K SUBHAKAR RAO Vs. MONETRECK COMPUTERS SECUNDERABAD

JUDGEMENT

(1.) The applicants, who claim to be small money depositors, in M/s. D.C.L. Finance Limited (company in liquidation) have filed these two applications. C.A. No. 986 of 2002, has been filed by Sri. K. Subhakar Rap, under Section 466 of the Companies Act, 1956 read with Rule 116 of. the Companies (Court) Rules, 1959 praying to recall the order dated 14-12-2001 passed by this Court in C.A. No. 855 of 2001 in C.P. No. 133 of 2001 and restore status quo ante in the larger interests of the small money deposit holders, while C.A. No. 169 of 2003 has been filed by Sri. C. V. Subba Rao, praying to stay the operation of the said order.

(2.) It is the contention of the applicants that the financial position of the company in liquidation is not so grave as to warrant its winding up. According to the applicants, C.A. No. 855 of 2001 is a collusive application, the same having been filed by the 1st respondent-M/s.Monetreck Computers at the behest of the company in liquidation, the applicants contended that the appointment of Provisional Liquidator being a drastic measure, ought not to have been resorted to by this Court, as prayed for by the 1st respondent in the said application. In support of this submission, he placed reliance on the judgment of the High Court of Madhya Pradesh in Kailash Prasad Mishra v. Medwin Laboratory (P) Ltd, (1995) 5 Comp LJ 449 (MP). The applicants submit that if the order dated 14-12-2001, passed by this Court in C.A. No.855 of 2001 is allowed to operate, persons like him, who have deposited small amounts in the company in liquidation, will not be able to realize or recover their money as any amount of money realized through the sale of the properties of the company in liquidation would first be appropriated towards the dues of the secured creditors. They contended that inasmuch as the company in liquidation made a statement before the Company Law Board that they will pay off the dues of the depositors in a phased manner, there was no necessity for the Court to appoint a Provisional Liquidator. According to the applicants, by reason of appointment of Provisional Liquidator, the undertaking given by the company in liquidation before the Company Law Board is defeated. Inasmuch as the Liquidator appointed by this Court is only a Provisional Liquidator, it was contended by the applicants that he not being a full-fledged Official Liquidator, would not enjoy the same powers as that of the Official Liquidator, and therefore, the powers of the Provisional Liquidator should be limited and restricted. In support of his contention, that the Provisional Liquidator does not enjoy the same powers as that of the Official Liquidator, the learned Counsel placed reliance on the judgment of the High Court of Madras in Sri Chamundi Theatre Mysore Talkies Ltd. v. S. Chandrasekara Rao, (1974) 45 Comp Cases 60.

(3.) Sri K. Gopala Krishna Murthy, the learned Counsel appearing on behalf of the secured creditor would submit that the company in liquidation is due to them monies to the tune of Rs.26.00 crores. The applicants being only small money depositors and unsecured creditors have no locus standi either to question the order of winding up of the company in liquidation or appointment of Provisional Liquidator. As the company in liquidation was unable to clear their dues, this Court ordered its winding up. When after the order of winding up, it was brought to the notice of the Court by the 1st respondent that the Directors of the company in liquidation were making frantic efforts to alienate the immovable properties, this Court with a view to protect the interests of the company in liquidation and secured creditors and small money depositors, appointed a Provisional Liquidator in C.A. No.855 of 2001 by order dated 14-12-2001. Inasmuch as pursuant to the orders of this Court, the Provisional Liquidator so appointed, had already taken certain steps in the direction of protecting the immovable properties of the company in liquidation from being alienated by the Directors of the company in liquidation, which include conduct of meetings of the secured creditors, appointment of valuers to value the properties of the company in liquidation and has also put the valued properties to sale by taking out advertisements in newspapers, which sale was even confirmed by this Court, it would not be proper for this Court at this distance of time, to recall the order dated 14-12-2001 passed by this Court appointing Provisional Liquidator. He would contend that the Provisional Liquidator has all the powers as that of an Official Liquidator, and therefore, the Provisional Liquidator is empowered to exercise all the powers that are vested in the Official Liquidator, and therefore, the applicants who are small money depositors cannot have any grievance with any of the actions of the Provisional Liquidator and his powers need not be limited or restricted. To support this argument, the learned Counsel for the secured creditor sought to rely on the paragraph relating to the Position of the Provisional Liquidator, See Guide to the Companies Act, 1956 by A. Ramaiya; 15th Edition 2001 Treatise Part-II at Page 3461.