O.N.G.C. Ltd vs Official Liquidator & Ors

2. The industries subscribing to the gas supplied by the appellant formed an association in 1978 called “The Association of Natural Gas Consuming Industries of Gujarat” (hereinafter referred to as ‘Association’). Respondent- Ambica Mills Co. Ltd. is one among the members of the said Association. The supply of gas to the member industries was based on individual contracts entered into with each of the concerns. The appellant and the members of the said Association entered into an agreement for supply of natural gas. The agreement provided the price payable for supply of gas and the rate of interest in the event of failure to pay the stipulated prices.

3. On 30th March, 1979, the contractual period of the aforesaid contract expired. After the expiry of the contract, a new contract stipulated prices for supply that were prevalent at the time of the respective contracts. The then levied price for supply of gas was Rs.504/- per unit.

5. The Gujarat High Court by an interim order dated 30th March, 1979 in the said Application, directed the Appellant herein to continue supply of gas at the old rate, i.e., Rs.504/- per 1000 cubic meter. On 29th December, 1982, the High Court modified the aforesaid interim order and directed the Appellant to supply gas to the member industries of the Association at Rs.1000/- per 1000 cubic meter.

7. The Appellant preferred an appeal being C.A. No. 8530-8540 of 1983 against the aforesaid order. On 15th April, 1987, this Court passed an interim order directing that the members of the Association including the Respondent shall be supplied gas at the rate of Rs.1000/- per 1000 cubic metres subject to an undertaking that the respondent shall not charge, encumber or alienate except with the leave of this Court any of the immovable assets.

11. Soon after the aforesaid judgment, ONGC filed an application for certain directions and modifications of the aforesaid judgment. When the matter was taken up for hearing on 8th December, 1992, learned senior counsel appearing on behalf of the Association submitted that the members of the Association will make some more substantial payments to ONGC by the end of the month, and particulars of payment so made would be submitted in the Court on or before 8th January, 1993. On 6th April, 1993, when the matter was taken up again on an application filed by the ONGC complaining of non-payment by the members of the Association, this Court observed that the liability of the members of the Association to make the payment of amounts due from them to the ONGC was beyond controversy and cannot be disputed. In the aforesaid order, it was further observed that the principal amount due from Ambica Mills Co. Ltd. as on 31st March, 1993 in respect of period 1st April, 1979 to 21st January, 1987, as shown in the statement furnished by ONGC, is Rs. 1.58 crores and interest thereon amounted to Rs.4.96 crores. Ambica Mills Co. Ltd. admitted the principal amount. The interest calculated would be accepted subject to verification. At the relevant time, reference relating to Ambica Mills Co. Ltd. under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) was already pending before the Board for Industrial and Financial Reconstruction (BIFR). Upon consideration of the matter, this Court on 29th April, 1993 granted the prayer of ONGC that it would be entitled to take steps for disconnecting the supply of gas in case of non payment of the amounts due. This Court directed that the principal amount must be paid within a period of 5 years latest by 31st March, 1998. So far as Ambica Mills is concerned, the statement was made by the learned senior counsel appearing for them that the respondent is prepared to sell the vacant land at Vatwa in Ahmedabad in order to discharge the due of ONGC in the present case. Ambica Mills was granted liberty by this Court to make prayer to that effect before the BIFR and to obtain suitable directions. It was also observed that the entire dues of the ONGC shall be first paid out of the total sale price and the balance, if any, remaining thereafter shall be available for utilisation in any other manner directed by the BIFR. It appears that in the meantime BIFR recommended that Ambica Mills be put into liquidation. This recommendation of the BIFR came up before the Gujarat High Court along with other winding up on 17th October, 1997, when the High Court appointed a provisional liquidator.

13. It is the case of the ONGC that it is in receipt of a letter dated 28th September, 1999 from the official liquidator wherein it has been stated that Plot No.307IPS-16 of Ambica Mills (in liquidation) property was disposed of for Rs.90.11 lakhs and the initial instalment of Rs.22.52 lakhs had already been deposited by the purchaser of the said plot. A prayer was made for release of the aforesaid amount to ONGC.

14. It appears that respondent No.10-Textile Labour Association, Bhadra sought review of the order dated 17th October, 1997 by filing Review Petition Nos.1193-1203 of 2001 in I.A.No.168-178/1997 in C.A.No.8530- 40 of 1983. The aforesaid review petitions were decided by this Court on 12th April, 2004 and it was directed that claims of ONGC will have to be worked out in accordance with Sections 529 and 529A of the Companies Act as well. The submissions made on behalf of ONGC that the mandamus issued by this Court earlier that ONGC must be paid up first from any sale of the assets of the company in liquidation, would prevail even if the statutory provisions contained in Sections 529 and 529A of the Companies Act, were rejected. The aforesaid judgment of this Court is reported at 2004 (9) SCC 741.

The Respondent No.10 Company further undertakes to make available all its immovable assets in the event of discharging the liabilities which may arise on account of the difference between the price at which all the Gas being supplied to the company during the pendency of the proceedings in this connection and the price which may be determined by this Hon’ble court while disposing of the present Appeals finally.

23. A perusal of the aforesaid undertaking shows that Ambica Mills has not identified any particular immovable assets which would be made available in discharging the liabilities in favour of the appellant. Therefore, we have no hesitation in rejecting the submission of Mr.Kuhad that the interim order read with the undertaking expressed an intention to create an enforceable charge of any particular asset of the company in liquidation.

April 17, 2014.