The Official Liquidator v. From Dt.01-04-2015 To 30-09-2015.

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IN THE HIGH COURT FOR THE STATE OF TELANGANA

AT HYDERABAD FRIDAY ,THE ELEVENTH DAY OF NOVEMBER TWO THOUSAND AND TWENTYTWO PRESENT THE HON'BLE SRI JUSTICE B.VIJAYSEN REDDY COMPANY APPEAL NO: 30 OF 2017 Against OUAP/ Claims / F-69 /RCC22 12000 12016149, dated 05.08.2016 ln R.C.C.No. 22 ot 2000

IN THE MATTER OF THE COMPANIES ACT, 1956

AND rN THE MATTER OF M/S. TUNGABHADRA TNDUSTRTES L|M|TED ( tN L|QN) Between:

M/s. The Aryan lndustries Limited , rep. by its Director Sd Dundoo Sirish S/o. Late D. Srinivas, aged 37 years, R:/o. 154, Saphire Lines, Balamrai, Secunderabad. ...APPLICANT/ Claimant AND The Official Liquidator, M/s. Tungabhadra lndustries Limited ( in Liqn) having office at 1"' Floor, Corporate Bhawan, Bandlaguda, Nagole, Thattiannaram Village, Hayatnagar Mandal, Ranga Reddy District.

...RESPONDENT/ Respondent Appeal Under Rule 164 of Company Court Rules 1959 praying that this Hon'ble Court may be pleased to set aside the decision of the Official Liquidator in OL/AP/ Claims lF-6SlRCC22l20OOl2O16l4g, dated 05-08-20'l 6 and consequently direct the Official Liquidator to pay the arrears to the appellant as claimed in the Claim Petition.

COMPANY APPL. NO:u28 oF 2017 Petition under Rules 165 (2) R/w. Rule 9 of Company Court Rules, 1959 praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to grant leave to the appellant company for contesting the decision of the Official Liquidator in OL/AP/ Claims /F691RCC221200012016149, dated 05-08-2016 by way of this appeal Counsel for the Appellant: SRI P.S.S. KAILASH NATH Counsel forthe Respondent: SRI J. SRINADHA REDOY The Court delivered the following: JUDGMENT lr

ll THE HON'BLE SRI ]USTICE B. VIJAYSEN REDDY COMPANY APPEAL No.3O of 2017 JUDGMENT:

By order dated 05.08.2016, the application of the petitioner for payment Rs.27,50,000/- towards licence fee due for the years L992 to 2001 was rejected by the Official Liquidator in OL/APICLAIM s I F - 69 / RCc.22 / 2000 / 20 16 / 49 in RCC. No. 22 of 2000, holding that the appellant herein failed to furnish proof evidencing that the company has used the above building and is in arrears of licence fees for the said period. However, it was held that in the absence of proof. the office of the Official Liquidator has sent a notice in Form No.68 dated 07.08.2015 calling upon the appellant to appear before the office and produce further evidence in support of its claim and that no response was received from the appellant. By concluding that there is no sufficient proof in support of the claim made by the appellant for payment of Rs.27,50,000/- against the company in liquidation, the application of the appellant was rejected.

2.

Mr. P.S.S. Kailash Nath, learned counsel for the appellant. submitted that a memorandum of agreement was entered into by the appellant company with M/s. Tungabhadra Industries Limited on 07.12.L962 granting leave and licence to use the plant and machinery, factory building and premises in the schedule property

l for carrying its business. Later, the agreemellt was modified by subsequent agreements dated 25.01.1963, 15.12.1963 and 18.03.1964. The agreement of licence was extended from time to time and the last of the extension was up to 30.09.1997. The company in liquidation agreed to pay an amount of Rs.2,75,000/- per annum as licence fee to the appellant herein. Initially, the company paid the licence fee regularly, later due to financial constraints, the company became insolvent. The company approached the BIFR for restructuring its unit in the year 1991. Subsequently, the company was ordered to be wound up by order dated 09.07.2001. The company is liable to pay Rs.27,50,000/- towards licence fee for the period from 1992 to 09.07.2001 and also an amount of Rs.11,00,000/- towards licence fee for the period 2001 to 2006. Thus, the company in liquidation has to pay an amount of Rs.38,50,000/- to the appellant.

3.

It is further stated that thereafter Official Liquidator was appointed by this Court in the winding up proceedings. A claim was made by the appellant company on 16.05.2006 in relation to recovery of licence fees. The Official Liquidator has issued notice of hearing for adjudication of claims on 25.08.2015. The appellant appeared before the Official Liquidator along with documentary evidence and order dated 05.08.2016 was passed rejecting the claim of the appellant.

J 4.

It is submitted that the licence agreement is part of the record. Orders have been passed in Company Application No.1668 of 2OO4 inviting tenders for sale of plant and machinery of the company in liquidation. The Official Liquidator has issued letter dated 27.06.2005 informing the appellant that there will be inspection of the intending bidders for the plant and machinery lying in the premises of the appellant, as such permission was sought for inspection. Pursuant to the said request, on 01.07.2005, the appellant informed the Official Liquidator that they would cooperate for inspection and sale of the plant and machinery. Later, on 29.O7.2005 a further letter was addressed to the appellant company stating that there is a sale of the plant and machinery lying in the property of the appellant company and the appellant was also asked to participate in the auction. 5.

Learned counsel for the appellant submitted that there is no dispute that the plant and machinery of the company in liquidation is lying in the premises owned by the appellant. Thus, the Official Liquidator could not have asked the appellant to produce sufflcient proof in support of its claim. It is stated that after the sale oF plant and machlnery, the Official Liquidator in its letter dated 06.12.2005 addressed to M/s. Gayatri Associates to take possession of the sold plant and machinery and also mentioned that the assets of the

--=....-_ ,1 appellant should not be disturbed. The letters have been overlooked by the Official Liquidator while rejecting the claim. 6.

Learned counsel for the appellant referred to letters dated 28.12.2005 and 25.07.2006 addressed by the Official Liquidator to the appellant for payment of watch and ward salaries, which are due for the last four years and contended that the same would clearly show that the company in liquidation has taken the premises of the appellant on licence and has fallen in arrears. A further Memorandum of Agreement dated 11.06.1982 submitted by the appellant showing the leave and licence was ignored by the Official Liquidator. In the year 1991, the company made an application to BIFR for reconstruction, but the same could not happen and winding up order was passed by this Court in the year 2001. 7.

In the common counter filed by the Official Liquidator, it is stated that the appellant has not filed all the documents such as MOU dated 07.12.L962, subsequent agreements dated 25.01.1963. 15.12.1963 and 18.03.1964, licence renewal agreement, renewal of licence etc. in support of its contentions. The appellant has not furnished any information whether they have taken any legal steps against the respondent company for recovery of their dues towards licence fee from the year 1992; that upon invitation of claims of the company in liquidation, the appellant has

) submitted two claims against the company in liquidation by submitting a copy of MOU dated 11.06.1982. However, the appellant failed to submit sufficient documentary prooF evidencing the respondent company in liquidation has not paid the licence fee from the year 1992 onwards. The respondent company issued a notice under Form No.6B dated 07.08.2015 advising the appellant to appear before the Official Liquidator and produce further evidence in support of its claim.

8.

Mr. J. Srinadha Reddy, learned counsel for the Official Liquidator, submitted that on the ground of non-submission of proof, the claim of the appellant was rejected. 9.

It is not in dispute that the company in liquidation was the licencee of the appellant herein. The plant and machinery was owned by the appellant company. The MOU dated 11.06.1982, which is filed along with the appeal, is not in dispute. Further, it is not in dispute that the company was referred to BIFR in 1991 and the company petition was admitted by this Court in 2001 6nd winding up order was passed on 09.07.2001. Thus, it cannot be said that the company in liquidation has not used the building, plant and machinery of the appellant company. When the licence of the company in liquidatlon pursuant to MOU dated 11.06.1982 is not in dispute, the burden is on the company in liquidation to prove that l

o licence fee has been paid. It is not the case of the company in liquidation and the Official Liquidator that the plant and machinery and the property was not owned by the appellant company and the company in liquidation was not the licencee of the appellant company. In fact, several correspondences have been exchanged between the appellant and the Official Liquidator wherein it is acknowledged that the appellant is the owner of the plant and machinery. As pointed out by the learned counsel for the appellant, the letters daled 27.06.2005, 16.12.2005 and 28.12.2005 clearly establish that the company in liquidation has set up its plant and machinery by taking the premises on licence from the appellant company. To the letter of the Official Liquidator dated 28.12.2005 for remitting 7 0o/o of the expenditure for watch.

and ward salaries totalling to Rs.1,80,134/-, the appellant company issued reply dated 16.05.2006 that the licence fee to the tune of Rs.38,50,000/- for the period of 14 years i.e. from 1992 is due and payable by the company in liquidation at the rate of Rs.2,75,000/- per year and requested for adjustment of watch and ward salaries and pay the balance licence fee. The licencee or the tenantr as the case may be, is bound to pay the licence fee/lease amount until expiration of the lease or determination of lease in accordance with law.

10. It is not the case of the Olficial Liquidator that the licence agreement has come to an end and there was eviction of the .\

company in liq u idation/licencee by following due process of law. The licence of the company in liquidation continued until the assets were sold to M/s. Gayatri Industries and possession was taken. Thus, the question of the appellant furnishing proof of usage of plant and machinery by the company in liquidation does not arise. The contention of the Official Liquidator that the appellant has to prove non-payment of licence fees and that documents of proof are not submitted is unsustainable. The company in liquidation made application for reconstruction before BIFR in the year 1991 and eventually was wound up by the High Court in the year 2001. The possession of the plant and machinery was handed over to the purchaser - M/s. Gayathri Industries in the year 2006.

Thus, when the assets of the company in liquidation were in the premises of the appellant company, it cannot be said that the premises was not used. The impugned order holding that the appellant company failed to furnish proof of usage of building by the company in liquidation and arrears of licence is perverse and absurd. In view of the above observations, the company appeal is allowed. Pending miscellaneous petitions. if any, shall stand closed. There shall be no order as to costs, SD/.B.S.

1. The Official Liquidator, M/s. Tungabhadra lndustries Limited (ln Liqn) Office at 1st floor Corporate Bhawan, Nagole,Bandlaguda Thattiannaram Village Hayathnagar Mandal, Ranga Reddy District, Telangana State Pin Code

2. The Registrar of Companies, Ministry of Corporate Affairs, Government of lndia 2nd floor Corporate Bhawan, Nagole, Bandlaguda, Thattiannaram Village Hayathnagar Mandal, Ranga Reddy District, Telangana State Pin Code 500 680.

3. One CC to Sri J. Sreenadh Reddy, Counsel for Official Liquidator, High Court forthe State ofTelangana at Hyderabad.

4. One CC to Sri P.S.S. Kailash Nath, Advocate [OPUC]

5. Two C.D. Copies Kul gbr q

HIGH COURT DATED:111'1112022 r4 .I J 7co(i rEB 2[A 7c)

JUDGMENT

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