Bombay High Court
Krantikari Kamgar Union vs Official Liquidator Of Zadona ... on 5 June, 2023
Bench: N. J. Jamadar
2023:BHC-OS:4340
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.22041 OF 2022
IN
COMPANY PETITION NO.518 OF 2005
Krantikari Kamgar Union ... Applicant
and
Kusum Jinppa Pujari and Ors. ... Petitioners
versus
Official Liquidator of Zadona Electronics Ltd.
And Ors. ... Respondents
Ms. Jane Cox with Ms. Rohini Thyagarajan for Applicant.
Mr. Shanay Shah, for Respondent No.1.
Mr. Rohit Gupta with Ms. Apoorva Kulkarni i/by V. Deshpande and Co., for
Respondent No.2.
Mr. Dashrath Dube-Patil with Mr. Y.R.Mishra, for Respondent No.3.
CORAM : N.J.JAMADAR, J.
RESERVED ON : 8 MARCH 2023
PRONOUNCED ON : 5 JUNE 2023
ORDER :
1. This application is preferred seeking direction to the Official Liquidator
of Zadona Electronics Ltd. ( in liquidation ) to comply with the directions contained in
the order dated 9 February 2016 passed by this Court in Official Liquidator's Report
No.274 of 2015 in the matter of distribution of dividend to workmen.
2. Background facts necessary for determination of this application can be
summerized as under :
2.1 The Applicant is a Trade Union registered under the Trade Unions Act,
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1926 and represents large number of workmen who were on the roll of M/s. Zadona
Electronics Ltd. ( M/s. Zadona). By an order dated 20 June 2007 in Company
Petition No.518 of 2005, M/s. Zadona was ordered to be wound up. Respondent No.1
came to be appointed as a liquidator with usual powers under the Companies Act, 1956
(the Act of 1956).
2.2 Kotak Mahindra Bank Ltd. (Kotak) - Respondent No.2 is one of the
secured creditors of M/s. Zadona. Adarsh Kamgar Sabha - Respondent No.4
represents another set of workmen of Zadona. The bank sold the assets of M/s.
Zadona by a private treaty. The sale proceeds to the tune of Rs.87.10 Crores came to
be deposited with the Debt Recovery Tribunal (DRT). The Official Liquidator
adjudicated the claims of workmen under an Adjudication Order dated 27 January
2012.
2.3 The Applicant as well as the bank challenged the adjudication before the
Company court. By an order dated 17 September 2012, the Company Court set aside
the order of adjudication dated 27 January 2012 and the Official Liquidator was
directed to pass fresh orders on re-adjudication, especially dealing with the issue as to
whether the claimants before the Official Liquidator were the workmen as defined
under Section 2(s) of the Industrial Disputes Act, 1947.
2.4 The Official Liquidator passed fresh adjudication order on 7 November
2012. The said adjudication order was again the subject matter of challenge by both
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the Applicant and the Bank in Company Application Nos.120 of 2014 and 93 of 2013.
While the said Company Applications were awaiting adjudication, on 19 March 2015,
consent terms were arrived at between the Applicant, Bank and the Respondent No.4.
Under the consent terms, the parties agreed to accept adjudication by the Official
Liquidator of workmen's due in the sum of Rs.56,51,48,201, a sum of Rs.8,34,90,485/-
towards PF dues, and an additional sum of Rs.11.10 Lakhs in respect of 29 workmen
enlisted in Annexure A1 thereto and such additional sum as would be adjudicated by
the Official Liquidator in respect of workmen enlisted in Annexure A2, as the total
entitlement of the workmen including their PF dues.
2.5 Since a sum of Rs.29 Crores was already released for disbursal to the
workmen, an amount of Rs.41,97,48,686/- came to be deposited with the Official
Liquidator towards the adjudicated claims of 782 workmen, additional claims of 29
workmen enlisted in Annexure A1 and PF dues.
2.6 Thereupon, the Official Liquidator filed a Report No.274 of 2015
proposing a declaration of dividend @ 98 paise and not 100 paise in a rupee on the
premise that the Official Liquidator had already erroneously disbursed a sum of
Rs.50,42,255/- to 12 former employees whose claims had earlier been classified as
workmen's claim having priority under Sections 529 and 529A of the Act, but were
subsequently, by an order of readjudication dated 7 November 2012 re-classified as the
claims under Section 530 of the Act, 1956.
