2021 (9) TMI 90 - HC - Insolvency and Bankruptcy

Recovery of dues from PSU - Seeking directions for payment of the dues of the company which was deposited as security deposit, along with interest - Writ Court is being used as a forum for recovering dues which, according to the Petitioner, are admitted - seeking an extraordinary remedy of recovery against the Union of India on the ground that HPCL is a PSU - HELD THAT - Admittedly, the claims of the Petitioner have already been filed before the Liquidator. In so far as the security deposit is concerned, the question as to whether the said amount would have to be treated as one which is held in trust by the company is a question which would be considered by the liquidator. If the Petitioner-company is, in any manner, aggrieved by the opinion of the liquidator, it is free to challenge the same before the appropriate forum i.e., the NCLT and avail of its remedies in accordance with law. The question as to whether a PSU ought to be revived or not is a question of policy. In the opinion of this Court, just because there are dues which are liable to be paid by the PSU it cannot be said that each and every PSU which is fully controlled by the Government would have to be revived or that the Government ought to pay the dues of the PSU. The PSU would have its own independent existence. In a writ petition which is seeking recovery of amounts, the Court cannot direct the Union of India to revive the Company. The scope of this writ petition is limited. If the Petitioner wishes to raise this as a legal issue, it may avail of its remedies in accordance with law. Since the liquidation process is underway and some assets of the Petitioner-company are stated to have been advertised for sale, upon any amount being recovered from the sale of the assets, the Petitioner-company is free to approach the liquidator for taking a view in respect of the amounts due, including the Security deposit, in accordance with the provisions of the IBC - Petition disposed off.

Summary

Issues:
Petition seeking payment of dues from HPCL, Liquidation of HPCL, Jurisdiction of NCLT over security deposit, Insolvency proceedings against PSU, Government's stand on revival of PSU.

Analysis:

1. Payment of Dues from HPCL:
The petitioner, a logistics company, filed a petition seeking payment of dues amounting to over ?6 crores from HPCL, along with interest and security deposit refund. Despite assurances and demand notices, HPCL failed to pay the outstanding amount, leading the petitioner to file a petition under Section 9 of the IBC before the NCLT.

2. Liquidation of HPCL:
HPCL went into liquidation, and the liquidator was appointed to handle creditor claims. The petitioner submitted its claim for the entire amount due, including the security deposit. The liquidator informed that HPCL has substantial assets but higher debts, and the liquidation process was ongoing.

3. Jurisdiction of NCLT over Security Deposit:
The petitioner argued that the NCLT had no jurisdiction over the security deposit as it was held in trust by HPCL. The respondent contended that the security deposit issue would be dealt with under Section 36 of the IBC, and the remaining claims would be processed according to Section 53 of the IBC.

4. Insolvency Proceedings Against PSU:
The petitioner, being a PSU wholly owned by the Government, raised concerns regarding insolvency proceedings against PSUs. Citing a judgment from the Bombay High Court, the petitioner argued against liquidation. However, the court emphasized that the claims had been filed before the liquidator, and the petitioner could challenge any decision by the liquidator through appropriate legal channels.

5. Government's Stand on Revival of PSU:
The Union of India had taken a policy decision regarding the revival of the petitioner-company, indicating no intention to revive the company due to its liquidation status. The court clarified that the recovery of dues through a writ petition against the Union of India was not appropriate, as the liquidation process was in progress, and creditors' dues were to be handled following the IBC hierarchy.

6. Conclusion:
The court disposed of the writ petition, emphasizing that the recovery of dues was subject to the IBC provisions and the liquidation process. It highlighted that the scope of the petition was limited to recovering amounts due, and decisions regarding the revival of a PSU were policy matters. The petitioner was advised to approach the liquidator for any dues upon asset sales, maintaining the legal discipline outlined in the IBC.