1. The applicant Bank of Baroda has taken out present application seeking below mentioned relief / direction:-
"(A) Your Lordship may kindly be pleased to direct the respondent - official liquidator to comply with order dated 2.12.2010 passed in Company Application No.96 of 2010 at annexure-J.
(B) Your Lordship may kindly be pleased to direct the official liquidator to disburse the amount towards the claim to the applicant bank as secured creditor, which is allowed by the chartered accountant.
(C) ....."
In the application it is, inter alia, claimed and alleged that though substantial amounts have been disbursed in favour of other creditors, the applicant bank is deprived of such disbursement and further amount deserves to be disbursed in favour of applicant bank so as to bring the applicant bank at least at par with other secured creditor. The applicant bank has also challenged the conclusions of the Chartered Accountant of not considering applicant bank's claim with reference to the assets / properties of the company (in liquidation) which have been disposed of and thereby not ranking the applicant bank at par with other secured creditors and instead considering the charge of the applicant bank as second charge. Various other allegations have also been made and claims have been raised by the applicant in present application the crux of which is that the claim of the applicant bank is second claim supported by registration of charge and Chartered Accountant is not justified in considering the charge as second charge.
Having regard to the submissions made by the applicant bank with reference to the grievance made and relief prayed for in present application, the Court, under previous orders passed in this application, directed the OL to engage another Chartered Accountant for the limited purpose of getting the claim of applicant bank scrutinized and to submit the report after examining the claim and the supporting details. In compliance of the said direction, the OL engaged services of Chartered Accountant M/s. Amal Datt and Associates who has, submitted report dated 1.8.2011 and another report dated 8.8.2011.
2. It emerges from the record that the ground that the reports of the Chartered Accountant's which have been received by the office of OL until now and which have been placed on record by OL reflect divergent views and conflicting or contradicting conclusions.
3. In light of the request, it is noticed on examination of record, that about 3 to 4 reports submitted by Chartered Accountant have been placed on record by office of OL. It also appears from the record that on the basis of the earlier reports submitted by Chartered Accountant diverse amounts have been disbursed by way of interim / ad-hoc payment on the strength of earlier orders passed by the Court. According to one of the reports (report dated 27.6.2011) filed by OL it appears that a sum of Rs. 55 Crores has been disbursed amongst 5 secured creditors as per the details mentioned in paragraph 2 of the said report which reads thus:-
Sr.
No.
Name of Secured Creditors 1st Payment on ad-hoc basis as per order dated 9.10.2006 (In Rs.) 2nd Payment on ad-hoc basis as per order dated 19.6.2007 (In Rs.) 3rd Payment on ad-hoc basis as per order dated 24.7.2009 (In Rs.) Total (In Rs.)
1. ICICI/SCB 2,30,54,276/-
8,05,15,506/-
10,96,35,947/-
21,32,05,729/-
2. IDBI 1,26,56,026/-
5,49,79,693/-
7,09,39,506/-
13,85,75,225/-
3. IFCI 1,27,64,263/-
5,91,77,322/-
7,61,55,262/-
14,80,96,846/-
4. LIC 15,25,435/-
53,27,479/-
32,29,486/-
1,00,82,400/-
5. BOB
---
---
4,00,39,800/-
4,00,39,800/-
Total 5,00,00,000/-
20,00,00,000/-
30,00,00,000/-
55,00,00,000/-
4. It also transpires from the record that thereafter all creditors have made grievance with regard to the report submitted by Chartered Accountants and with reference to the determination of the alleged claims of the secured creditor and also with reference to ratio for disbursement suggested by the chartered accountant.
Each secured creditor has raised objection against the other secured creditor's claim accepted as eligible claim by chartered accountant and also against the ratio of disbursement fixed in respect of other secured creditors.
5. In such factual background the applicant Bank of Baroda took out present application claiming that it has not been sufficient amount disbursed in its favour and therefore appropriate orders for further disbursement in favour of applicant bank may be passed which may at least, bring Bank of Baroda at par with other secured creditor.