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2.7 In the said Official Liquidator's Report, the Court noted, in view of an
erroneous payment of Rs.50,42,255/-, the Official Liquidator was not in a position to
pay 100% dividend and, thus, the question arose who picked up the tab for the short
fall amount of dividend to be declared namely two paise in a rupee, whether it sould be
the Bank or the workmen.
2.8 After considering the import of the consent terms entered into between
the parties and the circumstances in which consent terms came to be executed, the
learned Company Judge opined that the workmen's due cannot be held up pending
recovery of the amount erroneously distributed by the Official Liquidator and, thus,
the following order came to be passed :
"7(a) The Official Liquidator is directed to pay the entire balance
dividend of Rs.33,51,48,201/- to 782 workmen in terms of the consent terms
an order of the Company Court of 19 March 2015 in Company Application
Nos.93 of 2015 and 120 of 2014;
(b) The Official Liquidator is directed to pay the sum of
Rs.11,10,000/- to 29 workers listed in Annexure A-1 to the consent terms
dated 19 March 2015;
(c) The amounts be paid from the fund available with the Official
Liquidator to the account of Zadona Electronics Ltd. ( in liqn) including the
accrued interest upto date;
(d) The shortfall, if any, to be recovered from Kotak Mahindra Bank
Ltd., from out of the sale proceeds held by it;
(e) The Official Liquidator shall initiate and expeditiously complete
the process of recovery of the dues of Rs.50,42,255/- wrongly paid to twelve
recipients as mentioned in this order.
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(f ) Upon recovery of the amount in terms of clause (e) above, and after
adjustment of the Liquidator's expenses, the amount be made over to Kotak
Mahindra Bank Ltd.
(g) The Official Liquidator shall expeditiously initiate and complete the
process of adjudication of dues of workers listed in Annexure A-2 to the
consent terms dated 19 March 2015, and after completing such adjudication
and receiving the adjudicated amount from Kotak Mahindra Bank Ltd.,
distribute the same to the workers;
(h) The Official Liquidator is permitted to release advertisement in
terms of prayer clause (d) of the OLR."
2.9 Being aggrieved, the Bank carried the matter in Appeal. The Appeal
Bench by a judgment and order dated 17 October 2018 in Appeal No.333 of 2018
dismissed the Appeal by affirming the view of the learned Company Judge that the
short fall was required to be met by the bank.
2.10 It would be contextually relevant to note that before the Appeal Bench, a
grievance was made on behalf of the Bank that the Official Liquidator may mis-
interpret the directions to pay the short fall in clause (d) (extracted above), and call
upon the bank to pay the excess amount. The Appeal Bench observed that there was
no ambiguity in the order dated 9 February 2016 and the shortfall referred to in
paragraph 7(b) of the operative portion of the impugned order quietly clearly referred
to the shortfall between net amount then available with the Official Liquidator and the
amount necessary for settlement of the dues of 782 + 29 workmen on the basis of 100%
dividend which they were entitled to in terms of the Consent Terms.
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2.11 Eventually, the Bank, after unsuccessfully challenging the aforesaid
order before the Supreme Court, deposited a sum of Rs.50,42,255/- with the Official
Liquidator on 6 March 2019.
2.12 It is the grievance of the Applicant that despite the aforesaid orders and
repeated request to the Official Liquidator, the latter has not released the dividend as
per the full entitlement of the workmen. Hence, this application seeking directions to
the Official Liquidator to disburse balance 2% of the dues to the workmen after
recovering the shortfall from the Respondent No.2 Bank, adjudicate claims of
workmen enlisted in Annexure A2 and direction to the Official Liquidator to furnish to
the Applicant and Respondent No.4 Union copies of the admission of proof of claims
of the workmen whose dues stand transferred to the Respondent No.3 - Registrar of
Companies, so as to process claims for withdrawal of the dues.
