2016 (2) TMI 1102 - HC - Companies Law

Settlement arrived at by the appellant in his capacity as guarantor without the leave of the court - whether the appellant paid the money to the secured creditor i.e. Punjab & Sind Bank only to save his personal immovable property from coercive action? - Held that - The appellant in his capacity as the guarantor paid the debt, which was owed by the company (in liquidation). The OL, in fact, was aware of the appellant s involvement as is evident from the communication dated 30.11.2006 addressed to the Asst. O.L, which is appended as Annexure-D to the appeal. As a matter of fact, in the meeting held in the office of the OL, on 22.9.2011, these aspects squarely came to fore when, payments made by the appellant to Punjab & Sind Bank i.e. the secured creditor, were noted. A perusal of the minutes dated 22.09.2011 would show that, amongst others, Mr Sanjay Yadav, Dy. O.L. was present at the said meeting.A perusal of order dated 26.08.2011 would show that the date of appearance of ex-directors before the OL and the chartered accountant was changed from 29.08.2011 to 22.09.2011, which is when, the meeting was held and the minutes were drawn up. The argument that the OL was unaware of the payments made by the appellant i.e. the ex-director is, according to me, not tenable. Second, the submission of Mr Choudhary is equally unsustainable for the reason, which is, that irrespective of the motivation for payment of debts of the company (in liquidation), once, moneys are paid by the appellant, he should be allowed to take recourse to its assets. The principal debtor being the company (in liquidation), and the appellant having paid its creditor (i.e. the Punjab & Sind bank), it falls to reason that it should be entitled to seek recovery by lodging its claim with the OL. Appeal allowed.

Summary

Issues: Appeal against rejection of claim by Asstt. Official Liquidator

In this case, the primary issue revolves around the rejection of the appellant's claim by the Asstt. Official Liquidator (OL). The OL rejected the claim on the grounds that the appellant was neither a secured nor unsecured creditor of the company in liquidation, and that the appellant settled with a bank without court approval, thus not entitled to make any claim with respect to the funds available with the company. The OL also stated that the appellant did not fall under specific categories mentioned in the Companies Act, 1956.

Analysis:

The appellant appealed against the OL's order rejecting their claim. The OL contended that the settlement made by the appellant as a guarantor was without court approval and that the payment to the bank was to protect personal property. However, the Court found these contentions untenable. The Court noted that the OL was aware of the appellant's involvement in settling the debt owed by the company in liquidation. Minutes from a meeting held with the OL revealed that payments made by the appellant to the bank were acknowledged, indicating the OL's awareness of the situation. The Court emphasized that once the appellant paid the company's creditor, they should be allowed to seek recovery from the company's assets. The Court held that the appellant, having paid the creditor, should be entitled to lodge a claim with the OL for recovery.

The Court highlighted that the OL's argument of being unaware of the appellant's payments was not valid, as evidence showed the OL was informed about the payments. Additionally, the Court rejected the OL's argument that the appellant's motivation for paying the debts was irrelevant. The Court emphasized the appellant's right to seek recovery after settling the company's debts. Consequently, the Court allowed the appeal, setting aside the OL's order and directing the OL to consider the appellant's claim in accordance with the law. The appeal and related applications were disposed of accordingly.