2023 (5) TMI 1165 - HC - Companies Law

Recovery of dues - direction to Recovery Officer, DRT, Bangalore to comply with the directions of the Hon'ble Division Bench - direction to R-3 to associate with the Official Liquidator to bring the properties for sale and then to take his portion of outstanding dues on the sale proceeds as per law or otherwise - seeking permission to Official Liquidator to engage the services of ITCOT for valuing the assets of the company in liquidation - conduct of sale through public auction by giving vide publicity in the newspapers - meeting out the expenses in connection with sale. HELD THAT - It is relevant to mention herein that when the applicant Tungbhadra Sugar Works Limited, being a third party, was not impleaded as a party respondent in the proceedings before the Supreme Court, the applicant, giving reasons for the delay and also proving their ownership over the properties, filed applications for impleadment before the Supreme Court stating that they were ready to settle the dues of the workers, creditors and other statutory dues and that the management was taking necessary actions for revival of the company for the welfare of 947 workmen. Accepting their case that the applicant was a necessary party and was ready to settle the dues of the workmen, creditors and other statutory dues and the management was also taking necessary actions for revival of the company for the welfare of 947 workmen, the Supreme Court allowed the impleadment applications. In the meanwhile, the debts of Tapti Machines Private Limited were later assigned to MTitanium Apartments Private Limited vide the deed of assignment dated 06.01.2012. The motto of justice is to resolve the dispute and give a quietus to the problem once and for all. In the case on hand, when the Official Liquidator was appointed by the Court to resolve the disputes of the secured creditors, borrowers, workmen and the other creditors, peculiarly, the disputes between the creditors and the borrowers have been resolved. Evidently the borrower, having accepted the settlement, has given their acceptance in writing that there is no dispute pending between them. Secondly, the evidence with regard to the settlement of disputes of the workmen also has been enclosed showing that the claims and the dues payable to the workmen also have been settled and the workmen have also reached a settlement before the Assistant Labour Commissioner, Mangalore. But the only objection raised by the Official Liquidator shows that these settlements have not been effected through him. It is true that the Official Liquidator has been appointed to resolve the disputes. It may be restated that when Tungbhadra Sugar Works Limited addressed a letter to the State Bank of Mysore for creation of mortgage by deposit of title deeds in respect of the loans of Deve Sugars Limited, the applicant has confirmed that even after the execution of the agreement dated 15.01.1994, the execution of the conveyance deeds for transfer of properties in favour of Deve Sugars Limited have not been completed yet. In the meanwhile, since the agreement for transfer dated 15.01.1994 was cancelled on 30.09.1998, the rights and liabilities sought to be created by the sale agreement have become non est in the eye of law. The following directions are thus issued - (i) The applicant, Tungbhadra Sugar Works Limited has settled the debts of Deve Sugars Limited, the company in liquidation to the Pegasus Assets Reconstruction Private Limited and on receipt of the entire moneys, they have also returned the title deeds of the properties. (ii) Since the charge against the company has been completely lifted, the applicant, Tungbhadra Sugar Works Limited is entitled to the possession of the land including the plant and machinery morefully described in the Schedule to the Judge's summons. (iii) The first respondent, Official Liquidator is, accordingly, directed to handover the possession of the land, building, plant and machinery morefully described in the Schedule to the Judge's summons to the applicant, Tungbhadra Sugar Works Limited. Consequently, an injunction order is granted restraining the first respondent from in any manner interfering with the right of enjoyment of the applicant to the schedule mentioned properties. (iv) Since the workmen's dues have also been settled by the applicant, as indicated above, the first respondent is hereby directed to pay the arrears of rent of the warehouse, after deducting the security expenses incurred for maintaining the properties, including the balance funds available, to the applicant within a period of four weeks from the date of receipt of a copy of this order. Application allowed.

Summary

Issues Involved:
1. Compliance with previous court directions.
2. Association with Official Liquidator for sale of properties.
3. Valuation and sale of assets.
4. Payment of arrears of rent and possession of property.
5. Settlement of debts and dues.
6. Ownership and transfer of properties.

Summary:

Issue 1: Compliance with Previous Court Directions
The Official Liquidator sought directions for the Recovery Officer, DRT, Bangalore, to comply with the High Court's directions dated 17.09.2009. The court upheld the previous directions and noted that the Official Liquidator had taken possession of the assets on 28.09.1999.

Issue 2: Association with Official Liquidator for Sale of Properties
The court directed R-3 to associate with the Official Liquidator to bring the properties for sale and then take his portion of outstanding dues from the sale proceeds as per law.

Issue 3: Valuation and Sale of Assets
The Official Liquidator was permitted to engage ITCOT for valuing the assets and to conduct the sale through public auction with wide publicity in newspapers. The Official Liquidator was also permitted to meet the expenses from the common pool fund and recoup the amount from the sale of assets on a priority basis.

Issue 4: Payment of Arrears of Rent and Possession of Property
Thungbhadra Sugar Works Limited sought directions for the Official Liquidator to pay arrears of rent after deducting security expenses and to hand over possession of the land, building, plant, and machinery. The court acknowledged that the applicant had settled the dues and the properties belonged to them.

Issue 5: Settlement of Debts and Dues
The court noted that the debts of Deve Sugars Limited were assigned to Pegasus Assets Reconstruction Private Limited and settled by the applicant for Rs.42.55 crores. The applicant obtained a no dues certificate and the title deeds were returned. The court recognized the settlements with the workmen and creditors.

Issue 6: Ownership and Transfer of Properties
The court emphasized that the properties in question belonged to Thungbhadra Sugar Works Limited and not Deve Sugars Limited. The agreement for transfer dated 15.01.1994 was canceled on 30.09.1998, making the transfer of properties non-existent in the eye of law. The Supreme Court had allowed the impleadment of the applicant, confirming their ownership and readiness to settle dues.

Order:
1. The applicant, Thungbhadra Sugar Works Limited, has settled the debts of Deve Sugars Limited and received the title deeds.
2. The applicant is entitled to the possession of the land, plant, and machinery.
3. The Official Liquidator is directed to hand over possession of the properties to the applicant and is restrained from interfering with the applicant's enjoyment of the properties.
4. The Official Liquidator is directed to pay the arrears of rent after deducting security expenses to the applicant within four weeks.

Company Application Nos. 298 to 300 of 2021 were allowed, and Company Application No. 626 of 2017 was dismissed.