Parmanand Sitlaprasad Pandey v. Gopaldas Lilaram Valecha

1. Heard Mr. Jain, learned Advocate for one of the Creditor of the Insolvents, Mr. Bagwe, learned Advocate for Insolvents and the learned Deputy Official Assignee.

2. This Notice of Motion has been filed by Applicant / Insolvent No. 1 - Mr. Parmanand Sitlaprasad Pandey for seeking the following reliefs:- (a) That the delay of 22 days in filing the present Notice of Motion be condoned; 1 of 15 (b) This Hon'ble Court be pleased to set aside the order dated 27.04.2022 passed by the learned Official Assignee of Bombay, transferring the amount to Unclaimed Dividend Account, equivalent to the claim amount of some of the Claimants who have not came forward and prove their claim before the Official Assignee;

(c) This Hon'ble Court further be pleased to set aside the order dated

27.04.2022 passed by the learned Official Assignee admitting the claim of some of the other Claimants, which are based on the Bill of Exchange only and not on any order and / or decree from any Court of Law obtained by them against the Insolvents;

(d) That the provision towards the claims of the claimants be made and if they couldn't come forward and proved and claimed the said amount within period of Six months, the said amount may be return / paid to the Insolvent No. 1; (e) That in view of the more than sufficient amount standing to the credit of the estate account of the Insolvent above named towards the payment of the claimants of the Insolvents, the order of adjudication 14.12.1999 passed against the Insolvents above named by the Hon'ble the Insolvency Court, may be annulled under Section 21 (1) of the Presidency Towns Insolvency Act, 1909 on the ground of full payment; (f) That the Public Examination of the Insolvents above named be ordered to be dispensed with by this Hon'ble Court; (g) That this Hon'ble Court be pleased to direct the Official Assignee, High Court, Bombay to write necessary letters to the concerned parties, to whom he had informed about the Insolvency of the above named Insolvents; (h) That this Hon'ble Court further be pleased to direct the Official Assignee, High Court, Bombay to refund to the Insolvent No. 1 above named, the surplus amount, if any, standing to the credit of the estate account of the above named Insolvents after making provision for the payment of the creditors of the Insolvents as admitted by the learned Official Assignee of Bombay.

3. It is contended by the Applicant (Insolvent No.1) that he was adjudicated insolvent along with his brother Dayanand S. Pandey (Insolvent No. 2) by order dated 14.12.1999 passed by the Hon’ble Insolvency Court, High Court, Mumbai in Insolvency Petition No. 16 of 1999 which was filed by the Petitioning Creditor. The name of Petitioning Creditor was Mr. Gopaldas Lilaram Valecha. 2 of 15

4. Next it is contended that the Applicant and his brother filed their schedule of assets and liabilities with the office of the Insolvency of claimants were shown in the schedule on the basis of claims filed by them with the Official Assignee’s office. Some claims were admitted by the Applicant and his brother. However, many of the claims were time barred and many claimants did not take steps to prove their claims by filing appropriate proceedings.

5. Record indicates that during the course of pendency of the Insolvency proceedings, Official Assignee of Bombay sold one immovable property namely residential flat belonging to Insolvent NO. 1 – Applicant herein situated at Andheri (E), Mumbai for a sum of Rs.

85 Lacs sometime in October 2018 for the purpose of distribution of the amounts to the claimants of the insolvents. Sometime in April 2022, the Official Assignee fixed meeting in his office for investigation of claims of the claimants who had filed the same with the office of the Official Assignee. It is submitted by Applicant that some of the claims have been admitted by the Official Assignee vide order dated 27.04.2022. This order is under challenge in the present Notice of Motion by the Insolvents. Notice of Motion has been filed on 07.06.2022 pursuant to the order dated 27.04.2022 for amendment. Claims which are admitted by the Official Assignee are given in Exh. 3 of 15 “B” and “C” to the Notice of Motion by the Applicant. There is a delay of 22 days in filing the Notice of Motion for which reasons for the delay are explained in paragraph No. 10 of the affidavit in support. In view of reasons stated therein, delay stands condoned for the reasons explained by the Applicant.

6. It is contended by Applicant that as on date, there is an amount of Rs. 1,21,16,122/- standing to the credit of the insolvent’s estate whereas according to the statement showing the claim of claimants along with interest prepared by the Official Assignee at Exh. “C” to the Notice of Motion, it is revealed that the total amount of claim along with interest is Rs. 96,71,670.67. Applicant would therefore submit that the amount of Rs. 1.21 Crores (approximately) is more than sufficient to meet the payment of all claimants, if proved by the claimants before the Official Assignee and towards fees and expenses, if any. Applicant would submit that in any view of the matter after meeting the entire claims, there would still be a surplus of approximately Rs. 37,59,520/- available to the credit of the insolvency estate in the present case. In that view of the matter, Applicant has therefore prayed for refund / return of the surplus amount, if any, that would remain available to the credit of the insolvency estate to Insolvent No. 1 i.e. the Applicant as the said amount was realized after disposal of the immovable residential flat belonging to him. 4 of 15

7. It is contended by Mr. Jain that the order dated 27.04.2022 is under challenge. However considering that substantive surplus amount is now available for distribution after realizing all claims, assuming that all pending claims are proven, appropriate orders can be passed for fixation of time limit for satisfaction of the claims which are not proved till date, annulment of adjudication order dated 14.12.1999 passed against the insolvents by this Court on the ground that all claims stand settled and for refund of the surplus amount to Insolvent No. 1 i.e. the Applicant after making provision for the payment of the creditors.

