IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY PETITION NO.970 OF 1997 M/s.Mineral Sales Pvt.Ltd. ...Petitioners V/s. Otoklin Plants & Equipments Ltd. (In Prov.Liquidation) ...Respondents And Al-Qahatani Pipe Coating Terminal ...Applicants V/s. Official Liquidator, Liquidator of Otoklin Plants & Equipments Ltd. (In Prov.Liquidation)...Respondents ...... Mr.D.J.Khambatta with Mr.Shyam Mehta i/b Federal Rashmikant & Co. for the Company - Al-Qahatani Pipe Coating Terminal. Mr.N.R.Jagtap i/b M/s.Niranjan Jagtap & Co. for M/s.R.K.Steel Syndicate. Mr.Rafiq Dada, Senior Counsel with Mr.Milind Vasudeo with Ms.Mohana Nair i/b Mohana Nair & Associates for Centurion Bank. Mr.Naushad Engineer i/b Desai & Diwanji for O.N.G.C. Mrs.Shakuntala Joshi for M/s.Crack Detective Network Pvt.Ltd. (Security Agency). Mr.S.R.Rajguru, Counsel for Customs Department, Special Economic Zone, Kandla. : 2 : Mr.S.R.Kom, Official Liquidator is present. Mr.H.N.Shaikh, Representative of Court Receiver is present. Mr.M.A.Magdum, Section Officer, Company Department is present. ...... CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. CORAM: A.M.KHANWILKAR, J. JUNE 21, 2004. JUNE 21, 2004. JUNE 21, 2004. ORAL ORDER : ORAL ORDER : ORAL ORDER : 1. This order will dispose of the report submitted by the Official Liquidator dated January 2, 2004 and incidental reports thereto. This report was moved before me for the following directions: "(a) In view of para 11, 12 and 13 supra whether this Hon’ble Court may be pleased to direct the Police authorities at Gandhidham to register the F.I.R. and take up immediate investigation on the basis of information furnished by the Official Liquidator in respect of the missing plant and machineries belonging to M/s.Al-Qahatani Pipe Coating Terminal, Saudi Arabia and book the culprits as well as recover the missing plant and machineries. : 3 : (b) In view of para 14 above, whether this Hon’ble Court will be placed to direct the Centurion Bank Limited and its dismantling agent M/s.R.K.Steel Syndicate to make good of the loss of value of the machineries removed from the site at Khandla, Gandhidham at the time of removal of lease machineries to Centurion Bank Limited. (c) for such other and further directions as this Hon’ble Court may deem fit and proper." 2. On 7th January 2003, after hearing Counsel for the parties, I proceeded to grant directions in terms of reliefs (a) and (b), however, after that order was dictated in open Court, it was brought to my notice by the Counsel for the Centurion Bank Limited (hereinafter referred to as ‘CBL’) that the machinery which was dismantled and made over to CBL has already been sold. In the light of the said statement, Counsel for the CBL was asked to disclose the details about sale transaction, on affidavit. Consequent thereto, affidavits of CBL as well as M/s.R.K.Steel Syndicate (hereinafter referred to as ‘RKS’) have been filed, so as to disclose the nature of transaction and the steps taken from time to time on the site for dismantling : 4 : and for removal of the goods in question. The affidavit of M/s.Al-Qahatani Pipe Coating Terminal (hereinafter referred to as ‘AQH’) asserts that they had leased out about 83 items of plant and machinery to Otoklin Plants & Equipments Limited (In Prov. Liquidation) (hereinafter referred to as ‘Otoklin’) and the said items were lying on the site, as has been noticed in the proceedings taken out by AQH for permission to take away the same. AQH had filed Company Application before this Court, in which, it has come on record that 83 items belonging to AQH were lying on the site at the relevant date. Joint inspection taken in this behalf pursuant to the direction of the Court dated November 20, 2002 also reinforces this position. The same reads thus: "Minutes recorded at the time of giving joint Inspection to the representative of M/s.Al-Qahtani Pipe Coating Terminal, Saudi Arabia and Al-Qahtani Pipe Coating Terminal India of the plant and machineries lying at to M/s.Otoklin Plant & Machine Equipment Ltd. (In liqn.) lying as and where it lies basis in the factory premises situated at Sector No.IV, Kandla Special Free Trade Zone, Kandla. Kandla. Dated : 20.11.2002. 1) Shri P.K.Kale, Representative of the : 5 : Inspector, Office of Official Liquidator, High Court, Bombay. 2) Shri Sirish Desai Chartered Engineer, Representative of M/s.Gandhi & Associates, (Valuers). 3) Shri Hazefa Abbas Representative of Al-Qahtani Pipe Coating Terminal Saudi Arabia. 