admitted secured debt of Rs.2,68,96,92,750/-. The Annexure-III contains the list of workmen to whom payment was made of a sum of Rs.5,40,44,219.96/-. The details of the charged assets/freehold assets are given in Annexure-IV and it is noticed that 16 creditors have paripassu first charge on movables/immovable assets. The Annexure-V is the table showing the proportionate share of secured creditors and workmen, who are having charge against the immovable assets based on admitted amount and the proportionate realized amount is Rs.57,08,71,033/-. The Annexure-VI is the table showing the proportionate share of secured creditors and workmen, who are having charge against the movable assets based on admitted amount and the proportionate realized amount is Rs.10,03,055/-, as against the amount admitted as secured debt of Rs.3,12,53,29,396/- @ 0.03209438%. The Annexure-VII is the table showing the details of dividend eligible, interim relief paid and balance dividend payable to secured creditors and workmen on 13 charged assets @ 25.72212611% on immovable assets and @ 0.03209438% on movable assets and the balance dividend payable to 10 secured creditors is Rs.8,35,57,155/-. The Annexure-VIII is the table showing the details of excess interim paid on charged assets and recoverable from the secured creditors together with interest @ 8% p.a., from the date of second interim payment i.e., 27.03.2014 to 17.06.2025. The Annexure-IX is the table showing the details of the 11 companies, who are the secured creditors and to whom balance dividend is payable on the charged assets, whose claim has been admitted as secured debt, but no payment has been made till date. The Annexure-X is the table showing the details of dividend @ 100% payable to workmen of the company-in- liquidation. The Annexure-XI is the table showing the details of declaration of 100% dividend to the preferential creditors, workmen and other creditors (other than secured creditors) on priority basis and the balance amount payable to them is Rs.1,56,82,195/-. The Annexure-XII is the table showing the details of unsatisfied secured debt and unsecured debt. The Annexure-XIII is the table showing the details of proportionate 14 dividend payable to the creditors on the freehold property i.e., proposed amount of Rs.1,23,55,72,035/-. The Annexure-XIV is the table showing the details of the dividend eligible, interim dividend paid and the balance dividend payable to all the creditors. As seen from Annexure-XIV, the official liquidator claims to have paid excess amount to the following parties:
(1) General Insurance Corporation of India; (2) Life Insurance Corporation of India; (3) Unit Trust of India (SUUTI); (4) IFCI Limited;
(5) ARCIL (SCB/ICICI); (6) IDBI Bank Limited;
(7) State Bank of Hyderabad; (8) State of India.
According to the official liquidator, the interim payment/dividend/priority expense has been made to six out of eight secured creditors i.e., other than SBH and ARCIL listed above. It is submitted that the six secured creditors have received the amount in excess of their entitlement on the charged property 15 and two secured creditors have received less amount than their entitlement on the charged property and 8 secured creditors have not received any amount on the charged properties till date.
10. The official liquidator on the basis of the report of the Chartered Accountants/Auditor is therefore claiming refund of the excess amount paid to the six creditors along with interest @ 8% thereon and by taking the said amount into consideration is proposing the payment of the third interim dividend. The official liquidator is also proposing to keep aside a sum of Rs.19,89,51,259/-, to satisfy ten belated claims which are pending for adjudication due to non-submission of condonation delay orders from the Hon'ble High Court as well as non-submission of required information.
11. The learned counsel appearing for the SUUTI and also SBI have submitted that the proposal to keep a sum of Rs.19,45,74,261/- in respect of secured creditors who not even filed applications for condonation of delay of this Court is not justified. It is submitted that by keeping aside, a sum equivalent to 16 100% of their claim, while secured creditors who approached this Court are granted only a proportion of their claims is unjust and unwarranted. It is submitted that if at all, the amount is to be kept side to meet the claims of such parties, only such of the proportion of their debts should be kept aside, which is being paid to the other secured creditors.
12. As regards the charging of interest on the excess payments made to the six of the secured creditors mentioned above, the learned counsel representing such of the creditors submitted that the secured creditors have not been paid in excess of their entitlement amount, but they have been paid in the same proportion as was paid to other secured creditors and therefore, there was no cause for return or refund of the same, much less with interest thereon.