6. At this stage it is necessary to note that the OL has placed on record, in one of the reports that according to the report of the chartered accountant certain excess amount has been disbursed and paid (i.e. more than eligible amount has been disbursed on the basis of the ratio taken into account at that point of time) to two creditors viz. ICICI Bank and Standard Chartered Bank and IDBI bank. In his report dated 27.6.2011 the OL has stated below mentioned details:-
Sr.
No.
Name of Secured Creditors Claim Amount (In Rs.) (A) Amount Considered eligible (In Rs.) (B) Final Ratio Determined by the C.A. (in %) (C) Amount paid (In Rs.) (D) Amount to be recovered (In Rs.) (B-D)
1. General Insurance Corporation of India 91,86,217/-
6,80,000 0.06
-------
--------
2. LIC of India 11,17,58,000 3,14,56,000 2.74 1,00,82,400
------
3. Bank of Baroda 37,11,05,764 37,11,05,764 32.33 4,00,39,800
------
4. IDBI Bank Ltd 6,24,58,885 6,24,58,885 5.44 13,85,75,225 7,61,16,340
5. Oriental Insurance Company Ltd.
1,90,86,844 1,90,86,844 1.66
--------
ICICI Bank/Standard Chartered Bank 39,66,18,899 2,26,69,870 1.97 21,32,05,729 19,05,35,859
7. IFCI Ltd.
23,29,27,741 23,29,27,741 20.29 14,80,96,846
8. Workers / employees
---
40,75,41,766 35.51
--------
Total 120,31,42,350 114,79,26,870 100 55,00,00,000
7. In the very same report dated 27.6.2011 the OL has also mentioned that:-
6.....
The official liquidator is not in a position to disburse any amount to any financial institution / secured creditors of the company"
8. Having regard to such facts and circumstances and upon considering the request made by applicant in present application, it was considered appropriate to direct OL to call for report from the chartered account suggesting as to whether any amount was required to be disbursed in favour of the applicant bank so as to bring it at par with other secured creditors (in terms of the amount disbursed in their favour) and to suggest appropriate amount which ought to be paid to the applicant bank.
In pursuance of the said direction chartered accountant engaged by the OL submitted his first report dated 8.8.2011 wherein the said chartered accountant has observed in paragraph 1.2 that:-
"1.2 Our observations and findings:-
The officials of the Bank of Baroda and IDBI have been approached by us to support their stands and offer the evidences and explanations.
We find that Bank of Baroda mainly relies on the pari-passu agreement dated 20.1.1976 in support of their claim that they are having the equal right on the immovable assets of the company. Close scrutiny of the records reveals as under:-
"1.2.1 BOB presented the pari-passu agreement dated 20.1.1976 in support of their claim. The said pari-passu agreement dated 20.1.1976 was related to the demand loan facility of Rs. 21.50 Lacs and two separate loan facility of Rs.50 Lacs and Rs.5 Lacs aggregating to Rs.55 Lacs total amounts to Rs.76.50 Lacs. From the search report of M/s K.J. Shah and Company (company secretaries) it is clearly evident that the charge related to the 55 + 21.50 = 76.50 Lacs had already been satisfied.
Further, the said Loan facilities of Rs.76.50 Lacs are neither mentioned in C.A. M&R's report nor claimed by the BOB.
1.2.2 We have verified the form 8 filed by the company from time to time related to the CC facilities of the Anand and Nariman point, where in it is clear that Bank of Baroda had no charge on the immovable properties of the company with regard to the CC facilities. Even form 8 filed by the company for CC facilities doesn't contain any reference to the pari-passu charge as mentioned in 1 above. Thus, the said pari-passu charge has no relevance with regard to the present outstanding CC facilities.
1.2.3 In case of 40,000 13.5% Convertible Debentures of Rs. 2 Crores, it is clearly evident that the said debentures had been already converted into the equity shares of the company as on 03.08.1985 as set out in the search Report of M/s. K.J. Shah and company (company secretaries) "
9. In the same report the said chartered accountant has also observed, in paragraph No.2 that:-
"2.
