2020 (7) TMI 91 - HC - Companies Law

Reimbursement of liquidation expenses of vessels/tugs - winding up of company - HELD THAT - The official liquidator has rightly rejected the claim for supply of food provision on board on 4th September, 2017 in the sum of ₹ 42,040/-. The claim for port charges in the sum of ₹ 6,51,473/- is rightly rejected on the ground that official liquidator had taken possession on 6th February, 2018 and as the same were neither approved by this Court nor informed to the official liquidator prior to incurring such expenses and thus could not be considered as liquidation expenses. The manning expenses were incurred by the applicant without permission of this Court and without conveying such expenses to the official liquidator before taking possession by the official liquidator. The official liquidator rightly rejected the claim for reimbursement of salary expenses in the sum of ₹ 2,68,927/- as the said claim would fall under Section 529A or 530 of the Companies Act, 1956 depending upon the nature of work. The port dues of ₹ 2,87,675/- and ₹ 22,62,182/- have been rightly rejected under Section 530 of the Companies Act, 1956 being Government dues which shall be paid only after payment of workman and secured creditors - the claim for port dues cannot be admitted and if would have been admitted would result in disturbing the priority mechanism provided as per the provisions of Companies Act, 1956. The report submitted by the official liquidator before this Court being OLR No. 141 of 2018 allowing the claims made by the applicant partly and rejecting the part of the claims shows no infirmity and is based on various orders passed by this Court from time to time. The claims which were not admissible as liquidation expenses have been rightly rejected by the official liquidator. Application dismissed.

Summary

Issues Involved:
1. Reimbursement of liquidation expenses.
2. Validity of claims rejected by the official liquidator.
3. Admissibility of various expenses as liquidation expenses.
4. Priority of claims under the Companies Act, 1956.

Issue-wise Detailed Analysis:

1. Reimbursement of liquidation expenses:
The applicant sought reimbursement of ?62,65,898/- towards liquidation expenses of vessels/tugs of the respondent company, which was rejected by the official liquidator. The applicant had previously filed multiple applications for the sale of vessels mortgaged to them, and various court orders had directed the official liquidator to reimburse expenses incurred by the applicant for manning, maintaining, safeguarding, and selling the vessels.

2. Validity of claims rejected by the official liquidator:
The official liquidator allowed a partial claim of ?43,80,295/- and rejected the remaining ?62,65,898/-. The rejection was based on the grounds that certain expenses were not approved by the court or conveyed to the official liquidator prior to incurring them. The applicant argued that the claims were not rejected due to lack of documentation or exorbitance but were necessary to safeguard the vessels and facilitate their sale.

3. Admissibility of various expenses as liquidation expenses:
The court examined various orders and found that the official liquidator had admitted claims for valuation, publication, and manning charges that were within the court's directives. However, expenses such as travelling, lodging, and some port charges were rejected as they were not pre-approved or communicated to the official liquidator. The court upheld the rejection of these expenses, stating they did not qualify as liquidation expenses.

4. Priority of claims under the Companies Act, 1956:
The court emphasized the priority mechanism under Sections 529A and 530 of the Companies Act, 1956. Government dues, such as port charges, were to be paid after the claims of workmen and secured creditors. The rejection of port dues and other similar expenses was upheld to maintain the statutory priority of claims.

Conclusion:
The court found no infirmity in the official liquidator's report (OLR No. 141 of 2018) that partially allowed and partially rejected the applicant's claims. The claims not admissible as liquidation expenses were rightly rejected. Consequently, the applicant's request for reimbursement of ?62,65,898/- was dismissed, and the Company Application No. 107 of 2019 was denied without any order as to costs.