2017 (12) TMI 1319 - HC - Companies Law

Official Liquidator liability to refund an amount along with interest @ 4% p.a. to the applicant as was directed vide order dated 08.02.2016 - Held that - This Court has already taken a decision on 08.02.2016 as to how much amount is to be paid to the applicant. No appeal has been filed against the said order hence the issue qua the amount to be refunded to Awas Samiti has attained finality. However per OLR No.255/2017 dated 11.10.2017 only an amount of ₹ 4,20,69,163/- is lying as on 30.09.2017 in the corpus fund of company in liquidation. Thus taking into consideration the overall circumstances; the plight of other creditors who are also waiting their turn to get payments and though not placing the applicant in queue with them, I direct the official liquidator to initially release an amount of ₹ 2.5 Crores to the applicant within four weeks from today. As the order dated 17/10/2012 notes the company has various properties at Ghaziabad, Dharudhera, Rewari and Faridabad, the learned Official Liquidator should file a report confirming status of such properties of TIDCO and its subsidiaries and to disclose what steps it had taken till date to dispose those of and/or as to how it proposes to deal with the same viz., sale and/ or realise proceeds thereof to clear of claims of the company in liquidation at the earliest. Since there is no clarity till date as to what happened to the money received by three companies viz., (a) RMS Club & Resorts Ltd.; (b) Chahhat Garments Pvt. Ltd. and (c) Rewari Developer (P) Ltd. which allegedly were the paper companies of Mr.Madhur Mittal and Mr.Sumit Mittal and since its erstwhile management has conveniently allege they have no objection if money is paid by Official Liquidator to Awas Samiti, without even disclosing the end use of the money received by their three companies aforesaid, it would be appropriate to issue notices to said three companies viz (1)RMS Club and Resorts Private Limited; (2)M/s Chahat Garments Private Limited; and (3) M/s Rewari Developer Private Limited asking them to disclose the bid amount received and if such amount on cancellation of bid was remitted to the Official Liquidator and if not then to return such amount(s) so received. Admittedly, on cancellation of bid, these companies cannot be allowed to enrich themselves in an unjust manner. On realization of funds from the companies above and on sale of land etc, further payments be made to the applicant.

Issues Involved:
1. Refund liability of the Official Liquidator.
2. Payment made by Awas Samiti.
3. Auction and sale process of the land.
4. Role and findings of the Triveni Monitoring Committee (TMC) and Serious Fraud Investigation Office (SFIO).
5. Court orders and directions regarding the refund.
6. Status of properties and funds of the company in liquidation.
7. Notices to other companies involved.

Detailed Analysis:

1. Refund Liability of the Official Liquidator:
The core issue is whether the Official Liquidator is liable to refund an amount of ?6,01,34,307/- along with interest at 4% per annum to the applicant, as directed by the court order dated 08.02.2016. The Official Liquidator contends that only ?15 lakh was paid to the company in provisional liquidation and thus only this amount should be refunded.

2. Payment Made by Awas Samiti:
The Official Liquidator claims the amount was not fully paid to Triveni Company but to four different companies and investors. However, the applicant, Awas Samiti, had paid ?8.32 crores as part of the bid amount for purchasing the land. The Division Bench had previously directed that the payment should not be treated under the Memorandum of Understanding, and the applicant should not stand in the queue of creditors.

3. Auction and Sale Process of the Land:
The land was sold on an 'As Is Where Is' basis with the consent of all involved companies. The applicant participated in the auction and was successful in its bid for ?23.10 crores, paying ?8.32 crores initially. However, the transaction was not completed, and the applicant sought a refund. The court directed the sale to be carried out under its supervision, and the land was auctioned with the court's approval.

4. Role and Findings of the Triveni Monitoring Committee (TMC) and Serious Fraud Investigation Office (SFIO):
The TMC was created to minimize loss to investors, and the SFIO was directed to investigate potential fund siphoning by the company's promoters. The SFIO found that the promoters had floated/acquired subsidiaries using TIDCO's funds. The court orders indicated that the TMC transferred around ?8 crores to the Official Liquidator's account, forming a corpus fund.

5. Court Orders and Directions Regarding the Refund:
Several court orders were referenced, including those dated 17.10.2012, 11.07.2014, and 08.02.2016. These orders established that the applicant's payment should not be treated under the Memorandum of Understanding and directed the Official Liquidator to refund the amount. The court also noted that the applicant should not stand in the queue with other creditors for the refund.

6. Status of Properties and Funds of the Company in Liquidation:
The court directed the Official Liquidator to release ?2.5 crores to the applicant within four weeks and to file a report on the status of the company's properties and the steps taken to dispose of them. The court emphasized the need to clear the claims of the company in liquidation at the earliest.

7. Notices to Other Companies Involved:
The court issued notices to RMS Club & Resorts Ltd., Chahat Garments Pvt. Ltd., and Rewari Developer Pvt. Ltd. to disclose the bid amount received and whether it was remitted to the Official Liquidator. The court stressed that these companies should not unjustly enrich themselves from the bid cancellation.

Conclusion:
The judgment comprehensively addresses the refund liability of the Official Liquidator, the payment made by Awas Samiti, the auction process, the role of TMC and SFIO, and the court's directions on the refund and status of properties. The court's decision to issue notices to other companies involved ensures transparency and accountability in the liquidation process.

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