As informed to us official liquidator has Rs.25 Crore to distribute among the secured creditors.
2.1 The following is the distribution pattern of the Rs. 55 Crores already distributed.
Sr.No.
Name of Secured Creditors Claim (A) Eligible (B) Distributed (C) % of Revised Eligible Claim Received (C/B* 100)
1. GIC 9186217 680000 0 0
2. LIC 111308000 31456000 10082400 32.05
3. BOB 371105764 50049750 40039800 80.00
4. IDBI 62458885 62458885 138575225 221.87
5. OICL 19086844 19086844 0 0.00
6. ICICI (SCB) 396618899 22669870 213205729 940.48
7. IFCI 232927741 232927741 148096846 63.58
8. Workers 407541766 0.00 550000000 2.2 IDBI and ICICI had been paid excess amount of Rs.7,61,16,340 and Rs.19,05,35,859/- respectively.
We observe unequal distribution of the funds among other secured creditors also."
10. After above quoted observation, the said chartered accountant in his report dated 8.8.2011 offered his final conclusion which are found in paragraph 3.1.1 to 3.3.3 which reads thus:-
3.1.1 Bank of Baroda has no pari-passu charge with respect to the CC of Anand and Nariman Point facilities granted to the shree Vallabh Glass Works Limited (in Liqd.) (Ref; 1.2.1 and 1.2.2) 3.2.2 4000 13.5% secured convertible Debentures of Rs.2 Crores had already been converted into the equity shares of the company and thus BOB is now no more secured creditor for the purpose of these debentures.
3.3.3 Official liquidator to distribute Rs.13,59,81,289/- among the secured creditors as above out of the Rs.25 Crore funds available. This will settle all secured creditors fully excess distributions to IDBI and SCB (ICICI) will have to be recovered by OL.
11. The said report also received the same treatment i.e. objection from all creditors.
12. As part of their objection the creditors including the applicant cited previous report of the same chartered accountant which was submitted under covering letter dated 1.8.2011. In the said report the chartered accountant had taken into account the details of the disbursement of Rs.55 Crores already made in favour of the creditors and then the chartered accountant observed in the said previous report dated 1.8.2011 that:-
"On considering the report of the chartered accountant and the distribution of the funds of Rs.55 Crores, it is clear that IDBI and ICICI have been paid excess amount and the remaining secured creditors also have not been paid equally. Since IDBI and ICICI has already recovered the excess amount than their eligible claim amount, the excess needs to be recovered from them. Therefore, we have not considered them for additional distribution from Rs.25 Crore.
Based upon the above, we suggest distributing the amount in such a way that "remaining" secured creditors be first distributed additional amount so as to equate them at 65% of their eligible claim. Accordingly, the following shall be the first round distribution pattern.
Name of the Secured Creditor Claim Eligible Distribute % of Total claim distribute Amt at 65% To pay to set at 65% A B C D E (E)-(C) GIC 9186217 680000 0 0 442000 442000 LIC 111308000 314560000 10082400 32.05 20446400 10364000 BOB 371105764 84574750 40039800 10.79 241218747 201178947 IDBI 62458885 62458885 138575225 221.87
------
----
OICL 19086844 19086844 0 0.00 12406449 12406449 SCB 396618899 22669870 213205729 940.48
-------
-----
IFCI 232927741 232927741 148096846 63.58 151403032 3306186 Workers 407541766 0.00
-----
------
550000000 42,59,16,627 22,76,97,581
13. It is in backdrop of the above mentioned factual aspect it is necessary to mention that during the hearing of present application, the applicant and other 3 creditors have requested that until the Court takes decision after hearing the matter on merits appropriate amount in light of the outstanding dues vis a vis the amount disbursed until now, may be disbursed by way of interim or ad-hoc disbursement.
