Tamil Nadu Agro Industries Development Corporation Ltd. v. The Official Liquidator,High Court, Madras & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 24.02.2011CoramTHE HON'BLE MRS. JUSTICE R.BANUMATHIANDTHE HON'BLE MR. JUSTICE M.M.SUNDRESHO.S.A.No.203 of 2010Tamil Nadu Agro IndustriesDevelopment Corporation Ltd.,Agro House, industrial Estate,Guindy, Chennai-32rep. by its Managing Director... AppellantVs1.The Official Liquidator,High Court, MadrasAs Liquidator of Dutch RamaAgro Foods Ltd. (in liquidation)now at Corporate Bhavan,2nd Floor, No.29, Rajaji Salai,Chennai-600 001.2.The Registrar of Companies,No.26, Haddows Road,Sastri Bhavan, Tamil Nadu, Chennai-6(2nd Respondent impleaded as party vide order of the Court dt. 14.2.2011 in M.P.No.2/2010).. Respondents.Appeals preferred against the order of this Court in CompanyApplication No.2106 of 2008 in C.P.No.39 of 2001 dated 22.8.2008For Appellant.. Mr.C.VenkatesaluFor Respondents .. Mr.S.R.Sundar for R1 Ms.K.Latha Parimala Vadana for R2JUDGMENTR.BANUMATHI,JChallenge in this intra Court Appeal is the order of learnedsingle Judge dated 22.8.2008 in Company Application No.2106 of 2008in C.P.No.39 of 2001, whereby the learned single Judge declined todirect the Official Liquidator to process the claim of the appellantfor Rs.40,00,000/- invested in M/s.Dutch Rama Agro Foods withoutinsisting on production of the original share certificates. 2. The Appellant – Tamilnadu Agro Industries DevelopmentCorporation Limited was then jointly owned by Union of India andGovernment of Tamil Nadu registered under the Companies Act. Main https://hcservices.ecourts.gov.in/hcservices/ objects of the appellant is to grow, raise, cultivate and deal in alltypes of mush rooms and mush room products and their by-products andalso to carry on business of the farming in all its branchesincluding dairy farming, fruit farming, vegetable farming, fishfarming, etc., The Managing Director of M/s.Dutch Rama Agro FoodsLimited (in short, Rama Agro Foods") approached the appellantstating that it is processing and canning white button mushrooms andthat it has to commence production . Believing the representation andthe assurance made by the Managing Director of the said Company, theappellant paid Rs.40,00,000/- by Cheque bearing NO.046618 dated8.5.1996 and the said Dutch Rama Agro Food Products issued 4,00,000equity share certificates. Contrary to its assurance, the saidCompany did not commence business of button mushroom product. Afterissuing statutory notice, the appellant Company filed winding uppetition under Sections 433, 437 and 439 of the Companies Act. By anorder dated 3.7.2002 in C.P.No.39 of 2001, Rama Agro Foods wasordered to be wound up and the Official Liquidator was appointed asthe liquidator of the said Company with directions to take charge ofall the assets and effects of the company in liquidation. Theappellant Company filed affidavit of claim and affidavit of proof ofdebt dated 7.2.2007 before the Official Liquidator claiming a totalamount of Rs.97,79, 455/- as due and payable from and out of theassets of Rama Agro Foods. The Official Liquidator has stated thatthe claim affidavit should have been filed on or before 6.12.2006.Hence, the appellant filed C.A.No.2553 of 2007 and by order dated29.7.2007, the said application was allowed condoning the delay infiling the claim affidavit before the Official Liquidator. TheOfficial Liquidator also scrutinised the details of claim affidavitand other claims and is said to have admitted that Rs.40,00,000/-invested in Rama Agro Foods by the appellant would be payable atOfficial Liquidator's Office on 27.2.2008. 3. Case of Appellant is that by the orders of Government ofTamil Nadu, the entire operations and functions of Tamil Nadu AgroIndustries Development Corporation was closed and entire staff andemployees were retrenched with effect from 26.3.2002. According tothe Appellant, case bundles numbering more than 60,000 were dumped inthree rooms of the appellant Corporation and the original sharecertificates are not immediately traceable. Therefore, the appellantCorporation filed C.A.No.2106 of 2008 to direct the OfficialLiquidator to process the claim of the appellant for Rs.40,00,000/-on the basis of available records and books of accounts seized fromthe office of Rama Agro Foods without insisting on production of theoriginal share certificates and to direct the Official Liquidator topay Rs.40,00,000/- to the appellant. 4. The Official Liquidator has filed the report stating thatas per the direction of the Court in C.P.No.39 of 2001 (3.7.2002),the Official Liquidator has taken possession of the movable andimmovable assets situated in Meyyur village, Madurantakam Taluk on16.8.2002 and subsequently the same was sold and a sum ofRS.4,55,00,000/- was realised. Based on the statement of affairs andother information furnished by Ex.Directors of the Company inliquidation, the Official Liquidator filed an application inC.A.No.1552 of 2007 in C.P.No.39 of 2001 to pay dividend at 100 paisein a rupee as the return of capital to the contributories. By the https://hcservices.ecourts.gov.in/hcservices/ order dated 27.2.2008, Court directed the Official Liquidator todeclare and pay the dividend at 100 paise in a rupee to thecontributories amounting to Rs.3,74,77,470/- and to open a specialdividend account with Punjab National Bank, N.S.C.Bose Road, Chennaifor the purpose of dividend payment. The Official Liquidator hasdeclared and paid the dividend at 100 paise in a rupee to thosecontributories who have produced the original shares based on thelist of contributories submitted by the Directors of the Company inliquidation. The Official Liquidator has paid a total amount ofRs.3,04,95,210/- to those contributories, who have submitted FormNo.141 of the Companies (Court) Rules, 1959 along with the originalshare certificates. 5. On application filed by the Official Liquidator inC.A.No.684 of 2009 in C.P.No.39 of 2001, the Court permitted theOfficial Liquidator to declare and pay further return of capital atthe rate of 20 paise in a rupee to the contributaries to the extentof Rs.74,95,494/- subject to T.D.S. Deductions at the rate of17.50%. The Official Liquidator has declared and paid further returnof capital of Rs.47,09,677/- to those contributories who havesubmitted form No.141 after deducting TDS from the special dividendaccount that was opened with the Punjab National Bank, N.S.C.BoseRoad, Chennai. In the report filed by the Official Liquidator, itis stated that the unclaimed/undistributed amount has beentransferred and remitted into the Companies Liquidation Account inPunjab National Bank, Mount Road Branch, Chennai-2.6. The Appellant filed the application – C.A.No.2106 of 2008to direct the Official Liquidator to process its claim for Rs.40lakhs invested with Rama Agro Foods on the basis of available recordsand books of accounts seized from the office of Rama Agro Foodswithout insisting on production of the original share certificatesand to direct the Official Liquidator to pay a sum of Rs.40,00,000/-to the appellant. By the order dated 22.8.2008, the learned singleJudge dismissed the said application on the ground that the originalshare certificates have not been filed and that it is open to theappellant to place its claim before the Official Liquidator as andwhen the original share certificates are traced. Being aggrievedwith the said order dismissing its application, the appellantCorporation has filed this appeal. 7. The contention of the appellant is that the appellantCorporation has closed its entire activities with effect from26.3.2002 as per G.O.Ms.No.339 dated 28.11.2001 and all its employeesand Officers were retrenched and the Corporation is functioning witha skeleton staff and that they are not in a position to trace out theoriginal share certificates from the godown and while so the learnedsingle Judge was not right in directing the appellant to trace theoriginal share certificates from the godown. According to theappellant, inspite of the best efforts made by the appellant, theoriginal share certificates could not be traced. Further case ofappellant is that as per Rule 4(3) of the Companies (Issue of ShareCertificate) Rules 1960, the learned single Judge ought to haveissued directions applying the said rule by effecting paperpublication of the loss of original share certificates issued by RamaAgro Foods in the name of the appellant and executing the Indemnity https://hcservices.ecourts.gov.in/hcservices/ Bond for Rs.40,00,000/- in favour of the respondent and the Courtought to have directed the respondent to pay the amount ofRs.40,00,000/-. 8. Earlier, by the order dated 30.6.2010 the Bench hasdirected the Managing Director of the appellant Corporation to fileadditional affidavit as to the status of functioning of appellantCorporation and in the mean time to effect paper publication in twodailies having circulation all over Tamil Nadu - in one issue ofEnglish daily "Indian Express" and in another issue of Tamil daily"Dinakaran" setting out the particulars of share certificates anddeclaring that the appellant Corporation is the owner of 4,00,000equity shares of Dutch Ram Agro Foods. In pursuance to the order ofthe Court, the appellant Corporation has effected paper publicationto the effect that the appellant Corporation is the owner of 4,00,000equity shares [3049828 to 3449827]. The Managing Director of theAppellant Corporation has also filed additional affidavit statingthat the appellant Corporation is functioning with two skeletonstaffs appointed on contract basis and having bank transaction inaccount No.10565627401 operating with State Bank of India,Commercial Branch, Guindy. In the additional affidavit, the appellantCorporation has also undertaken to indemnify the respondent OfficialLiquidator in the event there are third party claims by reason ofpayment of claim to the appellant due to the loss of original sharecertificates. 9. In the report of the Official Liquidator, it is stated thatas per Sec.555 of Companies Act, 1956, Official Liquidator hastransferred and remitted on 10.03.2010 the unclaimed/undistributedamount of Rs.69,82,260/- towards first return of capital to thecontributories and another amount of Rs.14,74,101/- towards furtherreturn of capital to the contributories after deducting TDS, into theCompanies liquidation Account in Punjab National Bank, Mount RoadBranch, Chennai-2. The Official Liquidator has also sent statementin Form No.159 containing particulars of unclaimed/undistributedamount to the contributories of the company in liquidation to theRegistrar of Companies, Tamil Nadu, Shastri Bhavan, No.26, HaddowsRoad, Chennai-6.10. In our order dated 14.02.2011 in M.P.No.2 of 2010, we haveordered impleading of Registrar of Companies, Tamil Nadu as 2ndRespondent in the proceedings. M.p.No.3 of 2010 has been filed topermit the Appellant to include further claim of Rs.6,60,000/-.11. We have perused Form No.159 dated 10.03.2010 filed by theOfficial Liquidator before the Registrar of Companies towards thefirst return of capital at the rate of 100 paise in a rupee to thecontributories. In the said Form No.159, the name of Appellant isstated in Serial No.1 as per the said statement of unclaimed dividendor undistributed amount of Rs.40,00,000/- is payable to theAppellant. Appellant-Corporation has also filed M.P.No.3 of 2010 topermit the Appellant to include further claim of Rs.6,60,000/- inrespect of second return of the capital as per the subsequentdeclaration dated 09.06.2009 in addition to the claim ofRs.40,00,000/- . In Form No.159 filed by the Official Liquidator inrespect of further return of capital at the rate of 20 paise in a https://hcservices.ecourts.gov.in/hcservices/ rupee to the contributories, amount of Rs.6,60,000/- is stated to bepayable to the Appellant. Learned counsel appearing for OfficialLiquidator as well as the counsel appearing for 2nd Respondent-Registrar of Companies submitted that since paper publication as tothe missing of share certificates has been effected, it is for theAppellant-Corporation to move the Registrar of Companies claiming theamount of Rs.40,00,000/- plus Rs.6,60,000/-. The said statement isrecorded.12. Appellant-Corporation is directed to file its claim beforethe Registrar of Companies-2nd Respondent/Central Government (in lieuof its four lakhs shares - Distinctive No.3049828 to 3449827 whichare not traceable for which paper publication has been effected asper the order of the Court) claiming Rs.40,00,000/- towards firstreturn of capital at the rate of 100 paise in a rupee andRs.6,60,000/- towards further return of capital at the rate of 20paise in a rupee to the contributories before the Registrar ofCompanies/2nd Respondent. On such claim filed by the Appellant-Corporation, the 2nd Respondent/Central Government is directed toprocess the claim without insisting for original shares after gettingIndemnity Bond and usual undertaking as expeditiously as possible.The Appellant is a Public Sector Undertaking and having regard to thefact that the public money is involved, the above order is passed.The above order shall not be quoted as a precedent.13. For reporting compliance, the appeal is directed to belisted after eight weeks.Sd/Asst.Registrar/true copy/Sub Asst.Registrarusk/bbrTo1. The Sub Assistant Registrar, (Original Side), High Court, Madras.2.Ms.K.Latha Parimala Vadana, Deputy Registrar of Companies,The Registrar of Companies,26, Haddows Road,Shastri Bhavan,Chennai-600 006.1 cc To Mr.S.R.Sundar Official Liquidator, Advocate, SR.134172 cc To Mr.C.Venkatesalu, Advocate, SR.13352 Judgment in O.S.A.No.203 of 2010PA (CO)RH (28.2.11)