The Ol Of M/S Aps Star Industries LTD. (In Liqn) vs. The Manager(Legal/Recovery)
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The Official Liquidator (OL) of M/s. APS Star Industries Ltd. (in liquidation) filed a report seeking permission to pay outstanding security expenses of Rs. 47,83,559/- to M/s. National Security Force. This amount covers the period from February 1, 2015, to November 7, 2019, and includes bills of Rs. 40,53,841 and CGST/SGST of Rs. 7,29,718. The OL had taken possession of the company's assets, including property at Dombiwali, Thane. Initially, security guards were deployed by M/s. Real Detective and Security Organization Pvt. Ltd., and later by M/s. National Security Force. The High Court had previously permitted the OL to disburse payments to security agencies and to pay minimum wages to security guards. The sale of the Dombiwali property was confirmed by the Court on July 17, 2019, to M/s. Avenue Supermarts Ltd. Upon receiving full sale consideration, possession was handed over, and security services were discontinued on November 8, 2019. M/s. National Security Force then submitted their final bills.
Held
The Court allowed the Official Liquidator's report in terms of paragraph 15(b), permitting the payment of outstanding security expenses of Rs. 47,83,559/- to M/s. National Security Force. The Court directed that the payment be made directly to the bank account of M/s. National Security Force through RTGS/NEFT only. The reasoning was based on the facts and circumstances presented in the report and the documents produced, which supported the necessity of settling these dues. The Court considered the period for which the services were rendered and the fact that the security agency had submitted its bills. The ratio decidendi is that expenses incurred by the Official Liquidator for the preservation and protection of company assets during liquidation, including security services, are legitimate and payable from the company's funds, provided due procedure is followed and supported by documentation. The report was disposed of accordingly.
Key Issues
1. Whether the Official Liquidator is permitted to pay the outstanding security expenses of Rs. 47,83,559/- to M/s. National Security Force for the period from February 1, 2015, to November 7, 2019, from the funds available in the company's account. The petitioner, the Official Liquidator, argued that the payment is necessary to settle the dues of the security agency that provided services for the company's assets during the liquidation process. The OL highlighted previous court orders permitting the disbursement of payments to security agencies and the payment of minimum wages, indicating a procedural history of sanctioning such expenses. The OL also detailed the timeline of security deployment and the eventual discontinuation of services after the sale of assets. No arguments were recorded for the respondents.
Sections Cited
CGST/SGST
AI-generated summary — verify with the full judgment below
Cause title — parties, addresses and appearances
ORAL ORDER Permission to delete Respondent no. 1 and 8 is granted as they are secured creditor and part of the Sale committee.
Heard Mr. Pathik Acharya, Learned Counsel for the Applicant, Though served, no one appears for Respondent no. 2 to
The Official Liquidator has filed present report with following prayers:- “(a) This Hon’ble Court may be pleased to take on record above facts narrated in the report. b) This Hon'ble Court may also permit the Official Liquidator to make the payment of outstanding security expenses of Rs. 47,83,559/- (Bill Rs. C/OLR/56/2020 ORDER 40,53,841 plus CGST/SGST Rs. 7,29,718= Rs.47,83,559) to M/s. National Security Force, the security agency for the period from 01-02-2015 to 07- 11-2019 from the fund available in the company’s account maintained by the office of the Official Liquidator. c). ******”
Record indicates that pursuant to the winding up order Official Liquidator has taken over possession of Company’s various assets situated at various locations including property situated at Village : Bhopar, Manpada Road, Opp.: M/s. Kitchen Kraft Shed & MIDC, Off Kalyan-Sheel Phata Road, Dombiwali (East), Dist. Thane. In this connection, it is submits that the said property consists of only land and sheds, no machinery existed at the time of taking over possession by the Official Liquidator.
Hence the Official Liquidator had not deployed any security guard at the premises. The Official Liquidator has deployed total 7 Guards (2 guards in 1st Shift, 2 guards in 2nd Shift & 3 guards in 3rd shift) of M/s. Real Detective and Security Organization Pvt. Ltd. at assets situated at Village : Bhopar, Manpada Road, Dombiwali (East), Dist. Thane on 13-04-2007 in the present of secured creditors and workers’ union.
This Court vide order dated 24.04.2014 in Company Application no. 16 of 2014 permitted the Official Liquidator to disburse outstanding payment to M/s. Real Detective and Security Organization Pvt. Ltd. also permitted to deploy another security agency from the panel. Threfore, in compliance of the order dated 24-4-2014, Official Liquidator has made outstanding payment to M/s. Real Detective & Security Organization Pvt. Ltd. and relieved C/OLR/56/2020 ORDER them and also deployed another security agency namely M/s. National Security Force with same strength of 7 guards i.e. 2x2x3=7 at assets situated at Village : Bhopar, Manpada Road, Dombiwali (East), Dist. Thane on 11-07-2014. 5. It further indicates that Official Liquidator has paid an amount of Rs. 1,18,670/- towards security charges to M/s Naitonal Security force for the period of 11-07-2014 to 31-01-2015 from the fund available in the Company’s account. The Official liquidator also submitted that the Hon'ble High Court vide order dated 14-8- 2015 passed in Official Liquidator's Report No. 1 of 2015 has permitted the Official Liquidator to pay minimum wages to the security guards deployed by the Security Agencies empaneled with the office of Official Liquidator under the Minimum Wages Act, 1948. To comply order dated 14.08.2015, the official liquidator has decided to give an effect of minimum wages under the Minimum Wages Act, 1948 to the security guards deployed by the Security Agencies empaneled with the office of Official Liquidator w.e.f 15-08-2015. It is also stated that members of the sale committee unanimously reviewed strength of security guards at the Dombiwali property of the company under liquidation and it was decided in said meeting that strength of guards may reduce from 7 (2x2x3) guards to 6 (2x2x2) guards w.e.f. 15-10-2015 as per the sale committee meeting dated 06.10.2015. 6. The Official Liquidator further indicates that after following due procedure of sale, this Hon'ble Court vide order dated 17-07- 2019 passed in Official Liquidator's Report No. 43 of 2019 confirmed the sale of assets situated at Revenue Survey No. 234 C/OLR/56/2020 ORDER (part), 236/1 (part), 237 (part), 42 (part), 43/1 (part), 44/2 (part), 44/3 (part) situated at Village : Bhopar, Manpada Road, Dombiwali (East), Dist. Thane in favour of M/s. Avenue Supermarts Ltd. for a sale consideration amount of Rs. 67 Crores and after receiving full sale consideration amount from M/s. Avenue Supermarts Ltd., the Official Liquidator has handed over the possession of assets situated at Revenue Survey No. 234 (part), 236/1 (part), 237 (part), 42 (part), 43/1 (part), 44/2 (part), 44/3 (part) situated at Village : Bhopar, Manpada Road, Dombiwali (East), Dist. Thane to M/s. Avenue Supermarts Ltd. and discontinue the service of security agency on 08-11-2019. Thereafter, M/s. National Security Force, the security agency submitted bills of Rs. 47,83,559/- towards outstanding security expenses for the period from 01-02-2015 to 07-11-2019. Copy of bills of Rs. 47,83,559/- (Bills Rs. 40,53,841 plus CGST/SGST Rs. 7,29,718= Rs.47,83,559)
Considering the aforesaid facts and circumstances and after perusing documents produced before with the report. Present report is allowed in terms of Para 15(b). The amount shall be paid directly to the bank account of the M/s National Security force through RTGS/NEFT only.
Present Report disposed of accordingly.
(BIREN VAISHNAV, J) DIVYA
Reproduced from the public record of the Gujarat High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.