Research › Search › Judgment

Madras High Court · body

2013 DIGILAW 1700 (MAD)

Mehrunnisa v. Official Liquidator

2013-04-18

VINOD K.SHARMA

body2013
Judgment :- Vinod K. Sharma, J. 1. This application under Order XIV Rule 9,11(b) & 19 of the Company Court Rules 1959 has been filed to direct the Official Liquidator to transfer the sum deposited by late Usman Sheriff, in W.P.No.1560, 2074 and 2075 of 2000 and kept apart in the "Crystal Loan Refund" to Crystal Investments. 2. It is pleaded case of the applicant that Crystal Investments is a partnership firm which was engaged in financing the projects. The husband of the applicant availed loan from the firm against security by way of mortgage. The partners of M/s.Crystal Investments were the erstwhile directors of M/s.Thiru-vi-ka Nagar Benefit Fund Ltd., but subsequently, resigned from their position as Directors. M/s.Thiru-vi-ka Benefit Fund Ltd. defaulted in repayment of deposits which resulted in filing of criminal case with DSP, Economic Offenecs Wing II in Cr.No.3 of 2000. 3. The partners of M/s.Crystal Investments were also accused in the charge sheet filed in C.C.No.4289 of 2002 pending in the Court of the Chief Metropolitan Magistrate, Egmore, Chennai. It was reported by the Investigation Officer that the partners of M/s.Crystal Investments had siphoned of money deposited by public, during their tenure as directors of the Company which was utilized by M/s.Crystal Investments to advance loan to the public against security. 4. W.P.No.1560, 2074 and 2075 of 2000 were filed against Reserve Bank of India and others with the prayer for issuance of a writ in the nature of mandamus, to direct the Union of India, to appoint fit and proper person as custodian for taking over the management of the Thiru-vi-ka Benefit Fund Ltd./fourth respondent. The petitioner in those writ petitions, also prayed for taking immediate control and position of the assets and properties both movables and immovables and securities, so as to pay the petitioner their dues. 5. This Court without waiting for report from the Reserve Bank of India or other respondents, by way of interim measure appointed Mr.Vijayarangan, as Advocate Commissioner for taking over the assets of M/s.Thiru-vi-ka Benefit Fund Ltd. 6. The writ petition was finally disposed of by this Court on 5.8.2008 in view of the order passed in C.P.No.216 of 2012, dated 5.8.2008 appointing the Official Liquidator as Provisional Liquidator of the Company. 7. The writ petition was finally disposed of by this Court on 5.8.2008 in view of the order passed in C.P.No.216 of 2012, dated 5.8.2008 appointing the Official Liquidator as Provisional Liquidator of the Company. 7. However, while disposing of the writ petitions, this Court made no order with regard to the act done by the Advocate Commissioner under the authorities of this court while acting as Advocate Commissioner. 8. The Advocate Commissioner under the authority of this court, and in pursuance to direction issued by the Chief Metropolitan Magistrate, Egmore, Chennai, received a sum of Rs.69,827/- (Rupees sixty nine thousand eight hundred and twenty seven only) from the husband of the applicant and kept it in a separate account. 9. The receipt issued by the Advocate Commissioner reads as under: "THIRU-VI-KA NAGAR BENEFIT FUND LTD. (Central Govt. Declared Nidhi Company) 26, S.R.P. Koil North St., Thiru-vi-ka Nagar, Chennai 600082. Head Office Working Hours: 9 a.m. To 1 p.m. & 2 p.m. To 5 p.m. Sundays: upto 1 p.m. Tuesday Holiday Date: 12.8.2004 TO WHOMSOEVER IT MAY CONCERN Mr.I Usman sheriff (one of the borrowers of Crystal Investments) has paid a sum of Rs.69,827/- (Rs.45,438/- towards Principal and Rs.24,389/-towards interest @ 22.2% p.a. For 29 months from August 2000 to December 2002) as per the directions of the Chief Metropolitan Magistrate Court at Chennai. As per the Loan Pass Book of Crystal Investments produced by Mr.I.Usman Sheriff a sum of Rs.45,438/- towards principal amount was outstanding as on 1.8.2000. This amount together with interest at 22.2% p.a. From 1.8.2000 to 31.12.2002 paid by the above party has been kept in separate account." Yours truly, For Thiru-Vi-Ka Nagar Benefit Fund Ltd., sd/- (S.VIJAYARANGAM) Commissioner." 10. The case of the petitioner is, that the criminal case ended in discharge of the accused. It may be noticed here that during pendency of the criminal case against the partners of M/s.Crystal Investments, the husband of the applicant after discharging the loan, filed an application for return of documents. 11. The application was allowed by the learned trial Court on 15.4.2010. M/s.Crystal Investments preferred revision petition in Crl.R.C. No.99 of 2005, in the Court of IV Additional and Sessions Judge, Chennai. 12. The revision was disposed of by recording an undertaking, that husband of the applicant will not mortgage or encumber the property, and shall be returned the documents. 13. The application was allowed by the learned trial Court on 15.4.2010. M/s.Crystal Investments preferred revision petition in Crl.R.C. No.99 of 2005, in the Court of IV Additional and Sessions Judge, Chennai. 12. The revision was disposed of by recording an undertaking, that husband of the applicant will not mortgage or encumber the property, and shall be returned the documents. 13. Crl.O.P.No.3384 of 2006 was filed by M/s.Crystal Investments to challenge the order of return of documents, on the ground that the loan amount remain unpaid to M/s.Crystal Investments. 14. On coming to know that M/s.Thiru-Vi-Ka Benefit Fund Ltd. Was in the process of being wound up in C.P.No.216 of 2002, the Court in Crl.O.P.No.3384 of 2006 ordered notice to the Official Liquidator wherein the payment made by the husband of the applicant was confirmed. The Official Liquidator made a statement in the Court that the amount received by the Advocate Commissioner, was kept apart under the head "Crystal Loan Refund". 15. This Court disposed of Crl.O.P.No.3384 of 2006 along with other Crl.O.Ps. On 2.11.2009, by passing following order. The operative part of the order passed by this Court reads as under: "13. To resolve the issue, this Court is of the considered view that since the amounts paid by the respective first respondents are kept under separate accounts as is seen from the Memo filed by the Official Liquidator and the Benefit Fund is under Liquidation proceedings in Company petition No.216 of 2002, the criminal original petitions are disposed of with the following direction:- "The petitioner herein shall be at liberty to file appropriate petition before the Company Court in Company petition No.216/2002 and seek appropriate directions for refund of the amounts said to have been deposited by the respective first respondents and which are kept under separate accounts as seen from the Memos filed by the Official Liquidator and before the Company Court, and the return of the documents also can be sought for." 16. After disposal of Crl.O.Ps. Referred to above, M/s.Crystal Investments moved Comp. Appln. No.1816 of 2009 in C.P.No.216 of 2002 to direct the Official Liquidator to refund a sum of Rs.2,83,021/- (Rupees two lakhs eighty three thousand and twenty one only) to the petitioner's firm. But the said application was got dismissed as withdrawn. 17. After disposal of Crl.O.Ps. Referred to above, M/s.Crystal Investments moved Comp. Appln. No.1816 of 2009 in C.P.No.216 of 2002 to direct the Official Liquidator to refund a sum of Rs.2,83,021/- (Rupees two lakhs eighty three thousand and twenty one only) to the petitioner's firm. But the said application was got dismissed as withdrawn. 17. As already noticed above, the husband of the applicant had filed an application under Sec.451 of the Code of Criminal Procedure for return of documents of title of the property in view of the discharge of loan by payment to the Advocate Commissioner appointed by this Court. 18. The learned Chief Metropolitan Magistrate passed an order for return of documents except mortgage deed to Mr.Usman Sheriff. Under the said order, the documents remained in custody of Mr.Usman Sheriff, who later on died. 19. In the criminal case, M/s.Mrs.Bharathi and Uma Maheswari were discharged, whereas accused 1 and 2 were convicted, against which they preferred Crl. Appeal No.174 of 2010 in the Court of IV Additional Sessions Judge, Chennai.16. The learned Sessions Judge set aside the judgment of the trial Court and acquitted A-1 and A-2 also. 20. However, while acquitting accused persons, no order was passed under Sec.452 of Code of Criminal Procedure with respect to the documents which were earlier handed over to Mr.Usman Sheriff as interim custody under section 451 of Cr.P.C. 21. That after withdrawal of the Comp. Appln. No.1816 of 2009 in C.P.No.216 of 2002 by the Crystal Investments, the applicant was directed to approach the criminal Court for return of documents, which resulted in Mrs.Bharathi and Uma Maheswari filing an application under section 452 of Cr.P.C. before the learned Chief Metropolitan Magistrate, Egmore, for return of documents. 22. The application was dismissed by the learned Chief Metropolitan Magistrate against which an appeal was preferred in Crl.A.No.118 of 2011. The appeal was allowed by the learned II Additional Sessions Judge, Chennai, and vide order, dated 14.11.2001 directions were issued to the Chief Metropolitan Magistrate, Egmore, Chennai to return the documents to the respondent No.2 herein, after getting them back from the husband of the applicant. 23. This order was challenged by the applicant in revision before this Court. The revision petition was dismissed by holding as under: "7. 23. This order was challenged by the applicant in revision before this Court. The revision petition was dismissed by holding as under: "7. Admittedly, the documents related to the property was mortgaged by means of a simple mortgage in favour of M/s.Crystal Investments of which the first respondent is the partner. Further, these documents were seized by the police only from the custody of the first respondent. Of course, under section 451 of Cr.P.C. interim custody was given to the petitioner's husband. But, it is only for safe custody till disposal of the case and that will not have any bearing in the final disposal of the documents. So far as the final disposal is concerned, it is governed by section 452 of Cr.P.C. Since there was no order made in respect of these documents in the judgment in Crl.A.No.174 of 2010, the first respondent filed appropriate petition under section 452 of Cr.P.C. for the return of documents. The contention of the first respondent is that the mortgage loan has not been discharged and, therefore, as per the simple mortgage deed, the first respondent is entitled for the documents. But, the contention of the petitioner is that since the petitioner's husband settled the entire dues including the interest to the Official Liquidator appointed by this Court, he is entitled for the return of the documents. In my considered opinion, the contention of the first respondent cannot be accepted. As has been seen from the records, in the criminal case, the first respondent herein and Uma Maheswari were discharged from the criminal charges on the ground that they have got nothing to do with M/s.Thiru-vi-ka Nagar Benefit Fund Ltd. The Official Liquidator was appointed only in respect of M/s.Thiru-vi-ka Nagar Benefit Fund Ltd. and he has no authority over the concern viz., M/s.Crystal Investments. Therefore, it is doubtful whether the Official Liquidator was right in collecting the money from Mr.Usman Sheriff. In any view of the matter, it is for the petitioner to workout as against the Official Liquidator before the Company Court. So far as the contention of the 2nd respondent is concerned, the mortgage loan has not been discharged. Whether the mortgage loan has been discharged or not cannot be adjudicated upon by the criminal Court. The criminal Court is concerned only with the disposal of the documents. So far as the contention of the 2nd respondent is concerned, the mortgage loan has not been discharged. Whether the mortgage loan has been discharged or not cannot be adjudicated upon by the criminal Court. The criminal Court is concerned only with the disposal of the documents. As per law, in such a situation, the documents should be returned to the person from whom they were seized. Therefore, the appellate Court was right in ordering the return of documents to the first respondent. It does not mean that the mortgage loan has not been discharged. I only say that it is a disputed question of fact, which is purely civil in nature and the same can be resolved only by the civil Court or by the Company Court. The learned Additional Sessions Judge was right in holding that the documents should be returned to the first respondent. Thus, I do not find any infirmity in the order passed by the appellate Court." 24. The reading of the order shows that this Court held that the question whether mortgage loan tood discharged or not could only be adjudicated by the civil Court or by the Company Court. 25. In the background of this order, the present application has been filed. 26. It is not in dispute that allegations against partners of M/s.Crystal Investments were that as directors of M/s.Thiru-vi-ka Nagar Benefit Fund these persons had siphoned of money of the company by advancing loan to the parties in their personal name. It was on these allegations, that the writ petition was filed to appoint a fit person under the Companies Act. 27. The appointment of a fit person is governed by the provisions of the Companies act. This Court appointed Mr.Vijayarangan, Advocate, as Advocate Commissioner of Thiru-vi-ka Nagar Benefit Fund Ltd. It was under the authorities given by this Court, that the Advocate Commissioner not only issued notice to the debtors of M/s.Crystal Investments and Thiru-vi-ka Nagar Benefit Fund Ltd, but also received payment from the respective parties and informed the learned Chief Metropolitan Magistrate about the receipt of money. It was also intimated that the amount was kept in the separate account, as it is clear from the receipt issued to husband of the applicant. 28. It was also intimated that the amount was kept in the separate account, as it is clear from the receipt issued to husband of the applicant. 28. The fact that the Advocate Commissioner received money under the authority of this Court, is further cleared from the order passed by this court in Crl.O.P.No.3384 of 2006 showing that amount was paid to the Advocate Commissioner and kept in a separate account under the head "Crystal Loan Refund". 29. It may also be noticed here that liberty was given to M/s.Crystal Investments to move the Company Court for appropriate direction for refund of the amount deposited by the debtors which was kept in separate account. It is the Crystal Investments which after filing the application chose to withdraw it, and proceed to move the Court for return of the documents. 30. In any case, nowhere it is disputed that the husband of the applicant paid full and final amount outstanding against him and that he was handed over documents, which have been ordered to be returned to M/s.Crystal Investments, on acquittal in the criminal case. 31. It is well settled law that no party can be made to suffer on account of the orders of the Court. Even though there was no order passed, qua the acts done by the Advocate Commissioner acting on behalf of the Company in liquidation. It may be noticed that it is not disputed that the Advocate Commissioner was appointed and he is in exercise of powers as Advocate Commissioner received money and deposited it in Court. Therefore, once the applicant has paid the total amount, he could not be made to suffer by making applicant as shuttle cork in different proceedings pending in different courts, i.e. in writ side, Company side, as well as on the Criminal side. 32. The reading of the orders passed in writ side read with the orders passed on criminal side, leaves no manner of doubt that the husband of the applicant paid the total amount outstanding against him as demanded and the amount was further deposited in the Court, which is said to be pending with the Official Liquidator or the Court. 