2019 (12) TMI 194 - HC - Companies Law

Winding up proceedings - conduct of Official Liquidator (OL) - rejection of application for impleadment and transfer moved by the appellant secured creditor herein - HELD THAT - The OL really should have no interest in seeking to retain its control over the company under liquidation since, supposedly, it has no pecuniary interest in the matter. - OL is not willing to let go of its control over the company under liquidation. The working of the office of the OL has, in the past, left us with a sense of disappointment. In fact, if the office of the OL were to discharge its obligations and duties efficiently and completely transparently, may be, the need to evolve the NCLT with jurisdiction, inter alia, to liquidate a company may not have arisen. There are no merit in this submission for the reason, that the personal properties of the guarantors do not constitute the property of the company under liquidation. With those properties, the OL, in any event, would have no concern. In relation to the properties of the company under liquidation, possession whereof has been taken by the O.L., no irreversible steps have yet been undertaken. The impugned order passed by the learned Company Judge proceeded on the basis that the appointment of the IPR had been stayed by the NCLAT on 30.04.2019. The NCLAT stayed the appointment of the IRP on the ground that the Liquidator had already been appointed in the Company Petition. The learned Company Judge rejected the application for impleadment and transfer moved by the appellant secured creditor herein - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Transfer of company petition to the National Company Law Tribunal (NCLT)
2. Official Liquidator's (OL) opposition to transfer
3. Rights of workmen in liquidation process
4. Ex-management's locus standi in the matter
5. Stay granted by NCLAT and impugned order by Company Judge
6. Monitoring of security guards by OL
7. Employment and security charges of security guards by OL

Issue 1: Transfer of company petition to the NCLT
The respondent No. 3, petitioner in the Company Petition No. 518/2018, supports the transfer of the company petition to the NCLT. The OL opposes the transfer, citing Section 529A of the Companies Act, 1956, regarding workmen's dues and debts due to secured creditors. The court finds the OL's opposition curious and allows the transfer to the NCLT, emphasizing the need for efficient functioning of the OL.

Issue 2: Official Liquidator's opposition to transfer
The OL opposes the transfer to retain control over the company under liquidation. The court dismisses the OL's argument, stating that the OL should not be concerned with the company's properties under liquidation. The court notes disappointment with the OL's past performance and emphasizes the need for transparent and efficient discharge of duties.

Issue 3: Rights of workmen in liquidation process
The OL champions the cause of workmen, claiming protection under Section 529A and Section 529 of the Companies Act, 1956. However, the court rejects this argument, stating that workmen's rights are protected under other laws, such as the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002.

Issue 4: Ex-management's locus standi
The ex-management opposes the appeal, but the court rules that the ex-management has no locus standi in the matter since the OL represents the company under liquidation. The court dismisses the ex-management's submissions regarding irreversible steps taken in the liquidation proceedings.

Issue 5: Stay granted by NCLAT and impugned order by Company Judge
The court sets aside the impugned order passed by the Company Judge, allowing the appeal and transferring the company petition to the NCLT. The court highlights the vacating of the stay granted by NCLAT and cites previous judgments in support of its decision.

Issue 6: Monitoring of security guards by OL
The court raises concerns about high security charges incurred by the OL for safeguarding properties under liquidation. It directs the OL to provide detailed information regarding the selection of security agencies, deployment of guards, and negotiation of rates. The court emphasizes the need for close monitoring of security guards through modern technology like geo-tagging.

Issue 7: Employment and security charges of security guards by OL
The OL is directed to submit information on the employment and charges of security guards, including details of guards, provident fund contributions, salary payments, bills raised by security agencies, and negotiation of rates. The OL is also instructed to provide suggestions on geo-tagging of security guards for effective monitoring. The court sets a deadline for compliance and emphasizes the importance of transparency in security-related expenses.