Hindustan Vegetable Oil Corporation Ltd. v. Union of India

1. The present company petition for winding up of the company – Hindustan Vegetable Oil Corporation Ltd.1, was instituted pursuant to a recommendation from the Board of Industrial and Financial Reconstruction[2] vide order dated 07.12.2001 in BFIR Case NO. 502/1999. The said order was assailed in an appeal preferred by some 1HVOC of the employees of HVOC, before the Appellate Authority for Industrial and Financial Reconstruction, and came to be dismissed on 04.08.2003.

FACTUAL BACKGROUND:

2. Briefly stated, the company in liquidation was incorporated on 31.03.1984 and is wholly owned by the Government of India. The company in liquidation was also vested with two undertakings on 23.04.1984 namely – Amritsar Oil Works and Ganesh Flour Mills Company Limited, subsequent to the said undertakings being nationalised.

3. The company (in liquidation) was referred to the BIFR under the Sick Industrial Companies Act, 1985, and was declared a sick industrial company on 24.12.1999. Thereafter, the BIFR vide order dated 07.12.2001 recommended the winding up of HVOC and referred the matter to this Court. This order passed by the BIFR was challenged in appeal by certain employees of the company before the AAIFR, which appeal came to be dismissed vide order dated 04.08.2023.

4. Thereafter, winding up proceedings commenced before this Court under the present company petition bearing CO.PET. 49/2002 and vide order of this court dated 28.09.2006, the Central Government was granted permission to appoint a Liquidator. Shri B.S.Mohapatra, then CGM, Finance (subsequently promoted as Executive Director, Finance) of Food Corporation of India was appointed asthe Liquidator of HVOC vide letter dated 06.11.2006 and subsequent to his retirement in 2020, the government appointed Shri Anand Prakash, an officer of the Administration Ministry, as the Liquidator of HVOC, and permission of the same was granted by this Court vide order dated 06.09.2021.

5. It is relevant to note that the company had 8 Industrial Units in Delhi, Amritsar, Kanpur, Mumbai, Bangalore, Kolkata and Chennai, engaged in the production and packaging of vanaspati and edible oils. It is also noted that one of the units in Delhi was a Breakfast Food Unit, which remained functional till 2011.

6. The company (in liquidation) filed an affidavit dated 18.09.2006, through its Managing Director – Mr. Abhinash Verma (Ministry of Consumer Affairs, Food and Public Distribution, Department of Food and Public Distribution) pursuant to the directions of this Court dated 27.07.2006.

7. It is stated in the said affidavit that HVOC has no secured creditors and that Rs. 6.83 crores excluding interest is due and payable to the unsecured creditors including customers, sundry debtors and others; and such outstanding amounts were proposed to be settled by realisation of the movable assets of HVOC. In addition to this, it was stated in the affidavit that a sum of Rs. 220.98 crores including interest, is due and payable to the Government of India and other statutory authorities as on 31.03.2006 and a liability in the form of unsecured credit towards the government amounting to Rs. 129.29 crores is also payable. It was also stated therein that the Government of India has no objection to the winding up of HVOC, except the Breakfast Food Unit.

8. A perusal of the record reflects that in respect of the movable assets of the various units of the company, the liquidation process was completed under the supervision of this Court in 2020. With regard to the immovable assets of the company, in view of the fact that these assets were placed at prime locations and could be utilized by the Government of India, a proposal was approved by the Union Cabinet in a meeting dated 30.11.2017 for the transfer of said assets to the Ministry of Housing and Urban Affairs[3]. A joint application was moved by HVOC and the Union of India, bearing CO.APPL. 2078/2017, for the transfer of the immovable assets of HVOC to MoHUA and the same was allowed by this Court vide order dated 20.12.2017. Thereafter, physical possession of all the landed assets of the company (in liquidation) was handed over to the Land and Development Office (L&DO) and the Central Public Works Department, MoHUA in 2018.

9. It was also resolved by the Union Cabinet that all the liabilities of HVOC towards loans raised by it from the Government of India as also accrued interest, were waived off in lieu of the transfer of the immovable assets of the company to MoHUA. Further, the Union Cabinet also decided that the Ministry of Finance is to provide HVOC with funds up to Rs. 50 crores, which may be utilised to meet future liabilities. However, it was directed vide order dated 20.12.2017 that 3MoHUA the Government would make good for any shortfall, in case the liabilities which arise in the future are in excess of Rs. 50 crores.

10. As regards the Breakfast Food Unit, which was initially kept outside the purview of the liquidation proceedings, it is relevant to mention that the Unit was brought within the ambit of the liquidation process of HVOC vide order dated 22.11.2016, and thereafter, the movable assets of the Unit were ordered to be liquidated vide order dated 22.11.2017.

11. With respect to the employees of HVOC, it is stated that the entire staff has been relieved through the Voluntary Retirement Scheme (VRS) and the Voluntary Separation Scheme (VSS), and as on date, the company (in liquidation) has no regular employees apart from certain ex-employees who have been retained on contractual basis. The employees of the Breakfast Food Unit were relieved by introduction of the Improved Voluntary Retirement Scheme (IVRS) by HVOC.

12. It is stated that the Liquidator published notices inviting claims in national as well as local newspapers, in the years 2008 and 2011, and thereafter settled the claims of the creditors received against the said notices. However, it is relevant to note that some claims are pending adjudication presently before various competent courts.

13. It is thus borne out that presently, there remain no movable or immovable assets with HVOC. Furthermore, HVOC has no pending claims or liabilities apart from contingent/future liabilities which may arise in respect of ongoing litigations regarding disputed dues which are pending adjudication.

14. At this stage, it is apposite to note that a Joint Application was moved on behalf of HVOV and the Union of India, bearing CO.APPL. 231/2023 seeking substitution of the company – HVOC, with the Union of India in the pending legal proceedings and to allow the winding up of the company to proceed. This application came to be allowed vide order dated 26.04.2023, whereby the following directions were passed: