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2000 DIGILAW 527 (GUJ)

MAFATBHAI v. SHAH VS SECRETARY,government OF INDIA

2000-06-23

B.C.PATEL, D.H.WAGHELA

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B. C. PATEL, J. ( 1 ) A practising Lawyer has filed this petition making a prayer, amongst other prayers, that the Central Government be directed to appoint adequate staff and to provide adequate space for the office of the Official liquidator. The petitioner has also prayed for a direction to the Official liquidator to expedite the disposal of all issues arising in winding-up matters more particularly of Textile Mills on top priority basis as the ex-workers of these Mills are suffering on account of non-payment of their dues. ( 2 ) FROM the record it appears that there are in all 239 Companies under liquidation and the present Liquidator is required to deal with all these 239 companies. Out of the 239 Companies under liquidation, 50 Companies are textile Mills. Management of huge assets are involved in the liquidation of these Companies. For example, it is indicated that assets worth Rs. 100 Crores are involved insofar as Calico Mills is concerned. Assets of about Rs. 70 to 80 Crores of Ambica Mills, Rs. 50 Crores of Motorolla Company and Rs. 150-175 Crores of 16 units of G. S. T. C. are involved in some of the other matters. ( 3 ) IN the petition, petitioner has given history of Textile Industry since the establishment of Textile Mills in Ahmedabad. The petitioner has placed on record the figures from a Press Cutting, Economic Times, dated 18-1-1999 (vide Annexure a) indicating that in Bombay in 1981, 2,50,000 workers were employed in Textile Mills and today there are less than 30,000 workers on the rolls of these mills. It is contended that the Mill Owners explain the downfall of the Textile Mills by saying that there is a massive evasion of excise duty by powerloom sector. So far as the State of Gujarat is concerned, it is stated that the winding-up of the Textile Mills has thrown about 50,000 workers out of their permanent jobs out of which about 36,000 workers in Ahmedabad alone. Out of 63 Mills in liquidation, 36 Textile Mills are situated in Ahmedabad and 12 Textile Mills belong to the Gujarat State Textile Corporation Ltd. Ambica mills group Company ordered to be wound-up on 17-1-1997 and Calico Mills and Illac Limited were ordered to be wound-up on 15-7-1998. Out of 63 Mills in liquidation, 36 Textile Mills are situated in Ahmedabad and 12 Textile Mills belong to the Gujarat State Textile Corporation Ltd. Ambica mills group Company ordered to be wound-up on 17-1-1997 and Calico Mills and Illac Limited were ordered to be wound-up on 15-7-1998. The petitioner has given figures in a separate Annexure vide Annexure b. The petitioner has placed on record list of the Companies in liquidation, vide Annexure c with number and date of winding-up order. Orders with regard to two Companies were passed prior to 1960. With regard to 7 Companies, the date of winding- up range between 1961 and 1969. Four companies were ordered to be wound- up in 1970. Thus even orders passed prior to 13-12-1970 still remain in cold storage in certain cases. The petitioner has given the break-up of workers and the date of winding-up orders etc. insofar as Textile Mills of Ahmedabad are concerned. ( 4 ) IN further affidavit, the petitioner has pointed out that the office of the Official Liquidator situated at 6, Navyug Society is not at all sufficient to bear the huge workload in view of shortage of staff and space. No doubt, it is not for the petitioner to point out as to how much area would be required looking to the present situation, but he is quite justified in pointing out that the office premises, looking to the quantum of work, is quite small and even the staff provided to the Official Liquidator is totally inadequate. It might not have been expected by the Parliament and even by the State Government that people who are investing huge amount in industries would be required to close the unit by winding-up. This Court is not required to examine the reasons for sickness of particular industry or particular Company or unit. Suffice it to say that large number of people who were working in the Companies ordered to be wound-up and creditors including small investors are suffering a lot today. As far as the industrialists are concerned, it is not for this Court to express an opinion whether they are the sufferers or not. ( 5 ) LOOKING to the fact that after winding-up order, appropriate actions are not taken, the petitioner has approached this Court. As far as the industrialists are concerned, it is not for this Court to express an opinion whether they are the sufferers or not. ( 5 ) LOOKING to the fact that after winding-up order, appropriate actions are not taken, the petitioner has approached this Court. It is required to be noted that when the office of the Official Liquidator was established, there were few units in comparison to the number of units existing today. Looking to the growth of industries and eventually some of them falling sick, and ultimately being wound-up, the establishment of Official Liquidator became totally inadequate in strength on account of paucity of staff as against the work. ( 6 ) IT is required to be noted that under the Companies Act, the Official liquidator is required to take charge of the assets when a Company goes under liquidation. He is required to file a report before the Court ordering winding- up of the Company. He has to look after the litigation and proceedings filed in various Courts. He has to take inspection of books of account. He is required to file criminal complaints in case of necessity against the defaulting Directors. He has to submit preliminary report under Sec. 135 of the Companies Rules. He is required to recover debts, loans and advances etc. after verifying the state of affairs. He has to examine various categories of creditors i. e. secured creditors or unsecured creditors. He is required to verify, investigate and file the claims of all creditors. He has to take the assistance of Chartered Accountants for verifying the statements of claims. He has to submit in the Court reports regarding proof of debts and the loan of creditors. He has to submit a list of contributories. He is required to sell all the properties of the Company in liquidation. He has to file Income Tax Returns and half yearly accounts before the Court, he has to file dissolution report in case of voluntary liquidation. As indicated earlier, considering the number of the industries existing at the time of bifurcation of bilingual Bombay State and comparing it with todays situation, certainly the space and staff provided to the Official Liquidator can be said to be inadequate and ineffective to carry out the duties to be discharged by the Official Liquidator more particularly looking at the numbers of Companies ordered to be wound-up. ( 7 ) SO far as the staff is concerned, we inquired from the learned Counsel appearing in the matter and we are told that there are only eight persons working today in the office of the Official Liquidator, as against the 9 sanctioned posts, which are indicated below.