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Telangana High Court
Lic Of India vs M/S. Allwyn Watches Ltd., ( In Liqn) on 26 March, 2026
IN THE HIGH COURT FOR THE STATE OF TELANGANA
AT HYDERABAD
THE HONOURABLE SMT JUSTICE T.MADHAVI DEVI
COMPA NOS. 1212 OF 2014, 815 OF 2017 &
73 OF 2025
DATED: 26.03.2026
COMPA No. 1212 of 2014:
Between
LIC of India, Represented by its Secretary (Legal),
South Central Zone Office, Jeevan Bhagya Saifabad,
Hyderabad.
...Petitioner/Appellant
And
M/s.Allwyn Watches Limited (in Liquidation),
Rep., by the Official Liquidator, High Court of A.P.,
...Respondent/Respondent
COMPA No. 815 of 2017:
Between
Asset Reconstruction Company (India) Limited,
The Ruby, 10th Floor, 29, Senapati Bapat Marg,
Dadar (W), Mumbai - 400 028 and Another.
...Petitioners/ Appellants
And
M/s.Allwyn Watches Limited (in Liquidation),
Rep., by the Official Liquidator, High Court of A.P.,
...Respondent/Respondent
2
COMPA No. 73 of 2025:
Between
M/s.Allwyn Watches Limited (in Liquidation),
Rep., by the Official Liquidator,
Attached to High Court of Telangana and
Andhra Pradesh, 1st floor, Corporate Bhawan,
Bandlaguda, Nagole, Hyderabad - 500 068.
...Petitioner/Appellant
And
The Deputy General Manager,
General Insurance Corporation of India,
'SURAKSHA', # 170, J.Tata Road, Chruchgate,
Mumbai - 400 020 & Seventeen Others
...Respondents/Respondents
COMMON ORDER
M/s.Allwyn Watches Limited (in Liquidation) is the
respondent in COMPA Nos.1212 of 2014 and 815 of 2017 (for
short, 'the respondent company') and the petitioner in COMPA
No.73 of 2025 and the petitioners in COMPA Nos.1212 of 2014
and 815 of 2017 and the respondents in COMPA No.73 of 2025 are
its secured creditors and these applications are filed seeking a
direction to the Official Liquidator (OL) to make an interim
disbursement of the balance sale proceeds lying to the credit of the
respondent company account as against the claim of each of the
first charge holders, pending final adjudication of the claims of
workmen and others.
2. Brief facts of the case are that vide orders dated
11.12.2006 in C.P.No.108 of 2001, this Court was pleased to direct
the winding up of the respondent company M/s.Allwyn Watches
Limited and appointed the official liquidator as its provisional
liquidator. Thereafter, the land and buildings situated at
Patancheru, Medak District and Plant & Machinery situated at
Penukonda, Ananthapur District, were put to sale as per the
directions of this Court and an amount of Rs.136,19,22,000/- was
realized from the auction of the said assets. Thereafter, the official
liquidator invited the claims of the creditors by publishing the same
in the newspapers on 05.04.2011 and the last date of submission of
claims was fixed as 04.05.2011. Some of the claims have been
submitted by the creditors. However, since the official liquidator
was not recognizing the creditors as the secured creditors of the
company in liquidation, the secured creditors filed C.A.No.955 of
2012. This Court vide orders dated 15.02.2013 held that the
petitioners therein are the secured creditors of the company in
liquidation and accordingly, directed the official liquidator to
adjudicate the claims of the petitioners therein expeditiously,
preferably within a period of two months. However, the official
liquidator did not adjudicate the claims within the time granted by
the Court, but filed C.A.No.757 of 2012 to grant additional time for
adjudication of claims or alternatively to adjudicate the claims of
secured creditors by the High Court itself. Thereafter, the secured
creditors filed C.A.No.955 of 2012 seeking a direction to the
official liquidator to adopt a simpler method of adjudication and
also for interim disbursement pending adjudication. This Court,
while holding that the petitioners are the secured creditors of the
respondent company, had directed the official liquidator to
adjudicate the claims expeditiously and pass appropriate orders
preferably within a period of two months.