4) Mr.P.B.Tiwari, Representative of M/s. Field Officer Crack Detectives Network P.Ltd. Security Agency of Vashi, New Mumbai. ------ As per the Court’s order dated 31.10.2002 passed by the Hon’ble Judge Shri R.K.Kochar passed under Company Application (L) No.862 of 2002 in Company Petition No.970 of 1997 and subsequently to the letter of the Official Liquidator dated 17.11.2002 addressed to the Advocates on behalf of Al-Qahtani Pipe Coating Terminal in Saudi Arabia and Mumbai and as per the office order of the Official Liquidator No.OL/Inspn/888 dated 18.11.2002 the representative being Sr.No.1 of the office of the Official Liquidator alongwith the representatives at Sr.No.2 to 4 had been to the factory premises situated at Sector No.IV, Kandla Special Free Trade Zone, Kandla today i.e. on 20.11.2002 at 2.00 P.M. The Field officer Mr.Tiwari one gun man, one supervisor and 10 security guards as per shift were present at the factory premises. The seals were in tact which were sealed on locks. All the aforesaid representatives took round inside the factory premises and saw that the machinery items as mentioned in the Manifesto/Export statement No.4032 dated : 6 : for the vessel Winco. A copy of the same is attached. Mr.Hazefa Abbas representative of M/s.Al-Qahtani Pipe Coating Terminal Saudi Arabia has specifically and personally verified and identified each and every item as listed in the aforesaid statement No.4032. We, all the representatives came across with identification marks viz.Serial No. as mentioned in the Manifesto on each and every item. Some of the items have the logo of the company marked in plant /\ A.Q.H. in the triangle. In some cases stickers of Al-Qahatani (AQH) are available. All the items as per the Manifesto/statement No.4032 were found as and where it lies basis except one Hopper. Some of the parts forming structural steel platforms/conveyor extension are available in dismantle condition but have no marking over it. Some of the small pieces from the equipment which formed part of the plant were also found in facility. In addition to containers as per the statement there are some other containers. Electrical cabling and parallel control station were also found. The general conditions of all the equipments/machineries found to be in deteriorated condition due to lack of maintenance. Equipments were also found to be exposed due to atmosphere on the roofing sheets shed have been fallen, broken and the shed was found to be extensively damaged due to natural calamities. The persons present have signed the minutes as witness hereof. 1.Sd/- 2.Sd/- 3.Sd/- 4.Sd/- 5.Sd/-" (emphasis supplied) : 7 : 3. This joint inspection was carried out in the presence of representative of Official Liquidator, representative of AQH, representative of Security Agency M/s.Crack Detective Network Private Limited (hereinafter referred to as ‘Security Agency’) and representative of M/s.Gandhi and Associates. The report indicates that except one hopper, which was found to be missing, rest of the items claimed by AQH were found on the site. As per the directions of this Court, the matter was examined by the Official Liquidator to establish the ownership of the said items claimed by AQH. That meeting was attended by the representatives of the CBL as well as other secured creditors of the Company in liquidation and Bank of Baroda. The meeting was held on 10th January 2003. The representative of AQH established the ownership in respect of the stated items, which fact has been recorded in the said Minutes. The Minutes reads thus : "MINUTES OF THE MEETING HELD ON 10-01-03 AT 11.00 A.M. IN THE CHAMBER OF DY.DIRECTOR (TECHNICAL) IN THE MATTER OF M/S.OTOKLIN PLANTS AND EQUIPMENTS LTD. (IN LIQN.). ILLEGIBLE : 8 : Centurion Bank Ltd. (.......) ....... Mohana Nair Associates Advocate for the Applicant. - Al-Qahtani Applicant in Company 865/2002 Rashmikant of M/s.Federal & Rashmikant - ....... Bank of Baroda, Prarthana Samaj, Navi Mumbai. - U.L.Laijawala Sr.Manager, Bank of Baroda, IBB Branch, Nariman Point The Hon’ble High Court, Bombay by order dated 31/10/2002 in Company Application No.865 of 2003 in Company Petition No.970 of 97 passed by Justice R.J.Kochar, J. directed the Official Liquidator to allow the applicant and their authorised representative to take inspection of the machinery at site i.e. Kandla factory premises of the company (in liqn.) at their own cost. The Official Liquidator provided inspection to the applicant and inspection was completed within 3 weeks from the date of order, in compliance thereof. Accordingly, after giving the inspection to the applicant viz. Al-Qahtani Pipe Coating Terminal on 20/11/2002 and copy of the minutes drawn at site is annexed as Ex."A" to these minutes. At the site present were representative of Al-Qahtani Pipe Coating Terminal, applicant, their valuer represented by M/s.Gandhi & Associates, representative of Official Liquidator apart from the security provided at the site by the Official Liquidator. Subsequent thereto, the applicant requested to fix meeting in connection with : 9 : satisfying the claim of ownership of the plant and machinery claimed by the applicant. Shri Rashmikant from Federal & Rashmikant submits that on completion of inspection, it