Delhi High Court

Dinesh Mittal & Ors vs M/S Triveni Infrastructure ... on 28 November, 2013

Author: R.V. Easwar

$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                     Date of decision: 28th November, 2013

+      CO.PET. No.39/2009 AND CO. APPL. Nos.1500/2013 & 1913-
       1914/2013

       DINESH MITTAL & ORS.                                   ..... Petitioners
                    Through:                 Mr. Sarat Chandra and Mr. Sachin
                                             Chandra, Advs. for petitioner in
                                             CP 333/2010 and creditors in CP
                                             39/2009.
                                             Mr. Amit Gaurav, Adv.
                versus
       M/S TRIVENI INFRASTRUCTURE
       DEVELOPMENT CO. LTD.                        ..... Respondent

Through: Mr. Harish Malhotra, Sr. Adv. with Mr. Sanjay S. Chhabra, Adv. for Ex-Director, Triveni Infrastructure.

Mr. Sachin Chopra and Mr. Manish Jain, Advs. for TFAA.

Land Auctioner Officer, Faridabad, Haryana.

Mr. Rajiv Bakshi, Adv. for applicant (Mr. Sachin Duggal) in CA 2176/2013.

Mr. Jay Savla, Adv. along with Mr. Prabhat K.C. and Mr. Amrita Mishra, Advs. with Mr. M.N. Das, Regional Manager, SICOM Ltd.

Mr. Jitender Gupta, Adv.

Mr. Rakesh Tiku, Sr. Adv. with Mr. Abhinav Bajaj, Adv. for R-2.

Mr. Rajiv Bahl with Mr. Ashish Makhija, Advocates for Official Liquidator.

CORAM:

HON'BLE MR. JUSTICE R.V.EASWAR

R. V. EASWAR, J.: (ORAL)

CO. APPL. No.2176/2013

1. This is an application filed by Mr. Sachin Duggal seeking release

of the original documents annexed with Company Application

No.1331/2013 in Company Petition No.39/2009.

2. Company Application No.1331/2013 was disposed of on

06.08.2013 with liberty to the applicant to file reply and also to apply for

condonation of delay in case there was any delay. Pursuant to this order

the applicant filed CA No. 1590/2013 seeking condonation of delay

which was allowed.

3. All the original documents annexed in Company Application No.

1331/2013 are listed in para-4 of the application. Since that application

was already disposed of by this Court by orders dated 06.08.2013 and

11.09.2013, the original documents are no longer required by this Court.

4. In these circumstances, the original documents are directed to be

returned to Mr. Amit Mittal who is the GPA of the applicant. This may

be done within two weeks from today.

The application stands disposed of.

CO. APPL. No.1500/2013

1. This is an application filed on behalf of the OL. The following

prayers are made: -

"i) Directions may be issued to Land Acquisition Officer, Urban Estate, Faridabad (Haryana) to deposit the entire amount of Compensation determined vide award No.24, 25 & 27 with this Hon'ble Court;

ii) The directions may be issued to the Land Acquisition Officer, Urban Estate, Faridabad (Haryana) to give details of the amount of Compensation payable qua the land owned by Smt. Bati Devi as stated in para 16 herein above;

iii) Pass an order directing the Respondent No.2 legal heir of late Smt. Bati Devi to refund the amount of Rs.1,30,04,125/- received as part consideration or in the alternate deduct the same from the amount payable as per above;

iv) Pass an order permitting the official liquidator to appear before the ADJ Faridabad on behalf of the company and raise objections to those proceedings in terms of section 446(1) of the Companies Act, 1956.

v) Pass an order permitting the OL to make a reference before the LAC for the enhancement U/s 18 of the Compensation payable to the company (In liqn.); and;

vi) Pass such other order/ orders which may be deemed fit and proper."