3. Against the said order, the petitioners in COMPA
No.815 of 2017 preferred OSA, but the same was withdrawn
subsequently as not pressed. Since there was inordinate delay in
adjudicating the claims, the secured creditors once again
approached this Court and filed C.A.No.409 of 2013 for a direction
to the official liquidator to make interim disbursement of atleast
75% of the claim of each of the first charge holders, pending final
adjudication of the claims. A learned Single Judge of this Court,
vide order dated 26.03.2013, was pleased to direct the official
liquidator to disburse an amount of Rs.59,19,01,522/- and further
directed the official liquidator to finalize the liquidation
proceedings. Thereafter, vide orders dated 04.06.2013 in
C.A.No.757 of 2012, this Court directed the official liquidator to
complete the adjudication and file the report. The secured creditors
once again approached this Court by filing C.A.No.312 of 2014 for
a direction to the official liquidator to adjudicate the claims and
disburse the balance sale proceeds lying to the credit of the
company in liquidation. On 18.03.2014, the official liquidator filed
its report stating that the claims of 15 secured creditors have been
admitted and Form-69 have been issued to the secured creditors.
By taking the same into consideration, on 19.03.2014 while
disposing off C.A.No.312 of 2014, this Court has directed the
official liquidator to finalize the claims, issue Form-71 in all the
cases within a period of five weeks and make appropriate
applications for permission for disbursement within one week
thereafter. The official liquidator, thereafter, issued Form-71.
4. Aggrieved by the said orders dated 19.03.2014, the
secured creditors filed OSA No.19 of 2014 and vide orders dated
27.03.2014, this Court directed the official liquidator to disburse an
amount of Rs.12,19,55,087.56 paise on pro-rata basis against each
of the claims admitted and the official liquidator accordingly
disbursed the said amount amongst the secured creditors in respect
of the admitted claims. It is submitted that in spite of repeated
directions of this Court to complete the adjudication of claims, the
official liquidator had not been adjudicating the claims. It is
submitted that sale proceeds will not cover even 25% of the claims
of the secured creditors even after considering the sale proceeds
from the last lot i.e., the plant and machinery of Patancheru unit of
Allwyn Watches Limited (AWL) which were sold for an amount of
Rs.5 Crores. It is submitted that the maximum amount that may be
available for distribution before the first interim disbursement by
the official liquidator was only around Rs.150 Crores (including
the sale proceeds already received, Rs.136.19 Crores and interest
on the same), whereas the total claim of secured creditors admitted
by official liquidator as per official liquidator's report dated
11.03.2014 was Rs.300.65 Crores. It is stated that after the interim
disbursements are made from time to time, an amount of Rs.100
Crores (including interest) is lying with the official liquidator
pending final adjudication. Therefore, a direction was sought to the
official liquidator for interim disbursement pending adjudication of
other secured/unsecured creditors and the workmen dues, failing
which the applicants would put to irreparable loss and injury.
5. I.A.No.1 of 2024 was filed by the petitioner No.2 in
COMPA No.815 of 2017 claiming to be one of the secured
creditors and to be impleaded in the company application and
enclosed therewith was the list of 8 secured creditors out of 16
secured creditors and at Serial No.1 was the implead petitioner.
This Court, vide orders dated 09.01.2025, allowed the implead
petition and the Petitioner No.2 was directed to be treated as a co-
applicant in C.A.No.815 of 2017. Further in the COMPA Nos.1212
of 2014 and 815 of 2017, this Court has taken note of the fact that
the official liquidator was in possession of 145 Crores in 2023 and
therefore, the official liquidator was directed to make an
appropriate application for disbursement of the amount in favour of
the secured creditors. Thereafter, on 08.04.2025, this Court has
taken the note of the order dated 17.03.2025 in COMPA No.73 of
2025 in C.P.No.108 of 2001 appointing M/s.T.Badarinath and
Associates, Chartered Accountants, who were in the panel of
official liquidator, for the purpose of verification of various
parameters involved in the affairs of company in liquidation and to
give suggestions for disbursement of dividend to the eligible
creditors including workmen of the company-in-liquidation as
directed by this Court vide orders dated 09.01.2025 in COMPA
Nos.1212 of 2024 and 815 of 2017. This Court also accorded
permission to official liquidator to pay a sum of Rs.80,000/- + GST
to the said Chartered Accountants/Auditor towards professional
charges from out of the available funds of company-in-liquidation.
