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TMI Blog2008 (4) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... absence of any representation on behalf of the official liquidator and any further action is required to be taken in those matters. On pointing out such matters by the applicant to the official liquidator, the official liquidator shall take prompt and immediate action in the best interest of the company in liquidation. The applicant shall be allowed to represent the official liquidator at his own cost. The applicant shall not have any access to the records of the company in liquidation. He has to make a request in writing to the official liquidator, which shall be examined by the official liquidator on its merits and if he finds such request to be acceptable, he shall provide necessary inspection to such records.The applicant’s prayer for initiating contempt proceedings against the official liquidator is hereby rejected. - C.A. NO. 69 OF 2008 IN C.P. NO. 37 OF 1998 - - - Dated:- 15-4-2008 - K.A. PUJ, J. Ms. Amee Yajnik for the Official Liquidator. Mihir Thakore and Sandeep Singhi for the Respondent. JUDGMENT 1. The applicant has taken out this judge s summons praying for the following directions and/or orders from this court : (A)Your Lordships ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relating to the proceedings of previous judge s summons taken out by the present applicant in Company Application No. 285 of 2006 are placed on record. 5. It is the case of the applicant that he was the promoter/shareholder and ex-chairman and managing director of Mardia Chemicals Ltd., the company in liquidation. The applicant is also a guarantor to various loans advanced by the banks and financial institutions to the company in liquidation. The company in liquidation was ordered to be wound up by this court by order dated 3-8-2005, passed in Company Petition No. 37 of 1998. The company in liquidation is facing multiple proceedings initiated by its various lenders. The proceedings are pending either before the Debts Recovery Tribunal at Ahmedabad, Debts Recovery Tribunal at Mumbai, the High Court of Judicature at Mumbai and in the City Civil Court at Ahmedabad. After the order for winding-up was passed, the official liquidator was informed about all the proceedings pending against/by the company in liquidation and was also requested to appear in the said proceedings and to represent the company in liquidation. The court s attention was drawn to the table showing major proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... represent the company in liquidation in the said proceedings. However, the said application was taken up for hearing in the absence of the official liquidator and by an order dated 12-9-2007, passed by the City Civil Judge at Ahmedabad, the said application has been allowed and the plaint was ordered to be rejected under the provisions of Order VII, rule 11 of the Civil Procedure Code. In paragraph 6 of the said order, it was specifically observed by the learned City Civil Judge that though notice came to be issued to the official liquidator and was served upon him on 31-7-2006, the official liquidator has not remained present. Mr. Mardia has further submitted that relying upon the above order of the City Civil Court, Ahmedabad in the suit filed by the company in liquidation, one miscellaneous application has been preferred in the pending proceedings before the DRT, Mumbai, in the counter claim to the O.A. No. 272 of 2002. The said OA has been filed by ICICI Bank Ltd., wherein a counter claim has been filed by the company in liquidation. By an order passed by the Bombay High Court, the said counter claim has been ordered to be heard along with the original application. Relying upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d manner. Being aggrieved by such a large scale pilferage of the properties of the company in liquidation, the applicant had moved a petition being the Notice of Motion No. 3835 of 2007 in Civil Suit No. 434 of 2003 before the Bombay High Court giving very exhaustive details along with the copies of the correspondence/documents with prayers for direction for fresh inventory and valuation of the assets, for direction for CBI investigation, recoupment of loss caused to the properties of the company in liquidation and change of security agency appointed by ICICI Bank Ltd. A copy of the said notice of motion was served on the official liquidator. However, he did not remain present and the applicant s locus standi to the debenture trustee suit was protested by ICICI Bank Ltd., before the Bombay High Court. Taking the view that the company is in liquidation and the official liquidator has been brought on the record of the case, notice of motion moved by the applicant was rejected by the Bombay High Court. 10. Mr. Mardia has further submitted that in Civil Suit No. 434 of 2003, when the court receiver represented before the Bombay High Court, regarding non-cooperation of ICICI Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mardia has submitted that similar negligence is observed in the protection of the properties of the company in liquidation by the official liquidator of Amar Dye Chem. Ltd., a company in liquidation at Mumbai where also the applicant was ex-chairman. The properties were worth Rs. 300 crores out of which heavy machineries attached to the earth have been stolen from the possession of the official liquidator and the litigation was also pending before the Bombay High Court. On the application moved by the applicant before the Bombay High Court, an order was passed on 29-9-2006 in Company Application No. 676 of 2006 preferred by the applicant wherein one of the reliefs is in relation to holding of an inventory by the official liquidator and after depositing a sum of Rs. 5 lakhs to meet with the expenses of taking inventory, the Bombay High Court has passed an order directing the official liquidator to take assistance from the applicant to find out an agency which can hold an inventory and also personally go to the site at the time of inventory. He has, therefore, submitted that on joint verification with the help of newly appointed valuer, the applicant and the official liquidator, inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erein it is observed that if the court does not get any co-operation from the police in respect of the properties under the custody of the court, the state will have to compensate for the losses suffered by such robberies and dacoities committed to loot the property. He has, therefore, submitted that in a similar manner, for the negligent approach of the official liquidator, in the present case, the concerned Ministry should be held responsible to compensate the losses on account of the negligent and lackluster approach of the official liquidator of the company in liquidation causing irreparable and irreversible loss to the company in liquidation. He has, therefore, submitted that the reliefs prayed for in the present judge s summons may be granted. 