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TMI Blog2014 (12) TMI 1431X X X X Extracts X X X X X X X X Extracts X X X X ..... the security expenses incurred by the Official Liquidator upto October 2011. Thereafter in-spite of repeated reminders they have not paid due amount till date towards the expenses incurred by the Official Liquidator on the security of the two immovable properties of the company. These amounts now aggregate to Rs. 7,43,744/- at the rate of Rs. 46,484/- p.m. It has been submitted that it now transpires that the BIFR in the meantime vide order dated 14.3.2012 had rejected reference No. 185/2002 holding it to be not maintainable under the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter 'the Act of 1985'). However this fact was neither brought to the notice of the Company Court nor the Official Liquidator as directed by this Court in its order dated 5.8.2010. It has been further submitted that the Official Liquidator has also not been informed as to whether any appeal was filed by the non-applicants as Directors of the Company or the Company itself against the order dated 14.3.2012 passed by the BIFR. It has been submitted that in the circumstances it would be appropriate to ensure compliance with this Court's order dated 5.8.2010 and in the interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ispat Industries Limited (in SB Civil Company Petition No. 34/1998) the Company was not represented before this Court. It has been submitted that various sums towards security charges payable under this Court's order dated 5.8.2010 have been paid upto April 2012 but have yet to be accounted for by the Official Liquidator. The Official Liquidator has been accused of serious and culpable acts of omission and commission on his part in failing to preserve and protect the assets immovable and movable of the Company, such as the material which was allegedly lying in the premises of the company situate at E- 368 and A-1113, RIICO Industrial Area, Bhiwadi (Alwar). The material is alleged to have been stolen and wasted. This according to the non-applicants precludes the Official Liquidator from claiming reimbursement of expenses for the alleged preservation, protection and safeguarding of company property. Reference to an alleged visit by the non-applicant No.1 along-with his counsel to the two properties of the company on 1.6.2011 has been made and it has been stated that the properties were found in a "reprehensible state". Hence under a letter dated 7.6.2011 the Official Liquidator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at by him. Thereupon the Official Liquidator sought time to personally look into the matter. On 13.3.2014 counsel for the Official Liquidator stated that on a personal visit made to the two immovable properties of the company by the Official Liquidator, he found the security arrangement satisfactory. Time to file a formal affidavit in this regard was sought. The affidavit by the Official Liquidator was filed on 4.4.2014. Inevitably a counter affidavit on behalf of the non-applicants followed on or about 9.5.2014. And a rejoinder by the Official Liquidator also as almost always followed. I have perused the reply to the application under Rule 9 of the Rules of 1959 filed by the Official Liquidator and reply thereto. What transpires from the facts on record is that the M/s. C.V Steel Limited, the respondent Company has been closed since 1999, and being in default on its obligations to RIICO on a term loan had its immovable assets mortgaged as collateral taken possession by the RIICO under section 29 of the State Financial Corporation Act, 1951 (hereinafter 'the Act of 1951') sometime in the year 2000. The assets remained with RIICO even after the passing of the winding up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the directions of this Court passed on 5.8.2010 directing the non-applicants for payment of security expenses incurred on the protection of assets of the respondent Company to the Official Liquidator. The defence to the non-compliance of the condition of the order dated 5.8.2010 passed by the Company Court is broadly argued by the counsel for the non-applicants Shri Salecha as follows: (i) with the recall of the winding up order dated 19.7.2002 vide order dated 5.8.2010, proceedings in SB Company Petition No. 34/1998 have "come to a close". (ii) monies paid to the Official Liquidator under the order dated 5.8.2010 upto April 2012 have yet to be accounted for. (iii) The Official Liquidator has been guilty of omission and commission and failure of proper preservation and protection of material lodged at company's premise at E-368 and A-1113, RIICO Industrial Area, Bhiwadi (Alwar). It has also been alleged that "substantial material lying in the two premises has been stolen and whisked away. According to counsel, this precludes the Official Liquidator from seeking to recover monies allegedly expended, if at all on security of the company assets. No amounts as claimed for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossession of the properties from RIICO till the assets thereafter remained with him. It has been submitted that the said order dated 5.8.2010 was never modified, vacated or set aside. For about 7 years till the filing of the reply to the Official Liquidator's application under Rule 9 of the Company (Court) Rules, 1959, for the payment of security charges as directed by the Court in its order of 5.8.2010, no issue about the alleged failure to adequately protect "material" on the premises in issue in possession with the Official Liquidator was raised before this Court. Even an application incorporating the said allegations was not moved before the Company Court even after the alleged 'reprehensible' state of affairs came to the non-applicants notice in the inspection of 1.6.2011. Only a letter dated 7.6.2011 was addressed to the Official Liquidator in all its vagueness and thereafter not followed up. The sole intent was using the letter of 7.6.2011 as evidence / material when warranted to avoid compliance with the order dated 5.8.2010 and satisfaction of the condition of the recall of the winding up order dated 19.7.2002. Counsel for RIICO further submitted that the very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licants has reiterated the contents of the reply to the Official Liquidator's application. He has submitted that reimbursement for expenses on security as directed by the Company Court in its order dated 5.8.2010 has to be reasonably construed as reimbursement in case of security of assets of the company having been provided- and not in case where the security was farcical, a mere sham and where in-fact the assets of the respondent company were depleted by unabated theft. Counsel submitted that to require the non-applicants to pay the amount allegedly expanded by the Official Liquidator on non-existent security would add insult (financial burden) to injury (loss of material of the company to theft). Heard. Perused the relevant order of the Company Court passed on 5.8.2010 and thereafter considered. The over-all facts of the case reflect a very disturbing aspect of the misuse of the legal processes of the Company Court and the non-applicants cocking a snook at the liberal view taken by the Company Court in recalling the winding up order dated 19.7.2002 by its subsequent conditional order dated 5.8.2010. From the facts on record it is apparent that RIICO in the exercise of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der dated 5.8.2010 upto were paid. No application for the modification of the order dated 5.8.2010 requiring reimbursement of security charges for the assets of respondent company was moved. It is also extremely odd that the alleged 'reprehensible state' of the properties of the company in liquidation purportedly found on the alleged visit of 1.6.2011 was never brought to the notice of this Court except over two years thereafter on the occasion of filing the reply to the application filed by the Official Liquidator for payment of security charges as directed by this Court under its order dated 5.8.2010. It is fundamental to a claim that one who alleges has to prove it. To my mind thus the issue of the Official Liquidator being responsible for the "loss" of the "material" of the company from its two sites is on the face of it sought to be generated on vague assertions without any semblance of specifics. And if indeed the Official Liquidator is found to be remiss, at any stage, in the discharge of his obligations, he will be called for his explanation. For that however, specifics have to be pleaded and proved. Not yet done. But even that cannot be the basis of the non-appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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