Rajasthan High Court

State Bank Of Patiala vs M/S Raunaq Finance Ltd. ... on 2 February, 2024

Author: Sameer Jain

Bench: Sameer Jain

[2024:RJ-JP:5720]

        HIGH COURT OF JUDICATURE FOR RAJASTHAN
                    BENCH AT JAIPUR

                    S.B. Company Application No. 5/2020

State Bank Of Patiala, R/o
                                                                       ----Petitioner
                                       Versus
M/s Raunaq Finance Ltd., R/o
                                                                     ----Respondent

Connected With S.B. Company Appeal No. 1/2020 State Bank Of India Through Its Chief Manager, 11, Gopinath Marg, M.I. Road, Jaipur.

----Petitioner Versus Official Liquidator Of M/s Raunaq Finance Limited (In Liquidation), Corporate Bhawan, G/6-7, Residency Area, Civil Lines, Jaipur -302001

----Respondent in S.B. Company Petition No. 3/2009

For Petitioner(s) : Mr. Yash Sharma For Respondent(s) : Mr. Gaurav Sharma for OL

HON'BLE MR. JUSTICE SAMEER JAIN

Order

02/02/2024

1. The instant application has been preferred by the applicant-

Bank under Rule 9 of the Companies (Court) Rules, 1959, after

having been aggrieved of the rejection of the notice of proof of

debt dated 17.07.2020, by the learned Official Liquidator, whereby

the claim of the petitioner to the tune of Rs. 73,06,424.82 has

been turned down.

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2. Learned counsel for the applicant-Bank, Mr. Yash Sharma, has

submitted that the State Bank of Patiala (hereinafter, erstwhile-Bank)

merged into the State Bank of India (hereinafter, applicant-Bank) in the

Year 2017, on account of which, the latter derived all the rights and

liabilities of the erstwhile-Bank. Having established the fact of the said

merger, learned counsel averred that the erstwhile-Bank filed an

Original Application against the respondent-Company before the Debt

Recovery Tribunal, Jaipur (hereinafter, DRT) on 06.09.1999. The DRT

vide judgement and recovery certificate dated 18.06.2011, allowed the

claim of the erstwhile-Bank to the tune of Rs. 79,42,711.94/- along

with simple interest @ 12% p.a. payable from the date of

application till the date of recovery.

3. It was further argued that the erstwhile-Bank in the Year 2009

filed S.B. Company Petition No. 03/2009 titled as 'State Bank of Patiala

vs. M/s Raunaq Finance Limited under Section 439 read with Section

433 (e) (f) and (i) of the Companies Act, 1956 (hereinafter, Act of

1956) before this Court, seeking winding up of the respondent-

Company. Thereafter, vide order 28.07.2011, the said petition was

allowed and resultantly, the respondent-Company was ordered to be

wound up. The Official Liquidator attached to the Court was appointed

as the Official Liquidator of the respondent-Company.

4. Learned counsel further contended that in pursuance to the said

order of winding up, the Official Liquidator on 18.11.2015 issued a

notice to the erstwhile-Bank, under Form No. 64 in terms of Rule 148(2)

of the Companies (Court) Rules, 1959 (hereinafter, Rules of 1959) to

prove its debt. Consequently, the erstwhile-Bank submitted the affidavit

of proof of debts as per Form No. 66 inter-alia claiming an amount of

Rs. 79,42,711.94 along with future interest @ 12% p.a. in terms of the

DRT order dated 18.06.2001. Thereafter, time and again, the Official

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Liquidator sought certain information/documents from the erstwhile-

Bank, which were duly provided.

5. In this background, learned counsel for the applicant-Bank

submitted that the Official Liquidator vide notice of admission of proof

of debt dated 17.07.2020, allowed the claim of the applicant-Bank to

the tune of Rs. 1,76,79,752/- only. The said amount included the

principle amount of Rs. 79,42,711.94/- along with interest from the

date of judgement till the date of winding up order including the

expenses. The Official Liquidator however, rejected the claim of Rs.

73,06,424.82/- vide notice to rejection of proof of debt dated

17.07.2020 on the specific ground that the said amount is pertaining to

interest for the post winding up period and the same is not admissible

under the provisions of Section 529/530 of the Act of 1956. Therefore,

being aggrieved of the said rejection of claim to the tune of

73,06,424.82, the applicant-Bank has filed the instant Original

Application.

6. In order to repudiate the ground adopted by the Official Liquidator

whilst rejecting the applicant-Bank's claim as noted above, learned

counsel put forth the following arguments:-

6.1 That the Official Liquidator did not award interest to the applicant-

Bank which was due in terms of the order of the DRT dated 18.06.2011,

which categorically spells out that interest shall be applicable at the @

12% p.a. from the date of filing of the application before the DRT till the

date of recovery.

6.2 That post the passing of the winding up order dated 28.07.2011,

the applicant-Bank has not been awarded any interest and the rejection

thereof, in spite of having remained in surplus, is erroneous and bad.

6.3 That the notice of rejection of proof of debt is rather cryptic and

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accordingly, in the absence of a speaking rejection order, the principles

of natural justice have not been adhered with by the Official Liquidator.

7. Lastly, learned counsel for the applicant-Bank submitted before

this Court that the Official Liquidator had two properties available for

auction before him viz-a-viz the wound up respondent-Company. Out of

the said properties, the one situated in New Delhi has been sold for a

sum of Rs. 47,49,000/-. The foregoing sale has been duly confirmed by

this Court vide order dated 22.10.2019 as well. Therefore, placing

reliance upon the arguments furnished above, it was conclusively

argued that the sum so recovered by the aforesaid sale i.e. Rs.

47,49,000/-, be paid to the applicant-Bank, especially considering that

the applicant-Bank has the highest amount recoverable out of all the

creditors of the respondent-Company in liquidation and as such, the

aforesaid amount ought to be released in favour of the applicant-Bank.

8. Per contra, learned counsel for the Official Liquidator, Mr. Gaurav

Sharma, has submitted that the Official Liquidator, while adjudicating

upon the claim of the applicant-Bank, has duly taken note of and/or

considered the DRT judgement dated 18.06.2011 allowing the claim of

the erstwhile-Bank. However, it was argued that the Official Liquidator

has to adjudicate upon the claims strictly in accordance with the

Companies Act and Rules framed in connection therewith. The Act of

1956, when read with the Rules of 1959, requires that the value of all

debts and claims against the company in liquidation shall as far as

possible be estimated according to their value, at the date of the

winding up of the company. The interest payable to the claimant has to

be calculated as on the date of the winding up for the purposes of

adjudicating the claim by the Official Liquidator.

9. Lastly, learned counsel submitted that the averment of the

applicant-Bank regarding the claim of the applicant-Bank being over

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and above the other secured creditors on account of having the highest

amount recoverable is illegal and baseless. In this regard, it was stated

that the Official Liquidator received 11 claims out of which 6 claims

were of secured creditors, including the applicant-Bank. Thus, evidently,

the applicant-Bank is not the only secured creditor. All the secured

creditors have a pari passu charge in terms of Section 529 and 529A of

the Act of 1956 over the sale proceeds realized from charged assets.

Merely having the highest outstanding amount as a secured creditor

shall not in any manner create a preferential/overriding charge in favour

of the applicant-Bank over and above the other secured creditors and

workmen. Therefore, placing reliance upon the aforesaid, learned

counsel prayed that the instant Original Application be dismissed with

cost.

10. Heard the learned counsel for both the sides, scanned the record

and perused the judgment(s) cited at Bar.

11. At the outset, prior to ascertainment of the applicant-Bank's claim

on merits, this Court deems it appropriate to take note of the

instrumental legal provisions, necessary for its adjudication, namely:-

"Rule 154-Value of Debts:

The value of all debts and claims against the company shall, as far as is possible, be estimated according to the value thereof at the date of the order of the winding- up of the company or where before the presentation of the petition for winding-up, a resolution has been passed by the company for voluntary winding-up, at the date of the passing of such resolution.

Rule 156-Interest:

On any debt or certain sum payable at a certain time or otherwise, whereon interest not reserved or agreed for, and which is overdue at the date of the winding-up order, or the resolution the case may be, the creditor may prove for interest at a rate not exceeding four per cent per annum up that date from the time when the debt or sum was payable, if the debt or sum is payable by virtue of a written instrument at a

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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. Rule 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."

12. Upon a considered perusal of Rule 154 of the Rules of 1959, it is

made abundantly clear that a literal construction of the same, mandates

that the quantification of debt/claim, ought to be ascertained as on the

date of winding up of the company. The only exception drawn out by the

said Rule is for companies voluntarily wound up, wherein the date of

dissolution shall be taken for quantification of the debt/claim.

13. In the established/undisputed facts of the instant case, it is noted

that the winding up order qua the respondent-Company was passed by

this Court on 28.07.2022. Therefore, in pursuance of a literal

construction of Rule 154 of the Rules of 1959, a lock shall be imposed,

and the cut-off date would be taken as the date of winding up of the

company i.e. 28.07.2022. Therefore, the quantification of interest on

the amount to be paid by the Official Liquidator, would only be till the

said date of winding up and not thereafter.

14. Furthermore, in terms of Rule 156 of the Rules 1959, if a debt is

payable by virtue of a written instrument, which includes within its

ambit the order passed by the DRT, the interest has to be calculated

from when a demand in writing has been made giving notice that the

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interest shall be claimed from the date of demand until the date of

payment.

15. Accordingly, in light of the aforesaid, it goes without saying that

the applicant-Bank would have raised a demand before the Official

Liquidator pursuant to the date of winding up i.e. 28.07.2011.

Therefore, interest accruing subsequent to the said winding up shall

have no relevance viz-a-viz the Official Liquidator, as per the Rules of

1959, as in alternative, for recovering the interest accruing subsequent

to the winding up, the applicant-Bank can take recourse to the

provisions of The Recovery of Debts and Bankruptcy Act, 1993. In this

regard, reliance can be placed on the judgment of the Bombay High

Court as passed in IDBI Ltd. vs. Official Liquidator of Maharashtra:

2011 (2) DRTC 634 wherein after considering the Company Rules, it

was held that the Official Liquidator is not bound to accept or execute a

certificate, which is issued under the Recovery of Debts and Bankruptcy

Act.

16. In terms of the aforesaid, the instant Original Application is

decided against the applicant-Bank with a caveat that in terms of Rule

179, if any surplus remains/subsists after due payment in full of all

claims, then the same may be awarded to the applicant-Bank, which is

a secured-creditor, as per the requisite calculation.

17. Accordingly, in light of the above, S.B. Company Application No.

5/2020 & S.B. Company Appeal No. 1/2020 are dismissed. Pending

applications, if any, stand disposed of.

(SAMEER JAIN),J

DEEPAK/368, 370