3. Respondent No.2 Bank resisted the application by filing an Affidavit in
Reply. After narrating the sequence of events leading to the deposit of a sum of
Rs.50,42,255 with the Official Liquidator on 6 March 2019, the Respondent No.2
contends that it had repeatedly pursued the matter with the Official Liquidator to
comply with the directions in the order dated 9 February 2016. The Official
Liquidator has yet not recovered the sum of Rs.50,42,255/- erroneously paid to 12
employees. Nor the amount of Rs.50,42,255/- has been distributed by the Official
Liquidator. Respondent No.2 asserts that, instead the Official Liquidator has been
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calling upon the Bank to pay various sums despite clear directions by the Division
Bench in Appeal No.333 of 2018 that the bank is required to pay only the shortfall
arising out of the erroneous payment of Rs.50,42,255/-. Various demands made by
the Official Liquidator are clearly untenable.
4. Since the Respondent No.2 has brought in the entire amount in
accordance with the consent terms and also deposited a sum of Rs.50,42,255/- being
the shortfall in payment of the dividend to the workmen, the Respondent No.2 cannot
be called upon to make further payment and, thus, no relief be granted against the
Respondent No.2 Bank.
5. Having regard to the nature of the dispute, by an order dated 25 August
2022, this Court directed the Official Liquidator to place the facts about the receipt,
disbursal and expenditure incurred as well as the amount, which according to the
Official Liquidator, the bank is expected to deposit, on an Affidavit.
6. Pursuant to the said order, the Official Liquidator has filed an Affidavit
asserting, inter alia, that the Respondent No.2 has deposited an aggregate amount of
Rs.64,97,48,686/- with the Official Liquidator. The Official Liquidator claims to have
released a sum of Rs.8,34,90,485/- towards PF, Rs.55,38,45,237- towards dividend to
782 workmen and Rs.11,10,000/- to 29 workers, enlisted in Annexure A1, totalling to
Rs.64,34,87,978/-. As on date, according to Official Liquidator, a sum of
Rs.79,79,000/- is lying to the credit of the company in liquidation. The Official
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Liquidator further asserts that for balance 2% dividend payable to the workers, a sum
of Rs.1,13,02,964/- is required and to disburse the dividend for satisfaction of the
claims of workmen admitted in 4 th Supplementary List, including adjudication of
claims of workers enlisted in Annexure A2, a further sum of Rs.23,82,239/- is
required. Excluding the Official Liquidator's expenses of Rs.2,00,000/-, a sum of
Rs.1,36,85,203/- is required to disburse 100% dividend to the workmen and, thus,
there is a shortfall of Rs.59,06,203/-. A direction is sought to the Respondent No.2
Bank to deposit a sum of Rs.59,06,203/-.
7. In the backdrop of the aforesaid pleadings, I have heard Ms. Jane Cox,
learned Counsel for the Applicant, Mr. Shanay Shah, learned Counsel for the Official
Liquidator, Mr. Rohit Gupta, learned Counsel for the Respondent No.2 Bank and Mr.
Dube-Patil, learned Counsel for Respondent No.3 at some length. The learned
Counsel for the parties took the Court through the material on record, including the
earlier orders.
8. Ms. Cox, learned Counsel for the Applicant would submit that the
workmen are deprived of their legitimate entitlement despite clear and explicit orders
passed by this Court on 9 February 2016 and the Appeal Bench in Appeal No.333 of
2018. This Court as well as the Appeal Bench have ruled that the Respondent No.2
bank is liable to make good the shortfall. Indisputably, dividend to the extent of 98
paise in a rupee has been disbursed to 782 workmen. On account of the tug of war
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between the Official Liquidator and the Respondent No.2 bank, the workmen are
unjustifiably deprived of the full dividend. Therefore, Respondent Nos.1 and 2 be
directed to comply with the orders passed by this Court so that the workers dues are
satisfied, submitted Ms. Cox.
9. Mr. Shanay Shah, learned Counsel for the Official Liquidator, submitted
that there can be no two views about the liability of the Respondent No.2 Bank to
bring in the amount to pay 100% dividend to the workers. Laying emphasis on clause
(d) of the operative order dated 9 February 2016, whereby it was directed that the
shortfall, if any, is to be recovered from the bank, from and out of the sale proceeds
held by the bank, Mr. Shah would urge that the Respondent No.2 bank cannot wriggle
out of the situation by asserting that with the deposit of Rs.50,42,255/-, the liability of
the bank came to an end.
