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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
R. D. DHANUKA, J.
M/s. Nagindas Kasturchand & Ors.
Vs.
The Official Liquidator, High Court Bombay & Anr.
Company Application No.96 of 2013 in Company Application No.653 of 2013 in Company Petition No.20 of 1984
Decided On : 30th July, 2013
Where company in liquidation, having only lease hold rights in respect of certain plots had mortgaged said rights with a Bank therefore disposal of said properties cannot be challenged by company. - The applicant thus had no locus of appearing in this proceedings for opposing the reliefs sought by the Central Bank of India and also to file this proceedings for recalling the orders passed by the Court on the application made by the Central Bank of India. This Court has passed order in furtherance of the order passed by the Debt Recovery Tribunal. By an order dated 16th December, 2004 in this company petition, this Court has already held that Official Liquidator has to handover possession of the premises as per directions of the Debt Recovery Tribunal. Reliefs claimed by the Central Bank of India in this proceedings is consequential to the orders passed by the Debt Recovery Tribunal in favour of the Central Bank of India which has not been stayed and/or set aside by any competent Court. Application thus filed by the Central Bank of India (653 of 2012) for seeking permission in favour of the Central Bank of India to release all claims on the leasehold rights in favour of the owners of the properties which were mortgaged in favour of the bank by accepting a sum of Rs. 1 .40 crores and for the directions to the official liquidator to release and relinquish the leasehold rights in favour of the owners and to execute documents was maintainable and the Court has rightly allowed the said application in favour of the bank on the bank furnishing an undertaking that the bank shall deposit proportionate amount if any due to the workers of the company in liquidation in terms of Section 529-A of the Companies Act, 1956 from the amount recovered as and when required or be directed by the Court or Debt Recovery Tribunal. While passing that order on 12th February, 2013 the Court also considered affidavit in reply filed by the Official Liquidator.
If during the pendency of liquidation proceedings in the Court or execution proceedings before Debt Recovery Tribunal, if unexpired period of leasehold rights in favour of the company in liquidation are not surrendered on payment of appropriate consideration, on expiry of such unexpired period, Official Liquidator would not be able to fetch any income and no funds will be made available for clearing the liabilities of the creditors including secured creditors and workers. Official Liquidator therefore made it clear that Official Liquidator did not require the unexpired leasehold rights in the said properties under two lease deeds for the purpose of winding up and if those rights are surrendered, it would save company not only from incurring further liability but would fetch some income which would be available for clearing the liabilities of the company of the secured creditors, workers and others. It is not in dispute that decree passed by this Court in favour of the Central Bank of India is final and is being executed before Debt Recovery Tribunal. This Court has already directed that all such secured properties will have to be sold by the Debt Recovery Tribunal.
Perusal of record in these proceedings indicates that Central Bank of India had obtained a valuation report in respect of the said properties which report was on record before Debt Recovery Tribunal and also in this proceedings. Considering the report, Debt Recovery Tribunal as well as this Court was of the view that rights in favour of the secured creditors can be released in favour of the owners of the said properties on payment of Rs. 1.40 crores. If the official liquidator does not require the leasehold property of the company in liquidation for winding up of the company, with a view to avoid any further liability of the company in liquidation, Official Liquidator has to surrender the properties to the landlords and/or to the owners in the interest of the company in liquidation and also creditors and ex-management of the company.
When the Court had considered all these aspects while allowing the application filed by the Central Bank of India. Applicant is not affected in any manner whatsoever by order of the Court directing the Official Liquidator to execute the requisite documents in favour of the owners pursuant to the order passed by the Debt Recovery Tribunal.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 - Section 34 - Jurisdiction of DRT.
Where properties of company in liquidation, mortgaged with Bank and Bank already filed proceedings before DRT therefore Company Court would have no jurisdiction to interfere as it is within exclusive jurisdiction of DRT. - It is not in dispute that the said company in liquidation did not have ownership rights in respect of such properties but had only leasehold rights to the extent of unexpired period under the said two lease deeds. It is not in dispute that since last 45 years, the said company in liquidation is closed and there are no business activities. There is no income fetched out of the said properties in the hands of the Official Liquidator or otherwise. Since last several years Central Bank of India, the decree holders has been paying security charges, and incurring expenses on the said properties and sends bills to the Official Liquidator. By order dated 16th December, 2004, this Court has already ordered that the properties which are subject-matter of the security of the bank and financial institutions will have to be sold and disposed of in pursuance of the recovery certificate issued by the Debt Recovery Tribunal under the provisions of Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The said order passed by this Court on 16th December, 2004 is subsisting and is binding on all parties including applicant and Official Liquidator.
Without going into the allegations of the applicants, that no recovery certificate has been issued by the Debt Recovery Tribunal and thus Debt Recovery Tribunal could not have passed any order allowing Central Bank of India to settle the claims with Mr. Prabhakar Barbole and others, in my view, even if no recovery certificate is issued by the Debt Recovery Tribunal, fact remains that the recovery proceedings filed by the secured creditors in whose favour decree against the company in liquidation has been passed, are pending before Debt Recovery Tribunal. High Court thus cannot sanction any sale in favour of such secured creditors in respect of the properties of the company in liquidation.
By this application filed by Mr Shashikant Pasari who is a ex-Director of Rajan (Textile) Mills Pvt Ltd (in liquidation), Barshi, Taluka Barshi, District Sholapur, and a guarantor to the secured creditor and who is major shareholder and claims to be a creditor of the Company (in liquidation), seeks recall/review of the order dated 12th February, 2013 passed by this Court in Company Application No.653 of 2012. By the said order dated 12th February, 2013 passed by this Court in Company Application No. 653 of 2012 filed by the Central Bank of India one of the secured creditor, this Court allowed the Central Bank of India to release all claims on the leasehold rights in favour of the owners of the properties which were mortgaged with the Central Bank of India, being Block Nos. 400, 401, 402, 403, 405 and 427 situate at village Barshi, Taluka Barshi, District Sholapur (hereinafter referred to as "the said properties) by accepting the sum of Rs.1.40 Crores from the owners of the said properties and also directed the Official Liquidator to release and relinquish the leasehold rights held by M/s Rajan (Textile) Mills Pvt. Ltd (in liquidation) in favour of the owners of the said properties and to execute necessary deeds and the documents as required.
2. Some of the relevant facts for the purpose of deciding this application are as under:
(a) The said Company in liquidation M/s Rajan Textiles Pvt Ltd (hereinafter referred to as "the said Company) had mortgaged leasehold rights in respect of land bearing Block No.399, admeasuring 7 H. 92 R, Block No.400, 6 H. 38 R, Block No.401, 5 H. 71 R, Block No402, 1.26 R, Block No.403 admeasuring 7 H. 93 R, Block No.405 admeasuring 7 Hand 34 R and block No.427, 5 H. 81 R situated at village Barshi, Taluka Barshi, District Sholapur in favour of the Central Bank of india by depositing title deeds. The said properties were acquired by the said Company (in liquidation) from the Official Liquidator of M/s Barshi Spinning and Weaving Mills Ltd (in liquidation).
(b) The Central Bank of India are one of the secured creditor filed a suit bearing No.99/1986 in this Court against the said Company for recovery of its dues. By judgment and order of this Court dated 30th November, 1996 the said suit came to be decreed.
(c) Vide sale deed dated 11th August, 2000 executed by Mr Ramchandra Renukdas Deshpande and others, as the owners of the land bearing Block No.427, comprising 5 Hectares and 81 ares situated at Barshi for consideration of Rs. 10,25,000/- and by another sale deed dated 11th June, 2003 executed by Mr Bhalchandra Vishnu Pendse and others as owners of land bearing Block Nos.400, 401, 402, 403 and 405 sold those lands in favour of Vishwas Arjunrao Barbole, and others for a total consideration of Rs.33,73,750/-. It is the case of the applicant herein as well as the Official Liquidator that the said Company had lease hold rights in respect of the land bearing Block No.400, admeasuring 6 H. 38 R, Block No.401, admeasuring 5 Hectares 71 aers, Block No.402 admeasuring 1 Hectar 26 ares, Block No.403 admeasuring 7 Hectares, 93 ares and Block No.405 admeasuring 7 Hectares 34 ares situated within the revenue village of Barshi, Taluka Barshi, District Sholapur. The said leasehold rights were mortgaged by the said Company in favour of the Central Bank of India by depositing title deeds.
(d) On 1st August, 2003, the Official Liquidator submitted a report in Company Petition No. 20 of 1984 seeking sanction of sale of the properties of the said Company. By an order dated 16th December, 2004 passed by this Court, it was held that no orders were necessary on the report of the Official Liquidator dated 1st August, 2003 and the said report was disposed of. It has been held in the said order that the recovery proceedings were pending against the said Company before the Debt Recovery Tribunal (for short DRT) instituted by the various parties and in view of pendency of such recovery proceedings which were instituted by
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