Elephanta Oil & Vanaspati ... vs --
2011 Latest Caselaw 604 Del

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*       IN THE HIGH COURT OF DELHI AT NEW DELHI

+       CO.PET. 115/1991

IN THE MATTER OF
ELEPHANTA OIL & VANASPATI
INDUSTRIES LTD.       ..... Petitioner
        Through       Mr. G.L. Rawal, Senior Advocate with
                      Mr. Praveen Kapur, Advocate for Ex-
                      director.
                      Mr. D.K. Agarwal, Senior Advocate
                      with Mr. Shanto Mukerjee, Advocate
                      for Workmen.
                      Mr. Pallav Saxena, Advocate for
                      Punjab and Sind Bank.
                      Ms. Purnima Sethi, Advocate for
                      Official Liquidator.
                      Mr. Ajeet Kumar, Advocate for
                      respondents-Mr. Munni Lal and
                      Mr. Satya Pal.
                      Mr. Mukesh Anand with Mr. R.C.S.
                      Bhadoria, Advocates for Central Excise
                      and Customs Act.

%                                           Date of Decision: 2nd February, 2011


CORAM:
HON'BLE MR. JUSTICE MANMOHAN

1. Whether the Reporters of local papers may be allowed to see the judgment? Yes.
2. To be referred to the Reporter or not?                                     Yes.
3. Whether the judgment should be reported in the Digest?                     Yes.


                                  JUDGMENT

MANMOHAN, J : (Oral)

CO. APPL. 755/2008

1. The present application has been filed by the Punjab and Sind

Bank, secured creditor of the company in liquidation for recall of the

order dated 27th May, 2008 and for restoration of the order dated 13 th

March, 2008.

2. It is pertinent to mention that by the order dated 13 th March,

2008, this Court had issued a sale proclamation for Ghaziabad property

of respondent company in liquidation as well as for plant and

machinery installed in the said premises. The sale was to be conducted

on 29th May, 2008.

3. However, before the sale could be conducted, two applications

being Company Applications No.562-563/2008 were filed by Mr.

Vinod Kumar Jain, ex-director of the company in liquidation. After

hearing the learned counsel for applicant as well as learned counsel for

Official Liquidator, this Court recalled the sale proclamation upon

certain conditions. The order dated 27th May, 2008 is reproduced

hereineblow:-

"I have heard learned counsel for the applicant/ex- management and Mr. Luthra on behalf of the O.L. It is submitted by learned counsel for the applicant that the order dated 13.3.2008 had been passed in chambers without notice or information to the ex management. By that order sale proclamation had been issued for 29.5.2008. The applicant came to know of the same upon noticing the proclamation as published in the newspapers. Mr. Rawal, learned senior counsel argues that till date the liability of the company qua the secured creditors is not ascertained, inasmuch as, the proceedings filed by Punjab and Sind Bank before the DRT are still pending. There is no ascertained debt of the said bank. So far as the claim of the workmen is concerned, it is the case of the ex management that a memorandum of settlement has already been arrived at with them. Mr. Rawal further submits that the property proposed to be auctioned is extremely valuable and there will be no necessity of selling the said valuable assets of the company to meet the eventual liability that the company may have to be discharged. He further submits that the Court has already directed sale of steel drums of the company and they are likely to fetch substantial amount, since prices of stainless steel have gone up in the market substantially.

Last but not the least, Mr. Rawal submits that the applicant is not only willing to meet whatever expenses the office of the official liquidator and/or the secured creditors have incurred on account of publication etc. of the sale proclamation/advertisements by the official liquidator/ secured creditors in its entirety, they are also willing to deposit, with the official liquidator, amounts as may be directed by this Court to show the bona fide and seriousness of the ex management to meet its liability, if any, and to revive the company.

Considering the aforesaid submissions and subject to the condition that the applicant makes an on account deposit by 11 a.m. on 29.5.2008 with the official liquidator vide a pay order of Rs.2 lakhs, drawn in favour of Official Liquidator towards the expenses incurred in the publication of the sale proclamation, and further deposits an amount of Rs.1.5 crores within two months with the O.L., the order dated 13.3.2008, issuance of sale proclamation is recalled.

Applications stand disposed of."