10. Mr. Gupta, learned Counsel for the Respondent No.2 Bank, submitted
that the apprehension entertained by Respondent No.2 Bank that the aforesaid
directions contained in Paragraph No.7(d) of the order dated 9 February 2016, would
be misinterpreted to call upon the bank to make payment to cover all the situations has
proved true. Mr. Gupta strenuously submitted that the entire controversy arose on
account of an erroneous payment of Rs.50,42,255/- to 12 workers, who were
otherwise not entitled to the said payment on priority basis. The Official Liquidator
has not made earnest efforts to recover the said amount. Instead Respondent No.2
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bank despite having deposited the stated shortfall of Rs.50,42,255/- is again called
upon to make further payment as if the liability of the Respondent No.2 bank is
unlimited. Mr. Gupta laid special emphasis on the fact that in the order dated 9
February 2016, this Court had explicitly recorded that the liability of the bank cannot
exceed a sum of Rs.64,97,48,686/- and the dues of the workmen enlisted in Annexure
A2. The Respondent No.2 bank has, in addition to the said amount of
Rs.64,97,48,686/-, brought in a sum of Rs.50,42,255/- which was the shortfall. It
would, therefore, be wholly unconscionable to again call upon the Respondent No.2
bank to make further deposit on account of the irregularities in the disbursal of the
amount by the Official Liquidator.
11. In the backdrop of the aforesaid submissions, the question which
wrenches to the fore is whether the Respondent No.2 bank is liable to make good
further shortfall in spite of having deposited a sum of Rs.50,42,255/- ? Before
adverting to explore an answer to this question in the light of the orders passed by this
Court on 9 February 2016, and the judgment of the Appellate Court in Appeal No.333
of 2018, it may be apposite to note what the parties had agreed to in the Consent
Terms on the strength of which Company Application Nos.93 of 2013 and 120 of 2014
came to be disposed. Relevant part of the Consent Terms reads as under :
"a. The Parties have agreed to accept the adjudication order passed
by the Official Liquidator dated 7 th November, 2012 and subsequent
adjudications with respect to adjudication of claim of 782 Workmen of the
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Company in Liquidation to an extend of Rs.56,51,48,201/- out of which a
sum of Rs.23,00,00,000/- has already been released to the Official
Liquidator;
b. The Parties have agreed to accept the adjudication order passed by the
Official Liquidator dated 6th August 2013 as far as adjudication of claim of
Provident Fund Authorities is concerned for the amount of
Rs.8,34,90,485/- (plus any amount of provident fund, in the event it is
adjudicated for the workers listed at Annexure A-2). The Parties agree that
they will place these consent terms before the Hon'ble High Court in
Company Application No.239 of 2014 filed by the Provident Fund
Authorities challenging the order dated 6 th August 2013 for passing of
appropriate orders in light of these consent terms. The Applicant Bank will
withdraw Company Application No. 382 of 2014, challenging the order
dated 6th August 2013. This is without prejudice to rights and contention of
the Parties in respect of this Application.
c. Parties agree that any claim of the Provident Fund Authority as may be
allowed by the Hon'ble Court, over and above the amount of
Rs.8,34,90,495/-(plus any amount of provident fund, in the event it is
adjudicated for the workers listed at Annexure A-2) as adjudicated by the
Official Liquidator, will have to be paid by the Workers and Applicant Bank
on pari passu basis, as and when such orders are passed, subject to rights of
Parties to challenge the said orders.
d. The Applicant Union and Intervener Union have submitted to the
Applicant Bank that some claims of certain workers have been rejected by
the Official Liquidator and requested that the same be paid as a special case.