was observed that by and large, all their machinery supplied by their client are available at site, except one item i.e. Hopper No.1974.1 placed Sl.No.15 of the List Ex."B". Support of their claim about ownership of the machinery as per the list Ex."B" they produced the certified copy of various bills leasing certified by Indian Embassy, Saudi Arabia, further supported by Chamber of Commerce Industries, Kingdom of Saudi Arabia, Ministry of External Affairs, Kingdom of Saudi Arabia. Copy of the list item claimed by the applicant was circulated to Centurion Bank and Bank of Baroda (only secured creditor) to seek clarification whether any of the machinery claimed by the applicant were hypothecated to the Bank of Baroda. Shri Rashmikant from Federal & Rashmikant, Advocate of applicant submits that there is no question of hypothecation to any secured creditor as the company does not have ownership of the said machinery supplied by the applicant Al-Qahtani Pipe Coating Terminal. List of Machinery claimed by the applicant were given to the representative of Bank of Baroda, Prarthana Samaj Branch, Mumbai who was also present in the meeting to verify and give a reply by 15/1/2003, failing which it will be presumed that they have no claim over said machinery as per the list given to them. On expiry of 15/1/2003, the Official Liquidator will submit a report to the Hon’ble Company Judge for release of machineries claimed by the applicant. Shri Rashmikant, Federal & Rashmikant, Advocate for the applicant was advised to submit the certified copies of the original documents before official Liquidator by today : 10 : itself." (emphasis supplied) 4. After the ownership of AQH in respect of items lying on the site was established, this Court (Justice D.K.Deshmukh) by order dated 20th February 2003 allowed AQH to dismantle, remove and transport the machinery which belonged to them. By the same order, this Court had also directed Oil & Natural Gas Corporation Limited (hereinafter referred to as ‘ONGC’) to take away its pipes, 396 in number, on payment of certain amounts, which were lying on the site. The relevant portion of the said order reads thus: 1. Company Application No.32 of 2003 has been taken out for directions to the liquidator to return to the Applicant the plant and machinery belonging to the Applicant. Perusal of the report of the liquidator and documents accompanying the same shows that the plant and machinery has been inspected together with all the documents produced by the Applicant and the liquidator has been satisfied about the ownership of the machinery as per the list of the Applicant. It was found that except one hopper, which was not found, plant and machinery were found as per the manifesto produced by the Applicant. . In this view of the matter, therefore, as the ownership of the Applicant of the plant and machinery, details of which are in Schedule "I" to the Plaint is now : 11 : established. The Company Application No.32 of 2003 is granted in terms of prayer clause (a). . Dismantle, removal and transportation of the machineries shall be at the costs of the Applicant. The Official Liquidator shall give certified copies of the documents relating to the machineries that may be found by the liquidator in the record of the company. The Applicant shall also deposit with the liquidator an amount of Rs.1,00,000/- towards security charges. The liability of the Applicant to pay the security charges, however, shall be finally determined after the liquidator puts in a report for recovery of security charges from various persons including creditors, Company Application No.32 of 2003 is disposed of. 2. So far as Company Application No.486 of 2002 is concerned, it is filed by ONGC for return of its pipes, 396 in number. Admitted position appears to be that these pipes are owned by ONGC and therefore, the ONGC is entitled to remove the same. . The learned Counsel appearing for ONGC points out that an amount of Rs.3,72,56,507/- is payable by ONGC. However, only 50% of that amount is payable to the Company under liquidation and that the ONGC is willing to deposit that amount with the liquidator,. The learned Counsel further state that this amount will be deposited within a period of four weeks from today. The learned Counsel further points out that as per the contract between the ONGC and the Company under liquidation, trailor was to be provided for transportation of the pipes by the Company, and therefore, according to the learned Counsel, the company under liquidation is liable to pay for the transportation charges. In this view of the matter, therefore, Company Application No.486 of 2002 is disposed of in following terms:- : 12 : . The ONGC, as per their statement, to deposit an amount of Rs.1,86,28,753/- (Rupees One Crore Eighty Six Lakh Twenty Eight Thousand Seven Hundred & Fifty-three only) with the liquidator