Delhi High Court
Jhalani Tools (India) Ltd. vs Tata Iron & Steel Company Ltd. & ... on 21 August, 2012
Author: Rajiv Sahai Endlaw
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 21st August, 2012
+ Company Appeal No.39/2011
% JHALANI TOOLS (INDIA) LTD. ....Appellant
Through: Mr. Dhruv Mehta, Sr. Adv. with Mr.
Aman Vachher, Mr. Ashutosh Dubey,
Mr. Sameer Abhyankar, Mr. Love K.
Sharma & Ms. Vriti Anand, Advs.
Versus
TATA IRON & STEEL COMPANY
LTD. & ORS. ..... Respondents
Through: Mr. Rajiv Bahl, Adv. for Official
Liquidator.
Mr. R.C. Chawla, Adv. for RPFC.
Mr. Jos Chiramel & Ms.
Abhinandanna Kain, Advs. for R-
3,4,6&8.
Mr. Sangram Patnaik & Mr Umesh
Yadav, Advs. for IDBI.
Mr. Anil Nauriya, Adv. for R-15.
Ms. Priyadarshini Verma, Adv. for
IFCI.
AND
+ Company Appeal No.40/2011
% JHALANI TOOLS (INDIA) LTD. ....Appellant
Through: Mr. Dhruv Mehta, Sr. Adv. with Mr.
Aman Vachher, Mr. Ashutosh Dubey,
Mr. Sameer Abhyankar, Mr. Love K.
Sharma & Ms. Vriti Anand, Advs.
Versus
Co.App.Nos.39,40&68/2011 & Co.App.No.73/2012 Page 1 of 7
TATA IRON & STEEL COMPANY
LTD. & ORS. ..... Respondents
Through: Mr. Rajiv Bahl, Adv. for Official
Liquidator.
Mr. R.C. Chawla, Adv. for RPFC.
Mr. Jos Chiramel & Ms.
Abhinandanna Kain, Advs. for R-
3,4,6&8.
Mr. Sangram Patnaik & Mr Umesh
Yadav, Advs. for IDBI.
Mr. Anil Nauriya, Adv. for R-15.
Ms. Priyadarshini Verma, Adv. for
IFCI.
AND
+ Company Appeal No.68/2011
% JHALANI TOOLS (INDIA) LTD. ....Appellant
Through: Mr. Dhruv Mehta, Sr. Adv. with Mr.
Aman Vachher, Mr. Ashutosh Dubey,
Mr. Sameer Abhyankar, Mr. Love K.
Sharma & Ms. Vriti Anand, Advs.
Versus
TATA IRON & STEEL COMPANY
LTD. & ORS. ..... Respondents
Through: Mr. Rajiv Bahl, Adv. for Official
Liquidator.
Mr. R.C. Chawla, Adv. for RPFC.
Mr. Sangram Patnaik & Mr Umesh
Yadav, Advs. for IDBI.
Ms. Priyadarshini Verma, Adv. for
IFCI.
AND
Co.App.Nos.39,40&68/2011 & Co.App.No.73/2012 Page 2 of 7
+ Company Appeal No.73/2012
% JHALANI TOOLS (INDIA) LTD. ....Appellant
Through: Mr. Dhruv Mehta, Sr. Adv. with Mr.
Aman Vachher, Mr. Ashutosh Dubey,
Mr. Sameer Abhyankar, Mr. Love K.
Sharma & Ms. Vriti Anand, Advs.
Versus
TATA IRON & STEEL COMPANY
LTD. & ORS. ..... Respondents
Through: Mr. Rajiv Bahl, Adv. for Official
Liquidator.
CORAM :-
HON'BLE THE ACTING CHIEF JUSTICE
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW
RAJIV SAHAI ENDLAW, J.
1. Company Appeal No.39/2011 has been preferred impugning the order
dated 24.05.2011 of the learned Company Judge holding the revival and
rehabilitation scheme filed by the Ex-Management of Jhalani Tools (India)
Ltd., in Liquidation to be untenable and unworkable and accordingly
dismissing the Company Application No.2352/2010 seeking sanction of the
revised scheme of arrangement filed on behalf of the Ex-Management.
Notice of this appeal was issued.
2. Company Appeal No.40/2011 was preferred impugning the order
dated 25.05.2011 of the learned Company Judge directing sale of the only
remaining asset of the Company in Liquidation viz. the Unit at Faridabad.
