[Cites 5, Cited by 0]
Madhya Pradesh High Court
Deepak Bhandari S/O Shri Virendra Singh ... vs Official Liquidator on 8 January, 2026
NEUTRAL CITATION NO. 2026:MPHC-IND:503
1 MCOMA-2-2025
IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PAVAN KUMAR DWIVEDI
ON THE 8 th OF JANUARY, 2026
MISC. COMPANY APPEAL No. 2 of 2025
DEEPAK BHANDARI S/O SHRI VIRENDRASINGH BHANDARI AS
LEGAL HEIR OF LATE SHRI VIRENDRASINGH BHANDARI
Versus
OFFICIAL LIQUIDATOR
WITH
MISC. COMPANY APPEAL No. 3 of 2024
DEEPAK BHANDARI
Versus
OFFICIAL LIQUIDATOR
MISC. COMPANY APPEAL No. 4 of 2024
DEEPAK BHANDARI S/O SHRI VIRENDRA SINGH BHANDARI AS
BENEFICIARY BY WILL OF SMT. MADANBAI
Versus
OFFICIAL LIQUIDATOR
MISC. COMPANY APPEAL No. 5 of 2024
DEEPAK BHANDARI S/O SHRI VIRENDRA SINGH BHANDARI
LEGAL HEIR OF SMT. SHANTABAI BHANDARI
Versus
OFFICIAL LIQUIDATOR
MISC. COMPANY APPEAL No. 6 of 2024
DEEPAK BHANDARI S/O SHRI VIRENDRASINGH BHANDARI AS
LRS SHRI VIRENDRASINGH BHANDARI
Versus
OFFICIAL LIQUIDATOR HIGH COURT OF MADHYA PRADESH
Signature Not Verified
Signed by: SREEVIDYA
Signing time: 1/8/2026
5:20:42 PM
NEUTRAL CITATION NO. 2026:MPHC-IND:503
2 MCOMA-2-2025
MISC. COMPANY APPEAL No. 7 of 2024
SHOBHA SINGHVEE
Versus
OFFICIAL LIQUIDATOR
MISC. COMPANY APPEAL No. 1 of 2025
VIRENDRA SINGH BHANDARI JR.
Versus
OFFICIAL LIQUIDATOR
MISC. COMPANY APPEAL No. 3 of 2025
JYOTI KANKARIYA
Versus
OFFICIAL LIQUIDATOR
Appearance:
Shri Vivek Patwa - Advocate for the appellant in all the appeals.
Shri H.Y.Mehta - Standing Counsel For the Official Liquidator.
Reserved on: 18.11.2025
Pronounced on: 08.01.2026
.........................................................................................................................................................................
JUDGMENT
Regard being had to the similitude of controversy involved in the
aforementioned appeals, they are being heard analogously and disposed of by
this common order.
2. These appeals have been filed by the appellants being aggrieved
by the rejection of their claims to the extent of denying interest at the rate of
12% per annum and instead, applying interest at the rate of 1.5% per annum
on the amount of debt as claimed by the appellants.
For the sake of convenience, facts of MCOMA No. 3/2024 are being
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referred to
3. The appellant is one of the creditor and shareholder of the
company M/s Nandlal Bhandari & Sons - the company under liquidation.
The company petition was filed against the company under liquidation in the
year 1972 which was registered as Company Petition No. 4 of 1972 (COMP
No.8/1981). This was a contributory's petition filed under Section 439 of the
Companies Act, 1956 on the basis that company failed to repay debts thus,
same may be wound up. In the said company petition, on 27.04.1981 the
learned Company Judge passed an order for winding up. After the said
order, it remained pending without any further proceedings by the Official
Liquidator who was directed vide order dated 27.04.1981 itself to secure the
assets of the company and proceed in the matter in accordance with the
provisions of the Indian Companies Act, 1956. This Court while considering
the said company petition on 11.01.2021 considered the facts of the case and
directed for preparation of a chart showing outstanding dues of each of
secured and unsecured creditor as on the date of filing of the application
before this Court after deciding the claim of respective creditors. Pertinently,
on direction for winding up, claims were invited from the creditors of the
company by an advertisement published on 15.02.1982 in the daily
newspapers pursuant to which the present appellant filed a claim of Rs.
1,23,508.64 for his deposits with the company along with interest at the rate
of 12% per annum. The affidavit of proof of debt has been filed by the
appellant as Annexure P/1 with this appeal in Form No. 66 in accordance
with Rule 151 of the Companies (Court) Rules, 1959 (hereinafter referred to
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as the 'Rules of 1959'). The claims remained pending without adjudication
for a long period and it is only pursuant to the above referred order of
11.01.2021 that the Official Liquidator initiated steps for claim adjudication.
As such on 12.01.2021 a notice was issued by Official Liquidator to the
persons whose claims were pending to attend the investigation or to produce
further evidence on 22.01.2021.