13. At this juncture, the learned standing counsel for the OL has filed the copies of the undertakings given by the respective parties at the time of receipt of the interim relief, wherein while acknowledging the receipt of the payments, it is stated that in the 17 event of their arising a superior claim or such equal claim as ordered by the Hon'ble High Court or otherwise by the official liquidator and the available funds being insufficient to meet such claim or in the event of the dividend become excess upon final adjudication of all the claims received and admitted against the company or in any other event when they were found to be not entitled or any part thereof or in the event of the Hon'ble High Court passing an order for refund, they undertake to refund the said amounts without demur, or on receipt of a notice from the official liquidator, to the credit of the company-in-liquidation, within such time as may be stipulated by the official liquidator and that such refund shall be remitted back within seven days along with interest at the prevailing bank rate from the date of receipt of such amount/portion of the amount has to be refunded from the date of receipt. The cost of the litigation was also undertaken to be refunded. The copies of similarly worded undertakings given by the other creditors are also filed by the official liquidator.
14. Learned counsel for the secured creditors, who have allegedly received the excess amounts, however, opposed/objected 18 to the same and submitted that the undertaking was given only in the case of payment of excess amount than their entitlement and when the payment was made as per the orders of this Court and in the same proportion in which other secured creditors have been paid, there is no cause for refund of the said amount or the interest thereon. The parties have also filed their objections in writing.
15. Having gone through the material on record and having regard to the rival contentions, this Court finds that the official liquidator is in possession of certain funds and the same is to be disbursed amongst the secured creditors in equal proportion. Some of the creditors have charges against the movable and immovable properties and it is the claim of the official liquidator that six creditors have been paid in excess of their charge. The details of the debts and the value of the charged assets and their realization are not available before this Court. For coming to the conclusion about the excess of the amounts paid, a notice would have to be given by the official liquidator and the said excess amount would have to be determined after giving an opportunity of hearing to the concerned parties. It is noticed that no such notice 19 has been given by the official liquidator so far and it is only at the stage of disbursement of the third interim dividend that the official liquidator has taken this stand. Therefore, this Court is of the opinion that the parties cannot be saddled with the liability of paying interest on the amount, when no notice has been given to the parties for refund of the same.
16. Further, this Court finds strength in the contentions of the respondents that setting aside of the 100% of the debt due to the some secured creditors who have not even filed application for condonation of delay in submission of their claims before this Court is not justified. The learned counsel for Punjab National Bank had submitted that delay condonation petition has already been filed before this Court and the same is pending consideration. Therefore, this Court is of the opinion that only such proportion of the debt which is allowed to all the other creditors can be set aside for meeting the liability towards such claims. The official liquidator is therefore directed to keep aside only such proportion of the amount.
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17. This Court finds that as per the report of the Chartered Accountants, the official liquidator has a sum of Rs.89 Crores, for disbursement after taking into consideration, the amount set apart for meeting the above liabilities and also after taking the excess amount along with interest thereon into consideration. The official liquidator is directed to re-compute the balance of dividend payable without considering the excess amount paid as interim payment/ dividend/priority expenses and also interest thereon to the six secured creditors and also by keeping aside only such percentage of debts to the unpaid secured creditors who are yet to submit their claims in the proportion of payments made to the secured creditors. The payment of the third interim dividend shall be made to all the secured creditors in the same proportion according to their eligibility. The amounts claimed as excess payment and interest thereon shall be determined by the official liquidator after issuing notices to the concerned parties and the payment of the third disbursement shall be made after taking an undertaking from the concerned parties that they would abide by such determination and that they would refund the money with interest after the 21 determination. The undisputed amount shall be credited to the accounts of the secured creditors on or before 30.04.2026.
18. With these observations, all the company applications are disposed of. There shall be no order as to costs.
19. Miscellaneous petitions, if any, pending, shall stand closed.
____________________________ JUSTICE T.MADHAVI DEVI Date: 26.03.2026 bak