The main legal point established in the judgment is the applicability of DAVP rates and the obligations of the advertising agencies and the Official Liquidator.

S. Muralidhar, J.

Co. Appl. Nos. 908 of 2007, 480 of 2008, 1702 of 2009, & 151 of 2011

1. These applications arise out of orders passed by the Court in Company Petition No. 292 of 2004 seeking the winding up of the Respondent Data Access (India) Limited (‘DAIL’). The subject matter of the present order concerns the payments due to two advertising agencies, Infinity Advertising Services Private Limited and Blue Bird Advertising (P) Limited.

2. DAIL was involved in the business of international long distance network services using high grade technical equipments. It was operating its business from various places in India, i.e., Delhi, Bangalore, Chennai, Mumbai and Kolkata. The assets of DAIL lying at the aforesaid places were inventorised and valued under the orders of this Court. By a judgment dated 18th November 2005, DAIL was directed to be wound up by the Court.

3. Canara Bank (‘CB’) is one of the secured creditors of DAIL. Pursuant to the orders dated 2nd February 2007 and 8th March 2007 passed by the Court, proclamations for the sale of the movable assets of DAIL were ordered to be issued. According to CB no bids were received in response to the notices issued. By an order dated 31st May 2007 the Court directed that a fresh advertisement be issued for the sale on 20th September 2007. This led to CB filing Co. Appl. No. 907 of 2007 stating that since it was in the process of negotiating with some private parties, the order dated 31st May 2007 should be kept in abeyance.

4. CB also filed Co. Appl. No. 908 of 2007 stating that pursuant to the orders dated 6th November 2006, 18th December 2006, 2nd February 2007 and 8th March 2007 the sale proclamations had been issued in various newspapers by the Official Liquidator (‘OL’). Pursuant to the order dated 2nd February 2007 the advertisement was published by the OL on 16th February 2007 in various newspapers through an advertising agency, Infinity Advertising Services Private Limited (‘Infinity’). The cost of the advertisement had to be borne by CB. Infinity raised a bill of Rs. 42,69,844 on the OL, who in turn asked CB to pay the said sum. The OL also asked CB to pay the invoices raised by Blue Bird Advertising (P) Limited (‘Blue Bird’) for a sum of Rs. 27,80,347.50.

5. CB contended that the demand raised by Infinity was exorbitant and not payable for the following reasons:

“(a) The Official Liquidator is bound by the new Advertising Policy of the Government of India, which is effective from 1st June 2006.

(b) As per the said policy, all Central Governments advertisements are to be routed through the Directorate of Advertising and Visual Publicity (‘DAVP’), which is the Nodal Advertising Agency of the Government of India.

(c) As per the DAVP Policy, all the Government, autonomous organizations and PSUs under the Ministries/Departments are also bound to route their advertisement through DAVP.

(d) As per the said policy, the advertisements are to be published in newspapers, which are in the panel of DAVP and the rates of advertisement fixed by the Rate Committee of the DAVP are applicable uniformly to all the newspapers.”

6. CB further states that the bill raised by Infinity was not as per the DAVP rates and was, therefore, not payable by the OL to Infinity. It is pointed out that a sum of Rs. 17.54 lakhs had been spent by CB towards the inventorization charges and the valuation of the assets of DAIL. It is further pointed out that CB was being subjected to unreasonable expenditure on account of different charges as well as security charges. It was prayed that the OL should ensure that the public money was not wasted by accepting exorbitant and wrong demands of the advertising agency who was obliged to ensure that the DAVP rates would be charged by the newspapers for advertisements in question. In Co. Appl. No. 908 of 2007 CB prayed that (a) the OL should be directed to deposit the amount received so far in the account of DAIL with CB; (b) the OL should be directed to