(emphasis supplied)

4. After the said order was passed, Mr. Vinod Kumar Jain deposited

only a sum of Rs. 25 lakhs and subsequently, prayed for some more

time to deposit the remaining amount.

5. On 16th October, 2008, this Court gave further time till 5 th

December, 2008 to deposit Rs. 75 lakhs and, thereafter till 15th

February, 2009 to deposit remaining amount of Rs. 50 lakhs.

6. On 17th December, 2008, Mr. Vinod Kumar Jain filed an

application being Company Application No. 1462/2008 for being

relieved from depositing the money in terms of the initial order dated

27th May, 2008. By the same application, Mr. Jain also asked for

refund of the amount of Rs. 25 lakhs along with interest.

7. Upon a reading of the order dated 27th May, 2008 (supra), I am of

the considered opinion that the sale proclamation was recalled on the

false and misleading statement of Mr. Vinod Kumar Jain that there was

no ascertained claim leave alone debt of the Punjab and Sind Bank.

8. Further, the order was recalled subject to Mr. Vinod Kumar Jain

depositing not only Rs. 2 lakhs towards expenses incurred in

publication but also depositing an amount of Rs. 1.5 crores within two

months. Admittedly, since the deposit of Rs. 1.5 crores has not been

made within the stipulated time and as Mr. Vinod Kumar Jain has

already filed an application that he is unable to deposit the said amount,

I am of the considered opinion that the order dated 27 th May, 2008

needs to be recalled forthwith. Accordingly, it is so ordered.

9. Mr. Pallav Saxena, learned counsel for Punjab and Sind Bank

states that though the Bank is outside the process of winding up yet the

Bank is willing to render all co-operation for sale of Ghaziabad

property as well as fixed assets of the company in liquidation.

10. Consequently, with the consent of the Official Liquidator,

M/s. ITCOT Consultancy and Services Ltd. is appointed as Valuer for

properties bearing No.A1, A3 & A3/1, Industrial Area, Meerut Road,

Ghaziabad, U.P. as well as plant and machinery installed in the said

premises. The Official Liquidator is directed to prepare a sale

proclamation in consultation with the officials of Punjab and Sind

Bank. The said sales proclamation would also be displayed on the

official website of the Official Liquidator. The sale proclamation is

directed to be issued for 28th April, 2011. The sale proclamation shall

be published 30 days before the said date.

11. Accordingly, the present application stands disposed of.

CO. APPL. 1112/2008

12. The present application has been filed by the Punjab and Sind

Bank seeking suo moto initiation of contempt proceedings against Mr.

Vinod Kumar Jain, ex-director of company in liquidation.

13. Mr. Pallav Saxena, learned counsel for Punjab and Sind Bank has

pointed out that in Co. Appl. 562/2008, it has been averred by Mr. Jain

that no ascertained amount is claimed much less any ascertained

amount is due or payable to Punjab and Sind Bank. The relevant

averments in Company Application No.562/2008 are reproduced

hereinbelow:-

"5. It is not out of place to mention that till today there is no ascertained claim, though no doubt, Punjab & Sind Bank claims to be secured creditor and have filed application before the Ld. DRT and same is being contested............

6. Applicant respectfully submits and say that no ascertained amount is there much less payable...........

10. It is evident that there is no ascertained amount......"

(emphasis supplied)

14. Mr. Pallav Saxena, learned counsel for Punjab and Sind Bank has

drawn my attention to the annual returns, additional objections filed

before this Court as well as averments made in the writ petition filed by

company against an order passed by AAIFR wherein it has been

admitted by Mr. Vinod Kumar Jain that suit amount of Rs. 12.86 crores

was due and payable by company to Punjab and Sind Bank.

15. On the other hand, Mr. G.L. Rawal, learned senior counsel for

Mr. Vinod Kumar Jain has contended that the Punjab and Sind Bank

has filed recovery proceedings before Debt Recovery Tribunal and the

same are still pending. He states that in Co. Appl. 562/2008, Mr. Vinod

Kumar Jain has advisedly and correctly used the expression that no

ascertained amount was claimed or due and payable to the Punjab and

Sind Bank as no decree has been passed till date.

