ROCKSMELT COMPANY Vs. GANGA AUTOMOBILES LTD

JUDGEMENT

(1.) By this order I shall be deciding whether property No. 1, Sikandara Road, New Delhi, is liable to be sold in auction to pay off the debts of the Respondent Company M/s Ganga Automobiles Limited(hereinafter to be referred to as 'GAL') which already stands wound up.

(2.) GAL was appointed as a dealer of Maruti cars by Maruti Udyog Ltd.(now known as Maruti Suzuki India Ltd.) in the eighties. As per the petitioning creditors, GAL was managed and controlled by one Shri G. Sagar Suri though his son Shri Ashwini Suri was its Managing Director during the era when GAL was enjoying good reputation in the automobile market. Mr. G.Sagar Suri himself was the Chairman of another automobile Company in the Sagar Suri Group of Companies by the name of M/s Delhi Automobiles Ltd. which was also selling Maruti cars. In order to make quick and easy money the Directors of GAL started accepting inter-corporate deposits/loans of huge amounts from various parties against the security of bookings of Maruti cars during the nineties when Maruti cars were selling like hot cakes. During those good old days over hundred crores were stated to have been collected by GAL from various parties. It now appears that that money was collected without any intention of paying back to the investors/depositors. When the depositors/investors asked for refund of their money they were not paid back by GAL and so they started approaching Maruti Udyog Ltd. for getting back their money since their deposits were secured by the Maruti bookings. At that time Maruti Udyog Ltd. appears to have come to know that the bookings of Maruti vehicles against which GAL had collected crores of rupees from the market in the form of inter-corporate deposits/loans were non-existent and not genuine ones. So, it objected to GAL about the means adopted by it for collecting money from the market by putting the reputation of Maruti Udyog Ltd. at stake and that gave rise to disputes between GAL and Maruti Udyog Ltd. and because of that bookings of Maruti vehicles through GAL were stopped. That appears to have triggered off en bloc lodging of claims by the depositors with GAL but the investors were not paid back their money by GAL. During that period letters were exchanged between GAL and Maruti Udyog Ltd. and some kind of understanding appears to have been arrived at between the two and pursuant to that understanding GAL's Managing Director Mr. Ashwini Suri executed indemnity bond on behalf of GAL and also personal guarantee bond indemnifying Maruti Udyog Ltd. against any kind of demands against it by GAL's investors from whom GAL had taken inter-corporate loans against non-existent bookings of Maruti cars. Mr. G.Sagar Suri also executed a personal guarantee bond in favour of Maruti Udyog Ltd. Both father and son had admitted that GAL had secured loans from the public against non-existent bookings of Maruti cars and that is evident from the following paragraphs in the indemnity bond executed by Mr. Ashwani Suri on behalf of GAL:

(3.) M/s Rocksmelt Company(India) was one of the creditors of GAL who had approached this Court for winding up of GAL. Company Petition No. 161/97 of M/s Rocksmelt Company(India) had been treated as the lead case. When notice of C.P. No. 161/97 was given to GAL it had entered appearance and right from the beginning not only GAL had started coming out with proposals for liquidating the liabilities of its creditors but M/s Delhi Automobiles Ltd. also came forward to re-pay the debts of GAL so that GAL was not wound up by the Court. Now, it also appears that proposals and assurances given by GAL as well as Delhi Automobiles Ltd. during the pendency of winding up proceedings to avoid passing of order of its winding up and to save the reputation of Sagar Suri Group of Companies were never intended to be honoured by the Directors of both these Companies. That is evident from the orders passed in the matter on different dates. The relevant portions of those orders are re-produced below: