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TMI Blog2008 (6) TMI 355X X X X Extracts X X X X X X X X Extracts X X X X ..... so, when some of the parties are not within the territorial jurisdiction of this Court. It is for this reason that this Court made the observations in para 13 and thereafter in 14 as well. In my view, without entering into any larger controversy and considering the above observations and peculiar facts of this case, it can safely be concluded that the present application is not maintainable. - COMPANY APPLICATION NO. 827 OF 2006 COMPANY PETITION NO. 970 OF 1997 - - - Dated:- 13-6-2008 - S.C. DHARMADHIKARI, J. S.A. Divan for the Applicant. P.K. Samdani for the Respondent. Ms. Shakuntala Joshi for Security Agency. M.G. Vasudeo and Ms. Mohana Nair for Centurion Bank. JUDGMENT 1. On 13-6-2008 an order was passed dismissing this Company Application. Here are the reasons for dismissing the same : "The Company Application is instituted for the following relief : ( a )that this Hon ble Court be pleased to order and direct the Official Liquidator to pay to the Applicants a sum of USD 3.5 million (approximately Rs. 18,25,00,000) together with interest at the rate of 12 per cent per annum or such other sum from 20-2-2003 or from such other date that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of pipe-coating used in the Oil and Gas sector in India, and it was agreed between them to form the Consortium. 5. The Consortium put in bids and was selected for the purpose of Pipe Coating for both the said Projects. The tender of the SBHT Project as awarded to the Consortium on 24-11-1993 and tender for the ICP-Heera Project was awarded to the Consortium on 26-5-1994. ONGC entered into two separate contracts with the Consortium for each of the said Projects, i.e., Contract dated 15-12-1993 for the SBHT Project and Contract dated 7-7-1994 for the ICP-Heera Project. 6. From time to time, Al-Qahtani and Otoklin executed Memorandum of Understanding recording the understanding between themselves, which finally culminated in the Memorandum of Understanding dated 27-1-1994 the First MOU for the SBHT Project. Thereafter, by a Memorandum of Understanding dated 18-7-1994 between the parties the Second MOU , the terms and conditions of the First MOU were modified to the extent set out in the Second MOU. This was necessitated as by July 1994 the ICP-Heera Project had also been awarded to the Consortium. It was agreed by the parties that rental charges would be paid for the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Associates, Chartered Engineers to visit the site at factory premises to inspect the plant and machinery. There was no reply to this letter. Subsequently, the site visit was delayed and in fact the case of the applicants is that it took place on 29/30-9-2002. At that time the applicants for the first time learnt that the company had been ordered to be wound up and Official Liquidator had been appointed to take charge of the assets. The Official Liquidator had also taken charge of the entire site including the plant and machinery belonging to the applicant. A report was made by the Chartered Engineer on these lines. It is in such circumstances that the applicants preferred a Company Application and prayed that this Court should pass appropriate orders and directions directing the Official Liquidator to return to the applicants the plant and machinery belonging to the applicants and more particularly set out in Schedule I to the Company Application on such terms as this Court deems proper. On this Company Application which was numbered as Company Application No. 865 of 2002, the following order and directions were passed : "Leave under Rule 19(3) of the Company Court Rules, 1959 gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a , seeking direc- tions with regard to giving delivery of these equipments to the applicants. An order was passed on this report on 20-2-2003 copy of which is annexed as Annexure I to the affidavit in support to the present Company Application. Since strong reliance is placed upon this order also, it is reproduced herein below : "Company Application No. 32 of 2003 has been taken out for directions to the liquidator to return to the applicant the plant and machinery belonging to the applicant. Perusal of the report of the liquidator and documents accompanying the same shows that the plant and machinery has been inspected together with all the documents produced by the Applicant and the liquidator has been satisfied about the ownership of the machinery as per the list of the Applicant. It was found that except one hoper, which was not found, plant and machinery were found as per the manifest produced by the Applicant. In this view of the matter, therefore, as the ownership of the Applicant of the plant and machinery, details of which are in Schedule "1" to the plaint is now established. The Company Application No. 32 of 2003 is granted in terms of prayer clause ( a ). Dismant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing fork lifts and cranes of 30 tonnes at the minimal to remove the same. Even on dismantlement of the plant, the said plant and machinery would require at least 40 trucks (approximately) including special sized trucks to load and remove the same from the Factory premises. Al-Qahtani has had photographs taken of the said plant and machinery, when the same was verified, identified, listed, etc., in November 2002. The situation at the factory premises on 15/16-12-2003 have also been photographed, which would show that the huge plant and machinery of Al-Qahtani have been literally taken away from the custody of the Official Liquidator. Al-Qahtani craves leave to refer to both these sets of photographs when produced. The Official Liquidator s representative has made two Site Reports, one dated 15-12-2003 and the other dated 16-12-2003 duly tabulating the limited available plant and machinery of Al-Qahtani (constituting less than 30 per cent of the total plant and machinery). The said Reports allege that Al-Qahtani s plant and machinery has been dismantled and removed sometime between 1-7-2003 to 9-8-2003 and purportedly that was done, in the presence of representatives of the Official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnivance and collision of the Official Liquidator. It is alleged that the plant and machinery removed bore the stamp, name and serial number of the applicant on it and in spite the same was wrongfully and illegally permitted to be removed. It appears that the inspection/valuation report was called for by the Official Liquidator and even that came to be forwarded to Centurion Bank and police authorities. 19. The Official Liquidator filed his report dated 2-1-2004 and sought directions from this Court. That report came to be disposed of by this Court on 21-6-2004. The applicant places reliance upon this order and I will make a due reference to the same at an appropriate stage. 20. The plant and machinery which was dismantled had already been sold as scrap to Deepak Steel and Pankaj Traders of Rajkot and in the light of this Centurion Bank was asked to give details on affidavit. It appears that several affidavits have been filed pursuant to the directions of this Court and reference to that has been made by Mr. Justice A.M. Khanwilkar in his order. It is alleged that the affidavits disclosed that the entire plant and machinery has been removed and misappropriated in complete c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r leading evidence of various parties involved. Thus, it is submitted that this Hon ble Court in summary proceedings in the form and nature of an application taken out cannot arrive at a complete and proper conclusion of the issues involved in the matter. By order dated 21-6-2004 this Hon ble Court has held that the proper course would be to examine various issues inter alia, ownership with regard to items which are now missing as there is dispute regarding ownership of the goods as well as it is not possible to quantify the value of the lost goods and that all these aspects can be and will have to be examined in a substantive proceedings to be taken out by the applicants. It is thus submitted that the application as taken out is not in compliance with the order dated 21-6-2004 and thus, the application be rejected with costs. (5) The application also suffers from the vice of non-joinder of necessary party and unless and until Centurion Bank of Punjab Ltd. and their agents viz., R.K. Steel Syndicate, officers of the Court Receiver, officers of the Customs Authorities, Valuers, Crack Detective Network Pvt. Ltd., Security Agency of Vashi and others are joined as parties to thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication. The allegations against the Official Liquidator and his officers/employees have been reiterated. It is stated that the respondent No. 1 Official Liquidator alone is responsible and liable for the harm and loss and the injuries suffered. The applicants urged that it is not disputed that the plant and machinery belonging to them were lying at the factory premises till 1-7-2003. They have referred to the proceedings instituted by Centurion Bank of Punjab Ltd. They have also referred to the appointment of Court Receiver therein. It is their case that the Court Receiver was directed by this Court to take possession of the equipments purportedly leased by the Centurion Bank to the company in liquidation under the supervision of the Official Liquidator Para 4 of the rejoinder affidavit makes reference to all these facts. The applicants are aware of the order dated 10-4-2003 in the suit filed by the Centurion Bank. Yet, they reiterate the contents of the affidavit in support. 26. On this Company Application orders have been passed permitting impleadment of the following parties : "(2) The Court Receiver, High Court, Bombay, having its office at Bank of India Building, 2nd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly. He submits that if at all the Official Liquidator wants to dispute the valuation of the articles in question, then, this Court should issue appropriate directions in that regard. In other words, the dispute about valuation could be referred to an Independent authority/person and he should decide the quantum and make a recommendation/report to this Court. Thus, computation of the losses suffered is something which can be segregated at this stage. The Official Liquidator must be directed to pay to the applicants damages/compensation or else there will be total miscarriage of justice. He submits that the issue is extremely serious. There is removal of goods from the custody of the Official Liquidator. Once the goods are " custodia legis ", then, it is the duty of this Court to issue appropriate directions to the Official Liquidator or else there will be no sanctity to the orders and directions of this Court. People will violate and breach them with impugnity and yet there will be no accountability. In such circumstances, this Court should take cognizance of the request of the applicants and issue appropriate directions. 28. Mr. Diwan then submits that the objections raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admittedly belonged to the applicants. Admittedly, respondent No. 1 was in possession thereof pursuant to the orders of this Court. Admittedly, the said plant and machinery is missing from the custody of the respondent No. 1 and cannot be returned to the applicants despite the said order dated 20-2-2003. The applicants have been unable to put the said plant and machinery to any use because of the gross negligence and dereliction of duty on the part of the applicants. Thus, the applicants are entitled for compensation even on the principle of restitution as stated in the ONGC case hereinabove. In the circumstances, it is submitted by Mr. Diwan that the present application is maintainable even on the principle of restitution. 32. With respect to the contention of the respondent No. 1 that the present application is contrary to the directions issued by this Hon ble Court in its order dated 21-6-2004 it is submitted by Mr. Diwan that the same were passed upon the report dated 2-1-2004, made by the respondent No. 1 and not upon an application of the applicants. Further, the direction was issued by the Hon ble Court in view of prayer ( b ) of the said report dated 2-1-2004 which rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are seeking reliefs only against the respondent No. 1. Admittedly it was the respondent No. 1 who submitted the report dated 5-2-2003 which led to the said order dated 20-2-2003. Till the filing of its affidavit dated 14-12-2006 in reply to the present application, Official Liquidator addressed several correspondences and filed report admitting the ownership of the applicants in respect of the said plant and machinery. In the circumstances, the respondent No. 1 is estopped from questioning the ownership of the applicants in respect of the said plant and machinery. In other words, as between the applicants and respondent No. 1 there is not a dispute save and except with respect to valuation of the plant and machinery. The dispute referred to in the said order dated 21-6-2004 is the dispute that would arise if the applicant files another proceeding against third party, claiming that the machinery taken by the third party belonged to the applicants. The dispute of valuation can be resolved by leading evidence in the present application which this Hon ble Court is competent to take. Further, the summary proceedings referred to in the said order dated 21-6-2004 is the Official Liquida ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that the bifurcation as suggested by Mr. Diwan is wholly impermissible in the facts of the present case. This Court cannot pass a declaratory order and thereafter grant liberty to the applicant to initiate proceedings for quantification and computation of the loss/damages/compensation. All this will amount to by passing the normal civil remedies. They cannot be by passed in this manner and when the applicant knows fully well that it will have to institute a civil suit. He submits that the relief claimed will have to be seen as a whole and together with the pleas in the affidavit in support. Having alleged that there is a collusion between the Official Liquidator and his officials together with Centurion Bank and third parties the applicant claims compensation or damages. All such persons are impleaded as party respondents. Now, urging that the claim be restricted to Official Liquidator is an afterthought. 37. Mr. Samdani invited my attention to prayer ( a ) of the Company Application and contended that his submissions are fully supported by bare reading of the said prayer. The nature of the relief claimed itself indicates that the Company Application is not the remedy. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Official Liquidator placed before the learned Judge. The report dated 2-1-2004 prayed for following reliefs : "( a )In view of paras 11, 12 and 13 supra whether this Hon ble Court may be pleased to direct the Police authorities at Gandhidham to register the FIR and take up immediate investigation on the basis of information furnished by the Official Liquidator in respect of the missing plant and machineries belonging to Al-Qahtani Pipe Coating Terminal, Saudi Arabia and book the culprits as well as recover the missing plant and machineries. ( b )In view of para 14 above, whether this Hon ble Court will be pleased to direct the Centurion Bank Ltd. and its dismantling agent R.K. Steel Syndicate to make good of the loss of value of the machineries removed from the site at Kandla, Gandhidham at the time of removal of lease machineries to Centurion Bank Ltd. ( c )for such other and further directions as this Hon ble Court may deem fit and proper." Thus, the controversy is regarding the removal of the goods and the nature of the remedy that is to be pursued by the applicant was squarely raised before the Court. In paragraphs 5 and 6 of the order the learned Judge has ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the present proceedings. For, the affidavits which have come on record indicate that both sides have claimed ownership with regard to some of the items which are now missing from the site. As there is dispute regarding ownership of the goods, and more so, it is not possible in this summary proceedings to quantify the value of the lost goods or the goods removed from the site as also the goods which are left behind and rendered damaged or useless, the appropriate course, to my mind, is to relegate AQH to take recourse to appropriate proceedings against CBL or RKS or any other person including M/s. Deepak Steel or Pankaj Traders, who in turn, have purchased the dismantled goods as scrap from the site. If such proceedings are taken out, the parties will have to establish the ownership of their respective items and also adduce evidence with regard to the actual loss caused to them due to the loss of items removed from the site and also the damage which has been suffered to the items which are left behind on the site. All these aspect can be and will have to be examined in such substantive proceedings to be taken out by AQH. (13) In view of the course that I have adopted, I have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the site. The parties have to establish the ownership of the goods by adducing evidence with regard to actual loss caused to them if also a clear finding. Mr. Diwan s reliance on General Principles pertaining to the status of a liquidator apart, the applicants cannot be permitted to now urge that the relief be granted in their favour in the present Company Application. Mr. Diwan is aware that the present application is in sense also a summary proceedings. 41. Now, it is not open for Mr. Diwan to urge that this application is maintainable on the premise that there is no dispute with regard to the title/ownership of the goods. Despite the earlier orders including that of Mr. Justice D.K. Deshmukh, Mr. Justice A.M. Khanwilkar in his subsequent order dated 21-6-2004 has made the above reproduced observations. They are clearly binding upon the applicants. They cannot now say that the title and ownership is proved and only quantification of loss and damage remains. Once they have to lead evidence to establish ownership and title so also the loss and damage sustained by them, then, obviously the present Company Application is not the proceedings contemplated in the above order. Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been made. While it is true that the liquidator is an officer of the Court and Court cannot ratify or ignore allegations of misconduct on his part, yet, everything depends upon the facts of each case. The Court has observed that the inquiry is summary but strangers can be brought into inquiry or not would ultimately depend upon the facts of each case. 43. Similarly, the observations in Amba Tannin Pharmaceuticals Ltd. v. Official Liquidator [1975] 45 Comp. Cas. 457 (Bom.) would not apply in this case. In the context of the powers of the liquidator it is undisputed that he is answerable to Court. However, whether he can be directed to compensate parties like the applicant for losses when disputed and contentious issues are raised is something which must be decided on facts of each case. He being an officer of the Court and acting in finding capacity is a principle about for which there can be no quarrel. 44. The judgment of this Court in Nilesh Lalit Parekh, In re 2002 (1) Bom. CR 357 is upon an issue, as to whether consent terms which were filed in a winding up petition in which the guarantee is given by the Managing Director to make payment would entail in his be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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