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High Court of Delhi
S. MURALIDHAR J.
In The Matter of: International Ceramics Ltd.
Co.Pet. No. 222 of 1999
Decided on : 30-05-2013.
Official Liquidator - Application for direction to deposit missing items valuation amount - Companies Act, 1956, Section 529 - The court discussed the missing items valuation, responsibility of the security agency, and the amount to be paid by the security agency for the missing assets.
Fact of the Case:
The Official Liquidator (OL) sought a direction for Keshav Security Services (P) Limited (KSSPL) to deposit an amount for missing items at a factory premises. KSSPL was responsible for providing security services at the premises of International Ceramics Limited (ICL) during its liquidation.
Finding of the Court:
The court found that a considerable part of the plant and machinery and equipment found at the site in 2003 had gone missing during KSSPL's tenure. KSSPL was held responsible for the missing assets due to its grave dereliction of duty and gross negligence. The court directed KSSPL to pay Rs. 70 lakhs to the OL for the missing assets.
Issues: The court considered whether a considerable part of the assets had gone missing, the responsibility for the missing items, and the amount to be paid by KSSPL for the missing assets.
Ratio Decidendi: The court held that KSSPL was responsible for the missing assets and directed it to pay Rs. 70 lakhs to the OL. The court also stated that if KSSPL failed to pay the amount, it would accrue simple interest at 12% per annum for the period of delay.
Final Decision: The court directed KSSPL to pay Rs. 70 lakhs to the OL for the missing assets within eight weeks, failing which KSSPL would be liable to pay the amount with simple interest at 12% per annum.
1. This is an application by the Official Liquidator (‘OL’) for a direction to Keshav Security Services (P) Limited (‘KSSPL’) to deposit an amount of Rs. 99,15,440 with the OL towards missing items as valued by M/s. Chadha & Associates.
2. The background to the application is that International Ceramics Limited (‘ICL’), was ordered to be wound up by this Court on 8th March 2001 and the OL was appointed as its Provisional Liquidator (‘PL'). ICL was finally wound up an order dated 17th September 2004. The OL was appointed as its Liquidator. KSSPL filed Company Application No. 1334 of 2008 for payment of its bills for providing security services at the factory premises of ICL situated at 25 KM, Rohtak, Jind Road, Haryana for a period of five years, i.e., from August 2003 to August 2008. In the said application, the Court passed the following order on 27th August 2009:
“Co. Appl. No. 1334 of 2008 in C.P. No. 222 of 1999
This is an application moved by M/s. Keshav Security Services Pvt. Ltd. for payment in respect of security services provided at the factory premises for the company in liquidation situated at 25 KM, Rohtak, Jind Road, Haryana. Arguments heard.
Since this is a claim pertaining to a period of more than five years, i.e., from August, 2003 to August, 2008, the Official Liquidator is directed to ascertain the full particulars of the services stated to have been provided by the Applicant, after determining the number of staff deployed from time to time and their proper identification. The Official Liquidator may also verify the requisite details of the ESI provident fund etc. in this regard. At the same time, Mr. I.C. Singhal, ex-Managing Director of the company, who is present in Court, states that he has some objections to the release of any amount to the Applicant. Let all objections that he may have be filed by him before the Official Liquidator. The Official Liquidator shall thereafter consider all aspects of the matter and file a consolidated report on this aspect within four weeks. Let the Official Liquidator also prepare a full inventory of the plant and machinery situated at the above premises, while assessing the quality of the security services stated to have been provided by the Applicant.
The Official Liquidator may also have the assets available at the site checked against the inventory prepared earlier by the valuer. He may also take the assistance of the ex-Managing Director for verifying this inventory. For this purpose, the Official Liquidator is permitted to de-seal the property and to reseal it again after completion of the inventory.
Let the inventory be prepared on 16th September 2009 at 11.30 am. Since the matter of payment will now be considered after the report is filed in this regard by the Official Liquidator, as directed above, no useful purpose will be served by continuing with this application.
The application is disposed of in the above terms.”
3. Consequent upon the above order, the OL addressed a letter to KSSPL on 6th October 2009 enquiring about the missing items from the aforementioned factory site. In response thereto, KSSPL informed the OL by its letter dated 17th November 2009 that upon deputing their persons alongwith photographer to visit and verify the position regarding existing plants, machineries and equipments at the factory premises, it was found that the equipments, plants and machineries stated to be missing from the site in the Minutes dated 16th September 2009 were very much existing and available. The photographs of the visit by the KSSPL security persons to the site were also enclosed with the letter.
4. On 1st December 2009 the OL filed a report bearing No. 325 of 2009 regarding compliance with the directions issued by the Court on 27th August 2009. It was stated that the OL had deputed a team on 16th September 2009 to visit the factory premises. It was found that the seal of the OL placed earlier at the time of taking over possession of the assets of
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