Pacific Convergence Corpn. Ltd. vs Data Access (India) Ltd.
2018 Latest Caselaw 6113 Del

$~CP-17
*    IN THE HIGH COURT OF DELHI AT NEW DELHI
%                                           Date of decision: 08.10.2018
       CO.PET. 292/2004
       PACIFIC CONVERGENCE CORPN. LTD.                   ..... Petitioner
                        Through

                     versus
       DATA ACCESS (INDIA) LTD.                ..... Respondent

                     Through  Mr.Y.P.Narula      Sr.Adv.      with
                              Mr.abhey Narula, Advs. for Canara
                              Bank.

                                      Ms.Haripriya           Padmanabhan,
                                      Mr.Feroz Ali and Mr.Rohan K.
                                      George, Advs. for the applicants.

       CORAM:
       HON'BLE MR. JUSTICE JAYANT NATH

JAYANT NATH, J.(ORAL)

CA No. 31/2014

1. This application was heard in detail on the last date of hearing, namely, on 14.09.2018 when this court had passed the following orders:-

1. This application is filed by Kasturi and Sons Limited seeking modification of the order of this court dated 21.1.2011 to the extent that it concerns the movable and immovable properties of Sporting Passtime India Limited (SPIL). As per the application the company SPIL was originally promoted by the applicant. The applicant acquired a large amount of immovable property of about 435 acres of land for the purpose of setting up a golf course cum beach resort. In 2004 Mr.K.C.Palanisamy approached the applicant for taking over SPIL. An agreement was entered into between Mr.Palanisamy

and the applicant in July 2004. The applicant transferred 90% of the shares of SPIL to Mr.Palanisamy and his group of companies. It is pleaded that however, Mr. K.C.Palaniswamy breached some of the material terms of the agreement and defaulted on obligations to repay the loans incurred by SPIL etc. It is pleaded that pursuant to arbitration proceedings between the applicant and Mr.Palanisamy an award was passed in favour of the applicant whereby the entire shareholding which was transferred to Mr.Palanisamy was directed to be transferred back to the applicant. The Award was upheld by the High Court of Madras and also by the Supreme Court. Subsequent to the Award being upheld the applicant approached the NCLT for rectification of the registers. NCLT accepted the plea of the applicant and the matter went to Supreme Court and the Supreme Court in recent judgment of 24th April 2018 in Cheran Properties Limited vs. Kasturi and Sons Limited, 2018 SCC Online 431 has upheld the order of NCLT. It is pleaded that now the register of SPIL has been rectified.

2. On 18.11.2005 this court noted that a sum of Rs.83.81 crores was due from Data Access America to the respondent company, The said Data Access America had remitted a sum of 17 million USD to the respondent company/Data Access India Ltd. on 19.8.2004 alongwith a swift message. The said payment was on account of the outstanding liability towards services rendered. Case of the applicant is that this amount received from Data Access America was transferred by Mr.Palanisamy to some of the companies he was controlling including SPIL. A sum of Rs.25 crores approximately was transferred by Mr.Palanisamy from the accounts of the respondent company to SPIL. This court accordingly made a direction that all the companies who were beneficiaries of this amount including SPIL would remit back the funds received to the account of the respondent company maintained with ABN Amro Bank and thereafter to Canara Bank who is a creditor of the respondent company. This court also appointed the OL as the Provisional Liquidator to take over possession of the assets and records of the respondent company under liquidation.

3. In view of failure of the companies including SPIL to

comply with the order of this court dated 18.11.2005, on 21.1.2011 directions were passed to attach the bank accounts of the said companies including SPIL. Companies were also restrained from selling, disposing of or creating third party rights in respect of movable and immovable assets.

4. Learned counsel for the applicant has submitted that as far as SPIL is concerned it was the beneficiary of an amount of Rs.25 crores. She relies upon an order of this court dated 17.1.2013 to contend that a sum of Rs.11.60 crores that was lying with SBI Chennai has already been transferred to Canara Bank. In addition a sum of Rs.17,40,29,511 which was pending for refund from the IT department with interest has also been transferred to Canara Bank. Hence, she submits that in view of the fact that the entire benefit that was received by SPIL and which was then under the control of Mr.K.C.Palanisamy has been returned to Canara Bank. She states that the restraint order passed against SPIL on 21.1.2011 may be vacated.

5. Learned senior counsel appearing for the Canara Bank has, however, submitted that in terms of the order of this court dated 18.11.2005 and 21.1.2011 the liability of SPIL is joint and several. He submits that the entire payment of 78.45 crores plus interest would have to be paid by SPIL before any interim orders are vacated. He has also objected to the present application on the ground that the application has been filed by Kasturi and Sons Ltd. and not by SPIL. He has submitted that Kasturi and Sons Limited has no locus standi to move the present application. He further submits that as far as receipt of Rs.17.40 crores plus interest from IT Department is concerned he submits that this is subject to any further orders that may be passed by the higher authorities. He also submits that this is subject to adjustments.

