2008 (3) TMI 486 - HC - Companies Law

Winding up - Custody of company s property - Held that - The Official Liquidator shall examine the claim of each of the applicant herein and other security agencies whose claims are pending before him, keeping in mind the observations made hitherto; The Official Liquidator shall ensure that the assets (movable and immovable) of company in liquidation in respect of which there is no claim of any secured creditor and there is no impediment for sale of such assets, shall take steps to sell those assets forthwith by following necessary procedure and sale proceeds recovered from such sale shall be disbursed in accordance with law; In cases where the secured creditors have set up claims in respect of the assets of company in liquidation, the Official Liquidator shall call upon the secured creditors to deposit suitable commensurate amount towards security charges to be paid to the concerned security agency after due verification of its claim. In addition, if there is no impediment to sell the assets (movable/immovable) of such company in liquidation, the Official Liquidator may simultaneously ensure that the assets are put up for sale forthwith by following necessary procedure; In cases where the secured creditors of any company have instituted recovery proceedings before the DRT, the Official Liquidator shall forthwith move the concerned DRT praying for sale of the assets of the company and to invest the sale proceeds in suitable fixed deposit scheme to derive best returns thereon, which amount can be disbursed subject to such orders to be passed by the competent Court; Copy of this order be forwarded forthwith to the Secretary, Ministry of Company Affairs, Government of India for information and taking necessary action as may be advised in the light of observations made hereinbefore.

Issues Involved:
1. Non-payment of dues to security agencies.
2. Unavailability of funds in the accounts of companies in liquidation.
3. Deployment of security personnel.
4. Delay in the sale of assets.
5. Alleged collusion and misconduct by the Official Liquidator.
6. Justification for the number of security personnel.
7. Payment from the consolidated fund.
8. Role and duty of the Official Liquidator.

Detailed Analysis:

1. Non-payment of dues to security agencies:
The applicants, security agencies, claimed that they provided security services for a long time, approved by the Official Liquidator and ratified by the Company Court. However, the charges for these services remained unpaid or were only partially paid, leading to substantial outstanding amounts. The applicants approached the Company Court for directions to the Official Liquidator to disburse the outstanding dues.

2. Unavailability of funds in the accounts of companies in liquidation:
The principal reason cited for non-payment was the unavailability of funds in the accounts of the concerned companies. The applicants argued that the lack of funds could not be a legitimate ground for delaying payment, especially when the services were requisitioned and availed by the Official Liquidator. They suggested that payment could be made from the Common Fund available with the Official Liquidator.

3. Deployment of security personnel:
The Official Liquidator had a panel of security agencies, and the services of these agencies were utilized for different assignments. However, it was observed that only a few agencies were engaged in multiple assignments, raising concerns about the disproportionate deployment of security personnel. The court noted that in some cases, the number of security personnel deployed appeared to be disproportionately large compared to the nature of the assets being protected.

4. Delay in the sale of assets:
The court emphasized the duty of the Official Liquidator to dispose of the assets of the company in liquidation at the earliest opportunity to realize the best price and distribute it among the stakeholders. The delay in disposing of the assets resulted in continued deployment of security services, causing loss to the stakeholders and distributing largesse to the security agencies. The court directed the Official Liquidator to expedite the sale of assets to avoid such situations.

5. Alleged collusion and misconduct by the Official Liquidator:
The court observed that the facts disclosed in the compiled chart furnished by the Official Liquidator raised serious doubts about possible collusion with the security agencies. The court noted that the concerned agencies continued to offer their services without receiving any consideration for several years, which was incomprehensible. The court directed a deeper inquiry at the appropriate level to ascertain whether there was any act of commission or omission by the officials in the office of the Official Liquidator.

6. Justification for the number of security personnel:
The court questioned the justification for deploying a large number of security personnel for protecting assets of insignificant value. It was observed that the deployment of security guards should be proportionate to the nature and value of the assets being protected. In several cases, the court found that the security arrangement was excessive and unwarranted. The court directed the Official Liquidator to adjudicate the claims of the applicants based on the assumption that only a reasonable number of security personnel were deployed.

7. Payment from the consolidated fund:
The applicants requested payment from the Consolidated Fund. However, the court noted that the Consolidated Fund was created for a specific purpose, primarily to pay the salaries of the company-paid staff. The court rejected the request to disburse the outstanding dues of the security agencies from the Consolidated Fund, as it would exceed the available amount and was not intended for such payments.

8. Role and duty of the Official Liquidator:
The court reiterated the role of the Official Liquidator as a trustee appointed by the court to protect and preserve the properties of the company in liquidation for the benefit of the stakeholders. The Official Liquidator was expected to act with due diligence and ensure the assets were sold promptly to avoid unnecessary expenses on security services. The court emphasized the need for the Official Liquidator to take immediate steps for the sale of assets and to ensure that the claims of the security agencies were verified and paid from the sale proceeds.

General Directions:
- The Official Liquidator was directed to examine the claims of each applicant and other security agencies, keeping in mind the observations made by the court.
- The assets of the company in liquidation, where there were no claims of secured creditors and no impediment for sale, should be sold forthwith.
- In cases where secured creditors had set up claims, the Official Liquidator should call upon them to deposit commensurate amounts towards security charges.
- For companies with pending proceedings before the DRT, the Official Liquidator should move the DRT for the sale of assets and invest the sale proceeds in suitable fixed deposits.
- The court ordered the Official Liquidator to take immediate steps for the sale of assets in cases where there was no impediment and to reduce the number of security personnel to lessen the liability.

Conclusion:
The court disposed of the applications with specific directions to the Official Liquidator to expedite the sale of assets, verify the claims of the security agencies, and ensure payment from the sale proceeds. The court emphasized the need for due diligence and prompt action by the Official Liquidator to protect the interests of the stakeholders and avoid unnecessary expenses on security services.

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