14. Actually the secured creditors have tendered a statement which is claimed to be mutually agreed temporary, interim and ad-hoc arrangement arrived at after inter se discussion between the secured creditors. The said statement is purportedly signed by the authorized representative / officer of the four secured creditors. The said statement has been filed by way of request / proposal for disbursement which reads thus:-
Sr.
No.
Name of secured creditor Eligible Claim Distributed till date Remaining amount proposed to be distributed Total amount disbursed including present disbursement 1 SCB 411483605 213205729 100000000 313205729 2 BOB 371105764 40039800 120000000 160039800 3 IFCI 294888992 148096846 35000000 183096846 4 IDBI 179251300 138575225 35000000 173575225 Total 1256729661 539917600 290000000 829917600
15. Before proceeding further it is necessary to note that although under the reports of the chartered accountant the eligible amount payable to the workers is identified and quantified however any amount does not appear to have been disbursed amongst the workers (though it appears that certain amount - out of the sale consideration received until now by OL - is set aside by the OL). Therefore, while considering the joint request of the creditors and before making any order the said aspect is required to be kept in focus, particularly in light of the submission of OL that excess amount is already disbursed to IDBI and ICICI (now Standard Chartered Bank, as the assignee of ICICI Bank) .
16. It is also noticed from the record that according to the OL's report dated 27th June 2011 the status of the eligible claim amount of the concerned 4 creditors (i.e. those 4 creditors who are presently raising claim for further disbursement as interim / ad-hoc disbursement) and the workers is as follows:-
Bank of Baroda :- 37,11,05,764/-
Standard chartered Bank :- 02,26,69,870/-
IFCI Limited :- 23,29,27,741/-
Workers :- 40,75,41,766/- However,
the eligible claim amount mentioned by the said 4 secured creditors in their above referred joint request / proposal for disbursement is as mentioned below:-
Bank of Baroda :- 37,11,05,764/-
IDBI Bank :- 17,92,51,300/- ICICI/
Standard chartered Bank :- 41,14,83,605/-
IFCI Limited :- 29,48,88,992/-
Workers :- 40,75,41,766/- 17.
A comparison of the above mentioned details brings out the discrepancy in the two submissions namely the figures submitted by OL and the figures claimed by the secured creditors. While there is no difference between the eligible claim amount of Bank of Baroda , in other three cases there is difference of more than about 11 crores in case of IDBI, more than about 39 crores in case of ICICI / Standard Chartered Bank and more than about Rs.6 crores in case of IFCI between the amount considered eligible in OL's report and the figures mentioned by the said 4 creditors in the above mentioned joint note / request for disbursement proposal.
18. In the aforesaid backdrop the amounts which have already been disbursed to the said 4 secured creditors are also required to be considered. The details are as follows:-
Bank of Baroda :- 04,00,39,800/-
IDBI Bank :- 13,85,75,225/- ICICI/
Standard chartered Bank :- 21,32,05,729/-
IFCI Limited :- 14,80,96,846/-
19. Thus, if the details with reference to the eligible claim amount mentioned by OL are to be considered as the base then it emerges that against the eligible amount of about Rs.37 crores Bank of Baroda has been paid about 4 crores while against the claim of about Rs.6 crores IDBI has been paid about 13.85 crores and against the claim of about Rs.2 crores ICICI / Standard Chartered Bank is already paid about Rs.21.32 crores whereas against claim of about 23 crores IFCI has been paid about Rs.14.80 crores.
20. However, the above mentioned four creditors have, in the note / request submitted for disbursement proposal, the eligible claim amount is shown on much higher side inasmuch as IDBI has claimed that eligible claim amount is about Rs.17.92 crores while IFCI has claimed that eligible claim amount is about Rs. 29.48 crores and ICICI / Standard Charted Bank has claimed that the eligible claim amount is about Rs. 41.40 crores.
