2009 (1) TMI 486 - HC - Companies Law

Winding up - Custody of company s property - entitlement of the workmen - Held that - Pending adjudication of all claims, the applicant would be disbursed a portion of the amount and having regard to the Award already passed by the Debts Recovery Tribunal, direct that 25 per cent of the claim less expenses incurred for the conduct of sale could be disbursed in favour of the applicant-company. This is wholly provisional and the amount could be disbursed on securing an undertaking that if there is any amount paid in excess than what the company financed, it shall reimburse the same. There shall be also a further liability on the Company to pay interest @ 9 per cent from the date of disbursement till the date when accounts are drawn finally after considering all the claims and when the money is distributed to the workmen also. This direction is only to assuage the claims of the workmen whose lis has not been finalised and whose claims have not been fully addressed although they are equally entitled. Even at the time of disbursal, if the O.L. has obtained a sizable number of claims from workmen, it shall be open to the O.L. to determine a portion of the amount that would bear the same proportion which the applicant-company is being paid out of its total entitlement with similar restrictions regarding the undertaking and payment of interest as issued to the applicant-company.

Summary

Issues:
1. Delay in adjudicating claims of secured creditors and workmen by the Official Liquidator.
2. Disbursement of interim payments to secured creditors.
3. Impleadment of the Chartered Accountant and Employees Union in the application for interim disbursement.
4. Objections raised by the Official Liquidator and workmen regarding interim disbursement.
5. Decision on the amount and conditions for interim disbursement to the applicant-company.

Issue 1: Delay in adjudicating claims of secured creditors and workmen by the Official Liquidator
The judgment addresses the concern of a secured creditor regarding the Official Liquidator's failure to adjudicate claims of all secured creditors and workmen, leading to a delay in distributing sale proceeds. Despite previous court orders directing the Official Liquidator to settle claims promptly, delays persisted. The workmen sought impleadment of the Chartered Accountant and Employees Union, but objections were raised against this, emphasizing the need for finalizing claims before any interim disbursement.

Issue 2: Disbursement of interim payments to secured creditors
The Official Liquidator and workmen objected to interim payments to a single secured creditor, arguing that all claims should be settled simultaneously to ensure fairness. The court considered the objections but acknowledged the necessity of interim disbursement to address the applicant's claims promptly. A provisional disbursement of 25% of the claim, subject to reimbursement if overpaid, was directed, along with an interest liability of 9% until final distribution of funds to all parties.

Issue 3: Impleadment of the Chartered Accountant and Employees Union
The workmen sought impleadment of the Chartered Accountant and Employees Union in the interim disbursement application, but objections were raised against this, stating that their involvement was unnecessary as the claims were already being adjudicated. The court deemed the impleadment applications unnecessary and disposed of them accordingly.

Issue 4: Objections raised by the Official Liquidator and workmen
The Official Liquidator and workmen objected to interim payments, citing concerns about premature disbursement and unequal treatment of creditors. They highlighted the need for a fair distribution of assets among all parties entitled to claims. The court considered these objections but ultimately decided in favor of interim disbursement to address the applicant's specific concerns promptly.

Issue 5: Decision on the amount and conditions for interim disbursement to the applicant-company
The court directed a provisional disbursement of 25% of the claim to the applicant-company, subject to conditions such as reimbursement of any excess amount and payment of interest at 9%. This decision aimed to balance the interests of the applicant with the rights of other creditors, ensuring a fair distribution of funds pending final adjudication of all claims. The court referred to previous legal precedents to support its decision on the amount and conditions for interim disbursement.

Overall, the judgment addresses the challenges faced in adjudicating claims of secured creditors and workmen, the necessity of interim disbursement to address specific concerns promptly, and the importance of ensuring fairness and equal treatment among all parties entitled to claims in the liquidation process.