Notice of the said appeal was also issued and vide interim order dated
20.07.2011, the sale of the Unit of the Company in Liquidation at Faridabad
was stayed.
3. Company Appeal No.68/2011 has been preferred impugning the order
dated 27.09.2011 of the learned Company Judge dismissing the applications
of the Ex-Management of the Company in Liquidation for stay of
prosecution by the Provident Fund Authorities. Notice of this appeal was
also issued and vide interim order dated 14.11.2011, the prosecution
initiated was stayed.
4. Company Appeal No.73/2012 has come up for consideration for the
first time today and impugns the order dated 31.07.2012 of the learned
Company Judge directing distribution of the sale proceeds of the other five
Units of the Company in Liquidation between the Provident Fund
Authorities, workers and the secured creditors.
5. The senior counsel for the appellant i.e. the Ex-Management of the
Company in Liquidation could not controvert, that the fund position of the
Company in Liquidation from the sale proceeds of the five Units as on
18.07.2012 is `71,99,93,780/-; that Justice (Retd.) S.N. Dhingra Committee
appointed by the learned Company Judge to scrutinize the claims of the
workmen has found the said claims at `51,95,03,803/-; that as per the report
of the Official Liquidator, the claims of the seven secured creditors are to
the tune of `93,37,90,231/- and that the Provident Fund Authorities have
raised claims, upto the date of winding up, in the sum of `27,50,38,384/-.
The only argument raised is that an appeal has been preferred against the
Provident Fund assessment and which is still pending consideration.
6. Learned Company Judge has vide order dated 31.07.2012 impugned
in Company Appeal No.73/2012 directed payment of dues of the Provident
Fund and distribution of the balance amount pari passu between the workers
and the secured creditors.
7. The senior counsel for the appellant has argued that the secured
creditors led by Dena Bank had in the year 2006 agreed to settlement of
their dues on payment of `21.38 crores; that though the said monies were
available from the sale proceeds of the five Units of the Company in
Liquidation but could not then be released to the secured creditors owing to
the objections then preferred to the sale and which objections were
ultimately dismissed. He contends that the stand of the Banks that their
settlement offer was valid till June, 2006 only and they are not bound by the
same thereafter is unreasonable. He further, on instructions states that the
Banks are at best entitled to reasonable interest on the settlement offer from
the year 2006 till now.
8. Even though the counsel for the Banks has opposed and contended
that the settlement offer was subject to payment being made by June, 2006
and the Banks are not bound by the same and are now entitled to insist upon
the sale of remaining Faridabad Unit also (which the Ex-Management wants
to retain) but we are of the opinion that the monies realized out of the sale
proceeds of the remaining assets of the Company in Liquidation are not
sufficient to meet the claims of the Provident Fund and workers and the
Banks, even if the Banks are to be held bound by the said settlement offer.
In the said settlement offer, the Banks, besides the sum of `21.38 crores
were also entitled to 42% of the difference between the reserved price of
`43/- crores and the actual price fetched of `59/- crores. This coupled with
interest even at 10% per annum would take the said settlement offer, as of
today to in excess of `30/- crores. As aforesaid, a sum of `27,50,38,384/- is
to be appropriated towards the Provident Fund dues. Admittedly there is no
interim stay in the appeal preferred by the appellant. The balance amount
remaining, is not sufficient to pay the workers as well as the secured
creditors. The senior counsel for appellant has also not been able to
disagree. We have enquired from the senior counsel for the appellant
whether the Ex-Management is willing to infuse any funds from their own
coffers. The answer is in the negative.
9. In the aforesaid state of affairs, we need not to go into the question as
to whether the Banks are bound or not by their settlement offer inasmuch as
the monies realized from the sale, till now of assets of the Company in
Liquidation are not sufficient for the Scheme proposed. We accordingly
dismiss Company Appeal No.39/2011.
10. The senior counsel for the appellant fairly concedes that upon the
dismissal of Company Appeal No.39/2011, the Company Appeals
No.40/2011 and 73/2012 would also have to be dismissed.
12. As far as Company Appeal No.68/2011 is concerned, we are of the
view that since the monies with the Company in Liquidation are sufficient
for meeting the Provident Fund claims, the question of prosecution for non
payment would not arise. The counsel for the RPFC also agrees. With this
observation, Company Appeal No.68/2011 is also disposed of.
No costs.
RAJIV SAHAI ENDLAW, J
ACTING CHIEF JUSTICE
AUGUST 21, 2012
'gsr'