16. However, I am not impressed by the argument advanced by Mr.

Rawal as I am of the prima facie view that Mr. Vinod Kumar Jain has

deliberately made false and misleading averments in paragraphs 5, 6

and 10 of Company Application No.562/2008 which have been

reproduced hereinabove. In fact, from the said averments as well as

from the submissions recorded by this Court on 27 th May, 2008, an

impression was conveyed to this Court that neither any ascertained

claim leave alone any determined amount is due or payable by the

respondent company to Punjab and Sind Bank.

17. I am of the prima facie opinion that Mr. Vinod Kumar Jain by

making false, misleading and mischievous statements and submissions

before this Court has interfered with and/or attempted to interfere with

the administration of justice and has also prejudiced the due course of

judicial proceedings.

18. The falsity of the averments and submissions that neither any

ascertained amount had been claimed nor any ascertained amount was

due or payable by respondent to Punjab and Sind Bank would be

apparent from the following facts:-

A) The annual returns of the respondent company in liquidation

pertaining to Financial Years 1998-99, 2000-01, 2001-02, 2002-03 and

2003-04 admit the claims of Punjab and Sind Bank :-

       i)      Financial Year 1998-1999:-

               UNSECURED LOANS                  As at         As at
                                                31.03.1999    31.03.1998
                                                (Rs.)         (Rs.)
                Punjab & Sind Bank, New Delhi
                  ABLC Account                 7,99,98,398    7,99,98,398
                  Cash Credit Account          4,50,76,141    4,50,76,141
                  Sundry Loan Account          1,07,39,582    1,07,39,582



       ii)     Financial Year 2000-2001:-

                UNSECURED LOANS                 As at         As at
                                                31.03.2001    31.03.2000
                                                (Rs.)         (Rs.)
                 Punjab & Sind Bank, New Delhi
                   ABLC Account                 7,99,98,398   7,99,98,398
                   Cash Credit Account          4,50,76,141   4,50,76,141
                   Sundry Loan Account          1,07,39,582   1,07,39,582



       iii)    Financial Year 2001-2002:-

                UNSECURED LOANS                 As at         As at
                                                31.03.2002    31.03.2001
                                                (Rs.)         (Rs.)
                 Punjab & Sind Bank, New Delhi
                   ABLC Account                 7,99,98,398   7,99,98,398
                   Cash Credit Account          4,50,76,141   4,50,76,141
                   Sundry Loan Account          1,07,39,582   1,07,39,582


       iv)     Financial Year 2002-2003:-

                UNSECURED LOANS                 As at         As at
                                                31.03.2003    31.03.2002
                                                (Rs.)         (Rs.)
                 Punjab & Sind Bank, New Delhi
                   ABLC Account                 7,99,98,398   7,99,98,398
                   Cash Credit Account          4,50,76,141   4,50,76,141
                   Sundry Loan Account          1,07,39,582   1,07,39,582





        v)      Financial Year 2003-2004:-

                UNSECURED LOANS                   As at         As at
                                                  31.03.2004    31.03.2003
                                                  (Rs.)         (Rs.)
                 Punjab & Sind Bank, New Delhi
                   ABLC Account                 7,99,98,398     7,99,98,398
                   Cash Credit Account          4,50,76,141     4,50,76,141
                   Sundry Loan Account          1,07,39,582     1,07,39,582



B)     In Writ Petition (Civil) 2974/1996 while assailing the order dated

19th April, 1996 passed by the AAIFR, Mr. Vinod Kumar Jain again

admitted indebtness of respondent company towards the Bank to the

extent of Rs. 12.68 crores. The relevant portion of the said writ petition

is reproduced hereinbelow:-

"8. It is submitted that the Punjab and Sind Bank has filed suits in Delhi High Court against the company for Rs. 12.68 crores in the year 1986.

xxxx xxxx xxxx xxxx

11. That in these circumstances, when the petitioner company, its shareholders, State of U.P., New Bank of India & other creditors were ready and willing to put the Industrial Unit into production merely on the rigid attitude by the Punjab & Sind Bank and that too when the petitioner company was ready and willing to pay the suit amount, the order passed by AAIFR and BIFR are contrary to the essence and spirit of the aim and object which have been sought to be achieved enacting Sick Industrial Act, 1985.

