2018 (2) TMI 1983 - HC - Companies Law

Permission to sell three tugs - company under liquidation - HELD THAT - The Official Liquidator shall sell the two tugs, namely, Gal Beaufort Sea and Gal Ross Sea to M/s Akil Corporation in accordance with the terms proposed by the party. The Applicant has already received 10% of the offer amount as EMD, which it will have to deposit with the Official Liquidator. The liquidator shall hold the amount of EMD as also balance payment to be made by M/s Akil Corporation to the account of the company in liquidation. Distribution of the sale proceeds or declaration of dividend shall await hearing of the company application. The Company Application is stood over to 28 February 2018 - By the next date, the Applicant shall submit a valuation in respect of the third tug, namely, Sangita.

Summary

Issues:
1. Permission to sell three tugs under Section 51(1) of the Merchant Shipping Act, 1958.
2. Acceptance of a commercial offer for two tugs.
3. Objection by Seafarers regarding the distribution of sale proceeds.

Analysis:

1. The Company Application sought permission to sell three tugs, claiming to be a registered mortgagee under Section 51(1) of the Merchant Shipping Act, 1958. As the Respondent company was under liquidation, the properties could only be sold under the supervision of the Official Liquidator. The Applicant had received a good commercial offer for two tugs and requested the Court to permit the sale by private treaty, with the distribution of sale proceeds to be decided later. The Court found the suggestion reasonable and noted the valuation reports obtained for the two tugs, Gal Beaufort Sea and Gal Ross Sea, prepared by reputable Chartered Engineers. The Official Liquidator had no objections to these valuations, and the Court deemed the offer submitted by M/s Akil Corporation as reasonable and worthy of acceptance.

2. Despite objections from Seafarers who worked as crew on the tugs, the Court emphasized that the distribution of sale proceeds or declaration of dividend must await the hearing of the company application. The crew's submissions would be considered at that time. To ensure the expeditious sale of the tugs in the interest of justice for all stakeholders, the Court directed the Official Liquidator to sell the two tugs to M/s Akil Corporation in accordance with the proposed terms. The Applicant was required to deposit the Earnest Money Deposit (EMD) received with the Official Liquidator, who would hold the EMD and the balance payment to be made by M/s Akil Corporation in the company's liquidation account.

3. The Court postponed the decision on the distribution of sale proceeds or declaration of dividend until the hearing scheduled for 28 February 2018. The Applicant was instructed to submit a valuation report for the third tug, Sangita, by the next hearing date. This comprehensive analysis of the judgment outlines the Court's decision to permit the sale of two tugs based on a reasonable offer, while addressing objections raised by Seafarers and emphasizing the need for a fair and just distribution of sale proceeds under the supervision of the Official Liquidator.