HIMALAYAN MAGNESITE LTD Vs. STATE

JUDGEMENT

(1.) SUNIL Ambwani, J. Heard Sri A. K. Misra for Official Liquidator.

(2.) M/s. Himalayan Magnesite Ltd. (In Liq.) was ordered to be wound up by this Court on 22-9-1999, on the recommendation of BIFR and the Official Liquidator was appointed as Liquidator by virtue of Section 449 of the Companies Act, 1956. The possession of the assets of the Company (In Liq.) situate at Pithoragarh were taken over by the Official Liquidator on 18-9-2002 in the presence of, among others, and the Deputy Manager, State Bank of India, Rudrapur, one of the secured creditor. The Official Liquidator reports in application No. 219961 of 2005 that at the time of taking over the possession, it was found that all the movable assets including plant and machinery was removed and nothing was found in the factory except scrap. The company has leases of land, mines and some scrap material was found on the spot. Sri Dayaloo Ram was appointed to take care of the security. It is now reported that the State Bank of India having full knowledge of the liquidation proceedings and the possession of the Official Liquidator initiated proceedings under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and obtained a decree in execution vide DRT No. 41 of 2003 State Bank of India v. M/s. Himalayan Magnesite Ltd & Ors. . The Recovery Officer, Debts Recovery Tribunal, Lucknow ordered for the auction sale which was conducted on 13-10-2005 with reserved price of Rs. 12 lakhs and the properties were sold on 13-10-2005. It is reported that all this took place with full knowledge that the assets of the Company are in possession of the High Court and that the Official Liquidator was appointed and is functioning as the Liquidator of the Company.

(3.) THE up shot of aforesaid decision is that when the company has been wound up and the assets are in possession of the Court through the Official Liquidator, the creditors of the company the Debt Recovery Tribunal or the recovery officer cannot, without informing the Court and associating the Official Liquidator proceed with the sale or disposal of the assets of the company or to distribute or appropriate the sale proceed, where the assets have been disposed of without assent of the Official Liquidator. THEre is likelihood of it being appropriated, without taking into account the rights of the workmen Government dues and the dues of other creditors. Further it is also a question of propriety and fairness in sale of the assets. I, therefore, prima facie find that the State Bank of India as well as Recovery Officer, Debt Recovery Tribunal, Lucknow exceeded their authority to sell the assets of the company and that the sale made by them cannot be sustained. Sri A. K, Misra states that the Official Liquidator has not been informed about the details of the sale and the price fetched by the Recovery Officer.