This Court also noted that the petitioners in both the company
applications are respondents in the COMPA No.73 of 2025.
Therefore, they were directed to appear before the said Chartered
Accountants/Auditor and cooperate with them. The official
liquidator submitted the report of the Chartered
Accountants/Auditor on 17.06.2025 and the applicant No.1 has
filed its objections to the Auditor's report on 17.02.2026.
6. The COMPA No.1212 of 2014 was filed by LIC of
India, one of the secured creditors, who was not paid any interim
disbursement. The COMPA No.73 of 2025 was filed by the official
liquidator representing the company-in-liquidation (i) to take the
application on record; (ii) to direct the respondents No.1, 4, 5, 6, 8
and 11 to return the excess payment of Rs.22,55,39,676/- together
with interest @ 8% per annum from the date of order of second
interim payment i.e., 27.03.2014 till the date of realization; (iii) to
appoint M/s.T.Badarinath & Associates, Chartered Accountants or
any other Chartered Accountant to give suggestion for
disbursement of dividend to the eligible creditors including
workmen of the company as ordered by this Court vide orders
dated 09.01.2025 in C.A.Nos.1212 of 2014 and 815 of 2017 and
also to permit the official liquidator to pay an amount of
Rs.80,000/- + GST; (iv) to permit the official liquidator to file
company application before this Court to vary Form No.71 i.e., list
of creditors of the company-in-liquidation as well as proposal for
declaration of dividend to the eligible creditors of the company-in-
liquidation basing on the report to be submitted by the Auditor
appointed by this Court; (v) to order that the costs of the
application to come out of the available funds of the company-in-
liquidation and (vi) to pass such other order or orders.
7. As already observed above, this Court vide orders
dated 08.04.2025 has appointed the Chartered Accountant
proposed by the official liquidator for the purpose of verification of
various parameters involved in the affairs of company-in-
liquidation and to give suggestions for disbursement of dividend to
the eligible creditors including the workmen of the company-in-
liquidation and also accorded permission to the official liquidator
to pay a sum of Rs.80,000/- + GST to the said Chartered
Accountants/Auditor towards professional charges from out of the
available funds of company-in-liquidation.
8. The report of the Chartered Accountants/Auditor has
been filed into this Court by the official liquidator. According to
the said report, a sum of Rs.53,02,22,989/- was realized on sale of
charged assets and a sum of Rs.88,86,99,011/- was realized on sale
of freehold assets i.e., no creditor is having any charge and the total
sale realization was Rs.141,89,22,000/-. It is stated that in response
to the invitation by the official liquidator from the creditors of the
company-in-liquidation, the official liquidator has received total
claims from 165 various class of creditors of the company-in-
liquidation, out of which 155 claims (including 128 workmen
claims) have been adjudicated and necessary claim adjudication
orders have been issued to the concerned creditors and the
remaining 10 belated claims are pending for adjudication with the
official liquidator due to non-submission of condonation of delay
orders of the Hon'ble High Court including the claims of two
workmen in which they have obtained condonation of delay orders
from the Hon'ble High Court, but have not yet submitted required
information to complete the adjudication of their claims.
