Central Bank Of India vs Official Liquidator
2014 Latest Caselaw 2036 Del

           THE HIGH COURT OF DELHI AT NEW DELHI
%                                   Judgment delivered on: 23.04.2014
+        CO. A(SB) 5/2014
CENTRAL BANK OF INDIA                                       ..... Appellant
                           versus

OFFICIAL LIQUIDATOR                                         ..... Respondent
Advocates who appeared in this case:
For the Appellant    : Mr Jaswinder Singh.
For the Respondent   : Mr Mayank Goel for Official Liquidator.
CORAM:-
HON'BLE MR JUSTICE VIBHU BAKHRU
                                JUDGMENT

VIBHU BAKHRU, J (ORAL)

1. The appellant has filed the present appeal impugning the order dated 26.11.2013 passed by the Official Liquidator whereby the Official Liquidator has admitted the debt of `12,55,69,834/- as being secured by a second charge over the immovable assets of the company. The appellant is aggrieved that the Official Liquidator has not admitted the debt of `104 lakhs, owed on account of funded interest, as a secured debt.

2. The Official Liquidator had, by its letter dated 18.03.2013, admitted the claim of the appellant for a sum of `13,75,69,834/- (`1,20,00,000 as Secured debt and `12,55,69,834/- as Unsecured debt). The appellant was aggrieved by the said decision and had filed an appeal (Co.A(SB) No.18/2013) before this court contending that the appellant was also a secured creditor in respect of the amount of `12,55,69,384/-. By an order dated 10.04.2013, this court set aside the decision of the Official Liquidator

and remanded the matter with a direction to pass a reasoned order.

3. Thereafter, the Official Liquidator has passed the impugned order whereby the Official Liquidator has also admitted the debt of `12,55,69,834/- as being secured by a second charge over the immovable assets of the company. The appellant is now aggrieved by the impugned order as the Official Liquidator has not admitted the debt of `104 lakhs, owed on account of funded interest, as a secured debt.

4. The limited issue that arises in the present appeal is whether the funded interest loan of `104 lakhs ought to have been considered by the Official Liquidator while accepting the claim of the appellant.

5. The learned counsel for the appellant states that there is no dispute that funded interest loan for a sum of `104 lakhs was a secured debt of the respondent company and thus ought to have been accepted by the Official Liquidator, as such.

6. The learned counsel appearing for the Official Liquidator states that funds available with the Official Liquidator are insufficient to meet the principal amount due to the secured creditors. Thus, in order to facilitate an expeditious adjudication and disbursement of the claims, all secured creditors had unanimously agreed that their claims be adjudicated on the basis of the principal outstanding. This implied that the secured creditors had agreed that the funds available with the Official Liquidator be apportioned in the ratio of the principal amount payable to the secured creditors. He submits that other secured creditors also had outstanding claim for unpaid interest, however, the same was not considered in order to determine the ratio in which the available funds were to be disbursed.

7. The learned counsel for the Official Liquidator has also drawn the attention of this Court to an extract of the minutes of a meeting containing a noting dated 14.01.2013. A typed copy of the same is annexed with the reply. The said minutes indicate that the representative of the appellant bank had on 14.01.2013 had accepted the above principle and had confirmed the principal amount which was outstanding and due to the appellant bank. The said minutes record: "As claim of all secured creditors have been adjudicated on the basis of principle outstanding, the same criteria have been adopted for the purposes of adjudicating the claim of Central Bank".

8. The representative of the appellant (Mr. Pradeep Malik) thereafter confirmed the amount of principal outstanding and it was recorded that, "Mr. Pradeep Malik has confirmed that no other principle outstanding is there as on the date of provisional winding up."

9. I have heard the learned counsel for the parties.

10. The amounts available with the company have to be disbursed among the secured creditors on the basis of the amounts outstanding and payable by the company in liquidation to the secured creditors. In this case, while it may be correct that the sum of `104 lakhs ought to have been considered as debt outstanding towards the appellant bank, it cannot be ignored that in addition to the amount admitted as payable to other secured creditors, the other secured creditors would also be entitled to claim interest up to the date of winding up of the company. The Official Liquidator, in order to simplify the process, adopted the criteria of only taking into account the principal amount payable to all secured creditors as on the date

of appointment of a Provisional Liquidator in order to determine the ratio in which the available funds could be disbursed. This method was adopted, apparently, for the reason that the funds available with the Official Liquidator were less than the principal amount payable to the secured creditors. The representative of the Central Bank had agreed with this methodology and confirmed the amount of principal outstanding. The appellant now submits that the claim of the appellant should also be accepted to include the amount of interest funded by the bank. This contention cannot be accepted. In the event any interest is accepted as payable to the appellant bank it would also be necessary to consider the interest payable by the company to other secured creditors in order to arrive at the ratio in which the disbursement ought to be made. The other secured creditors have accepted and acted on the basis of the unanimous decision that only the principal amount would be considered by the Official Liquidator and the appellant is now estopped from challenging the same. In view of the fact that the representative of the appellant bank had agreed with the criteria adopted by the Official Liquidator, I find no reason to entertain the present appeal. The Official Liquidator exercises quasi judicial functions and the appellant cannot be permitted to resile from the concessions made before the Official Liquidator in discharge of his functions.

11. The present appeal is accordingly dismissed.

VIBHU BAKHRU, J APRIL 23, 2014 pkv