The details of the same are annexed in the schedule hereto marked as
ANNEXURE "A-1" and "A-2". The Applicant Bank has accepted the said
request in the interest of the said workers of the Company in Liquidation
and agreed to pay the said amount to the Official Liquidator for distribution
to the said workers. The amount at Annexure "A-1" amounting to
Rs.11,10,000/- to be released alongwith the other claims of the workers and
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the amounts at Annexure "A-2" to be released by the DRT after the
adjudication by the Official Liquidator.
e. Parties agree that total entitlement of Workers of the Company in
Liquidation from the sale proceeds will not exceed the sum of
Rs.64,97,48,686/- (Rupees Sixty Four Crores Ninety Seven Lacs Forty
Eight Thousand Six Hundred Eight Six Only) (which comprises of a sum of
Rs.56,51,48,201/- as adjudicated by the Official Liquidator towards wages
and a sum of Rs.8,34,90,495/- towards the Provident Fund Dues and the
additional sum of Rs.11,10,000/- at Annexure A-1) and the additional sum
as may be adjudicated by the Official Liquidator in respect of workers as
listed at Annexure A-2. The Applicant Union and Intervener Union both
agree that they will not claim any further amount from the sale proceeds
received from sale of assets of Company in Liquidation.
h. In the event any member of either of the Workers Union or any other
worker disputes the present arrangement and takes any stand contrary to
the present arrangement, the Applicant Union and Intervener Union both
take responsibility to resolve the dispute. The Applicant Bank will not liable
to pay any amount over the sum of Rs.64,97,48,686/- and the additional
sum as may be adjudicated by the Official Liquidator in respect of workers
as listed at Annexure A-2 to the workers of the Company in Liquidation and
will also not be liable to pay any amount from its share of sale proceeds."
12. The aforesaid consent terms would indicate that the parties agreed to
accept the adjudication order dated 7 November 2012 and the subsequent adjudication
qua 782 workmen to the extent of Rs.56,51,48,201/-. The parties agreed to accept
adjudication of claim of PF to the tune of Rs.8,34,90,485/- plus any amount of PF in
the event it is adjudicated in respect of the workers enlisted in Annexure A2.
Respondent No.2 bank also agreed to pay the claims which were rejected by the
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Official Liquidator and an additional amount of Rs.11,10,000/- at Annexure A1. The
total entitlement of the workers of the company will not exceed a sum of
Rs.64,97,48,686/-, comprising a sum of Rs.56,51,48,201/- towards wages,
Rs.8,34,90,495/- towards PF dues and additional sum of Rs.11,10,000/-, and the
additional sum as may be adjudicated by the Official Liquidator in respect of workers
enlisted in Annexure A2. The Respondent No.2 bank will not be liable to pay any
amount over the sum of Rs.64,97,48,686 and the additional sum as may be adjudicated
by the Official Liquidator in respect of the workers enlisted in Annexure A2. Nor the
Respondent No.2 will be liable to pay any amount from its sale proceeds.
13. In the light of the aforesaid consent terms, the import of the stipulation
that the shortfall, if any, shall be recovered from the Respondent No.2 Bank in the
order dated 9 February 2016, which was upheld by the Appeal Bench, deserves to be
appreciated. It may be advantageous to immediately notice, at this juncture itself, as
to what the shortfall would mean, as clarified by the Appeal Bench. Paragraph 18 of
the judgment of the Appeal Bench reads as under :
"18. Mr. Gupta's second contention based upon alleged attempt on
the part of the Official Liquidator to misinterpret the impugned order, is
certainly not a ground to interfere with the impugned order. There is no
ambiguity as such in the impugned order. The shortfall referred to in
paragraph 7(d) of the operative portion of the impugned order, quite clearly
refers to the shortfall between net amounts presently available with the
Official Liquidator and the amounts necessary for settlement of the dues of
782+ 29 workmen on the basis of 100% dividend which they are entitled to in
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terms of the consent order. In any case, this position is now clarified.
Therefore, the apprehension now expressed does not survive and in any
case, such apprehension constitutes no good ground to interfere with the
impugned order."
14. In the Affidavit in Reply filed on behalf of the Official Liquidator, the
details of the shortfall is tabulated as under :
"Calculation of the shortfall to be deposited by Kotak Mahindra Bank
Sr. No. Particulars Claims ( in Rs.) Balance ( in Rs.)