9. The list of 155 creditors together with details of their
claims adjudication is enclosed as Annexure-I and the total amount
admitted was Rs.3,24,02,70,064.49/-, whereas amount rejected was
Rs.9,15,77,08,089.67. The list of cases pending before this Hon'ble
High Court i.e., 8 companies, to whom interim disbursement was
made as per the orders of this Court is given as Annexure-II and
the total amount paid to them was Rs.71,38,56,609/- against the
admitted secured debt of Rs.2,68,96,92,750/-. The Annexure-III
contains the list of workmen to whom payment was made of a sum
of Rs.5,40,44,219.96/-. The details of the charged assets/freehold
assets are given in Annexure-IV and it is noticed that 16 creditors
have paripassu first charge on movables/immovable assets. The
Annexure-V is the table showing the proportionate share of secured
creditors and workmen, who are having charge against the
immovable assets based on admitted amount and the proportionate
realized amount is Rs.57,08,71,033/-. The Annexure-VI is the table
showing the proportionate share of secured creditors and workmen,
who are having charge against the movable assets based on
admitted amount and the proportionate realized amount is
Rs.10,03,055/-, as against the amount admitted as secured debt of
Rs.3,12,53,29,396/- @ 0.03209438%. The Annexure-VII is the
table showing the details of dividend eligible, interim relief paid
and balance dividend payable to secured creditors and workmen on
charged assets @ 25.72212611% on immovable assets and @
0.03209438% on movable assets and the balance dividend payable
to 10 secured creditors is Rs.8,35,57,155/-. The Annexure-VIII is
the table showing the details of excess interim paid on charged
assets and recoverable from the secured creditors together with
interest @ 8% p.a., from the date of second interim payment i.e.,
27.03.2014 to 17.06.2025. The Annexure-IX is the table showing
the details of the 11 companies, who are the secured creditors and
to whom balance dividend is payable on the charged assets, whose
claim has been admitted as secured debt, but no payment has been
made till date. The Annexure-X is the table showing the details of
dividend @ 100% payable to workmen of the company-in-
liquidation. The Annexure-XI is the table showing the details of
declaration of 100% dividend to the preferential creditors,
workmen and other creditors (other than secured creditors) on
priority basis and the balance amount payable to them is
Rs.1,56,82,195/-. The Annexure-XII is the table showing the
details of unsatisfied secured debt and unsecured debt. The
Annexure-XIII is the table showing the details of proportionate
dividend payable to the creditors on the freehold property i.e.,
proposed amount of Rs.1,23,55,72,035/-. The Annexure-XIV is the
table showing the details of the dividend eligible, interim dividend
paid and the balance dividend payable to all the creditors. As seen
from Annexure-XIV, the official liquidator claims to have paid
excess amount to the following parties:
(1) General Insurance Corporation of India;
(2) Life Insurance Corporation of India;
(3) Unit Trust of India (SUUTI);
(4) IFCI Limited;
(5) ARCIL (SCB/ICICI);
(6) IDBI Bank Limited;
(7) State Bank of Hyderabad;
(8) State of India.
According to the official liquidator, the interim
payment/dividend/priority expense has been made to six out of
eight secured creditors i.e., other than SBH and ARCIL listed
above. It is submitted that the six secured creditors have received
the amount in excess of their entitlement on the charged property
and two secured creditors have received less amount than their
entitlement on the charged property and 8 secured creditors have
not received any amount on the charged properties till date.
10. The official liquidator on the basis of the report of the
Chartered Accountants/Auditor is therefore claiming refund of the
excess amount paid to the six creditors along with interest @ 8%
thereon and by taking the said amount into consideration is
proposing the payment of the third interim dividend. The official
liquidator is also proposing to keep aside a sum of
Rs.19,89,51,259/-, to satisfy ten belated claims which are pending
for adjudication due to non-submission of condonation delay
orders from the Hon'ble High Court as well as non-submission of
required information.
11. The learned counsel appearing for the SUUTI and also
SBI have submitted that the proposal to keep a sum of
Rs.19,45,74,261/- in respect of secured creditors who not even
filed applications for condonation of delay of this Court is not
justified. It is submitted that by keeping aside, a sum equivalent to
100% of their claim, while secured creditors who approached this
Court are granted only a proportion of their claims is unjust and
unwarranted. It is submitted that if at all, the amount is to be kept
side to meet the claims of such parties, only such of the proportion
of their debts should be kept aside, which is being paid to the other
secured creditors.
12. As regards the charging of interest on the excess
payments made to the six of the secured creditors mentioned
above, the learned counsel representing such of the creditors
submitted that the secured creditors have not been paid in excess of
their entitlement amount, but they have been paid in the same
proportion as was paid to other secured creditors and therefore,
there was no cause for return or refund of the same, much less with
interest thereon.