21. In this background the said 4 creditors have, on the basis of their mutual agreement, claimed further disbursement in light of their inter-se and mutual agreement, in below mentioned ratio:-
Bank of Baroda :- 12,00,00,000/-
IDBI Bank :- 03,50,00,000/- ICICI/
Standard chartered Bank :- 10,00,00,000/-
IFCI Limited :- 03,50,00,000/-
22. Accordingly the said 4 creditors have claimed disbursement of Rs. 29 crores i.e. almost the entire available amount in the hands of official liquidator. In view of the submission made by learned advocate for OL with reference to the said note for disbursement by the four creditors, the creditors were asked to file affidavit declaring their undertaking. The affidavits appear to have been subsequently tendered in the Registry on 23.2.2012 and on 28.3.2012 which are then placed on record of present application but they do not contain the undertaking.
True it is that ordinarily no one (including OL) has any right and / or authority to retain - withhold the amount for long time and the amounts (received from the sale of assets of the company) should be disbursed amongst rightful owners - claimants viz. secured creditors, workers, statutory creditors, sundry - unsecured creditors members / shareholders etc., without any delay. However in present case, before proceeding further, it is necessary to note on one hand the OL has asserted that in two cases amount are to be recovered since excess payment (i.e. more than eligible amount) has been made and on the other hand it is also necessary to keep in focus that from the record it appears that though undisputedly, the eligible claim amount of workers is determined at about Rs.40.75 crores OL is allowed to set aside and separately retain a sum of Rs.30 crores for disbursement amongst workers.
23. Thus, the amount available with official liquidator for disbursement to workers is short of about Rs.10.75 crores.
24. It is true that if the disbursement is made on the basis of the duly ascertained "ratio for disbursement" in light of the undisputed eligible claim amount of all secured creditors and workers, then in that event workers may not receive and may not be entitled to received the entire claim amount, on pari - passu disbursement basis, and that therefore there may or may not be need to make provision for further allocation of additional amount to be set aside towards the workers claim.
25. In this context it is also necessary to note, at this stage, that according to the report of official liquidator, at one stage the charted accountant had determined the disbursement ratio amongst secured creditors and workers and according to the said report the status which has emerged is;
Bank of Baroda :- 32.33% IDBI Bank :- 5.44% ICICI/
Standard chartered Bank :- 1.97% IFCI Limited :- 20.29% Workers :-
35.51%
26. Thus, according to the said report the ratio of disbursement in case of workers is highest followed by the ratio in respect of Bank of Baroda and then by IFCI.
27. Of course, the four creditors have vehemently disputed the said determination i.e. determination of eligible claim amount as well as determination of ratio for disbursement and have asserted that their respective eligible claim amount would be as mentioned in the above mentioned joint request / note for disbursement proposal.
28. If the joint request / proposal for disbursement submitted by the said 4 creditors is accepted then the resultant situation as regards the disbursement of the amount (after payment of amount as claimed / suggested) would be as mentioned below:-
Bank of Baroda :- 16,00,39,800/-
IDBI Bank :- 17,35,75,225/- ICICI/
Standard Chartered Bank :- 31,32,05,729/-
IFCI Limited :- 18,30,96,846/-
29. Now, if the said position is compared in light of the eligible claim amount as per OL's report then the position which would emerge (if the disbursement as prayed for is granted) would be as mentioned below:-
Eligible claim as per If disbursement as OL claimed is allowed Bank of Baroda 37,11,05,764/- :- 16,00,39,800/-
IDBI Bank 06,24,58,885/- :- 17,35,75,225/- (excess payment) ICICI/ 02,26,69,870/- :- 31,32,05,729/- (excess payment) Standard Chartered Bank IFCI Limited 23,29,27,741/- :- 18,30,96,846/-
30. Whereas the position which would emerge (in light of amount considered "eligible claim amount" by creditors) after disbursement as requested by the four creditors (if accepted and allowed) as against the eligible claim amount asserted by the four creditors, is mentioned below:-
Eligible claim as per If disbursement as creditors claimed is allowed Bank of Baroda 37,11,05,764/- :- 16,00,39,800/-
IDBI Bank 17,92,51,300/- :- 17,35,75,225/-
ICICI/ 41,14,83,605/- :- 31,32,05,729/-
Standard Chartered Bank IFCI Limited 29,48,88,992/- :- 18,30,96,846/-
31. The above mentioned details bring out, undisputed fact - situation that except in case of Bank of Baroda all the three creditors have already been paid, even in terms of the eligible claim amount asserted by them (which is much higher than what is considered eligible claim by charted accountant and OL) , almost 50% of the claim amount and so far as Bank of Baroda is concerned, the reports of chartered accountant have observed that the said bank did not have any charge against the properties in question.
32. Therefore, the question which arises is as to whether any direction for further interim / ad-hoc disbursement should be passed at this stage when according to OL two creditors out of four creditors have been paid in excess and they are required to refund the disbursed amount until the final determination and disbursement takes place and when there is vast gap between the eligible claim amount asserted by the secured creditors and the claim amount considered eligible by OL and chartered accountants.
33. It also emerged from the record that after the first report dated 26.9.2009 was submitted by M/s. Mukund and Rohit, Charted Accountants the said Chartered Accountants also submitted another report under covering letter dated 10.12.2010 which was followed by third report under covering letter dated 18.5.2011. At the stage when the said reports came to be submitted by the Chartered Accountants it appears that the secured creditors had raised certain objections and fresh reports were called for in view of such objection. However, on one hand such objections and the details and base of the objection are not on record of present application (being Company Application No.264 of 2011) and on the other hand the reports, as mentioned earlier, are at variance and in each report the Chartered Accountant appears to have reached different / varying conclusion as regards the status of claimant - creditors as to secured creditors or otherwise and also as regards the eligible claim amount and the ratio for disbursement. The discrepancies emerging from the reports led this Court to direct OL to call for a report, from another Chartered Accountant, in light of the request made by Bank of Baroda in present application.
However, the said creditors claim that the report has only contributed its share to the confusion rather than to the solution or clarity. In this background, the said creditors were, immediately before they suddenly came out with the above mentioned joint request - suggestion and formula making request for further time (particularly the Standard Chartered Bank and IDBI) to file affidavit- objection against Chartered Accountant's report.
34. Now, the situation which is presented before the Court gives out that two claimants and creditors have been according to Chartered Accountant and OL, paid amount in excess of their eligible claim and they should return - refund such excess amount paid to them.
35. On the other hand the said two creditors viz. ICICI / Standard Chartered Bank and IDBI have raised objection against such conclusion and submitted that actually their claim is still outstanding and any excess payment has not been made.
36. As mentioned above the applicant, IDBI and respondent No.5 as well as respondent No.10 have tendered additional affidavits and submitted that the balance amount in the hands of OL may be directed to be disbursed in the ratio / proportion suggested in the jointly signed disbursement proposal tendered by 4 creditors or further / additional amount as may be considered appropriate by the Court may be disbursed by way of interim / ad-hoc disbursement.
On this count and particularly in light of the forgoing discussion, particularly the observations and remarks made by OL in the above referred OLR dated 27.6.2011 it is noticed that until now OL has not filed his affidavit / report against / with reference to the said affidavits and has not come out with his response or objection (in light of earlier OLR dated 27.6.2011) and has not clarified his stand and that therefore it is considered appropriate that the OL should file further report dealing with the request made by the secured creditors in their respective affidavits dated 23.2.2012 and 28.2.2012 (so far as respondent No.5 is concerned). The OL shall make his stand clear with reference to the said request while keeping in focus Chartered Accountant's reports dated 1.8.2011 and 8.8.2011. Such report shall be filed on or before 19.3.2012 with a copy to the learned advocates appearing for the secured creditors or to the authorized officer of the secured creditors. Appropriate orders can be passed after considering the report of OL. S.O. to 20.3.2012.
37. The comments and the conclusions offered by Chartered Accountant appointed by OL pursuant to the orders passed in present application have raised question even about the applicant's claim as secured creditor in respect of most of the properties which have been disposed of by way of auction sale.
(K.M.THAKER,J.) Suresh* Top