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In The Matter Of M/S Rajinder Steels Ltd. - COMPANY PETITION No. 44 of 1998  RD-AH 2844 (21 February 2007)
COMPANY PETITION NO. 44 OF 1998
In the matter of
M/s Rajinder Steels Limited (In Liquidation)
Hon'ble Sunil Ambwani, J.
Present Shri Anjani Kumar Misra for Official Liquidator; Shri B.K.L. Srivastava, Official Liquidator; Shri Om Prakash Misra for IFCI Ltd. and Standard Chartered Bank substituted in place of ICICI Bank Ltd.; Shri G.S. Tripathi, Manager, IFCI Ltd and Shri Amit Saxena for IDBI.
On the recommendation of Board of Industrial and Financial Reconstruction, M/s Rajinder Steel Ltd. (in liquidation) was wound up by the Court on 17.5.1999 and the Official Liquidator was appointed as Liquidator of the Company. The 'Statement of Affairs' has not been filed by Ex-Directors. The Official Liquidator took over possession of the assets identified by secured creditors at Raipur and Kanpur and has sold the assets at Raipur (Chhattisgarh), realising Rs. 75.40 crores in the sale held by the Asset Sale Committee at the office of IDBI at Mumbai and confirmed by this Court. The assets at Kanpur have not been sold as yet. The Asset Sale Committee is still ceased with the matter and was asked to submit a report regarding the modalities of sale. The other assets have not been recovered so far. Shri Vinod Sharma, Company Prosecutor was directed to make an enquiry with regard to other assets. He has submitted a report in ten volumes. Taking into account the serious financial irregularities and siphoning of assets of hundreds of crores, the matter has been referred to CBI.
In the meantime the IDBI and IFCI made a request to declare interim dividend as the financial condition of some of the financial institution/secured creditors namely IDBI, IFCI is precarious and that they are suffering losses in thousands of crores.
The secured creditors have relied upon a judgment of Delhi High Court in Bakeman Industries Pvt. Ltd in which it accepted the request of secured creditors for interim disbursement of the realised assets in the ratio prescribed under Sections 529, 529A and 530 of the Companies Act 1956. It is contended that the liquidation and the declaring of final dividend may take a long time. A prayer has been made to make interim disbursement of the amount kept by the Official Liquidator in Punjab National Bank with the undertaking that in case the interim disbursement is found to be more than the amount to which the secured creditors having first charge are held entitled in declaration of final dividend, the balance shall be returned to the Official Liquidator forthwith without any protest.
The Official Liquidator was required to invite claims. He has published advertisement in news papers, inviting claims from all the creditors of the company. He has received the claims 'Affidavits of proof' of IFCI; IDBI and LIC. It is reported that ICICI, IRBI, New India Insurance, United India Insurance, UTI, GIC and National Insurance have not filed their claims so far in pursuance of the advertisement. The Official Liquidator has also received claims from Vijya Bank towards the 'hire purchase scheme', and 'working capital loans' against stock book debt. He has also received claims of 773 workmen and some unsecured creditors.
Taking into account the fact that the final liquidation and declaration of final dividend may take a long time and to protect the interest of the financial institutions/secured creditors having first charge, the Court proposes to make an interim disbursement strictly in accordance with Section 529; 529A and 530 of the Companies Act, 1956. The Official Liquidator will retain an amount of Rs. 5.4 crores towards liquidation expenses. The remaining amount of Rs. 70 crores will be disbursed in a ratio, in which two-third of the amount will be shared by the secured creditors and one-third by the workmen. Out of the two-third of Rs. 70 crores for secured creditors having first charge over the assets of the Company (in liquidation), the amount will be paid in the same ratio in which the secured creditors/first charge holder, advanced the money as per the agreement between them. The Vijya Bank having second charge under 'hire purchase scheme' and 'working capital loans' against stocks book debt etc will not be entitled to share any amount at this stage. This arrangement will conform to the judgment of Supreme Court dated April 28th 2006 in Civil Appeal No. 2332 of 2006, ICICI Bank Ltd vs. Sidco Leathers Ltd and others.
The Official Liquidator has raised objections with regard to assignment of debts of ICICI to Standard Chartered Bank. It is contended by him that assignment was made after winding up, without seeking permission of the Court, and that the assignment will not create a charge over the assets of the company which has neither created mortgage over its assets in favour of Standard Chartered Bank nor acknowledged the assignment. He further submits that these assignments also are not registered nor such assignment could not registered as a charge under Section 125 of Companies Act 1956 after the company was wound up and is under liquidation. The questions may be considered at later date. At present the Court may consider to provide interim dividend on the principal amount due to secured creditors/first charge holders.
Let the Official Liquidator make interim disbursement only to those secured creditors/first charge holder claimants, who have filed their 'Affidavits of Proofs' of the two third of Rs. 70 crores in the same proportion in which their principal amount is mentioned in the agreement after taking an undertaking from them that in case at the time of declaration of final dividend they are held entitled to lesser amount, they will return the remaining amount to Official Liquidator without protest within a week from the declaration of final dividend.
It will be open to other secured creditors/first charge holder namely ICICI, IRBI, New India Insurance, United India Insurance, UTI, GIC and National Insurance Co. to submit their claims with 'Affidavits of Proof', for availing similar benefits as have been provided to the IFCI, IDBI and ICICI in the same ratio after furnishing of similar undertaking. If it is possible, the Official Liquidator may make interim disbursement in pursuance of this order before 28th February 2007 when the other matters in Rajinder Steel Ltd (in liquidation) for sale of assets at Kanpur are coming up for hearing.
The matter shall be listed again on 21.3.2007 with Official Liquidator's report.
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