'Desperate Attempt To Keep Claims In Limbo': Calcutta High Court Rejects Unsecured Creditor's Plea To Stay Dunlop E-Auction With ₹2 Lakh Cost

The Calcutta High Court on Monday came down heavily on an unsecured creditor seeking a stay of the e-auction process to liquidate plant and machinery of Dunlop India Ltd, opining that it is a desperate attempt to keep the claims of the creditors and workers uncertain and in a limbo for all times to come.Justice Moushumi Bhattacharya was adjudicating upon an application moved by one Miller Traders Private Limited, an unsecured creditor of Dunlop India Ltd seeking a stay of an e-auction sale notice dated February 21, 2022. The applicant also prayed for the setting aside of a valuation report of the two factories at Sahagunj and Ambattur of Dunlop India Ltd and for stay of operation of a fresh e-auction notice dated May 9, 2022, pertaining to the assets at the Sahagunj factory of the company. It was argued by the applicant that it is aggrieved by the alleged depreciated value of the assets at Sahagunj and Ambattur factories as reflected in the e-auction notice dated February 21, 2022, for sale of such properties.The applicant further sought reasons for such devaluation and submitted that the Official Liquidator has the duty to explain the drastic depreciation in the value of assets from 418 crores in 2014 to 13.21 crores in 2022.Pursuant to the perusal of the record, the Court noted that the Official Liquidator took possession of the assets of Sahagunj and Ambattur only after May 8, 2017 and hence the Official Liquidator cannot be held accountable for the depreciation of the value of the properties from the 2014/2015 till May, 2017. It was further opined that from the reports of the valuers it is evident that the plants and machineries were already in a highly devalued and damaged condition and could only be categorised as scrap. The Court also referred to an order of a Division bench order dated May 8, 2017, which had stipulated that there had been instances of fire in the facilities."Technology has also undergone rapid transformation and may have contributed to the further devaluation of the properties. Most significantly, the fact of a free- for-all of interested parties leading to rampant destruction of the assets till May, 2017 is corroborated by both the orders of the Division Bench and the reports of the valuers.", the Court noted further. Justice Bhattacharya further observed that even if the submission made on behalf of the Official Liquidator that an online search would reveal more than 39,000 records showing a link between the applicant and the group companies of the company in liquidation is discounted, the conduct of the applicant is desperate to say the least.It was further held that the applicant without a claim to support its acts, has thrown a spanner at every attempt made for sale of the properties of the company (in liquidation) at Sahagunj and Ambattur.The Court further underscored that the ground taken that the Official Liquidator was not able to explain the reasons for depreciation of the assets is feeble, dubious and should be rejected outright. It was reiterated that the record shows that the Official Liquidator could not have any knowledge or any role to play at the material point of time, i.e. 2014-2017 when the assets were lying unprotected and at the mercy of parties whose sole intention was to strip the company (in liquidation) of any value and frustrate the claims of its workers and creditorsAccordingly, the Court imposed costs on the applicant to the tune of Rs 2 lakhs and further observed, "The irrefutable conclusion is that the applicant does not want closure or any constructive resolution of the matter but seeks to keep the claims of the creditors and workers uncertain and in a limbo for all times to come. If a reference can be drawn to the meat of the matter – the conduct of the applicant is simply not kosher. This Court is therefore of the view that the applicant should be subjected to pay costs of Rs. 2,00,000/- to the welfare fund of the workers of the company (in liquidation). The said amount shall be paid to the Official Liquidator for being kept in a separate interest-bearing account for the benefit of the workers of the company (in liquidation)." Case Title: M/S. Dunlop India Limited and Ors v. Mathai and Sons Case Citation: 2022 LiveLaw (Cal) 238 Click Here To Read/Download Order

'Desperate Attempt To Keep Claims In Limbo': Calcutta High Court Rejects Unsecured Creditor's Plea To Stay Dunlop E-Auction With ₹2 Lakh Cost

Aaratrika Bhaumik

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