Gujarat HC Permits Final Disbursement to Unsecured Creditors u/s 530 in Company Liquidation Case [Read Order]

The High Court of Gujarat directed final settlement of dues of unsecured creditors in the liquidation proceedings of a pharmaceutical company, permitting disbursement of funds available with the Official Liquidator under Section 530 of the Companies Act, 1956.

The matter was initiated by the Official Liquidator of Aesculapius Remedies Limited (in liquidation), seeking permission to disburse the amount currently available in the liquidation account as full and final settlement of admitted unsecured claims. The company was ordered to be wound up in 2003, and its assets, including its factory premises and machinery, were disposed of under subsequent Court orders.

Creditors were invited to submit claims under Section 529A and Section 530 of the Companies Act, 1956, following which claims were received from Punjab National Bank (PNB) and Gujarat Industrial Investment Corporation Limited (GIIC). After verification, earlier proceedings held that PNB would rank only as an unsecured creditor for amounts recoverable from immovable assets.

Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here

After subsequent verification of claims in 2021, the Official Liquidator reported that the total admitted amount of unsecured claims was held at ₹13,92,94,557, out of which PNB’s share accounted for 87.31% and GIIC’s share accounted for 12.69%. It was further noted that the company’s funds had increased to ₹92,00,000 on account of accrued interest, enabling distribution of ₹90,00,000 to the unsecured creditors as final settlement.

On behalf of the Official Liquidator, Shivang A. Thacker contended that the Chartered Accountant’s verification and distribution ratio had been accepted by both creditors and that there were no other legally sustainable unsecured claims. It was submitted that the creditors would be directed to refund any excess amount received pursuant to final reconciliation.

The Bench of Justice Mauna M. Bhatt permitted the Official Liquidator to disburse ₹90,00,000 between PNB and GIIC strictly in accordance with the verified ratio under Section 530 of the Companies Act, 1956 and subject to obtaining undertakings that any excess disbursement, if found, would be returned with interest.

The Court also permitted encashment of fixed deposits held by the Official Liquidator, if required, to complete the distribution, thereby disposing of the liquidation report.

Support our journalism by subscribing to Taxscanpremium. Follow us on Telegram for quick updates