2024 (7) TMI 199 - HC - Companies Law

Relevant date for adjudication of claims - Whether the claims of the applicant are to be adjudicated up to the date of the appointment of the provisional liquidator i.e., 25.02.2002 or up to the date of final winding up of the company (in liquidation) i.e., 09.08.2012? - HELD THAT - A bare perusal of the order dated 28.09.2012 passed by this Court would substantiate the dual claims of the Bank of Baroda, which had submitted its claim for Rs. 7,56,02,275/- as secured creditor and claim for Rs. 8,34,4,285/- as Debenture Trustee. Insofar as the plea by the applicant is concerned, that a sum of Rs. 7,56,02,275/- was paid towards full and final settlement of its claim and that it was paid another sum of Rs. 6.50 crores towards its claim upto the date of final winding up i.e. 09.08.2012, the said aspect appears to be factually incorrect as the applicant overlooks that the DRT-II, New Delhi in O.A. No. 54/2002 passed an order thereby making the Bank of Baroda entitled to recover a sum of Rs. 7,57,77,191/- plus interest towards loan defaults, which order was also upheld by the DRAT vide order dated 28.05.2015. It was in respect of the aforesaid claim of Bank of Baroda being in the nature of a secured creditor, that a sum of Rs. 6.50 crores was paid towards full and final settlement of its claim. The order dated 31.01.2019 has not been assailed by the applicant and the same has attained finality. It goes without saying that a sum of Rs. 7,56,02,575/- has further been paid to Bank of Baroda in respect of the claims in the capacity of being a Debenture Trustee, which has been assessed up to the date of provisional winding up of the company vide order dated 25.02.2002. There is no error apparent on the face of the record to seek review of the order dated 03.02.2023 passed by this Court - this Court finds no merit in the present application - application dismissed.

Issues Involved:
1. Determination of the relevant date for adjudicating the claims of the applicant.
2. Comparison of the applicant’s claim with other secured creditors, specifically Bank of Baroda.
3. Applicability of Rule 154 of the Companies (Court) Rules, 1959.

Issue-wise Detailed Analysis:

1. Determination of the Relevant Date for Adjudicating the Claims of the Applicant:

The primary issue addressed was whether the claims of the applicant should be adjudicated up to the date of the appointment of the provisional liquidator (25.02.2002) or up to the date of the final winding up of the company (09.08.2012). The applicant, M/s. Kostub Investments Ltd., contended that their claims should be adjudicated up to the final winding-up date, relying on Rule 154 of the Companies (Court) Rules, 1959. They argued that the value of all debts and claims against the company should be estimated according to the value thereof at the date of the winding-up order. The court, however, found that the relevant date for admitting claims, including that of the applicant, would be the date when the liquidation process commenced, which is from the appointment of the Provisional Liquidator (25.02.2002). The court emphasized that the Provisional Liquidator was in control of the company's affairs from this date, making it the reference point for determining the priority of claims and the outstanding debts.

2. Comparison of the Applicant’s Claim with Other Secured Creditors, Specifically Bank of Baroda:

The applicant argued that the order dated 03.02.2023 was based on a flawed assumption that the claims of other secured creditors, such as Bank of Baroda and the Workmen, were adjudicated up till the date of the appointment of the provisional liquidator. The applicant highlighted that Bank of Baroda was allowed a sum of Rs. 7,56,02,575/- up to the date of the provisional liquidator's appointment and subsequently received an additional Rs. 6.50 crores up to the date of final winding up. The court clarified that Bank of Baroda had dual claims: as a secured creditor and as a Debenture Trustee. The sum of Rs. 7,56,02,275/- paid to Bank of Baroda was for its claim as a Debenture Trustee, adjudicated up to the provisional winding-up date. The additional Rs. 6.50 crores released to Bank of Baroda was in respect of a recovery certificate issued by the Debt Recovery Tribunal, which was upheld by the Debt Recovery Appellate Tribunal, and was related to its claim as a secured creditor.

3. Applicability of Rule 154 of the Companies (Court) Rules, 1959:

The applicant relied on Rule 154, arguing that the value of all debts and claims should be estimated as of the date of the winding-up order. The court, however, found that Rule 154 was inapplicable in this case as the valuation of the original debt/face value of debentures had already been fixed. The controversy pertained to the fixation of the date for determining the priority of claims. The court noted that the claims of other secured creditors, including Bank of Baroda and the workers, were adjudicated up to the date of the appointment of the provisional liquidator. Therefore, the court concluded that the applicant's claim should also be adjudicated up to the same date to avoid any anomaly and discrimination among various classes of creditors.

Conclusion:

The court dismissed the application, finding no merit in the applicant's arguments. It upheld the order dated 03.02.2023, which determined that the relevant date for adjudicating the applicant's claims was the date of the appointment of the provisional liquidator (25.02.2002), not the date of final winding up (09.08.2012). The court emphasized that Bank of Baroda's dual claims were appropriately adjudicated, and there was no error apparent on the face of the record to seek a review of the previous order.

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