CANARA BANK Vs. MOPEDS INDIA LIMITED

JUDGEMENT

(1.) M/s. Mopeds India Ltd., was ordered to be wound up by this Court on 17-10-1990. Official Liquidator of this Court issued notice of claim of debt to the creditors. Canara Bank and A.P. State Financial Corporation ('SFc' for brevity) filed their claim petitions. M/s. Mopeds India Ltd. Staff and Workers Union, a registered union represented by its President D.Rangaiah also filed an affidavit claiming workmen's dues. After due determination, Official Liquidator issued a notice of admission of proof of debt of workmen in Form No.70 determining an amount of Rs. 1,41,19,125/- towards workmen's dues. Aggrieved by the same, Canara Bank preferred these appeals under Rule 164 of Companies (Court) Rules, 1959 (for short, the Rules).

(2.) Mopeds India Ltd. (now in liquidation) was incorporated under the Companies Act, 1956 on 30-5-1962 as an automobile industry for manufacture of two wheelers. The company has 300 workmen under its control. On 29-9-1987, the company made a reference under Section 15(1) of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA). Board for Industrial and Financial Reconstruction (BIFR) registered the same as Case No.239 of 1987. By an order dated 17-7-1989, BIFR recommended for winding up of the company. Aggrieved by the same, M/s.Mopeds India Ltd. Staff and Workers Union preferred an appeal being Appeal No.25 of 1989 before the Appellate authority for Industrial and Financial Reconstruction (AIFR), New Delhi. The appeal of workers union was dismissed on 22-5-1990.

(3.) In pursuance of the order of BIFR, as confirmed by AIFR, Company Petition No.48 of 1989 was taken cognizance by this Court. By an order dated 15-9-1989 (while appeal of workers union was pending before AIFR), Official Liquidator of this Court was appointed as provisional liquidator, by reason of which all the assets stood vested in the company Court in the charge of Official Liquidator. Be that as it is, ultimately, by an order dated 17-10-1990 made in C.P. No.48 of 1989, this Court ordered winding up of Mopeds India Ltd. By that time, Canara Bank, appellant herein, had filed a suit being O.S. No.139 of 1990 on the file of the Court of the Subordinate Judge Tirupati for realising the debts of the company. Canara Bank as well as SFC filed C.A. No.470 of 2001. They took permission of the Court under Section 446 of the Companies Act to go out of winding up. For this reason, this Court permitted SFC to sell the assets of the company. SFC and Canara Bank realised a sum of Rs. 405 lakhs and the property was handed over to the purchaser. Thereafter, Canara Bank and SFC filed claim petitions in Form No.66 under Rule 151 of the Companies Rules. SFC claimed a sum of Rs.833.91 lakhs. Based on certificate of recovery issued by Debts Recover Tribunal (DRT) in O.A. No.972 of 1999 (Canara Bank's suit O.S. No.139 of 1990 stood transferred to DRT and re-numbered as O.A. No.972 of 1999), filed a claim petition to the tune of Rs.19,97,80,404.18 ps. These claims were enquired into by the Official Liquidator who issued notice of admission/rejection of proof of debt. By notice of rejection dated 27-6-2001, Official Liquidator rejected the claim of SFC to an extent of Rs.70.01 lakhs and also did not accept SFC as a secured creditor. So far as Canara Bank is concerned, Official Liquidator admitted its claim to an extent of Rs.6,74,06,344/-. SFC filed appeals under Rule 164 of the Companies Rules being C.A. Nos.535 and 536 of 2002. By an order dated 25-7-2003, this Court rejected the appeals by holding that date of winding up is relevant date for determining the claim of secured/unsecured creditors, that interest after the date of winding up cannot be allowed and that SFC's claim for treating as secured creditor is unsustainable.