2021 (3) TMI 609 - HC - Companies Law

Admission of certified list of 121 adjudicated claims of Ex-workers as admitted by the Official Liquidator - seeking direction to Corporation Bank to deposit an amount of 7,45,79,292/- with ₹ Official Liquidator to enable the Official Liquidator to distribute the same to 121 workers - validity of request of increasing the rate of adjudication of claim to the extent of ₹250/- per claim instead of ₹150/- per claim - HELD THAT - Based on such a vague affidavit and devoid of any particulars whatsoever, there is no question of re-adjudication of the workmen dues. The entire exercise carried out by the professionals cannot be upset based upon some alleged chance discovery of salary slips. There is no guarantee about the authenticity of such salary slips and in any case, there is no reason to revisit this issue of determination of the workmen dues based on surmises and conjectures. The earlier determination process was fair and after the involvement of all stakeholders. Such determination cannot be set at naught based on such vague premises. Besides, it is quite surprising that the OL seeks to express doubts on the exercise undertaken by its empannelled Chartered Accountants on the fanciful grounds to be found in the self-serving report got prepared by the Bank - earlier determination by the Official Liquidator and the Chartered Accountants from the panel of the Official Liquidator can stand and there is no reason for any re-adjudication based upon surmises and conjectures or even vague and fanciful doubts. According to me, this is not how the dues payable to the workmen should be delayed either by the Official Liquidator or the Nationalized Bank. The Corporation Bank, through its authorized officer Ayub Khan has stated on affidavit that the total outstanding liability of the Company in winding up towards the bank was ₹83.36 crores. The calculations will therefore have to be made on this statement and the Bank, cannot insist on running its interest meter and at the same time freezing dues payable to the workmen. Such an attempt is neither fair nor proper. By orders dated 26th February 2021 and 5th March 2021, an amount of ₹1.46 crores or thereabouts was already directed to be paid to the 121 workmen on pro-rata basis. Therefore, this amount will have to be deducted from the amount of ₹3.71 crores now payable to these 121 workmen. Further, Mr. Usgaonkar pointed out that by order dated 1st October 2015, an amount of ₹71,19,770/- was also paid to the 121 workmen. Therefore, even this amount will have to be deducted from the amount of ₹3.71 crores as aforesaid - Ms. Razaq points out that even on the amount of ₹45.30, interest must have accrued and orders can be made for the distribution of such interest on a pro-rata basis. This is correct. However, since the payments to be made in terms of this order are only provisional and subject to the Official Liquidator/Bank recovering further amounts by the sale of assets of the Company in winding up, this amount accrued by way of interest can be taken into consideration at a later stage. Therefore, this amount will have to abide by further orders as and when the Official Liquidator takes out a fresh report seeking directions - So also it is clarified that the issue of 40 additional workmen will also have to be treated separately and the Official Liquidator is at liberty to complete the process and file a further report, if necessary. Application disposed off.

Summary

Issues: Determination of workmen dues, Dispute over amount payable, Challenge to determination process, Principles of pro-rata distribution, Interest accrual on recovered amount

Determination of workmen dues:
The Official Liquidator sought directions from the Court regarding the certified list of 121 adjudicated claims of ex-workers and the amount due to them, totaling approximately ?7.45 crores. The determination was based on professional assessments and after granting all stakeholders, including the Bank and ex-directors, a fair hearing. The Corporation Bank disputed this amount, citing an enquiry report by an advocate suggesting an inflation of dues. However, the report was criticized for lacking expertise in accounting and not following due process, unlike the Official Liquidator's thorough examination.

Dispute over amount payable:
The Corporation Bank's challenge to the determined amount of ?7.45 crores for the 121 workmen was based on the advocate's report, which was deemed self-serving and lacking credibility. The Bank's attempt to delay or obstruct the disbursement of workmen's dues was criticized as unfair and not in line with professional assessments made by the Official Liquidator and approved Chartered Accountants.

Challenge to determination process:
The Bank's reliance on the advocate's report was questioned, as it attempted to undermine the Official Liquidator's findings without proper expertise or due process. The Official Liquidator's initial determination was upheld as fair and comprehensive, and any doubts raised by the Bank were considered vague and unsubstantiated, especially concerning alleged chance discoveries of salary slips.

Principles of pro-rata distribution:
Both the Corporation Bank and the workmen were recognized to have a pari passu charge under Sections 529 and 529A of the Companies Act, entitling them to preferential payment. The concept of pro-rata distribution was explained, with calculations based on recovered assets and outstanding liabilities. It was emphasized that the dues payable to the workmen should be based on the original determination by the Official Liquidator and Chartered Accountants.

Interest accrual on recovered amount:
The Corporation Bank was directed to provide details of interest accrual to the Official Liquidator within four weeks. The distribution of recovered amounts, including interest, was to be made on a pro-rata basis, with adjustments for previous payments to the workmen. The possibility of further amounts being recovered from asset disposals was acknowledged for future consideration. The issue of additional workmen was to be treated separately, with the Official Liquidator granted liberty to file a fresh report if needed.