An Official Liquidator cannot unilaterally demand the refund of alleged excess interim payments or accrue interest thereon without first serving notice and providing affected creditors an opportunity to be heard in accordance with natural justice.

COMMON ORDER

M/s.Allwyn Watches Limited (in Liquidation) is the respondent in COMPA Nos.1212 of 2014 and 815 of 2017 (for short, ‘the respondent company’) and the petitioner in COMPA No.73 of 2025 and the petitioners in COMPA Nos.1212 of 2014 and 815 of 2017 and the respondents in COMPA No.73 of 2025 are its secured creditors and these applications are filed seeking a direction to the Official Liquidator (OL) to make an interim disbursement of the balance sale proceeds lying to the credit of the respondent company account as against the claim of each of the first charge holders, pending final adjudication of the claims of workmen and others.

2. Brief facts of the case are that vide orders dated 11.12.2006 in C.P.No.108 of 2001, this Court was pleased to direct the winding up of the respondent company M/s.Allwyn Watches Limited and appointed the official liquidator as its provisional liquidator. Thereafter, the land and buildings situated at Patancheru, Medak District and Plant & Machinery situated at Penukonda, Ananthapur District, were put to sale as per the directions of this Court and an amount of Rs.136,19,22,000/- was realized from the auction of the said assets. Thereafter, the official liquidator invited the claims of the creditors by publishing the same in the newspapers on 05.04.2011 and the last date of submission of claims was fixed as 04.05.2011. Some of the claims have been submitted by the creditors. However, since the official liquidator was not recognizing the creditors as the secured creditors of the company in liquidation, the secured creditors filed C.A.No.955 of 2012. This Court vide orders dated 15.02.2013 held that the petitioners therein are the secured creditors of the company in liquidation and accordingly, directed the official liquidator to adjudicate the claims of the petitioners therein expeditiously, preferably within a period of two months. However, the official liquidator did not adjudicate the claims within the time granted by the Court, but filed C.A.No.757 of 2012 to grant additional time for adjudication of claims or alternatively to adjudicate the claims of secured creditors by the High Court itself. Thereafter, the secured creditors filed C.A.No.955 of 2012 seeking a direction to the official liquidator to adopt a simpler method of adjudication and also for interim disbursement pending adjudication. This Court, while holding that the petitioners are the secured creditors of the respondent company, had directed the official liquidator to adjudicate the claims expeditiously and pass appropriate orders preferably within a period of two months.

3. Against the said order, the petitioners in COMPA No.815 of 2017 preferred OSA, but the same was withdrawn subsequently as not pressed. Since there was inordinate delay in adjudicating the claims, the secured creditors once again approached this Court and filed C.A.No.409 of 2013 for a direction to the official liquidator to make interim disbursement of atleast 75% of the claim of each of the first charge holders, pending final adjudication of the claims. A learned Single Judge of this Court, vide order dated 26.03.2013, was pleased to direct the official liquidator to disburse an amount of Rs.59,19,01,522/- and further directed the official liquidator to finalize the liquidation proceedings. Thereafter, vide orders dated 04.06.2013 in C.A.No.757 of 2012, this Court directed the official li