within a period of four weeks from today. . The ONGC is permitted to remove the 396 pipes. The ONGC, after removal of the pipes, shall submit the bills of the expenses incurred by it for transportation to the Official Liquidator. Bills shall be verified by the Liquidator and the amount which may be payable by the Company on account of transportation charges in terms of the contract between the parties shall be paid by the Liquidator within two weeks from the date of submission of bills. If there is any dispute in this regard, the Liquidator shall put in a report for appropriate orders. . The learned Counsel appearing for ONGC states that the ONGC has received a notice from the Income-tax Department that certain amounts are payable by the Company to the Income-tax Department. The Official Liquidator, therefore, to inform the Income-tax Department that pursuant to this order the amount payable by ONGC to the Company has been deposited with the Official Liquidator and therefore, the Income-tax Department shall act in accordance with law. Company Application No.486 of 2002 is disposed of. 3. ..............." (emphasis supplied) 5. From the record as is produced by the parties and the Official Liquidator, it is established that the goods belonging to AQH in the : 13 : shape of plant and machinery were lying intact on the site till February 2003 when this Court by order dated 20th February 2003 permitted AQH to take away the items belonging to them. The said goods, however, could not be removed for reasons which need not be elaborated here - except to state that the modalities were being worked out by the Official Liquidator. 6. In the meantime, CBL had also sought permission from this Court for removal of items belonging to CBL. By orders dated 27th January 2003 and 10th April 2003, CBL was permitted to take away 68 items which were leased by them to company in liquidation (Otoklin). The order dated 27th January 2003 passed by Justice P.V.Kakade reads thus : "Heard learned Counsel for the parties. Also heard representative of the Official Liquidator. This Chamber Summons is taken out by the plaintiff for directions of this court to permit the Court Receiver, High Court, Bombay, to take possession of the suit equipment, more particularly described in Exhibit "A" to the plaint and in the schedule. : 14 : After hearing the parties this court by order dated 3rd June 2002 directed the Court Receiver to take inventory to ascertain whether the goods are indigenous or imported to meet the arguments advanced on behalf of defendant no.2 Union of India that customs duty is not paid on the said goods. Consequent upon that the Court Receiver made the inventory and his report is dated 6th January 2003. The Court Receiver appears to have taken assistance from technical assistant appointed in the matter. His report is annexed to the Court Receiver’s report. The Court Receiver’s report is based on the technical assistant’s report and unequivocally mentions that the goods were identified to be indigenous. The inventory of the said goods is also attached to the technical assistant’s report and therefore there is no reason why the report should be doubted. Learned Counsel for defendant no.2 vehemently urged that the report is incorrect and the customs duty of the said goods is yet to be paid as they are imported. However, there is no substance in the said submission. The Official Liquidator submits that the factory premises is in their possession and the goods are lying in the said factory premises. In view of this situation it is directed that the Court Receiver, High Court, Bombay, shall taken possession of the suit equipments, more particularly described in exhibit "A" as per the inventory list of the technical assistant’s report. It is made clear that the plaintiff may obtain further directions from the Company Court regarding the fate of the goods and this chamber summons cannot determine that issue as the claim of the official Liquidator has to be decided in due course. With these directions the chamber summons stands disposed of." : 15 : . The order dated 10th April 2003 passed by Justice D.G.Karnik reads thus : "1. Heard the learned counsel for the applicant and Mr.Ansari, Dy.Official Liquidator appearing for the Official Liquidator. M/s.Mineral Sales Pvt.Ltd. Petitioner in the winding up petition bearing Company Petition 970/97 is absent though served by the applicant. 