GENESIS OF THE APPLICATION

2. M/s. Triveni Infrastrucres Development Company Ltd. (hereinafter

referred to as the "Company") is the company under provisional

liquidation in the company petition. By order dated 22.03.2012, the OL

attached to this Court was appointed as the provisional liquidator of the

company. He was, however, directed not to take possession of the assets

of the company until 21.04.2012. Subsequently, a scheme for revival of

the company was filed but it was dismissed by this Court by order dated

17.10.2012 and the provisional liquidator was directed to take possession

of the assets and records of the company. In an application filed by the

provisional liquidator in Company Appeal No.94/2012, a Division Bench

of this Court by order dated 11.07.2013 clarified that the proceedings

before the company court were not stayed and the company court was

entitled to pass appropriate and required orders. It was also clarified by

the Division Bench in the aforesaid order that so far as possession of the

lands and properties of the company is concerned, the same will remain

with the provisional liquidator.

3. In the course of the proceedings before the Division Bench in

Company Appeal No.94/2012, it appears to have been brought to the

notice of the Court on behalf of the ex-management of the company that

some land belonging to the company at Faridabad, Haryana was acquired

by the Government of Haryana in respect of which compensation was yet

to be received by the company. This is noted by the Division Bench in its

order dated 11.02.2013. Pursuant to this disclosure, the provisional

liquidator wrote letters on 14.05.2013 and 24.07.2013 to the Land

Acquisition Officer, Urban Estate, Faridabad, Haryana (hereinafter

referred to as the "LAO") requesting him to furnish the complete details

of the land acquired by him and also requested for payment of the

compensation. It would appear that LAO had filed a certificate to the

effect that an amount of Rs.23,50,46,995/- is lying with him as

compensation for land of the company which was acquired.

4. At this juncture it is relevant to refer to the events leading up to the

acquisition of the land and the issue of the certificate by the LAO. The

company purchased land measuring 7 acres, 1 kanal and 19 marlas

situated in village Bhatola, Tehsil and District Faridabad, Haryana from

one (Late) Smt. Bati Devi under sale deed bearing Vaiska No.1586 dated

27.04.2006 for a total consideration of Rs.6,30,20,625/-. Part

consideration was paid by the company by six different cheques but due

to insufficiency of funds in the account of the company, only two cheques

amounting to Rs.1,30,04,125/- were honoured and the rest of the cheques

for the aggregate amount of Rs.5,00,16,500/- were not honoured. Thus, a

large amount of consideration thus remained unpaid. The sale deed was,

however, registered and the name of the company was also recorded in

the revenue records and the mutation of the land was done in the name of

the company. The legal representatives of Smt. Bati Devi filed a suit for

declaration and cancellation of the sale deed dated 27.04.2006. The sale

deed was cancelled under a compromise and a consent order was passed

in terms of the compromise on 28.05.2008 by the Court of Civil Judge,

Faridabad. Under the compromise, it was agreed that the company will

pay the balance sale consideration in instalments, failing which the sale

deed would be deemed to have been cancelled. The company, however,

could not pay the balance sale consideration. The cancellation of the sale

deed was, however, not got recorded by Smt. Bati Devi in the revenue

records and, therefore, the mutation in the revenue record continued to

remain in the name of the company. These facts have been confirmed by

Shri Dharam Singh the legal heir of Late Smt. Bati Devi and Madhur

Mittal, the ex-director of the company who are personally present in

Court.

5. Vide notification No.LAC(F)-2009NTLA/918 dated 06.02.2009

issued under Section 6 of the Land Acquisition Act, the LAO acquired

the land and passed award Nos.24, 25 and 27 and consequently

apportioned the entire compensation for the land, inclusive of the land

belonging to Late Bati Devi, to the company in provisional liquidation.

The company, however, did not get the compensation amount which is

still lying with the LAO.

6. By letter dated 22.07.2013, Madhur Mittal, the ex-director of the

company informed the OL that the compensation amount payable to the

company has been attached vide order dated 01.03.2011 passed by the

Court of Shri Lokesh Gupta, Judicial Magistrate, First Class in complaint

No.449 filed by Late Smt. Bati Devi against the company. The aforesaid

Court took the view that if the compensation amount reaches the

company, the whole of it might be utilised by the company jeopardising

the interest/ rights of Smt. Bati Devi.