8. At the outset, Mr. Jain learned Advocate who appears for one of the Creditors has drawn my attention to the Note dated 13.04.2023 prepared by the Official Assignee, High Court, Mumbai in respect of the prayer for annulment of the insolvents to be granted by this Court subject to various directions which are sought therein. The said Note is a comprehensive Reply to the Notice of Motion in respect of the present case. It is taken on record. Parties have been served with the said Note. By the said Note, the learned Official Assignee has drawn my attention to the facts of the present case. It is seen that by order of adjudication dated 14.12.1999, Applicant and his brother were declared insolvent. By order dated 27.04.2022, the Official Assignee prepared a list of claimants whose claims were admitted and 5 of 15 sought transfer of the amounts held by the Official Assignee in respect of those claimants to Unclaimed Dividend Account. All these claims were based on Bills of Exchange, but those claimants had not come forward to prove their respective claims. Notice of Motion No. 9 of 2022 was thus filed by Applicant – Insolvent No. 1 challenging the aforesaid direction of the Official Assignee for transferring the amount to the Unclaimed Dividend Account and seeking annulment under Section 21(1) of the Presidency Towns Insolvency Act, 1909 (for short “the Act”) on the ground that there was sufficient surplus amount available in credit to the estate of the insolvents and all claims alongwith 6% interest can be satisfied from there and upon payment to the creditors, the insolvents can be annulled.

9. According to the Official Assignee, there are 44 claimants whose details are given in the Note in paragraph No. 3 thereof. Out of 46 claims filed, 43 claims were filed in the office of the Official Assignee and the remaining three claims are shown in the schedule of Assets and Liabilities filed by the insolvents. One of the claim is repeated i.e. it is a double claim. The three claims shown in the schedule of Assets and Liabilities filed by the insolvents were settled by the insolvents / well wishers of the insolvents on their own in full and final satisfaction of the said claims. By order dated 27.04.2022, the learned Official Assignee admitted 21 claims of the claimants to 6 of 15 the tune of Rs. 25,19,090.96. Thereafter it is brought to my notice that in view of the order dated 09.02.2023 passed in Criminal Appeal No. 1311 of 2006, an amount of Rs. 20,25,000/- will have to be deposited on behalf of the insolvents from the insolvency estate account before the trial court on behalf of the Applicant in compliance of the said order. I have perused the order dated 09.02.2023 which has been placed on record by way of a fresh affidavit dated 15.03.2023 filed by Mr. Kunal Pravin Chandra Ved, one of the claimants in Notice of Motion No. 9 of 2022. Mr. Jain appears for Kunal Pravin Chandra Ved and Rina Kapadia the legal heirs of the claimant entitled to the above amount. Mr. Jain has argued that the amount be transferred to the Trial Court alongwith interest. He would submit that interest in excess of 6% should be awarded by the Court since there is surplus amount. For this submission, he has relied on Rule 23(2) of Schedule II to the said Act and claimed a higher rate of interest than 6% p.a. on the above amount since according to him all debts are proved and there is surplus amount.

10. Next the learned Official Assignee has informed me that there are three preferential claimants shown in the Register Proof of Debt. Two claims are of BEST and one claim is of MTNL. The total claim of the said three preferential claimants aggregates to Rs. 12,473/-. Since they being preferential claimants, the amount of such 7 of 15 claims has to be deposited in the Unclaimed Dividend Capital Account maintained by the Official Assignee as per the provisions of Rule 178 for a period of 15 years in compliance of Section 122 of the said Act and thereafter the said claims if not claimed will be remitted to the Government of Maharashtra. Next my attention is drawn to the claim of one Mr. Harshad S. Mehta & Smt. Chetna H. Mehta which has remained to be adjudicated though notices have been served to them. Similarly there are several claims which are also not yet adjudicated which are mentioned in the schedule of Assets and Liabilities of the insolvent. All such claims are included in the list of 45 claims which are detailed in paragraph No. 3 of the Note filed by the Official Assignee. However, considering that there is substantial amount lying in the estate account of the insolvents, those claims can be placed before the Official Assignee within a time bound programme and if proved, can be treated as admitted claims to be paid from the estate of the insolvents to the said claimants / creditors along with interest upto the date of order of annulment.

11. In view of the above, it is therefore brought to my notice that the relief for annulment on the ground that sufficient amount is standing to the credit of the estate account of the insolvents can be made subject to Rule 180 of the Presidency Towns Insolvency Rules, 1910 and more specifically sub-rule (iv) thereof under which the 8 of 15 insolvent is liable to pay 3% commission on the total of such debts and the same is payable before any order of annulment is made under Section 21(1) of the said Act. Once this is done, learned Official Assignee would contend that appropriate direction be passed to refund the surplus amount, if any, lying in the estate account of the insolvents after deducting the expenses incurred for adjudication under the provisions of the said Act which are alluded to herein above. It is contended by the Official Assignee that there will be sufficient funds available in the estate of the insolvents after payment to the creditors, however it is suggested that an amount of Rs.50,000/- may be permitted to be retained and realized by the Official Assignee towards administration expenses. Though this cost is claimed by the Official Assignee, the submission for retaining Rs.50,000/- is made before me today. I am inclined to grant the same. Mr. Jain, also does not object to this.