(emphasis supplied)

C) Mr. Vinod Kumar Jain admitted indebtness of company in

liquidation towards Punjab and Sind Bank for the suit amount of Rs.

12.68 crores in para 7 of the additional objections dated 17 th January,

2010 filed in the present Company Petition No. 115/1991. The said

paragraph 7 is reproduced hereinbelow:-

"7. In 1991 liability of the company towards the PSB was Rs. 262 lacs and in 1986 the liability of PSB alone was Rs.

12.68 crores and for which suit was filed by PSB (including interest thereon)."

(emphasis supplied)

D) In the settlement proposal dated 11th October, 2000 submitted by

Mr. Vinod Kumar Jain, a similar admission was made. The relevant

portion of said proposal is reproduced hereinbelow:-

"17. After the hearing dated 17.7.89 before the BIFR, the Management of the company started negotiation with the Senior Officer of the bank and thereafter the negotiation was finalised on 27.9.89 and on the request of the bank the company had given a letter addressed to the Branch Manager of PSB which contained details of the undertaking reached with the bank. In the said understanding the amount of liability was determined Rs. 12.89 crores, as the bank was adamant for an amount not less than the suit amount and in order to arrive at the said figure the cut off date was taken 1984 and the dues in 1984 were Rs. 6.84 crores though the cut off date should have been taken of 1981 (when the company started making loss) and the dues be taken at Rs. 262 lacs."

(emphasis supplied)

19. From the aforesaid facts, it is prima facie apparent that not only

false, misleading and mischievous averments were made in Company

Application No. 562/2008 but similar submissions were also made

before this Court on 27th May, 2008 which ultimately resulted in recall

of order dated 13th March, 2008.

20. It is pertinent to mention that in Chandra Shashi Vs. Anil

Kumar Verma, (1995) 1 SCC 421 the respondent produced a false and

fabricated certificate to defeat the claim of the petitioner for transfer of

a case. This action was found to be an act amounting to interference

with the administration of justice. The Apex Court has held as under:-

"The stream of administration of justice has to remain unpolluted so that purity of court's atmosphere may give vitality to all the organs of the State. Polluters of judicial firmament are, therefore, required to be well taken care of to maintain the sublimity of court's environment; so also to enable it to administer justice fairly and to the satisfaction of all concerned.

2. Anyone who takes recourse to fraud, deflects the course of judicial proceedings; or if anything is done with oblique motive, the same interferes with the administration of justice. Such persons are required to be properly dealt with, not only to punish them for the wrong done, but also to deter others from indulging in similar acts which shake the faith of people in the system of administration of justice."

(emphasis supplied)

21. In Dhananjay Sharma Vs. State of Haryana & Ors., (1995) 3

SCC 757 the Apex Court has observed as under :-

"38............Thus, any conduct which has the tendency to interfere with the administration of justice or the due course of judicial proceedings amounts to the commission of criminal contempt. The swearing of false affidavits in judicial proceedings not only has the tendency of causing obstruction in the due course of judicial proceedings but has also the tendency to impede, obstruct and interfere with the administration of justice. The filing of false affidavits in judicial proceedings in any court of law exposes the intention of the concerned party in perverting the course of justice. The due process of law cannot be permitted to be slighted nor the majesty of law be made a mockery by such acts or conduct on the part of the parties to the litigation or even while appearing as witnesses. Anyone who makes an attempt to impede or undermine or obstruct the free flow of the unsoiled stream of justice by resorting to the filing of false evidence, commits criminal contempt of the court and renders himself liable to be dealt with in accordance with the Act. Filing of false affidavits or making false statement on oath in Courts aims at striking a blow at the Rule of Law and no court can ignore such conduct which has the tendency to shake public confidence in the judicial institutions because the very structure of an ordered life is put at stake. It would be a great public disaster if the fountain of justice is allowed to be poisoned by anyone resorting to filing of false affidavits or giving of false statements and fabricating false evidence in a court of law. The stream of justice has to be kept clear and pure and anyone soiling its purity must be dealt with sternly so that the message perculates loud and clear that no one can

be permitted to undermine the dignity of the court and interfere with the due course of judicial proceedings or the administration of justice......"

