IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION NOTICE OF MOTION NO. 22 OF 2011 IN INSOLVENCY PETITION NO. 179 OF 2004. Re: M/s. Top Syringe Mfg. Co. & Ors. ..Insolvents. Ex-parte :- Padmavati Jugalkishore Mehta. …Petitioning Creditor. .... Mr. Gaurang R. Mehta, with Tripty Kapadia, with Murlidharan, with Premlata Yadav, i/b M/s. Joy Legal Consultants for Insolvents. Mr. S.T. Kapse, Acting Official Assignee present. Mr. Mhatre i/b by M/s. Doijode Associates for Thermax Industries Ltd. .... CORAM : S.J. KATHAWALLA, J. DATE : 21ST JUNE 2011. P.C. : This is a Notice of Motion taken out by the Insolvents under Section 21 of the Presidency Towns Insolvency Act on the ground that all creditors have been fully paid/settled. It is stated in the Affidavit in support that all the creditors of the Insolvents have been paid off. The Official Assignee confirms that proper receipts of most of the creditors evidencing proof of payment have been filed with his office. However, he submits that in respect of certain debts (about 5 of them) shown in the Schedule filed by the Insolvent No. 1 Firm (i.e. M/s. Top Syringe Mfg. Co.) in Insolvency Petition No. 179/04, the proof of payment filed by the Insolvents seems to be inadequate. He states that a list of such creditors and the debts owed to them have been furnished to the Insolvent’s Advocates. 2. Mr. Mehta appearing for the Insolvents submits that the said 5 creditors have been paid off and adequate proof of the same has been filed with the Official Assignee’s office. He further submits that in addition to make things clear, the Insolvents have also filed Affidavits in respect of the payments made to each of the said 5 creditors. With respect to the said 5 creditors, Mr. Mehta brought to my notice the following: (I) Dilip Atmaram Nagpal With regard to this creditor, the Insolvents have filed the Affidavit of Insolvent No. 3 dated 20.6.2011, stating that their well wisher had made payment of a sum of Rs. 5 lacs in full and final settlement of Dilip Atmaram’s claims against Insolvent Nos. 1 and 2 Firms. The Court’s attention was drawn to a photocopy of the Pay Order dated 26.9.2009 issued in favour of Dilip Atmaram for Rs. 5 lacs annexed as Exhibit “A” to the said Affidavit and also to the withdrawal application filed by Mr. Dilip Atmaram in the Chief Metropolitan Magistrate’s Court alongwith the Order dated 1.10.2009 passed thereon. In view thereof, it was stated that the debts of Rs. 1 lac each shown in the schedules of Insolvent Nos. 1 and 2 Firms, as due to Mr. Dilip Atmaram are fully satisfied/discharged. (II) Ramchand Atmaram Nagpal With regard to this creditor, the Insolvents have filed the Affidavit of Insolvent No. 3 dated 20.6.2011, stating that their well wisher had made payment of sums totalling to Rs. 10 lacs 2 in full and final settlement of Ramchand Atmaram’s claims against Insolvent Nos. 1 and 2 Firms. The Court’s attention was drawn to photocopies of the Pay Orders (both) dated 26.9.2009 issued in favour of Ramchand Atmaram for a total sum of Rs. 10 lacs annexed as Exhibit “A” to the said Affidavit and also to the withdrawal application filed by Mr. Ramchand Atmaram in the Chief Metropolitan Magistrate’s Court alongwith the Order dated 1.10.2009 passed thereon. In view thereof it was stated that the debts of Rs. 2,50,000/- and Rs. 2,00,000/- shown in the schedules of Insolvent Nos. 1 and 2 Firms, as due to Mr. Ramchand Atmaram are fully satisfied/discharged. (III) Diwan Arun Nanda With regard to this creditor, the Insolvents have filed the Affidavit of Insolvent No. 3 dated 20.6.2011 stating that their well wisher had made payments aggregating to Rs. 5 lacs in full and final settlement of Diwan Arun Nanda’s claims against Insolvent No. 1 Firm. The Court’s attention was drawn to photocopies of the Pay Orders dated 2.6.2005, 4.10.2005 and 26.9.2009 issued in favour of Diwan Arun Nanda for a total sum of Rs. 5 lacs, annexed as Exhibits “A” and “C” to the said Affidavit and also to the dishonoured cheques which were returned by Mr. Diwan Arun Nanda (annexed as Exhibit “B” to the said Affidavit). In view thereof it was stated that the debt shown in the schedule of Insolvent No. 1 Firm, as due to Mr. Diwan Arun Nanda is fully satisfied/discharged. (IV) Top Syringe Employees Credit Society Ltd. 3 With regard to this creditor, the Insolvents have filed the Affidavit of Insolvent No. 3 dated 20.6.2011 stating that a Memorandum of Settlement dated 11.2.2010 had been entered into with the Credit Society whereby the Insolvents’ well wisher had made payment of a sum of Rs. 5.50 lacs to the Credit Society in full and final settlement of all its claims against Insolvent No. 1 Firm. It is brought to the notice of this Court that the Memorandum of Settlement had been executed by the office bearers of the Credit Society and witnessed by the Advocate for the Union representing the workmen of Insolvent No. 1 Firm. It is also brought to the Court’s notice that by a subsequent Memorandum dated 29.3.2010 (Exhibit “B” to the said Affidavit) the Union of workmen had at clause 15 thereof acknowledged that there are no outstanding payments