1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION (L) NO. 689 OF 2009 IN COMPANY APPLICATION NO. 1294 OF 2007 IN COMPANY PETITION NO. 642 OF 1983 Venkatashwar Somani ..Applicant versus The Official Liquidator of Shree Niwas Cotton Mills Ltd. ..Respondents Mr. Janak Dwarkadas – Sr. Counsel with Mr. Cyrus Ardeshir and Mr. Rahul Dwarkadas i/b. Wadia Gandhy & Co. for Applicant. Mr. M.P.S. Rao – Sr. Counsel with Mr. Mayur Shetty and Mr. Deepankar i/b. M/s. M. V. Kini & Co. for S.B.I. and S.B.I. Debenture Holder Trustees. Mr. P. Ramarao – Official Liquidator present. Mr. Vishwajeet Sawant for Official Liquidator. Mr. J. J. Bhatt – Sr. Counsel with Mr. S. M. Dharap for SGKS (Labour Union). CORAM : A. M. KHANWILKAR, J. DATED : JUNE 24, 2009. P.C. : 1. Not on Board. Upon mentioning taken on board. 2 2. This Application is taken out by the Applicant in Company Application No. 1294 of 2007 for clarification / modification of my Order dated 14th May, 2009 to the extent that the amount to be deposited by the Applicant referred to in the said Order be reduced to Rs.110 Crores instead of Rs.125 Crores. The background in which this Application is filed is that when the Application was contested on 14th May, 2009 it was on the assumption that the liabilities of the workers and the staff is to the extent of Rs.5,93,47,621.55 paise as on 30th September 2007 and further amount towards interest and other claims. However, now 4719 workers named in the list submitted to the Official Liquidator referred to at page 31 of the Application, have amicably settled their claim fully and finally with the Management. As a result of that settlement, the liability of the Applicant would stand reduced to the extent of Rs.15 Crores. In other words, it may not be now necessary to deposit the said excess amount. It is common ground that the Applicant has already deposited a sum of Rs.110 Crores in compliance with the directions given in the Order dated 14th May 2009. The workers are represented by Advocates before this Court who have supported the stand of the Applicant. 3. Having regard to this position, there is no difficulty in acceding to the request of the Applicant of reducing the deposit amount from Rs.125 3 Crores to Rs.110 Crores. 4. However, this Application is opposed by the State Bank of India. State Bank of India was duly represented when the Order was passed on 14th May 2009. Their contention has been adverted to in the said Order. However, the objection of State Bank of India is now in the capacity of Debenture Trustees. It is stated that the amount referred to in the original Application payable to the Debenture Trustees is Rs.4.58 Crores as on 30th September, 2007, is not correct. No such grievance was made when the matter was argued before this Court and Order passed on 14th May 2009. According to State Bank of India, the Applicant should be made to deposit further sum of Rs.15 Crores. However, the Applicant contends that the amount payable to State Bank of India as Debenture Trustees by way of increase in interest after 30th September 2007, is already part of the amount deposited by the Applicant in this Court. In other words, the amount of Rs. 110 Crores would be more than sufficient to cover the amount payable to State Bank of India as Debenture Trustees. In addition, the Applicant is filing undertaking before this Court that in the event the Official Liquidator were to adjudicate the claim of State Bank of India and State Bank of India (Debenture Trustees) or otherwise and if the Official Liquidator comes to the conclusion that further amount is payable to State Bank of India, said 4 amount will be deposited with the Official Liquidator, forthwith. In the undertaking it is clearly mentioned that if the amount of Rs.110 Crores is not sufficient to meet all the liabilities of the Company, Cheque No. 999696 deposited with the Official Liquidator when presented for payment shall be honoured and encashed. That undertaking is accepted. Once this undertaking is accepted, the apprehension of State Bank of India will have to be rejected as misplaced. The Official Liquidator shall adjudicate the claim of State Bank of India and State Bank of India as Debenture Trustees on or before 23rd July 2009 when the main Application will be listed for further hearing. Till such time the Applicant undertakes to keep the cheque valid and would allow it to be encashed if required. 5. According to the counsel for the State Bank of India as Debenture Trustees there is possibility of workers pursuing some legal remedy against Debenture Trustees. In response to this apprehension, counsel appearing for the workers state on instructions that since the settlement arrived at between the Management and the workers is full and final settlement of all their claims, the question of pursuing any remedy against State Bank of India or against State Bank of India as Debenture Trustees does not arise and that the workers shall not resort to any such 5 proceedings. That statement is accepted. 6. According to the counsel for State Bank of India, the direction issued by this Court in its Order dated 14th May 2009 does not clearly provide as to within what time span the Applicant shall take steps to restart operations of the Company in liquidation. In response, counsel appearing for the Applicant submits that steps have already been taken for inviting tenders for restarting the existing mill and/or to modernize the same suitably. According to the Applicant, this process may take some time upto about 24 months from now. This aspect can be addressed in the main Application when the same is listed on 23rd July 2009. 7. Accordingly, this Application is allowed in terms of prayer clause (a). Needless to observe that the Official Liquidator shall disburse the amount to the respective workers and/or other creditors as soon as their claim is adjudicated. (A. M. KHANWILKAR, J.)