2019 (6) TMI 1247 - HC - Companies Law

Declaration of Dividend - authorisation to the Official Liquidator to open a separate dividend account - dispensation with the publication of notice of declaration of dividend in newspapers - HELD THAT - Since the unsecured creditors have filed individual claims and their claims were adjudicated issuing respective Form No. 69/70, the Official Liquidator is directed to issue individual notices of dividend in Form No. 138 in the name of one preferential creditor and 43 unsecured creditors of the company in liquidation, dispensing with publication of notice of dividend in newspapers as required under Rule 276 of the Companies (Court) Rules, 1959. The Official Liquidator is authorized to open a separate dividend account in Punjab National Bank and pay the dividend to unsecured creditors out of the said account in terms of Rule 290 of the Companies (Court) Rules, 1959. He is also authorised to fix the schedule for making payment and also to pay the dividend due to any deceased creditor to his legal heirs upon production of a family member certificate or such other certificate other than a succession certificate and upon furnishing a personal indemnity in terms of Rule 280 of the 1959 Rules and to incur incidental charges from and out of the available funds of the company in liquidation. Application allowed.

Summary

Issues:
1. Application under Sections 457(1)(e) and 460(4) of the Companies Act, 1956 for declaration of dividends to creditors.
2. Delay in filing Certificate in Form No. 71 of the 1959 rules.
3. Authorization for the Official Liquidator to disburse dividends and incur incidental charges.

Analysis:

1. The judgment pertains to an application filed under Sections 457(1)(e) and 460(4) of the Companies Act, 1956, seeking permission for the Official Liquidator to declare dividends to creditors. The Official Liquidator proposed to declare dividends to one preferential creditor and 43 unsecured creditors/chit holders. The total available amount for distribution was stated to be ?1,64,53,085, out of which ?1,92,035 was allocated for expenses, leaving a balance of ?1,62,61,050 for dividends. The proposed dividends were @ 100% to the Employees Provident Fund Organization and @ 62% in a rupee to the unsecured creditors, totaling ?1,81,068 and ?1,60,79,982 respectively.

2. Additionally, the application addressed a delay of approximately 1175 days in filing the Certificate in Form No. 71 of the 1959 rules. The Official Liquidator sought condonation for this delay and requested the Certificate to be taken on record. The court directed the Official Liquidator to issue individual notices of dividend in Form No. 138 to the preferential creditor and unsecured creditors, based on their adjudicated claims, thereby dispensing with the requirement of publishing a notice of dividend in newspapers as per Rule 276 of the Companies (Court) Rules, 1959.

3. Furthermore, the judgment authorized the Official Liquidator to open a separate dividend account in Punjab National Bank for disbursement to unsecured creditors, fix the payment schedule, pay dividends to legal heirs of deceased creditors upon certain documentation, and incur incidental charges from the company's available funds in liquidation. Consequently, the court allowed the applications filed to condone the delay and approved the Company Application No. 34 of 2019, enabling the Official Liquidator to proceed with the distribution of dividends and related activities as per the provided authorizations and directions.