(emphasis supplied)

22. In Murray & Co. Vs. Ashok Kumar Newatia & Anr., (2000) 2

SCC 367 the Apex Court has observed as under :-

"24.........The learned Advocate appearing for the respondent made a frantic bid to contend that the statement has been made without releasing the purport of the same. We are, however, not impressed with the submission and thus unable to record our concurrence therewith. It is not a mere denial of fact but a positive assertion and as such made with definite intent to pass off a falsity and if possible to gain advantage. This practice of having a false statement incorporated in an affidavit filed before a Court should always be deprecated and we do hereby record the same. The fact that the deponent has in fact affirmed a false affidavit before this Court is rather serious in nature and thereby rendered himself guilty of contempt of this Court as noticed hereinbefore. This Court in our view, would be failing in its duties, if the matter in question is not dealt with in a manner proper and effective for maintenance of majesty of Courts as otherwise the Law Courts would lose its efficacy to the litigant public........."

(emphasis supplied)

23. Consequently, I am of the prima facie opinion that Mr. Vinod

Kumar Jain by filing application being Co. Appl. 562/2008 interfered

with and/or attempted to interfere with the administration of justice as

well as prejudiced the due course of judicial proceeding in the present

case. By his conduct, Mr. Vinod Kumar Jain has also scandalized

and/or attempted to scandalize as well as lower the reputation of this

Court.

24. Accordingly, I suo moto issue criminal contempt notice to

Mr. Vinod Kumar Jain under the Contempt of Courts Act, 1971.

Registry is directed to open a separate file.

25. Mr. Praveen Kumar, learned counsel accepts notice on behalf of

Mr. Vinod Kumar Jain. He prays for and is granted eight weeks' time

to file a reply affidavit.

26. Since the contempt proceedings have been initiated consequent to

the facts brought on record by the Punjab and Sind Bank, the said Bank

is granted liberty to file a rejoinder-affidavit, if any, before the next date

of hearing.

27. A copy of Company Application No. 562/2008 as well as a copy

of the present application along with all annexures shall be placed in the

new file.

28. Registry is directed to list the matter before appropriate Bench

according to the roster on 23rd August, 2011.

29. With the aforesaid observations, the present application stands

disposed of.

CO. APPL. 1462/2008

30. The present application has been filed with the following prayer:-

"a) for the detailed reasons, as above said, applicant be relieved from deposit of money in terms of initial order dated 27th May, 2008 and time was extended from time to time.

b) This Hon'ble Court be pleased to direct for refund of the amount of Rs. 25 lacs with interest thereupon as the same was directed to be deposited in FDR.

c) pass any other/appropriate orders as this Hon'ble Court may deem fit and proper be pleased."

Since the sale proclamation was recalled at the instance of the

applicant and as the applicant has not complied with the said order

inasmuch as he has failed to deposit Rs. 1.5 crores, I am of the opinion

that the applicant has to bear not only the costs which were incurred for

the initial sale proclamation but also for the expenses like security

charges that have been incurred during the interregnum as well as the

costs for the fresh sale proclamation that is to be issued.

31. Though, in Company Application No. 755/2008 filed by the

Punjab and Sind Bank, it has been stated that said Bank has incurred

costs of Rs. 14,67,564/- towards initial sale proclamation as well as

towards valuation and security charges, I am of the view that the

Official Liquidator should certify as to how much expenses have been

incurred by the Punjab and Sind Bank and Official Liquidator for initial

and subsequent sale proclamations as well as valuation reports. The

Official Liquidator should also certify the security expenses that have

been incurred after 27th May, 2008 till the date of disposal of the

present application. For this purpose, the Official Liquidator is directed

to give a hearing to the officials of Punjab and Sind Bank and certify

the said expenses.

32. Consequently, at this stage, it is not possible to allow the present

prayer. Accordingly, the present application is dismissed with liberty to

the applicant to file a fresh application seeking refund, if any, after the

expenses have been verified and certified by the Official Liquidator.

CO. APPL. 1175/2008

33. Mr. D.K. Agarwal, learned senior counsel for applicant states

that the present application has become infructuous.

34. Accordingly, the application is dismissed as having become

infructuous.

CO. PET. 115/1991

35. Let a fresh status report be filed by the Official Liquidator before

the next date of hearing.

List on 23rd August, 2011.

MANMOHAN,J FEBRUARY 02, 2011 rn