2. By an order dated 4th May 1999 passed in Company Petition NO.970/97, M/s.Kotak Lands and Equipments Ltd. (for short ‘the company’) is ordered to be wound up and Official Liquidator has been appointed to take charge of the assets and business of the Company. The applicant had given on lease certain equipments of the Company. On failure of the Company to pay lease rent, the applicant filed a suit bearing Suit No.45/98 in this Court for recovery of the lease rent and also for the recovery of the leased machinery and equipment. By an order dated 4th May 1998, this Court appointed the Court Receiver in respect of the lease equipment and directed the receiver to take possession thereof. Thereafter, the Receiver went to the site for taking possession but actual possession could not be taken on account of the objection raised by customs authorities regarding the non-payment of the customs duty by the Company. Thereafter, Union of India was joined as defendant no.2 to the suit. 3. By an order dated 3rd June 2002, this Court directed the applicant to produce before the receiver originals of true copies of the invoice regarding the title to the leased equipment so that the receiver could : 16 : ascertain whether the leased equipment was imported or indigenous. By a further order dated 27th January 2003 passed in Chamber Summons No.1013/01 in Suit no.45/98, this Court directed that the Court receiver shall take possession of the leased equipment as per the inventory list of the technical assistance report. The Court however, directed that further steps would be taken after obtaining the necessary directions from the Company Court. Hence, present application has been moved for the directions to the Official Liquidator to hand over the leased equipment to the Court Receiver. 4. From the orders passed by the Court referred to earlier, it is clear that the leased equipment did not belong to the Company but belonged to the applicant. Official Liquidator has been appointed as an Official Liquidator only in respect of the assets of the Company. Leased equipment is not an asset of the Company but is an asset of the applicant which it had given on lease. 5. IN the circumstances, Official Liquidator cannot have any claim over the said leased equipment which is not and was never the asset of the Company. The possession of the leased equipment must therefore be given to the Court Receiver as per the order of this Court dated 27th January 2003. In the circumstances, Judges Summons is made absolute in terms of prayer clauses (a) and (c). 6. The Official Liquidator points out that in the meeting dated 9th December 2002, the applicant Company had agreed to bear and pay security charges in respect of the leased equipment. The applicant Company shall accordingly pay proportionate charges to the Official Liquidator whereupon the Official Liquidator shall hand over possession to the Court Receiver." : 17 : 7. Pursuant to the liberty granted to CBL, meeting was held in the office of the Official Liquidator on 12th June 2003 for deciding on the security charges. Thereafter, joint inspection was taken at the Kandla site by the representatives of the CBL, Security Agency and the Official Liquidator. The proposed purchaser of goods belonging to CBL, RKS made offer of Rs.58,25,000/- (Rupees Fifty Eight Lakhs Twenty Five Thousand) in respect of the 68 items belonging to CBL, which were estimated by CBL at much lesser amount. What is relevant for our purpose to note is that there is nothing on record to show that during this joint inspection, any missing items of the Plant and Machinery was noticed on the site. In other words, it is common ground that the entire Plant and Machinery (constituting items of CBL as well as AQH) was found in intact condition and in place. It is stated that after the offer made by RKS was accepted by CBL, the Official Liquidator directed his representative Shri C.L.Saraiya and Shri S.M.Shetty to give possession of the items : 18 : belonging to CBL to the Court Receiver, who in turn, was expected to hand over delivery of the said items to the CBL for dismantling and removing the same from the site. Accordingly, the representative of the Official Liquidator and the representative of the Court Receiver along with the representatives of CBL and the said RKS, visited the site on 1st July 2003. It is apposite to advert to the Minutes drawn on 1st July 2003, which reads thus: Kandla Gandhidham Dt.1.7.2003. Subject : In the matter of M/s.Otoklin Plants Equipments Ltd. (in liqn). ----- Minutes drawn at the time of handing over moveable assets lying at the factory premises situated at above. Pursuant to office order No.782 of 2003 dated 26.6.2003 we had been i.e. Mr.C.L.Sariaya and Mr.S.M.Shetty of this office to handover moveable leased assets belonging to the Centurion Bank to the Court Receiver as per Court’s order dated 10.4.2003. We reached to the abovesaid premises at 11.45 A.M. we round following persons present there: 1) Mr.C.L.Sariaya 2) Shri S.M.Shetty representative of O.L. Mumbai. : 19 : 3) Mahesh Rane representative of Centurion Bank 4) Shri R.Srinivasan 5) Mr.Mangesh Jog representative of Court Receiver 6) Mr.Rao - valuer appointed by Court Receiver. 7) Mr.Dhiraj Kumar rep.of C.D.Securities 8) Mr.Rajendra Singh Shamji 9) Mr.U.L.Laijwala, rep. of Bank of