33. Merely because M/s.Crystal Investments after making application withdrew it and approached the criminal Court for return of documents, cannot be used against the applicant. 34. 33. Merely because M/s.Crystal Investments after making application withdrew it and approached the criminal Court for return of documents, cannot be used against the applicant. 34. It was for the Crystal Investments to take appropriate steps to recover the amount deposited in Court through the Advocate Commissioner, by moving appropriate application. 35. The husband of the applicant paid money, on the asking of Advocate Commissioner which has been deposited in Court, now lying under the head of "Crystal Loan Refund" of Crystal Investments. 36. The learned counsel for the respondents, vehemently contended, that the application is not maintainable, as M/s.Crystal Investments was a partnership firm doing finance business and in the due course of business, it advanced mortgage loan to different borrowers including the husband of the applicant. 37. The loan was advanced, to the husband of the applicant under the mortgage deed, dated 9.11.1998 in which applicant was also Co-mortgagor. The said amount is still outstanding. 38. However, it is admitted that the partners of M/s.Crystal Investments were erstwhile directors of M/s.Thiru-vi-ka Nagar Benefit Fund Ltd. and it was due to the acts of the ex-directors of the Company, that criminal case was registered against them in which they were acquitted. 39. It is also admitted that the documents were handed over to the husband of the applicant under the orders of the Court, after deposit of money outstanding against him. 40. It is also case of the respondent that it was Company Court asked them to file application in the criminal Court. This contention is misconceived, as this Court permitted the respondent No.2 to file application for refund of money, which was filed, but subsequently withdrawn. Even in the affidavit, the factual position has not been disputed. The only ground taken is that the respondent by making payment to the Advocate Commissioner cannot claim to have discharged mortgage loan, as the respondent No.2 was not concerned with any such transaction. 41. It is submitted that an amount of Rs.7,37,117/-(Rupees seven lakhs thirty seven thousand one hundred and seventeen only) is outstanding towards principal and interest as on 1.3.2013 against the applicant. 42. On consideration, I find that this application deserves to succeed. As already noticed above, the party should not suffer for the fault of the Court. 41. It is submitted that an amount of Rs.7,37,117/-(Rupees seven lakhs thirty seven thousand one hundred and seventeen only) is outstanding towards principal and interest as on 1.3.2013 against the applicant. 42. On consideration, I find that this application deserves to succeed. As already noticed above, the party should not suffer for the fault of the Court. It is not a case where the husband of the applicant paid money on his own to third party, but was on asking of the Advocate Commissioner appointed by this court and the money was deposited. 43. The Advocate Commissioner was fully satisfied that the debt payable by the applicant stood paid. The necessary intimation was also given to the learned Chief Metropolitan Magistrate, Egmore, Chennai about the deposit of money by the applicant towards full and final outstanding. It was on account of receipt of total loan outstanding that the court had released the documents to husband of the applicant. It does not lie in the mouth of the respondent No.2 to claim Rs.7,37,117/-(Rupees seven lakhs thirty seven thousand one hundred and seventeen only) by ignoring the fact that husband of the applicant had paid whole amount due and outstanding as demanded. 44. It is also not understood how the Official Liquidator is sitting over the fund of the firm which is maintained as separate account, as he has no jurisdiction to deal with the funds of M/s.Crystal Investments and can only deal with the assets belonging to M/s.Thiru-vi-ka Nagar Benefit Fund Ltd. In case, the funds are not lying with Official Liquidator, but with the Court in that event also, the funds deserves to be released to the firm, as no proceedings on behalf of the Company are pending. 45. Consequently, this application is allowed. The Official Liquidator is directed to release the amount deposited by the husband of the applicant to respondent No.2 towards discharge of the mortgage amount. It will be open to the applicant now to claim return of title deeds and seek redemption of mortgage, by taking benefit of deposit with Advocate Commissioner. No costs.