4. The appellant contends that he attended the meeting with the
Official Liquidator on the given date pursuant to which certain documents
were filed as asked by the Official Liquidator along with the covering letter
dated 12.02.2021 which are enclosed as Annexure P/4 with this appeal. The
Official Liquidator after considering the documents submitted by the
appellant, adjudicated the claim of the appellant and an order was passed in
terms of Rule 163 of Rules of 1959 thereby accepting the outstanding
amount of Rs. 44,125.28 as an unsecured claim which includes interest at the
rate of 1.5% per annum. The contention of the appellant before the Official
Liquidator was that in other cases interest has been awarded at the rate of 9%
per annum for which orders were passed by the Company Court in different
proceedings as the matter was settled between the parties. For example, the
order dated 05.04.1974 passed in Company Petition No. 3 of 1972 in case of
Mangaldas S.Seth vs. M/s Nandlal Bhandari & Sons was placed on record in
which interest was awarded at the rate of 9% per annum.
Submissions of the counsel for the parties
5. Learned counsel for the appellant while arguing the matter
submits that it's a clear case of arbitrariness and mismanagement of the
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company. He submits that in fact majority shareholders had already secured
their debt by syphoning off their deposits of Rs. 38.61 lakhs (approx.) on
27.08.1971 by way of adjustments of the assets of the company under
liquidation against their deposits. Thereafter, on 28.04.1972 unilaterally
without the consent of appellant, varied the rate of interest on their deposits
made with the company to 1.5% annum which was never accepted by the
appellant, based on which the respondent seems to have awarded the
interest. Learned counsel for the appellant further submits that the appellant,
being minor issued notice through his father on 08.01.1972 requesting the
company to return the amount with interest. Again on 17.05.1974 a notice
was issued through the counsel for the appellant demanding interest at the
rate of 12% per annum from the company. He further submits that after about
42 years, now the claim has been settled for a paltry rate of interest of 1.5%
per annum just to shrink statutory liability of the company. He reiterates that
in the case of Mangal Das S. Sethi (supra) in Company Petition No. 3 of
1972 rate of interest was agreed at 9% per annum. Similarly in the Company
Petition No. 2 of 1972, the matter was settled by the company at the interest
rate of 9% per annum. He submits that the majority shareholders' group of
the company on 16.02.2021 adjudicated the claims of other minority
shareholders except the claim of the appellant. The objective of the same was
to discriminate against the appellant by not paying appropriate amount of
interest on the deposit. Thus, he submits that the order of adjudication is bad
in law and the same to the extent denying interest at the rate of 12% per
annum deserves to be set aside.
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6. Per contra, learned counsel for the Official Liquidator denied the
allegations made by the learned counsel for appellants and points out that
vide order dated 27.04.1981 when the winding up was directed, the Official
Liquidator attached to this Court seized of the assets of the company. After
following the due procedure, claims were invited pursuant to which the
appellant had also submitted his claim and by following due procedure
prescribed under Rules 154 and 156 of the Rules of 1959, the claim of the
appellants have been adjudicated. It has been stated specifically that no
document has been submitted by the appellants before the Official
Liquidator proving the agreed rate of interest at 12% per annum on the
deposit made by them. Learned counsel for the Official Liquidator places
heavy reliance on the resolution passed by the Board of Directors of the
company under liquidation on 28.04.1972 with respect to the accounting year
ended on 31.12.1971. In the said resolution, the rate of interest was allowed
to all the members at 1.5% per annum and the same is reflected in the
document filed by the appellant on 12.02.2021 as Annexure A/4 and on the
basis of the said document, the Statement of Affairs were perused and on
confirmation of the said rate of interest, the adjudication has been done. He
submits that the Statement of Affairs and the aforesaid Board Resolution
have never been challenged by any of the stakeholders till date. He thus
submits that there is no infirmity in the adjudication done by the Official
Liquidator.
Heard learned counsel for the parties. Perused the record.
7. From perusal of the documents enclosed by the appellant with
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Annexure A/4 at page 29 and 30, it is seen that it provides for confirmation
about interest in the meeting of the Board of Directors of M/s Nandlal
Bhandari & Sons Pvt. Ltd., Indore. The date of Board meeting is provided in
column No. 2 and the relevant accounting period is provided in column
No.1. The last item at page 30 in column No. 2 would show that the Board
meeting took place on 28.04.1972 for the accounting period from 01.01.1971
to 31.12.1971. The agreed rate of interest as provided in the said meeting
was 1.5% per annum. As such, it is clear that the reserved rate of interest for
the period under consideration decided to be 1.5% per annum.