12. During the pendency of this application, the applicant has also filed an additional affidavit for amendment in the prayers. Accordingly, he has sought the permission of this court for himself or for his advocate or counsel to represent in all legal cases filed by and/or filed against the company in liquidation and its guarantors and to make further appeals, representations and all other steps for the protection of legal interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... official liquidator. All the books of account or other documents of the company in liquidation also come within the custody and control of the official liquidator. He has further submitted that for properly and appropriately maintaining and defending any action, it would be necessary to have recourse to the books of account and other documents of the company in liquidation, which are statutorily within the custody and control of the official liquidator. Any permission as sought for, which may entitle the applicant to handle any litigation of the company will seriously prejudice the powers and authority of the official liquidator and may also not be in the interest of the company for the reasons, inter alia, that the books of account and documents cannot be trusted in the hands of the ex-promoters, including the applicant. Mr. Thakore has further submitted that there is no substance in the submission of the applicant that the applicant being ex-chairman and managing director of the company and being conversant with the affairs of the company, is better equipped to defend the proceedings initiated by various banks and financial institutions and to support the counter claims filed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice not only to all the secured creditors but even to workmen if the application is granted. Grant of such application is not in the interest of the liquidation proceedings. There were certain events which have transpired and briefly pointed out by the Board for Industrial and Financial Reconstruction (BIFR) and the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) in various orders, which sufficiently go to show crossing fingers at the applicant and the then management of the company which is very material and relevant consideration to persuade this court from considering the subject application. 17. In support of his submission, Mr. Thakore relied on the decision of the Kerala High Court in the case of Kaliappa Nadar v. Kathayee Cotton Mills [1964] 34 Comp. Cas. 947 , wherein it is held that a company in liquidation retains its corporate powers including the powers to sue and such powers are exercised by the liquidator who has to sue in the name of the company when the suit is for recovery of the property of the company. Once a liquidator is appointed, even the directors cease to have the power to sue on behalf of the company. A shareholder or a cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the application is not maintainable since it suffers from an infirmity of bar of principle of res judicata is not sustainable in view of the fact that the present application is moved in totally changed circum- stances. It is true that earlier this court has not granted any relief to the applicant to represent the company in liquidation in pending litigations filed by or against the company. It was, however, expected by the court from the official liquidator that he would take proper care of all such proceedings which are pending. This expectation was not fulfilled. Many matters were decided ex parte . No proper representation was made. Even actions were not taken in the matters which were decided against the company in liquidation. Respondent No. 2 objects to this application in as much as it ultimately suits their purposes in winning over the cases filed against them, without any protest. The official liquidator has not objected to this application in its entirety. On the contrary, Ms. Yajnik, learned advocate appearing for the official liquidator, invited such assistance being offered by the applicant, especially when the official liquidator is over-burdened with the wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore any court, authority or forum. It is true that provisions of the Companies Act do vest all powers and authorities in the official liquidator and he alone can represent the company in liquidation, but the Act nowhere debars the promoters, shareholders or guarantors from rendering proper and effective assistance to the official liquidator in pending cases filed by or against the company in liquidation. To prevent such persons from rendering any assistance to the official liquidator is violative of the principles of natural justice. 24. There is no such dispute about the proposition of law made in the decisions of Kaliappa Nadar s case ( supra ) and Associated Banking Corpn. of India Ltd. s case ( supra ) is no question of any independent action being taken by the applicant. He has to work along with the official liquidator till his interest remains in conformity with the interest of the company in liquidation. The applicant s only endeavour is to protect or safeguard the interest and properties of the company in liquidation. He neither replaces nor substitutes the official liquidator in any of the proceedings. The court, therefore, inclines to grant this application part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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