6. Let the applicant place on record an affidavit in detail about any further proceedings that may have taken place by the IT Department in any of the appellate courts as noted by this court in its order dated 17.1.2013. The applicant will also place on record an appropriate resolution of the Board of Directors of SPIL stating that they adopt the contentions raised in the present application.

7. I may note that despite several opportunities Canara Bank has not filed reply.

8. Needful be done within 10 days. List on 8.10.2018."

2. Learned counsel appearing for the applicant has pointed out that the applicant has filed an affidavit of Mr.R. Prabhakar who has stated that the best of his knowledge, the issue of income tax liability of Sporting Pastime India Ltd. (SPIL) has achieved finality and there are no dues to be paid towards the income tax. An order of the Commissioner of IT (Appeals) dated 08.09.2016 to this effect has also been attached. It has also been stated that the Company-SPIL is also supporting the present application. Ms.Pooja Dhar, learned counsel has entered appearance for SPIL.

3. Learned senior counsel for Canara Bank has today in court filed an affidavit on behalf of Canara Bank where a sum of Rs.72.25 crores has been claimed from SPIL including interest @ 15% per annum from the date of transfer. It has been accepted that a sum of Rs. 12,27,96,193/- was received from SBI, Erode Branch on 07.02.2013. Similarly, a sum of Rs.19,44,71,285 was received on 22.02.2013 from the Income Tax Department being the refund amount received from SPIL. It is further pleaded that these amounts have not yet been adjusted against the liability of the respondent company because of court orders. It is pleaded that this application may be allowed only on receipt of full payment as stated above by Canara Bank. Reliance is placed on the order of this court dated 21.01.2011 which had directed that the Bank would be entitled to interest @ 15% p.a. in case payments are not made on time. It is pleaded that Canara Bank had a lien on the amount received by the respondent company which it was deprived off.

4. Learned counsel appearing for the applicant has strongly urged that

these payments are dues of Canara Bank recoverable from the respondent Company. The liability to pay interest and outstanding dues is that of the respondent Company. It is pleaded that the liability of the applicant company is only to the extent that Mr. K.C. Palaniswamy had wrongly parked Rs. 25 crores into the account of the company which the application company is liable to refund. She submits that SPIL is a defunct company and the amount of Rs.25 crores was also not utilized by the Company towards any business activity. In fact the amount was attached by the income tax authorities and was taken away from the account of the SPIL.

5. The facts as noted by this court in its earlier order demonstrate that it was Mr. K.C. Palaniswamy who had on his own transferred a sum of Rs. 25 crores into the account of SPIL as at that time he was controlling the said company.

6. On 21.01.2011, this court had while passing interim orders noted above noted that the restraint order passed by this court shall be withdrawn only on deposit of Rs.78.45 crores with Canara Bank in terms of the order dated 18.11.2005 and that the amount be deposited latest by 31.03.2011 failing which the parties concerned will be liable to pay interest @ 15% p.a. w.e.f. the date of passing of that order. The question of interest for the past period was left open.

7. It is no doubt true that SPIL is liable only for the money that was put in its account by Mr. K.C. Palaniswamy. Canara Bank cannot claim more than that. Now, the question would remain of interest. This court on 21.01.2011 had already directed that for the dues payable after 21.01.2011, the interest @ 15% p.a. would be charged. In my opinion, the said order has attained finality. The applicant would remain liable to pay the said sum @

15% interest w.e.f. the date of the that order. As noted above, payments have been received in the account of Canara Bank as on February 2013. Accordingly, the applicant remains liable to pay the said interest @ 15% p.a. on the sum of Rs.25 crores. w.e.f. 21.01.2011 till February 2013 when payments were received in the account of Canara bank. The argument of Canara Bank that it has not formally adjusted the liability of the respondent Company would not suffice as the money has been received by Canara Bank.

8. The other aspect would the interest that may be payable from the date of the transfer of money till the date of the order i.e. 21.01.2011. This court on 21.01.2011 had kept this question open.

9. Keeping in view the circumstances of this case including the fact that the entire exercise has been carried out by one individual who had allegedly taken away money out of the account of the respondent and parked it into different accounts including in the account of the SPIL, it would be in the interest of justice that the SPIL may pay interest @ 6% p.a. simple interest w.e.f. 01.01.2005 till 21.01.2011. Whiling making the payment, money received by Canara bank as noted in its affidavit dated 08.10.2018 would be adjusted against the aforesaid liability of the applicant Company. On receipt of the Full amount, the interim order passed by this court against the assets of SPIL dated 21.01.2011 shall stand vacated.

10. I am told that Canara Bank has also approached the Income Tax Department for a higher refund on account of erroneous computation of interest by the Income Tax Department. In case any additional amount of refund is received by Canara bank on this account, the same would also be adjusted against the above liability payable by SPIL.

11. The application stands disposed of.

12. Needless to add, any observation made herein does not prevent SPIL or Canara Bank from taking any action against Mr. K.C. Palaniswamy as per law.

JAYANT NATH, J.

OCTOBER 08, 2018 rb