2022 (3) TMI 200 - HC - Companies Law

Secured creditor of the Company in liquidation, filed a suit Salem for recovery of a sum with interest at the rate of 19.5% per annum at quarterly rest - first and paramount charge on the property that was sold by the Official Liquidator - HELD THAT - When the matter came up for hearing on 07.09.2020, this Court directed the Official Liquidator to file a complete and comprehensive additional report and the the Official Liquidator also filed a detailed report on 15.10.2020, for which, the appellant/Bank also filed their objection. Finally, when the matter came up for hearing on 19.03.2021, this Court directed the the Official Liquidator to file the details of the re-adjudication of workmen claims with break ups on the next hearing. Accordingly, the Official Liquidator also filed a report dated 25.06.2021 with break-up details of workmen. Later, the Official Liquidator submitted that the re-adjudication work has not been completed for the reason that the disbursement work of interest amount at 4% was going on during that time. It was mentioned in the report dated 25.06.2021 that the re-adjudication work was made, instead of stating that, the calculation of arrears of wages for the years 1990 to 1993 were partially made - this Court, by the order dated 13.12.2019 in C.A.No.447 of 2019, permitted the Official Liquidator to publish notice in block letters/bold letters to contributories to prove the claim/extent of interest held by them in the subject Company in liquidation, in the The New Indian Express and Malai Malar . In compliance of the said order, the Official Liquidator issued notice. Subsequently, in response, one contributory has come forward with his claim and the same is pending for adjudication to proceed further in the matter - also, it is seen that the additional payment of dividend was already made to the appellant/Bank. Since the learned Official Liquidator has paid the amounts to the appellant/Bank, as per the earlier orders of this Court, nothing survives for consideration in this appeal - appeal dismissed.

Summary

Issues:
1. Dismissal of Company Applications 71 and 555 of 2018 by the learned Single Judge.
2. Dispute over interest rates and claims between Central Bank of India and M/s.Mettur Textiles Industries Ltd.
3. Payment discrepancies and directions to Official Liquidator.
4. Claims by other banks, namely ICICI Bank and IOB, in the liquidation proceedings.
5. Priority of payment to Central Bank of India due to first charge on assets.
6. Appeals and directions regarding payment settlement.
7. Re-adjudication of workers' claims and notice to contributories.
8. Financial position and additional dividend payment to Central Bank of India.

Analysis:
1. The Central Bank of India appealed against the dismissal of Company Applications 71 and 555 of 2018, seeking settlement in the liquidation of M/s.Mettur Textiles Industries Ltd. The learned Single Judge directed the Official Liquidator to settle amounts but denied the Bank's prayer, leading to the appeal.

2. A dispute arose over interest rates and claims between the Bank and the company. The Bank filed a suit for recovery, which was transferred to the Debt Recovery Tribunal. The Tribunal allowed the Bank's claim at a different interest rate, leading to appeals and subsequent directions by various tribunals and courts.

3. Payment discrepancies and directions to the Official Liquidator resulted in various orders for the settlement of claims. The Bank received payments at different stages, including dividend amounts and interest payments, as per the orders of the courts and tribunals.

4. Other banks, such as ICICI Bank and IOB, also claimed a share in the sale proceeds. While ICICI Bank's claim was proposed to be paid, IOB had not submitted details for their claim, highlighting the complexity of multiple claims in the liquidation process.

5. Due to having the first charge on the assets, the Central Bank of India asserted its priority in payment settlement. The Bank contended that its claim should be settled first before other claims due to its superior charge on the sold property.

6. Appeals and directions were made regarding payment settlement, with the Bank seeking directions for the payment available in the Company's Liquidation Account. However, the Single Judge directed the Bank to approach the Official Liquidator instead of granting the claim.

7. Re-adjudication of workers' claims and notice to contributories were initiated to ensure fair settlement. The Official Liquidator was directed to quantify arrears of workers and publish notices for contributories to prove their claims and interests in the company in liquidation.

8. The financial position and additional dividend payment to the Central Bank of India were detailed in reports submitted to the court. The Bank received various payments as per court orders, leading to the dismissal of the appeal due to the fulfillment of earlier payment directions.