The court emphasized the priority of payments to workmen and secured creditors under Sections 529A and 530 of the Companies Act, ensuring that they are paid in full before unsecured creditors.

Headnote:
Companies Act - Official Liquidator - Sections 460(4), 555 - Summary
Fact of the Case:

The Official Liquidator sought permission to disburse dividends to workmen creditors of a company in liquidation, in order to restore parity among the present claimants.
Finding of the Court:

The court allowed the application, permitting the Official Liquidator to disburse dividends to the workmen creditors at 48 paise in a rupee, bringing them at par with other workmen who were already paid dividends at the same rate.
Issues: The main issue was whether the workmen creditors should be paid dividends to bring them at par with other workmen who were already paid dividends at 48%.
Ratio Decidendi: The court held that the workmen hold pari passu charge with the secured creditors, and it is not disputed that all the secured creditors have been paid dividends at 48 paise per rupee.
Final Decision: The Official Liquidator was permitted to disburse the dividends at 48 paise to rupee to 62 claimants as per the Annexure A & B. It was directed that the dues of secured creditors and workmen should be settled first, and the remaining amount should be distributed to the unsecured creditors and others in accordance with the provisions of the Companies Act.

Judgment :-

Vinod K. Sharma, J.

1. This application under Sections 460(4), 555 of the Companies Act, 1956, read with Rules 9, 11(b), 167, 280 of the Companies (Court) Rules, 1959, has been moved to permit the Official Liquidator to disburse the dividend of Rs.47,03,647/- (Rupees forty seven lakhs three thousand six hundred forty seven only) @ 48 paise in a rupee, to 62 claimants, as detailed in the list of creditors as per Annexure 'A' and Annexure 'B'.

2. In support of the application, a report has been filed by the Official Liquidator recording therein that M/s. S.I.V. Industries was ordered to be wound up on 25.08.2004 in Company Petition No.17 of 2004.

3. In pursuance of the order passed by this Court in C.A.No.1325 of 2006 dated 17.08.2006, the Official Liquidator invited claims from the creditors including workmen creditors of the company in liquidation.

4. The total number of claims received were 3680. Out of 3680 claims, the Official Liquidator adjudicated the claims of 3313 under Section 529 A of the Companies Act, 1956 and filed 14 lists of creditors in this Court on various dates.

5. The Official Liquidator also made disbursement of four dividends, to workmen creditors, as well as secured creditors at 12% each, as per first to fourteen list of creditors filed in this Court.

6. It is the case of the Official Liquidator that there are 62 workmen creditors, whose applications for condonation of delay were allowed by this Court and their claims were entertained by the Official Liquidator, and adjudicated.

7. The total admitted claim of the workmen comes to Rs.97,99,265/- (Rupees ninety seven lakhs ninety nine thousand two hundred sixty five only).

8. It is also reported that other list of creditors showing 21 claims was filed before this Court under Rule 167 of the Companies Court Rules, 1959, in prescribed Form No.71 on 06.01.2012, for an amount of Rs.42,53,923/-(Rupees forty two lakhs fifty three thousand nine hundred and twenty three only). The copies of those are enclosed as Annexure 'A' and another Form No.71 in respect of 41 persons claiming Rs.55,45,342/-(Rupees fifty five lakhs forty five thousand three hundred forty two only) is filed as Annexure 'B'.

9. The funds position of the Company in liquidation as on 17.01.2013 is as under:-

Cash : Rs.631.50 (Rupees six hundred thirty one and paise fifty only)

Bank : Rs.73,65,122.84 (Rupees seventy three lakhs sixty five thousand one hundred twenty two and paise eighty four only)

Investments: 11,60,00,000/- (Rupees eleven crores sixty lakhs only)

10. It is submitted that in view of the availability of funds with the company in liquidation, and keeping in view the fact that the workmen have already been paid @ 48 paise in a rupee as dividend, in order to restore parity among the present claimants, it is necessary that the Official Liquidator be permitted to declare and disburse the dividend @ 48 paise in a rupee amounting to Rs.47,03,647/-(Rupees forty seven lakhs three thousand six hundred forty seven only) to the remaining workmen creditors as per the list of creditors mentioned above numbering 62 totalling to Rs.97,99,265/- (Rupees ninety seven lakhs ninety nine thousand two hundred sixty five only).

11. It is reported that 62 workmen creditors can be paid, after the approval by this Court.

12. It is prayed that the Official Liquidator may be permitted to disburse a sum of Rs.47,03,647/- (Rupees forty seven lakhs three thousand six hundred forty seven only) @ 48 paise in a rupee to 62 claimants, i.e., workmen as mentioned in the list of creditors as per Annexures 'A' and 'B'.

13. It is also prayed that the Official Liquidator be permitted to open a new dividend account in the Punjab National Bank, for a sum of Rs.Rs.47,03,647/- (Rupees forty seven lakhs three thousand six hundred forty seven only), so as to enable him to disburse the dividend to 62 workmen creditors of the company in liquidation.

14. Prayer is also made to dispense with the publication of notice for dec

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Judicial Analysis

2013 Supreme(Mad) 1327

High Court of Judicature at MadrasVINOD K. SHARMA, J.The Official LiquidatorVersus.Comp.A.No. 321 of 2013 in C.P.No. 17 of 2004Decided On : 15-03-2013

The court emphasized the priority of payments to workmen and secured creditors under Sections 529A and 530 of the Companies Act, ensuring that they are paid in full before unsecured creditors.

Judicial Analysis

High Court of Judicature at Madras
VINOD K. SHARMA, J.
The Official Liquidator
Versus
.
Comp.A.No. 321 of 2013 in C.P.No. 17 of 2004
Decided On : 15-03-2013