7. On 26.08.2013, the OL filed the present application.

PROCEEDINGS BEFORE THIS COURT ON 26.09.2013 AND 30.10.2013

8. In the course of the hearing of the present application it transpired

that SICOM has also laid a claim to the amount of compensation as a

secured creditor having a charge over a part of the land acquired by the

LAO. Therefore, on 26.09.2013 and 30.10.2013 when this application

was taken up, it was opposed by SICOM. It was pointed out on its behalf

that several orders of attachment have been passed by DRT, Delhi

attaching the compensation and that SICOM being a secured creditor,

Section 29 of the RDDB Act, 1993 was applicable. It was further

submitted on the basis of several judgments of Supreme Court that

SICOM being a secured creditor and having stood outside the liquidation

proceedings, was entitled to enforce its charge over the land and

consequently also get the compensation monies from the LAO in

discharge of the amounts due to it. It was accordingly prayed on behalf

of SICOM that the compensation monies should not be directed to be

given to the applicant (the Official Liquidator), but should be directed to

be paid to SICOM in partial discharge of the monies due to it by the

company. The learned counsel for SICOM handed over to this Court

copies of some of the orders of the Debt Recovery Tribunal, Delhi (DRT)

showing that there was an attachment by the DRT on the amounts lying

with the LAO. The amount of the debt, as certified by the recovery

certificate No.142/2010 of the DRT, due and payable to SICOM by the

company in provisional liquidation is approximately Rs.72,66,00,000/-.

This Court directed the OL to examine this aspect and file a status report.

In compliance with the order passed by this Court on 26.09.2013, the OL

filed status report No.786/2013.

9. Dharam Singh, the legal representative of Late Smt. Bati Devi, in

his reply to the application, stated that the company has undoubtedly

defaulted in paying the balance of the sale consideration, but with a view

to putting a quietus to the disputes pending between the parties, and to

avoid any further delay with consequential loss of interest, he was

agreeable to receive an amount of Rs.5,85,16,500/- in full and final

settlement of the amount due to him from the company. He also

undertook to take all steps for withdrawal/compounding of the pending

complaints, including the complaint under Section 138 of the Negotiable

Instruments Act and FIRs registered against the company and its

management. He also undertook to apply for withdrawal of the

attachment orders. After some arguments, the learned counsel for the

SICOM also put forth certain proposals for the amicable settlement of the

disputes between the parties, having regard to the delay with

consequential loss of interest to all the parties concerned. After hearing

the proposals put forth by the parties, this Court passed on order on

31.10.2013 as follows:

"After some arguments by all the parties concerned, some proposals were made by the parties. They seek time to work out these proposals".

SETTLEMENT BETWEEN SICOM & EX-MANAGEMENT:

10. Pursuant to the above order passed by this Court, a joint meeting of

SICOM and the erstwhile management of the company was convened in

the office of Official Liquidator. SICOM and the ex-management entered

into a term sheet on 21.11.2013 setting out the terms and conditions of

the settlement between the parties. A copy of the term sheet is annexed

to report No. 873/2013 filed by the Official Liquidator. The gist of the

settlement is as under:

"i) SICOM is in-principle agreeable for modification of the Recovery Certificate and has agreed to claim 10% simple interest (S.I.) instead of 19.50% interest as awarded by the Debt Recovery Tribunal vide R.C. No. 142/10 and confirmed by the Hon'ble Division bench of Hon'ble High Court of Delhi vide order dated 15.11.2010 and subsequently also confirmed by the Hon'ble Supreme Court of India vide order dated 04.01.2011.

ii) Thus the outstanding amount payable to SICOM in terms of the proposed settlement [being calculated at 10% simple interest instead of 19.50% interest with quarterly rest as awarded by DRT] will accordingly stand reduced from Rs.72.66 Crores to Rs.37.45 Crores as per the calculation sheet.

iii) SICOM Ltd is agreeable to receive the aforesaid amount of Rs.37.45 Crores in full and final settlement of all their claims from the Company subject to the following:-

a) That the amount of Rs.18.0 Crores be released in favour of SICOM in the following manner and not later than 31st December, 2013;

               [i]   Through LAC                   Rs.17,41,10,000/-
               [ii] Through DD                     Rs. 8,90,000/-
               [iii] Through withdrawal of         Rs. 50,00,000/-
                     amount deposited with DRAT
                     vide DD No. 005447 & 243247
                     both of Rs.25.00 Lacs each.
       b)      Balance amount of Rs.19.45 Crores will be paid to

SICOM by the Company within a period of 15 months i.e. not later than 31st March, 2015 [Rs.6.83 Crores principal amount and Rs.12.62 Crores interest upto 31.03.2015 being calculated at 10% simple interest instead of 19.5% interest with quarterly rest as awarded by DRT] subject to further extension of three months i.e. upto 30.06.2015 for which three month contractual interest i.e. 19.50% DRT] subject to further extension of three months i.e. upto 30.06.2015 for which three month contractual interest i.e. 19.50% rest quarterly on the balance principal amount will be payable as per the calculation sheet.

c) The interest calculation is subject to actual computation and reconciliation".

PROCEEDINGS BEFORE THIS COURT ON 28.11.2013 (REPORT No.873/2013)

11. On this date when the matter was taken up, report No. 873/2013

was filed by the Official Liquidator setting out the settlement entered into

between SICOM and the ex-management and also containing the views

of the Official Liquidator in the matter. In the said report, it was reported

as under:

"7. That in terms of order dated 31.10.2013 and upon receiving of aforesaid Term Sheet, a meeting was held in the office of Official Liquidator on 21.11.2013 wherein the senior officers of SICOM along with its advocate Sh. Jay Savla and Sh. Madhur Mittal, the ex- director of the Company (in provisional liquidation) along with his advocate Sh. Sanjay Chabra were present in the meeting. During the course of meeting both the parties reiterated that they shall abide by the terms and conditions stated in the Term Sheet. Further, it was also decided that the terms of the settlement as per the Term Sheet shall be binding upon the parties upon the approval of this Hon'ble Court. Copy of the minutes dated 21.11.2013 along with documents handed over by the SICOM and Sh. Madhur Mittal during the meeting are enclosed and marked as Annexure-C. Further, such a proposal based on the facts available and copies of documents/calculation sheet furnished by the ex- management will be beneficial for the Company in liquidation subject to approval of the Hon'ble Court.

8. That out of the funds lying with the Land Acquisition

Collector (LAC) on account of Company in liquidation, an amount of Rs.17,41,10,000/- shall be paid to the SICOM (Secured Creditor) and an amount of Rs.5,85,00,000/- shall be paid to the legal heirs of Smt. Bati Devi and the balance shall be paid to the Official Liquidator.

a) Sh. Dharam Singh, legal heir of Smt. Bati Devi shall have no further claim, title, interest or right of any kind what so ever in the land in question.

b) The company in liquidation shall become the exclusive owner of the land.

c) The company in liquidation shall have the exclusive right to the application for enhancement of compensation before the appropriate authority.

d) Sh. Dharam Singh shall have no further claim in the said land in terms of the affidavit filed before the Hon'ble Court.

e) Sh. Dharam Singh shall move appropriate application before the Court of JMIC Faridabad to get the stay vacated for releasing the land compensation amount in favour of the official liquidator which has been attached vide order dated 28.5.2008.

f) SICOM (Secured Creditor) and the ex-management of the Company in liquidation shall execute such documents/forms as may be necessary to implement the terms and conditions stated in Term Sheet".

12. It was accordingly prayed by the Official Liquidator that the report

may be taken on record and appropriate orders may be passed in

Company Application No.1500/2013.

13. On behalf of the erstwhile management, learned senior counsel

submitted that the settlement arrived at between the parties would be

beneficial to the company as also for the creditors and other stakeholders

in as much as the company would be saving about Rs.35 crores by paying

Rs.37.45 crores to SICOM as against the admitted liability of Rs.72.66

crores. He submitted that the amount thus saved by the company would

be available to the other creditors. He pointed out that at present, the

compensation amount of Rs.23 crores and odd was lying with the LAO

without earning any interest which is not conducive to the interests of the

company and the settlement between SICOM and the ex-management, if

given effect to, would ensure that the amount would come into the hands

of the Official Liquidator and will start earning interest which would be

substantial. Learned senior counsel further points out that there is every

possibility of the compensation amount paid @ Rs.42 lakhs per acre

(Approx.) would be enhanced, since similarly situated lands have fetched

much higher compensation and such compensation has already been

ordered. He submitted that if an appropriate application is made by the

O.L., it is certain that the compensation for the lands in question would

also be enhanced on the same basis as the similarly situated lands. He

pointed out that the company itself had purchased a part of the land at

Rs.86 lacs per acre (Approx.) and this itself is sufficient indication of the

likely enhancement which the LAO would order on the application to be

made by the O.L.

14. The learned counsel for the SICOM highlighted the payment of

Rs.18 crores on or before 31.12.2013 in terms of clause 4(a) of the

settlement. Once the payment of Rs.18 crores is made as per the

settlement, SICOM would withdraw all the 18 complaints. The

remaining complaint will be withdrawn when the final payment is made

in terms of the settlement. In terms of clause 8, it is pointed out, that

once the full payment is made as per clause 4 of the settlement, the

recovery certificate will stand satisfied and no further amount would be

payable to SICOM by the company or the ex-management or the

guarantors. The learned counsel also referred to clause 10 in which it was

agreed upon that receipt of the initial amount of Rs.18 crores before

31.12.2013, the insolvency notice issued by SICOM shall be withdrawn.

Under clause11, SICOM will also withdraw, on receipt of Rs.18 crores,

the petition filed against the company in the Punjab and Haryana High

Court. Under clause 17, the SICOM will release the original title deeds

of the land upon receipt of the full amount in terms of the settlement and

will issue "no dues certificate" in favour of the company. The original

title deeds will be deposited with the office of the O.L.

15. The learned senior counsel for Dharam Singh, the representative

and the legal heir of late Smt. Bati Devi, stated that his client has no

objection for the release of the compensation amount to the company in

liquidation or to SICOM subject to the payment of the amount of

Rs.5,85,16,500/- to him out of the compensation amount presently lying

with the LAO.

16. Mr.Rajiv Bahl, leaned counsel for the O.L. drew my attention to

the report No.873/2013 filed by the O.L. as well as the terms of the

settlement reached between the ex-management and SICOM. He

highlighted that not only the liability of the company to SICOM would be

reduced by about Rs.35 crores, which would be available for distribution

to the creditors, workmen etc., but in case the settlement is approved, the

compensation amount would come into the hands of the O.L. and would

start earning interest immediately, augmenting the resources of the

company and thereby bettering the chances of the creditors, workmen etc.

He also emphasises that once the right to apply for enhancement

compensation ennures in the official liquidator and he makes an

application to the LAO to that effect, there are good chances of the

compensation getting enhanced on the basis of the compensation already

ordered by the LAO in respect of similarly situated lands.

17. The LAO who is present today also broadly confirms the

statements of the parties with respect to the enhancement of the

compensation.

DECISION: -

18. I have taken note of the submissions made before me and I have

anxiously considered them in the light of the settlement reached between

SICOM and the ex-management of the company. The interests of the

company in provisional liquidation is the paramount consideration. The

interests of the contributories, creditors and other stake-holders have also

to be taken into consideration in judging the appropriateness of accepting

the settlement. Prima facie, on a fair reading of the terms of the

settlement and after hearing the submissions of the parties, including

those of the learned counsel for the O.L., it seems to me that the

proposals are fair, reasonable and acceptable. SICOM has chosen to

stand outside the liquidation proceedings. It approached the DRT and has

also obtained orders of attachment of Rs.21.2 crores (Approx.). Its total

dues from the company is aobut Rs.72.66 crores; under the terms of

settlement it has agreed to reduce the dues to Rs.37.45 crores. This

represents almost 50% reduction in the liability of the company and

would save approximately Rs.35 crores to the company. The parties are

right in pointing out that the resultant savings would be available for

distribution amongst the other creditors, workmen, contributories etc.

The proposal also has the advantage of the compensation monies being

brought into the coffers of the company in provisional liquidation and

once the amount is received from the LAO, it would start earning

substantial interest. The interest amount would also enhance the

resources of the company. Substantial savings would also result because

of the reduction in the rate of interest agreed upon. SICOM has agreed to

reduce the rate of interest from 19.50% to 10% (simple). Once the LAO

releases the compensation amount of about Rs.23 crores and odd, the

O.L. would be able to pay Rs.18 crores to SICOM on or before

31.12.2013. There are sufficient safeguards in the terms of settlement

protecting the rights of SICOM, which is a secured creditor. SICOM has

also agreed to withdraw all the 18 complaints filed against the company

under Section 138 of the NI Act under clause 7. The insolvency notice

issued by it against the company will also be withdrawn. The petition

filed by SICOM before the Punjab and Haryana High Court will also to

be withdrawn. Moreover, the dispute pending between the company and

the legal heir of Smt. Bati Devi would also come to an end, since the

legal heir would be paid the amount of Rs.5,85,16,500/- in full and final

settlement towards the balance of the sale consideration for the land,

interest etc. The legal heir has also undertaken to simultaneously

withdraw all the pending complaints/litigation, FIRs, Section 138

complaints and attachment orders against the amount lying with the LAO.

19. In view of the above advantages, both monetory and with regard to

the pending litigations/complaints etc., prima facie there appears to be

nothing objectionable to the proposals made by the parties which have

also been examined by the office of the O.L. The arrangement appears to

be in the interest of the company in liquidation. I accordingly, issue the

following directions:-

(a) The LAO, Urban Estate, Faridabad, Haryana, who is present

in Court today is directed to release the amount of compensation

determined under the awards Nos.24, 25 and 27 with regard to the

land owned by the company in provisional liquidation, i.e. Triveni

Infrastructure Development Co. Ltd. The amount of compensation

is directed to be released to the O.L. attached to this Court within

one week from today.

(b) On receipt of the compensation amount by the LAO as per

the above direction, the O.L. shall pay a sum of Rs. 5,85,16,500/-

to Dharam Singh, legal heir of Late Smt. Bati Devi and also pay a

sum of Rs.17,41,10,000/- to SICOM in terms of clause 4 (a) of the

settlement. Both the payments shall be made simultaneously and

within a period of one week after completion of the necessary

formalities by Dharam Singh and SICOM in accordance with the

settlement.

(c) Both Dharam Singh and SICOM shall take all necessary

steps for vacating the attachment orders/injunctions passed in the

proceedings pending between the parties.

(d) The O.L. shall make an application to the LAO for

enhancement of the compensation amount determined under award

Nos.24, 25 & 27. The competent court shall decide the application

for enhancement on merits and in accordance with law as

expeditiously as possible and preferably within three months from

the date of filing. If there is any delay in making the application by

the O.L., the competent court shall sympathetically consider the

application, if any, for condonation of the delay.

(e) SICOM shall take expeditious steps to get the attachments

made by the recovery officer, DRT, Delhi lifted.

(f) CA No.1289/2012 filed by a group of unsecured creditors

before this Court is agreed to be withdrawn, as stated by Mr. Sarat

Chandra, learned counsel for the applicant in the said application as

well as for petitioner in Company Petition No.333/2010. It is

disposed of as withdrawn.