1 Claims of 782 workers Rs.56,51,48,201/- For balance 2% dividend
[98% dividend declared and payable to the workers,
paid Rs.55,38,45,237/- ] the amount required to
be paid by the OL is
Rs.1,13,02,964/-
2 Claims of workers in 4th Rs.23,82,239/- Rs.23,82,239/-
Supplementary list of
admitted
Claims (including
adjudication of claims as per
Annexure A-2)
Total Claims at Sr.Nos.1 + 2 = Rs.1,36,85,203/-
(this does not include
the provision for OL
expenses of
Rs.2,00,000/-)
3 Provision for OL expenses Rs.2,00,000
4 Amount currently with the Rs.79,79,000/-
OL in Company Account (see
paragraph 7(c) of order dated
09-02-2016
Shortfall calculation Rs.59,06,203/-
(Sr. Nos.1 + 2 + 3 - 4 = shortfall
15. The alleged liability of the bank to make the aforesaid shortfall is
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required to be appreciated in two parts. First, whether the bank is required to
contribute further amount to make up the shortfall of 2% as regards the claim of 782
workmen. Second, the amount which the bank is called upon to contribute to satisfy
the claims of the workmen adjudicated by the Official Liquidator including the
adjudication of the claims of the workmen enlisted in Annexuure A2. On the second
count, clauses of the consent terms, if read in the correct perspective, provide a
legitimate answer. As noted above, the bank agreed to pay additional sum as may be
adjudicated by the Official Liquidator in respect of the workers enlisted in Annexure
A2.
16. In each of the clauses (b), (c), (d), (e) and (h), the parties provided in
clear and unambiguous terms that the bank would satisfy the claims of the workers
enlisted in Annexure A2 as may be adjudicated by the Official Liquidator. An amount
of Rs.23,83,239/- adjudicated by the Official Liquidator at Sr. No.2 in the table
extracted above, thus, constitutes the sum which the bank had undertaken to pay.
Therefore, I do not find any impediment in directing the bank to deposit the said
amount of Rs.23,83,239/-.
17. The first count of the liability to make a good shortfall of 2%, is also, in a
sense, covered by determination of the issues by the Division Bench, especially
paragraph No.18 extracted above. Even the consent terms crytalize the entitlement of
782 workmen beyond the pale of controversy. Clause (a) makes it abundantly clear
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that the parties agreed to accept adjudication by the Official Liquidator qua 782
workmen aggregating to Rs.56,51,48,201/-. Clauses (e) and (h) reinforce the aforesaid
entitlement of the said 782 workmen. These clauses cumulatively make it beyond the
cavil that apart from the other components, 782 workmen were entitled to receive a
sum of Rs.56,51,48,201/-. What the said 782 workmen have been paid is
Rs.55,38,45,237/-. However, a sum of Rs.1,13,02,964/- is required to achieve 100%
dividend payout.
18. The submission on behalf of the Respondent No.2 bank that the genesis
of the order dated 9 February 2016 passed by this Court and the judgment of the
Appeal Bench in Appeal No.333 of 2018 was the stated shortfall of Rs.50,42,255/-
and, therefore, once the said amount has been deposited by the Respondent No.2, it
cannot be again called upon to make further deposit, appears alluring at the first blush.
However, on a close scrutiny, the submission does not merit acceptance unreservedly.
19. It is imperative to note that there is no qualm over the fact that 782
workmen deserve to be paid the entire amount of Rs.56,51,48,201/-. The controversy
really arises in view of the quantification of the shortfall on the premises that the
amount of Rs.50,42,255/- erroneously paid to the 12 workers was the only cause of the
shortfall. In my view, the said quantification cannot be construed as the sole basis of
the order passed by this Court to recover the shortfall from the Respondent No.2
bank.
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20. This Court was careful to order that what was to be recovered was the
shortfall to pay 100% dividend. The amount was not specifically mentioned. If there
was any doubt as to the liability of the Respondent No.2 Bank, it stood dispelled by the
observations of the Division Bench in paragraph No.18 (extracted above), to the effect
that the shortfall referred to in paragraph No.7(d) quite clearly referred to the shortfall
between the net amount then available with the Official Liquidator and the amount
necessary for the settlement of the dues of 782 workmen on the basis of 100% dividend
which they were entitled to in terms of the consent terms.
21. Again the Division Bench did not quantify the 'shortfall'. It is true that
in clause (h) of the consent terms, the parties agreed that Respondent No.2 will not be
liable to pay any amount over the sum of Rs.64,97,48,686/- and the additional sum as
may be adjudicated by the Official Liquidator in respect of the workmen enlisted in
Annexure A2. However, this Court as well as the Appeal Bench have ascribed reasons
as to why the Respondent No.2 bank should bear the additional burden. It would be
superfluous to either reiterate or supplement those reasons. Suffice to state, in
between the workmen and the bank, the loss, if any, should fall on the bank.
22. It is also true that the shortfall despite deposit of the amount of
Rs.50,42,255/-, in addition to the sum of Rs.64,97,47,686/- brought in by the
Respondent No.2 Bank, arises due to failure on the part of the Official Liquidator to
recover the sum of Rs.50,42,255/- from 12 workmen and the provision for liquidation
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expenses. In terms of the order dated 19 March 2005, disposing of the Company
Applications on the strength of the Consent Terms, the Official Liquidator was to
make appropriate application before the DRT for recovery of a sum of Rs.31,25,474/-
towards the expenses and commission of the Official Liquidator.
23. A submission was sought to be canvassed on behalf of the Respondent
No.2 bank that the workmen must also share the proportionate liquidation expenses. I
am afraid, in the face of the consent terms, wherein the entitlement of the workmen
stood crystalized, it would be open for the Respondent No.2 bank to urge the ground
of apportionment of liquidation expenses, at this stage. In any event, the liquidation
expenses can only be recovered from the proceeds of the sale of the assets of the
company in liquidation. It is one thing to urge that the Official Liquidator has been
remiss in effecting the recovery of the liquidation expenses and another to contend
that the workmen also must bear the proportionate liquidation expenses. Equally, the
Official Liquidator is enjoined to take steps in right earnest to recover a sum of
Rs.50,42,225/- paid to the 12 workers, erroneously. However, as indicated in the
order dated 9 February 2016 and the Judgment of the Appeal Court in Appeal No.333
of 2018, payment to the workmen cannot be deferred till the recovery of the said
amount.
24. For the foregoing reasons, I am persuaded to hold that the Respondent
No.2 bank is required to deposit a sum of Rs.57,06,203/- for distribution of 100%
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dividend by the Official Liquidator. In the event the Official Liquidator recovers any
amount towards the liquidation expenses and the sum of Rs.50,42,255/- or any part
thereof from the 12 workmen, the amount so recovered shall be paid to the
Respondent No.2 bank.
25. Hence, the following order :
ORDER
(i) The Interim Application stands partly allowed.
(ii) The Respondent No.2 shall deposit a sum of Rs.57,06,203/- with
the Official Liquidator within a period of four weeks from today.
(iii) Upon deposit of the said amount, the Official Liquidator shall
disburse dividend so as to make dividend distribution 100% in a rupee to 782 workmen
and also distribute dividend to the workmen enlisted in Annexure A2.
(v) The Official Liquidator shall also take expeditious steps to recover
liquidation expenses by filing an application before the Debt Recovery Tribunal and
the sum of Rs.50,42,255/- from the 12 workmen.
(vi) In the event, any amount is recovered by the Official Liquidator
towards the liquidation expenses and from the 12 workmen, the same shall be paid
over to the Respondent No.2 Bank within a period of four weeks from the said
recovery.
(vii) The Application is also made absolute in terms of prayer clauses
SSP 19/20
ial 22041 of 2022.doc
(c) and (d) of the Interim Application.
(viii) The Official Liquidator shall furnish to the Applicant and the
Respondent No.4 Union copies of admission of proof of claims of the workmen whose
dues stand transferred to the Respondent No.3 - Registrar of Companies, within a
period of four weeks from today.
(ix) In the event, any workmen or legal representative/s, as the case
may be, move the Respondent No.3 for withdrawal of the dues, the same shall be
processed expeditiously.
(x) No order as to costs.
(xi) The Interim Application stands disposed.
( N.J.JAMADAR, J. )
SSP 20/20