8. The sheet anchor of the argument of learned counsel for the
appellant is two fold. One, that the majority shareholders group have
deliberately after syphoning of their deposits have reduced the rate of
interest unilaterally without taking consent of the appellant who made the
deposits and second, that in other cases, the same company had agreed for
interest at the rate of 9% per annum. However, there is complete absence of
any document so as to show that there was agreed rate of interest of 12% per
annum on the deposits of the appellant or it was a rate of interest reserved for
the deposits of the appellant. In absence of either one of them, this Court is
unable to hold that the appellant is entitled for interest at the rate of 12% per
annum. The rights with respect to interest in such claims are governed in
terms of provisions of Section 156 and 179 of the Rules of 1959. The said
provisions are reproduced below for reference :
156. Interest - On any debt or certain sum payable at a certain time or otherwise,
whereon interest is not reserved or agreed for, and which is overdue at the date of
the winding-up order, or the resolution as the case may be, the creditor may prove
for interest at a rate not exceeding four per cent per annum up to that date from the
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time when the debt or sum was payable, if the debt or sum is payable by virtue of a
written instrument at a certain time, and if payable otherwise, then from the time
when a demand in writing has been made, giving notice that interest will be claimed
from the date of demand until the time of payment.
179. Payment of subsequent interest - In the event of there being a surplus after
payment in full of all the claims admitted to proof, creditors whose proofs have been
admitted shall be paid interest from the date of the winding-up order or of the
resolution as the case may be, up to the date of the declaration of the final dividend,
at a rate not exceeding 4 per cent per annum, on the admitted amount of the claim,
after adjusting against the said amount the dividends declared as on the date of the
declaration of each dividend.
9. It is thus clear that both the Rules provide that in absence of any
reserved rate of interest on debt of certain sum payable at the date of winding
up order, it will carry interest at the rate not exceeding 4% per annum. In the
present case there is a resolution of the Board providing 1.5% interest on the
deposit of the appellant. The Hon'ble Apex Court in case of J.K. (Bombay)
(P) Ltd vs New Kaiser-I-Hind Spg. & Wvg. Co. Ltd. & Ors., 1968
SCCOnline SC 32 has held that, once a winding-up order is passed the
undertaking and the assets of the company pass under the control of the
liquidator whose statutory duty is to realise them and to pay from out of the
sale-proceeds its creditors. Such creditors acquire on such order being passed
the right to have the assets realised and distributed among them pari passu.
No new rights can thereafter be created and no uncompleted rights can be
completed. For doing so would be contrary to the creditors' right to have the
proceeds of the assets distributed among them pari passu.
10. In the present case, the appellant refers to the purported act of
the majority shareholders where they syphoned the assets of the company to
the prejudice of minority shareholders. However, the appellant does not say
any further i.e. the action of the majority shareholders group was never
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challenged for mis-management in any of the challenges put forth by any
person against the company. And in any case that issue is not relevant for the
purpose of the present case. The issue involved in the present appeals i.e. the
rate of interest has never been raised challenging authority of the resolution
which fixed the interest for the relevant period at 1.5% per annum.
Considering this, at this stage, it cannot be held that the appellant is entitled
for 12% per annum interest on his deposits with the company under
liquidation. In the considered view of this Court, the Form 70 issued under
Rule 163 of the Rules of 1959 accepting the claims of the appellant for its
deposit with interest at the rate of 1.5% and rejecting the claim of interest at
the rate of 12% per annum is valid and legal.
11. Consequently, all these appeals fail and are hereby dismissed.
12. The appellant in this case has also claimed remuneration for the
period from May 1972 to June 1975 at the rate of Rs. 2,000/- per month as
also payments made by the appellant to Narmada Valley Chemical Industries
Pvt. Ltd., MPEB and Indore Municipal Corporation. The appellant while
raising claim has not shown in the memo of appeal that in what manner, the
claims were sought be to proved before the Official Liquidator. The Official
Liquidator while rejecting these claims as per notice of rejection of proof
dated 14.06.2025 contained in the Form No. 69 has observed that on perusal
of the documents submitted in Form No. 66, it is observed that no proof in
respect of claim towards cost awarded by the Court payment made
to Narmada Valley Chemical Industries Pvt. Ltd., MPEB and Indore
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Municipal Corporation are furnished. With respect to claims towards
Directors' remuneration, it was observed by the Official Liquidator that no
specific order regarding payment of remuneration was furnished to this office
(i. e. to Official Liquidator). It is thus clear that the appellant in this case has
not provided sufficient material to the Official Liquidator for proving his
claim in absence of which the impugned order was passed. Again in the
present appeal also, there are no documents which would show the claims as
made by the appellant before the Official Liquidator. As such, in this case
also this Court does not find any infirmity. Thus, apart from the reasons
mentioned in all the appeals, this appeal is dismissed for the additional
claims also.
With the aforesaid, the appeals stand dismissed.
Let a copy of this order be placed in the record of MCOMA No. 3 of
2024, MCOMA No. 4 of 2024, MCOMA No. 5 of 2024, MCOMA No. 6 of
2024, MCOMA No. 7 of 2024, MCOMA No. 1 of 2025 and MCOMA No. 3
of 2025.
(PAVAN KUMAR DWIVEDI)
JUDGE
vidya
