Mr. R.L. Jain vs Ssl (India) Ltd. (In Liquidation) ...
2004 Latest Caselaw 224 Del

JUDGMENT

Manmohan Sarin, J.

1. Petitioner Mr.R.L.Jain seeks in this writ petition quashing of orders dated 24.8.99, 19.8.98, 16.9.98, 10.11.98, 21.12.98 and 31.10.98 passed by various District Consumer Forums and order dated 13.8.199 passed by the State Commission and order dated 20.2.2001 passed by the National Consumer Dispute Redressal Commission.

2. Petitioner contends that as the company is in liquidation being wound up, he has no role to play in the affairs of the company and is not responsible for obligation and liabilities of the company. It is contended that a Provisional Liquidator has already been appointed. The petitioner had not complied with various orders passed by the District Consumer Forum directing payment and vide order dated 24.8.1999 was given a sentence of imprisonment for non compliance of the decree and judgment passed against the company.

3. Petitioner had appealed to the State Commission urging that pursuant to the winding up order dated 17.7.1998 passed in Company Petition No.303/96 the said order of sentencing of the petitioner deserves to be stayed. The company had also filed appeal before the National Commission offering an upfront payment of Rs.1 lac and Installments of Rs.125 lacs per month thereby acknowledging the liability of the company to pay. The company had also pleaded before the National Commission that it had lot of dues to realize from one M/s Mohan Gold Water.

4. Be that as it may, the National Commission vide its order dated 20.2.2001 vacated the stay granted by it against the judgment of the District Forums.

5. It was in the aforesaid background of facts that the petitioner has filed the above writ petition. Show cause notice was issued by this Court in the writ petition on 26.3.2001 and the orders passed by the State Commission and District Forums were stayed.

6. Mr.Harish Malhotra, has taken me through the orders passed in the writ petition, commencing from 26.3.2001, in particular, the order dated 27.5.2002 and has also given a brief account of the developments that had taken place.

7. Respondents claim that petitioner has been holding out assurances, which the petitioner knew all along were not capable of implementation or coming through. In fact, an order was passed by my learned Predecessor on 27.5.2002, directing sale of property bearing No.40/72, Punjabi Bagh, New Delhi and proceeds thereof being distributed pro-rata amongst the creditors. This was obviously on the representation and the disclosure made by the petitioner. The Court even appointed Receiver for the sale of the said property. It then transpired that the property in question had been mortgaged with UCO Bank. The Bank had already taken out action for its auction. Considerable time was taken by the petitioner thereafter by making the submission that the property had been wrongly taken as mortgaged. Petitioner sought time to approach the Debt Recovery Tribunal to have the position clarified and the property released from encumbrance claiming that it had never been mortgaged to the UCO Bank. This also did not materialize. The net position is that the UCO Bank had carried out the auction but confirmation of sale has been stayed, in the appeal filed by the petitioner before the Debt Recovery Tribunal. There has hardly been any progress in recovery of the alleged dues of the petitioner company.

8. As per the petitioner, the official liquidator has not been active. Petitioner himself had taken liberty from the Court to approach the Company Court. It may also be noticed that the National Commission which had initially granted the stay of the order passed by the State Commission, has since been vacated by the National Commission. In fact, it was this action which led the petitioner to file the present writ petition.

9. Learned counsel for the petitioner, Mr.Dutta has submitted that a provisional liquidator had been appointed prior to passing of the order by the District Forum. In such a case, the District Forum could not have proceeded with the matter and pass an order holding the petitioner liable for the affairs of the company, which was under liquidation.

10. Mr.Dutta further submits that in view of the provisions of Section 446 of the Companies Act, once the official liquidator had been appointed, latter was in charge of the assets of the company and the Consumer Court could not have proceeded with the matter and pass the order, sentencing the petitioner.

11. Mr.Harish Malhotra opposes the submission on the ground that there is no winding up order. It is a winding up petition, which has been heard and provisional official liquidator has been appointed and there is no bar to the continuance of the present proceedings. In fact, he submits that the proceedings under the Consumer Protection Act had been initiated prior to the proceedings for winding up of the company. These are issues, which would be considered at the appropriate stage. However, as far as the question of stay is concerned, I may note the observations of my learned Predecessor made in the order dated 27.5.2002:-

"The Creditors in whose favor the order has

been passed by the District Consumer Redressal Forum are small investors who had deposited their life time savings with the company and they are being deprived of the same by the act of malfeasance and non-feasance by the Directors of the Company. I, therefore, do not see any reason to interfere with the orders of the District Consumer Redressal Forum or of the State or the National Commission."

12. After making the above observations, my learned Predecessor obviously was persuaded to accept the submission with regard to the sale of House No.40/72, Punjabi Bagh, New Delhi, which represented to be a valuable residential property and a large portion of the property was in possession of the petitioner and his wife. The learned Judge, therefore, directed the sale of property bearing No.40/72, Punjabi Bagh, New Delhi and its proceeds being distributed pro-rata amongst the creditors. This property, however, could not be sold, as it was found that it had been mortgaged with the UCO Bank. Petitioner by mis-representation continued to claim that the property had been wrongly included by the UCO Bank and he was approaching the Debt Recovery Tribunal to have the position clarified and this property released, as it was not mortgaged. Application was moved to this effect, which was not accepted. Rather, it has transpired that UCO Bank had already taken steps for auction of the property. In these circumstances, the very basis on which my learned Predecessor, who had earlier noted that there was no reasons to interfere with the orders of the District Consumer Redressal Forum or of the State or the National Commission, was persuaded to grant stay, had dis-appeared. Not only this, I am informed that the petitioner's company, which was claiming dues from M/s Mohan Gold Water, the latter has denied their liability and as such even that avenue does not appear to be open.

13. Mr.Dutta, learned counsel for the petitioner, attempted to urge that as the company has a large number of outstandings to recover, it can do so only if the Official Liquidator proceeds with the matter and directions to this effect have been given by the Company Court. A query was made from the counsel whether the petitioner is willing to contribute his bid to alleviate the sufferings of the creditors? No concrete response has been forthcoming. In this view of the matter, I feel, interest of justice would be served if stay with regard to the sentence, granted on 27.5.2002, is vacated. Ordered accordingly.

14. Liberty granted to the petitioner to move the Court for

variation in the order, in case he comes up with any concrete proposal.

CM stands disposed of.

March 04, 2004

Manmohan Sarin, J.

aka.