THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Appeal No.35 of 2008 in Company Petition No.99 of 2000 Date:12th October, 2012 Between: The Hyderabad Allwyn Employees Co-operative Credit Society Ltd. Rep. by its Liquidator P.Sumalatha …Appellant And Official Liquidator, High Court of Andhra Pradesh and the Liquidator of M/s.Allwyn Auto Ltd. (in liquidation) ….Respondent *** THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Appeal No.35 of 2008 in Company Petition No.99 of 2000 JUDGMENT: This Company Appeal is directed against the Notice of Admission/Rejection of the claim, dated 25.08.2008, issued by the Official Liquidator on a claim petition submitted by the appellant Society in Form No.66. 2. The appellant is a Society comprising of the members of Hyderabad Allwyn Employees. This Court, by an order, dated 17.07.2001 made in Company Petition No.99 of 2000, ordered for winding up of M/s.Allwyn Auto Limited and appointed the Official Liquidator as its liquidator. During the course of liquidation proceedings, properties of Hyderabad Allwyn Auto Ltd., came to be auctioned and certain amount came to be realized. Claims against the Company (in liquidation) have been invited by the Official Liquidator. The appellant Society filed an affidavit in Form No.66 claiming an amount of Rs.1,23,24,186-22 ps. The claim of the appellant Society is that the Company (in liquidation) deducted the subscription amounts payable by its members, but failed to pass on the subscription amounts to the Society. The appellant Society produced the statement of members of the society to substantiate its claim before the Official Liquidator. The Official Liquidator considered the consolidated statements and employee-wise recovery statement and came to the conclusion that the amount deducted from the employees as Rs.50,30,000/-. The Official Liquidator rejected the claim of the appellant Society as to the interest on the subscription amounts and thereby the Official Liquidator passed orders, by order, dated 25.08.2008, admitting the claim of the appellant Society to a tune of Rs.28,18,314-73 ps., as secured debt while rejecting the excess claim of Rs.1,22,55,117.57 ps. Hence, this appeal. 3. Heard learned counsel appearing for the appellant Society and learned counsel appearing for the Official Liquidator. 4. It is contended by the learned counsel appearing for the appellant Society that the Company (in liquidation) during the proceedings pending before the BIFR admitted its liability to a tune of Rs.1,21,00,000/- and therefore, the Official Liquidator is not justified in rejecting the claim submitted by the appellant Society in Form No.66. It is also contended by him that as per bye-law No.15(b) of the bye-laws of the appellant Society, the society is entitled to charge 4% simple interest p.a., and therefore, the amount due to the appellant Society is to be charged with 4% simple interest p.a. It is also contended by the learned counsel that the appellant Society is entitled to claim interest upto 30.11.2003. 5. Learned Counsel appearing for the Official Liquidator submits that the amount due to the appellant Society has been arrived at taking into consideration of the employee wise recovery statements and therefore, the order passed by the Official Liquidator is legal and proper and cannot be interfered with. It is also contended by him that under Rule 154 of the Companies (Court) Rules, 1959, the interest to be allowed on the principal amount is upto the order of winding up i.e. 17.07.2001. It is also contended by him that there is no contract between the appellant Society and its members with regard to rate of interest and therefore, the appellant Society is not entitled to claim any interest on the principal amount claimed by it. 6. The issues that call for adjudication are: 1) Whether the Official Liquidator is justified in arriving the amount due to the appellant Society at Rs.28,18,314.73 ps.? 2) Whether the appellant Society is entitled to claim interest on the principal amount ascertained by the Official Liquidator and if so, at what rate? 7. Point No.1: The Official Liquidator verified the employee wise recovery statement and ascertained the amount recovered from the employees as Rs.50,30,000/-. The Official Liquidator has also gone through the recovery statement and arrived at the amount sent to the appellant Society as Rs.22,12,465-09 ps. Thus, the balance payable to the appellant Society is Rs.28,18,314.73 ps. The Official Liquidator arrived the amount due to the appellant Society by referring the employee wise statement submitted by the appellant Society. Therefore, I do not see any reason to interfere with the finding recorded by the Official Liquidator with regard to the amount due to the appellant Society as Rs.28,18,314.73 ps. 8. Point No.2: With regard to the interest, as per Clause 15(b) of the Bye-laws of the appellant Society, the members are entitled to 4% simple interest p.a., on the subscription amount. I deem it appropriate to refer clause 15(b) of the Bye-Laws of the appellant Society, which reads as hereunder: “15.(b). All subscriptions received by regular recoveries from monthly salary of members shall be accounted for separately and employed as part of the working capital of the society. Members Account shall be credited with interest at the close of every year at the rate of 4% simple interest P.A. or such rates as may be fixed by the Board of Directors from time to time.” As per the above referred clause of the bye-laws, the members of the appellant Society are entitled for 4% simple interest p.a., on the subscription amount paid by them. Therefore, the appellant Society is entitled to claim interest at the rate of 4% simple interest p.a., on the principal amount of Rs.28,18,314.73 ps. 9. Accordingly, the Company Appeal is partly allowed granting interest at the rate of 4% simple interest p.a., on the principal amount of Rs.28,18,314.73 ps., upto the date of winding-up i.e., 17.07.2001. No costs. ______________________ B.SESHASAYANA REDDY, J. Dated:12th October, 2012. cs THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Company Appeal No.35 of 2008 in Company Petition No.99 of 2000 Date:12th October, 2012