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Judgment
Alok Sharma, J.—This company application has been filed with the following prayers:
"(i) issue directions to the non-applicant Official Liquidator to render complete account of M/s. San India Electrochem Private Ltd. (in liquidation);
(ii) declare that the applicant Corporation is entitled to receive the payment of entire expenditure incurred by it towards the advertisement, insurance premium and security expenses etc. before distribution of the sale proceeds among the secured creditors;
(iii) declare that the applicant Corporation is entitled to receive the payment of entire sale proceeds realized from the secured assets and consequently issue direction to the non-applicant Official Liquidator to make payment of balance amount of the sale proceeds to the secured creditors in proportion of their outstanding dues."
To evaluate the merits of the application, it would be necessary to recapitulate essential background facts.
The company, in liquidation, at the time when it was operational, was sanctioned a term loan of Rs. 55.07 lacs by the applicant-Rajasthan State Industrial Development and Investment Corporation Ltd. (hereinafter "RIICO"), out of which Rs. 49.44 lacs were disbursed upto 30.09.1992. The said term loan was secured on first charge by mortgage and hypothecation of existing and future assets of the company. On the company having defaulted on the term loan obligations, RIICO resorted to its powers under Section 29 of the State Financial Corporation Act, 1951 (hereinafter "the Act of 1951") and took possession of the fixed assets of the company on 29.08.1996.
The company in issue was then ordered to be wound up by this Court under its order dated 20.03.1997 passed in Company Petition No. 24/1996.
The applicant-RIICO sought to keep outside the winding up proceedings to recover its dues and was so allowed by the Company Court under its order dated 02.08.2002. The Court however also issued directions with regard to the procedure to be adopted by the applicant-RIICO in putting the mortgaged property of the company in liquidation to sale which was to be made after publication of notice of the sale. Further the proceeds from the sale of the assets of the company in liquidation was to be deposited with the Official Liquidator (hereinafter "O.L."). RIICO in terms of the directions issued by the Company Court brought the assets of the company in liquidation to sale for a sum of Rs. 114 lacs on cash down basis. The Company Court vide order dated 12.05.2006 directed that the amount of Rs. 114 lacs obtained by the auction sale be deposited with O.L. and be disbursed as per the provisions of the Companies Act, 1956 (hereinafter "the Act of 1956"). The amount of Rs. 114 lacs as directed by the Company Court was deposited with the O.L. on 26.06.2006.
Following notice dated 06.10.2006 by the O.L., the applicant-RIICO as the first pari-passu charge holder with RFC, over the fixed assets of the company in over the fixed assets of the company in liquidation, submitted its claim for a total sum of Rs. 7,15,88,542.40/- constituted of various heads including reimbursement of expenditure of Rs. 8,89,850.40/-, in bringing the assets of the company in liquidation to sale and expenses incurred on the preservation of the property of the company in liquidation. The O.L. vide letter dated 26.11.2008 admitted the proof of debt amounting to Rs. 98,49,066/- (on first charge basis), Rs. 12,87,487/- (towards second charge basis) and Rs. 1,40,898/- as an ordinary claim. Further vide another letter of even date, the claim of Rs. 6,03,11,091/- including for an amount of Rs. 8,89,850.40/- towards preservation and sale of assets of the company in liquidation was rejected.
In these circumstances, the applicant-RIICO filed company application No. 32/2009 seeking directions to the O.L. to make payment of Rs. 8,89,850.40/- incurred towards the advertisement expenses, insurance premium and security expenses out of the sale proceeds of the company in liquidation before distribution of the sale proceeds and for further directions for disbursement of the remaining sale proceeds to the secured creditors. On the matter coming up before this Court on 17.03.2011, this Court recorded that subsequent to invitation of claims from all the creditors of the company in liquidation through wide publication, the claims of the secured creators RIICO and RFC were approved to the tune of Rs. 1,22,61,617/- and after yielding interest on the sale proceeds (Rs. 114 lacs), a sum of Rs. 1,28,77,982/- as on 31.05.2010 was lying in credit of the company in liquidation." The Court further recorded in the aforesaid order that after disbursement to secured creditors, the balance amount available with the O.L. was to meet the statutory liabilities of the company in liquidation and "there are no other funds available with the O.L. to distribute to the secured creditors.. The Court however proceeded apparently on the request of the counsel to record only as a palliative that "if any funds are made available with the O.L. of the company in liquidation, parties may be permitted to move application."
The present application purports to be filed in the aforesaid backgrounds with the prayers as delineated hereinabove.
Mr. Sandeep Taneja, appearing for the applicant-RIICO has submitted that Section 462 of the Act of 1956 provides for audit of liquidator''s accounts. It has been submitted that the liquidator is thus under an obligation to inform the Company Court at least two times in a year with regard to the receipts and payments by him as a liquidator whereupon the Company Court is under an obligation to have the accounts audited in such manner as it thinks fit. Counsel submits that thereafter audited accounts are to be filed and kept with the Company Court and a copy thereof also to be delivered to the Registrar for filing, whereupon it is to be open to inspection of any creditor, contributory or person interested. It has been submitted that in terms of Sub-section 5 of Section 462 of the Act of 1956, the liquidator is under an obligation to make a summary of the audited accounts and send it by post to every creditor and to every contributory. It has been submitted that it is in the context of the aforesaid provisions of the Act of 1956 that a direction has been sought to the O.L. to render accounts of the company in liquidation M/s. San India Electrochem Private Ltd. to the applicant. Counsel submits that the other prayers in the application under consideration are consequential, for in the event any excess amounts were found in the accounts of the company in liquidation with the O.L., the company in terms of liberty granted by this Court under its order dated 17.03.2011 would be entitled to be reimbursed the expenses incurred by it towards the advertisement, insurance premium and security expenses etc. on the sale of the assets of the company in liquidation before pari passu distribution of the sale proceeds among the secured creditors.