13. At this juncture, the learned standing counsel for the
OL has filed the copies of the undertakings given by the respective
parties at the time of receipt of the interim relief, wherein while
acknowledging the receipt of the payments, it is stated that in the
event of their arising a superior claim or such equal claim as
ordered by the Hon'ble High Court or otherwise by the official
liquidator and the available funds being insufficient to meet such
claim or in the event of the dividend become excess upon final
adjudication of all the claims received and admitted against the
company or in any other event when they were found to be not
entitled or any part thereof or in the event of the Hon'ble High
Court passing an order for refund, they undertake to refund the said
amounts without demur, or on receipt of a notice from the official
liquidator, to the credit of the company-in-liquidation, within such
time as may be stipulated by the official liquidator and that such
refund shall be remitted back within seven days along with interest
at the prevailing bank rate from the date of receipt of such
amount/portion of the amount has to be refunded from the date of
receipt. The cost of the litigation was also undertaken to be
refunded. The copies of similarly worded undertakings given by
the other creditors are also filed by the official liquidator.
14. Learned counsel for the secured creditors, who have
allegedly received the excess amounts, however, opposed/objected
to the same and submitted that the undertaking was given only in
the case of payment of excess amount than their entitlement and
when the payment was made as per the orders of this Court and in
the same proportion in which other secured creditors have been
paid, there is no cause for refund of the said amount or the interest
thereon. The parties have also filed their objections in writing.
15. Having gone through the material on record and
having regard to the rival contentions, this Court finds that the
official liquidator is in possession of certain funds and the same is
to be disbursed amongst the secured creditors in equal proportion.
Some of the creditors have charges against the movable and
immovable properties and it is the claim of the official liquidator
that six creditors have been paid in excess of their charge. The
details of the debts and the value of the charged assets and their
realization are not available before this Court. For coming to the
conclusion about the excess of the amounts paid, a notice would
have to be given by the official liquidator and the said excess
amount would have to be determined after giving an opportunity of
hearing to the concerned parties. It is noticed that no such notice
has been given by the official liquidator so far and it is only at the
stage of disbursement of the third interim dividend that the official
liquidator has taken this stand. Therefore, this Court is of the
opinion that the parties cannot be saddled with the liability of
paying interest on the amount, when no notice has been given to
the parties for refund of the same.
16. Further, this Court finds strength in the contentions of
the respondents that setting aside of the 100% of the debt due to the
some secured creditors who have not even filed application for
condonation of delay in submission of their claims before this
Court is not justified. The learned counsel for Punjab National
Bank had submitted that delay condonation petition has already
been filed before this Court and the same is pending consideration.
Therefore, this Court is of the opinion that only such proportion of
the debt which is allowed to all the other creditors can be set aside
for meeting the liability towards such claims. The official
liquidator is therefore directed to keep aside only such proportion
of the amount.
17. This Court finds that as per the report of the Chartered
Accountants, the official liquidator has a sum of Rs.89 Crores, for
disbursement after taking into consideration, the amount set apart
for meeting the above liabilities and also after taking the excess
amount along with interest thereon into consideration. The official
liquidator is directed to re-compute the balance of dividend payable
without considering the excess amount paid as interim payment/
dividend/priority expenses and also interest thereon to the six
secured creditors and also by keeping aside only such percentage
of debts to the unpaid secured creditors who are yet to submit their
claims in the proportion of payments made to the secured creditors.
The payment of the third interim dividend shall be made to all the
secured creditors in the same proportion according to their
eligibility. The amounts claimed as excess payment and interest
thereon shall be determined by the official liquidator after issuing
notices to the concerned parties and the payment of the third
disbursement shall be made after taking an undertaking from the
concerned parties that they would abide by such determination and
that they would refund the money with interest after the
determination. The undisputed amount shall be credited to the
accounts of the secured creditors on or before 30.04.2026.
18. With these observations, all the company applications
are disposed of. There shall be no order as to costs.
19. Miscellaneous petitions, if any, pending, shall stand
closed.
____________________________
JUSTICE T.MADHAVI DEVI
Date: 26.03.2026
bak
