2003 (1) TMI 529 - HC - Companies Law

Summary

Issues Involved:
1. Payment of dues to workmen of the Star of Gujarat Mills Co. Ltd. (In Liquidation).
2. Verification and reconciliation of claims by the Official Liquidator and Chartered Accountants.
3. Determination of the exact number of workmen entitled to claims.
4. Secured creditors' claims and their verification.
5. Determination of the ratio for distribution of realized assets among secured creditors and workmen.
6. Discrepancies in the claims and the need for further verification.

Detailed Analysis:

1. Payment of Dues to Workmen:
The Textile Labour Association filed an application seeking a direction to pay Rs. 5,15,76,953 to 607 workmen of the Star of Gujarat Mills Co. Ltd. (In Liquidation). An interim relief was sought for payment at the rate of 10% of the claimed amount. The Court directed the Official Liquidator to make a payment of Rs. 30 lakhs to the workmen and for this purpose, the Official Liquidator was directed to encash fixed deposits prematurely to the extent of Rs. 30 lakhs.

2. Verification and Reconciliation of Claims:
The Official Liquidator appointed Chartered Accountants to verify the claims of the workers, which resulted in a reduction of the claimed amount to Rs. 4,89,03,920. The Central Bank of India, a secured creditor, claimed dues of Rs. 16,29,43,383 as of the winding-up date and filed an application for recovery in the Debt Recovery Tribunal. The Court also directed the Liquidator to verify the expenditure claims of the Central Bank of India, which were found admissible to the extent of Rs. 4,36,803.

3. Determination of the Exact Number of Workmen:
Discrepancies were found in the number of workers entitled to claims. The Chartered Accountant of the Official Liquidator calculated claims based on 529 workers, while the Textile Labour Association claimed 607 workers. The Court noted the need to ascertain the correct number of workers, considering retrenchments and new appointments post-BIFR scheme approval.

4. Secured Creditors' Claims:
The Central Bank of India and IIBI raised objections regarding the inclusion of GIIC as a secured creditor, stating that no charges were registered in favor of GIIC. The Court directed the Official Liquidator to call for necessary details from GIIC to verify their claim.

5. Determination of the Ratio for Distribution:
The Chartered Accountants provided different ratios for distribution among secured creditors and workmen. The Court noted discrepancies in the strength of workers and directed the Official Liquidator to ascertain the correct number of workers and verify the authority for new appointments post-BIFR scheme.

6. Discrepancies in Claims and Need for Further Verification:
The Court observed that the claim of 607 workers by the Textile Labour Association could not be entertained due to lack of necessary details. The Official Liquidator was directed to verify retrenchments and new appointments, and file a fresh report. The ratio for distribution would be determined based on this fresh information.

Conclusion:
The Court disposed of the application with directions to the Official Liquidator to verify the exact number of workers and the claims of GIIC as a secured creditor. The Liquidator was also directed to file a fresh report for determining the ratio for distribution of the realized assets. The Court clarified that the balance amount lying with the Liquidator was not appropriated towards the Liquidator's Commission and that a proper application for the Commission could be made in the future.