Ms. Sonal Singh, appearing for the respondent-O.L. has submitted that the present application is completely misdirected, mechanical and an abuse of the process of the court. It has been submitted that the claim of the applicant-RIICO has been fully and finally adjudicated upon by the O.L. whereupon a sum of Rs. 1,11,36,553/- was admitted and duly notified vide notice of admission of proof dated 25.11.2010. Thereafter the entire admitted amount was duly paid as per the Act of 1956 to the applicant on 06.01.2011 as full dividend of 100% and was so accepted without any protest. It has been submitted that it is too late in the day for the applicant to, as if by a second wind, re-agitate the issue of entitlement of any amount towards any head including amounts expanded on the preservation and sale of the assets of the company in liquidation in respect of the company in liquidation. Reference has been made to the letter dated 23.12.2010 addressed by the O.L. to the applicant-RIICO informing it that full dividend of 100% has been declared and the amount payable to RIICO was Rs. 1,11,36,553/-. Counsel submits that it is thus obvious that the accounts of the company in liquidation have been submitted before the Company Judge and he accepted the same. The accounts were not disputed when the matter was decided by the Court on 17.03.2011. It has been submitted that the prayer to render accounts is thus wholly misplaced as the accounts of the company in liquidation have been placed before the Company Court and so accepted over 4 year ago. It has been further submitted that the present application is also not maintainable as RIICO had earlier filed Company Application No. 32/2009 for disbursement of expenses incurred by it in securing/putting the secured property of the company in liquidation to auction sale and the said application was disposed of by this- Court under its order dated 17.03.2011 without any relief on that count holding that after settlement of the claims by RIICO and RFC to an extent of Rs. 1,22,61,617/-, the same had been disbursed to the secured creditors and the remainder amount with the O.L. out of total sale proceeds along with interest aggregating to Rs. 1,28,77,982/- was to be utilized to meet the statutory liabilities of the company in liquidation. She submits that the Court categorically held that there were thus no further funds available to be disbursed to the secured creditor by the O.L. It has been submitted that albeit liberty was indeed granted to the applicant-RIICO to make an application for further disbursement but this was only if any further fund was made available with the O.L. That the eventuality has not arisen, nor in fact even pleaded in the application under consideration and it is not the case of the applicant-RIICO that subsequent to the passing of the order dated 17.03.2011, any further funds have been made available to the O.L. in the account of the company in liquidation.
Heard the counsel for the parties and perused the application as also reply thereto.
I am of the considered opinion that the submission of the counsel for the O.L. that the application for disbursement of amounts towards reimbursement of the expenses incurred by the applicant-RIICO on account of advertisement, insurance premium and security expenses etc. of the assets of the company in liquidation is completely misdirected as is the prayer for the O.L. rendering accounts of the company in liquidation. It is indeed true from the material on record that accounts of the company in liquidation were considered by the Company Court, as was the issue of distribution and reimbursement of expenses incurred by the applicant-RIICO in Company Application No. 32/2009. No prayer with reference to Section 462(5) of the Act of 1956 has been made and in any event it is only directory as held in AIR 1959 Patna 417 [in the matter of the Bihar Bolts, Riverts and Engineering Works Ltd. (in liquidation)]. To my mind, the assets of the company in liquidation being small in the context of businesses today and in the context of the facts of the case, no direction with reference to Section 462(5) of the Act of 1956 would even otherwise be warranted. Aside of directing disbursement as per the Companies Act from the funds available with the company in liquidation, the Company Court impliedly denied in the order dated 17.03.2011 RIICO''s claim for reimbursement of expenses incurred on account of preservation and sale of the assets of the company in liquidation. Further this Court had held in its order dated 17.03.2011 that after disbursing the amount pari passu to the secured creditors, there was no other fund available with the O.L. for distribution. The accounts of the company in liquidation had thus quite apparently been rendered before the Company Judge as early as in 2011. It is not the applicant-RIICO''s case that any further funds have subsequently been made available to the O.L. from the sale of the assets of the company in liquidation. The liberty granted by this Court to move further application for disbursement therefore is not operative. Aside of the aforesaid full dividend of 100% having been declared as per the Company Court order dated 25.11.2010 in Company Application No. 157/2010 in Company Petition No. 24/1996, it is quite evident that the entire distributable amount with the O.L. has been so disbursed. The O.L. has no amount whatsoever for disbursement as earlier held by this Court in its order dated 17.03.2011 which has become final. A renewed resort by this company application filed in the year 2014 to re-agitate the issue of reimbursement of expenses for the preservation and sale of the assets of the company in liquidation earlier impliedly denied by this Court is without any just cause and re-agitating the same issue is a palpable misuse of the process of this Court.
Consequently, I find no force in the company application.