and/or any amount due and payable by Insolvent No. 1 Firm to the Credit Society or towards the Employees’ Provident Fund. In view thereof it was stated that the debt shown in the schedule of Insolvent No. 1 Firm, as due to the Credit Society is fully satisfied/discharged. (V) Income Tax Authority With regard to this creditor, the Insolvents have filed the Affidavit of Insolvent No. 3 dated 18.6.2011 stating that Insolvent No. 1 Firm had continuously suffered losses from 1998-99 till its operations came to a stand still and that Insolvent No. 1 Firm had not earned any income which was chargable to tax. It is further stated in the said Affidavit that an amount of Rs. 25,298/- has been inadvertently and incorrectly shown as claim of the Income Tax Authority when 4 nothing is due by Insolvent No. 1 Firm to the Income Tax Authority. The Insolvents therefore sought liberty to amend the schedule filed by Insolvent No. 1 Firm with a view to delete item No. 6 in part D thereof relating to the amount of Rs. 25,298/- shown as claim of the Income Tax Authority. In view thereof it was stated that no debt at all was payable to the Income Tax Authority. 3. Mr. Mehta also informed the Court that none of the above 5 creditors have lodged proof of claim with the Official Assignee even though the Order of adjudication has remained in operation for more than 5 years. None of these creditors have even come forward to oppose the Notice of Motion. It is evident that the said creditors have been paid off and they do not desire to object to the Notice of Motion. However, the Official Assignee submits that there being no formal receipts issued by the said 5 creditors, he ought to be protected. In light thereof and considering that the well wisher of the Insolvents have already paid off the above creditors, it is directed that the Insolvents and their well wisher give suitable indemnity in favour of the Official Assignee indemnifying him against any losses suffered by him on account of claims, if any, henceforth received by the Official Assignee from the said 5 creditors. Such indemnity has to be filed with the Official Assignee within two weeks from today. 4. The Official Assignee then submits that in the schedule of Insolvent No. 1 Firm, a claim of Rs. 1,05,89,875/- has been shown as “salaries/wages payable to workers”. In this regard, Mr. Mehta informs the Court that the Insolvents have already lodged with the Official Assignee’s office a copy of a Memorandum of Settlement dated 29.3.2010 entered into with the Shramik General Kamgar 5 Union representing the workmen of Insolvent No. 1 Firm, whereunder sums aggregating to Rs. 5.15 crores have been paid to the workmen in full and final settlement of their dues. He points out that the list of workers alongwith their acknowledgements are annexed to the Memorandum of Settlement. He also points out clause Nos. 13 and 19 of the Memorandum whereunder the Union of workmen has acknowledged that they have no further claim against Insolvent No. 1 Firm and that they shall not make any claim against the Official Assignee or against any of the Insolvents. In any event, the Union has not filed any objection to the grant of reliefs on the above Notice of Motion. The Insolvents have also produced a certified copy of an Order dated 10.6.2010 passed by the Industrial Court recording the withdrawal by the Union of workmen of Complaint (ULP) No. 114 of 2007 since the matter was amicably settled out of Court. I am satisfied that the dues of the workmen/employees of Insolvent No. 1 Firm are fully paid/settled through the well wisher of the Insolvents. 5. Considering the above, I am of the view that the Insolvents have made out a case of full payment to all their creditors. The Official Assignee therefore also submits that he has no objection to the Order of annulment being passed, as prayed for subject to the payment of his commission. The well wisher of the Insolvent has deposited the Commission of the Official Assignee under protest and has submitted that the issue whether the Official Assignee is entitled to the said Commission be independently decided by this Court. In view thereof, the following order is passed :- (i) The order of adjudication dated 5 th December 2006 stands annulled on the ground of full payment. 6 (ii) The Insolvents are allowed to amend the schedule of Insolvent No. 1 Firm, to delete the amount of Rs. 25,298/- shown as a debt payable to the Income Tax Authority. (iii) The Insolvents and their well wisher shall within a period of two weeks from the date of this order give an indemnity in favour of the Official Assignee indemnifying him against any losses suffered by him on account of claims, if any, henceforth received by the Official Assignee from the said five creditors. (iv) The Applicant/well wisher shall be at liberty to file a fresh Notice of Motion seeking refund of the commission or part thereof on the ground that the Official Assignee is not entitled to retain the same. Needless to add that the Notice of Motion if filed shall be decided on its own merits. (v) The Notice of Motion is accordingly disposed of. [S.J. KATHAWALLA, J.] 7