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2020 (3) TMI 528 - HC - Companies LawWinding up process - disbursement of amounts in discharge of debt - priority of charge of secured creditors - HELD THAT - In present case, it is undisputed that some amount, out of sale proceeds of assets of the Company, already stands released in favour of Secured Creditors without taking into consideration the provisions of Sections 529 and 529A of the Companies Act, wherein statutory charge has been created in favour of workmen in respect of their dues from the Company over the security of every Secured Creditor and also workmen s dues have been categorized as overriding preferential payments . It is evident that under Section 529A(1)(b), the Secured Creditors shall be entitled for overriding preferential payments of debts to the extent these are governed under clause (c) of proviso to Section 529(1), pari passu with workmen s dues, if the Secured Creditor, instead of relinquishing his security and proving his debts, opts to realize his security without participating in the winding-up proceedings, and in case he participates effectively in the winding-up proceedings then Section 529A(1)(b) will not be available to the Secured Creditor for want of applicability of clause (c) of proviso to Section 529(1) of the Companies Act. Payment under Sections 529A(1)(a) and 529A(1)(b) shall be made in priority to all other dues. Amount of debt payable under Section 529A(1)(b) is to be determined, in terms of clause (c) of the proviso to Section 529(1). As held by the Apex Court, for such debt ranking pari passu with the workmen s dues for the purpose of Section 529A, two limbs of proviso to Section 529(1) are to be satisfied - In absence of security and exercise of option by Secured Creditor to realize the same, there will not be any debt equivalent to workmen s portion, realization whereof could not be made by the Secured Creditor and in such eventuality there will be no right of overriding preferential payments under Section 529A(1)(b) in favour of Secured Creditor. In the present case, there is no debt due to the Secured Creditors, falling in the category of debts defined under clause (b) of Section 529A(1) of the Companies Act, to be paid as overriding preferential payments under Section 529A(1)(b) to them. So far as workmen s dues under Section 529A(1)(a) are concerned, the Official Liquidator has submitted report of Chartered Accountant dated October 10, 2014, wherein except three claims of workmen, all claims have been verified as workmen s dues and the claims of the remaining three applicants have been got verified by the Official Liquidator lateron, after passing of order, of condonation of delay in filing of those claims, in Company Application No.36 of 2014. Therefore, workmen s dues of workmen, who had filed the claims before the Official Liquidator, stand duly verified. Fee of Chartered Accountant, in present case, is to be governed by the order dated 9.10.2007, passed by this High Court, wherein it is ordered that remuneration of the Chartered Accountant will be on case-to-case basis, depending upon the nature and quantum of work to be performed/assigned. Application disposed off.
Issues Involved:
1. Payment of correct share to Punjab National Bank (PNB) in Company Applications No.32 of 2016 and 13 of 2018. 2. Release of workmen’s dues in Company Applications No.35 of 2016, 21, 22, and 7 of 2018. 3. Payment of Chartered Accountant’s fees in Company Application No.23 of 2018. 4. Request for launching prosecution under Section 276C(2) of Income Tax Act in Company Applications No.16 and 17 of 2018. Issue-wise Detailed Analysis: 1. Payment of Correct Share to Punjab National Bank (PNB): Company Applications No.32 of 2016 and 13 of 2018 were filed by PNB for the payment of the correct share as determined by the Chartered Accountant. The Chartered Accountant initially determined PNB's share as 67.64% and SBI's share as 32.36%. However, after a clerical mistake was identified, the revised report corrected PNB's share to 71.50% and SBI's to 28.50%. The Official Liquidator admitted the error and requested SBI to refund the excess amount of ?35,10,107/- along with interest. The Court directed SBI to refund the excess amount to PNB. 2. Release of Workmen’s Dues: Company Applications No.35 of 2016, 21, 22, and 7 of 2018 involved the release of workmen’s dues from the sale proceeds of the company’s assets. The Apex Court's judgment in Bank of Maharashtra v. Pandurang Keshav Gorwardkar established that the relevant date for disbursing sale proceeds is the date of the winding-up order. The winding-up order was passed on November 8, 2001, and affirmed on December 30, 2005. The verified claims of workmen totaled ?3,66,37,825/-. The Court ordered the disbursement of ?12.00 Crore, with ?3,66,37,825/- to be paid to the workmen first, and the remaining amount to be distributed among the secured creditors on a pro-rata basis. The Official Liquidator was directed to release the payment within one month, subject to the submission of bank account details by the workmen. 3. Payment of Chartered Accountant’s Fees: Company Application No.23 of 2018 was filed by Chartered Accountant Shri Ravi Chand Sood for the release of his fees. The Chartered Accountant’s bills, pending since 2012, amounted to ?9,23,220/-. The Court noted that the remuneration was to be determined on a case-to-case basis, depending on the nature and quantum of work. Given the extensive work detailed by the Chartered Accountant and the lack of response from the Official Liquidator, the Court directed the Official Liquidator to pay the full amount of the bills within one month. 4. Request for Launching Prosecution under Section 276C(2) of Income Tax Act: Company Applications No.16 and 17 of 2018 involved requests from the Principal Commissioner of Income Tax for launching prosecution against the company for delayed tax payments for the Assessment Years 2013-14 and 2014-15. The Official Liquidator explained that the delay was due to the bank not crediting TDS on interest income and the lack of a demand letter from the Income Tax Department. The tax was paid immediately upon receiving the notice of prosecution. The Court found the explanation satisfactory and dismissed the applications for prosecution. Conclusion: The Court addressed each issue comprehensively, directing the refund of excess amounts, prioritizing the payment of workmen’s dues, ensuring the Chartered Accountant’s fees are paid, and dismissing the prosecution requests due to satisfactory explanations from the Official Liquidator. The judgments were aimed at ensuring fair and lawful disbursement of funds while protecting the rights of all parties involved.
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