Official Liquidator Report No. 50 of 2011 in Company Petition No. 970 of 1997. Case: In Re: S.M. Shetty and Ors. Vs. High Court of Bombay (India)
| Case Number | Official Liquidator Report No. 50 of 2011 in Company Petition No. 970 of 1997 |
| Counsel | For Appellant: Shivani Kunder, Adv. |
| Judges | K. R. Shriram, J. |
| Issue | Company Law |
| Judgement Date | January 04, 2016 |
| Court | High Court of Bombay (India) |
Judgment:
K. R. Shriram, J.
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The Official Liquidator has filed a report dated 18th February, 2013 praying for sanction to terminate with immediate effect the services of Shri S.M. Shetty, company paid Group 'D' Peon. According to the Official Liquidator the misconduct against Shri Shetty has been proved considering the report of the enquiry officer and the explanation offered by Shri Shetty and it is grave and of serious nature warranting the punishment of removal from service. The Official Liquidator states that he has also considered the past record of the employee and there are no extenuating circumstances warranting any lenient view.
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The issue relates to handing over of certain leased assets that were in the factory site of M/s. Otoklin Plants & Equipments Limited (in liquidation) at Kandla, Gandhidham, Gujarat. Let us consider what was the act or omission or misconduct of Shri Shetty which has made the Official Liquidator to recommend the highest punishment that he could grant pursuant to the service conditions of the Company Paid Staff settled by this court from time to time, the last one being by an order dated 26th April, 1994. It will be useful to reproduce paragraph 4 (xii), (xiii) and (xv) of the said order and it reads as under:-
"(xii) No person shall be employed as a Company Paid Staff without prior sanction of this court.
(xiii) Services of the Company Paid Staff shall not be terminated without prior sanction of this court.
(xv) In case it is found that any member of the Company Paid Staff is guilty of dereliction of duty, it will be open for the Official Liquidator to take appropriate action including termination of services against such member subject to granting him an opportunity of hearing and sanction of this court."
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Pursuant to an order dated 10th April, 2003 this court directed the Official Liquidator to hand over leased equipments belonging to M/s. Centurion Bank Limited (CBL) through the Court Receiver. In order to comply with the order dated 10th April, 2003, the Official Liquidator vide office order dated 26th June, 2003 directed Shri S.M. Shetty, company paid Peon and Shri C.L. Saraiya, the then Junior Technical Assistant (JTA) to proceed to the factory site of M/s. Otoklin Plants & Equipments Limited at Kandla, Gandhidham, Gujarat to hand over through the Court Receiver the leased assets that belonged to CBL. The factory premises it should be noted was situated at Sector IV, Kandla Special Free Trade Zone, Kandla, which means inside a customs notified area.
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Shri Saraiya and Shri Shetty reached the site on 1st July, 2003. When these two gentlemen reached the site, there were two representatives from the Court Receiver's office, viz., Shri P.S. Rao and Shri Mangesh Jog and two representatives from CBL, viz., Shri Srinivasan and Shri Mahesh Rane. Apart from these six persons there were representatives of the person who had purchased the equipments from M/s. Centurion Bank Limited to take delivery of the same through the Court Receiver.
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On 1st July, 2003 Shri Saraiya and Shri Shetty then went to the office of the customs for obtaining permission to give delivery of the leased equipments to CBL through Court Receiver. The necessary permission was granted only on 2nd July, 2003 and hence the delivery commenced from 3/4th July, 2003 and it went on till 9th August, 2003. On 3/4th July, 2003 the representative of the Court Receiver - P.S. Rao who was also a valuer, identified the leased equipments by putting a mark on each of the equipment - "CBL" - denoting Centurion Bank Limited. At the time of marking, the representatives of the customs authorities were also present. Alongside there were machineries that belonged to a third party, viz., Al-Qahtani. So far so good. What happened during these 40 days period is that alongwith the leased assets that CBL were entitled to take away, CBL/its purchasers allegedly took away part of the machineries that belonged to Al-Qahtani.
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It has been noted in the oral order dated 21st June, 2004 of a single judge of this court (A.M. Khanwilkar, J. as he then was) that the general conditions of all the equipments/machineries were found to be in deteriorated condition due to lack of maintenance. Equipments were also found to be exposed to atmosphere, the roofing sheets/shed having fallen, broken and the shed was found to be extensively damaged due to natural calamities. Some of the parts forming part of the equipments were also found in dismantled condition with no markings over it.
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Shri Shetty after the delivery was over returned to Mumbai. This was some time in the second week of August, 2003.
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In December, 2003 when the representatives of Al-Qahtani went to take delivery of their equipments, it was noticed that a major part of their equipments were missing. When Al-Qahtani brought this to the notice of the Official Liquidator, the Official Liquidator recorded the statement of Shri Shetty on 23rd December, 2003. This statement has been signed by Shri S.M. Shetty, Shri S.R. Kom, the then Official Liquidator, Shri P.G. Rao, Deputy Director (Tech.), Shri S.D. Patil, STA and Shri Mohanan P.N., Senior Assistant. Thereafter Shri Shetty addressed a letter dated 6th January, 2004 to the Official Liquidator. The enquiry officer has placed reliance on both these documents, viz., statement recorded on 23rd December, 2003 and letter dated 6th January, 2004 in his report dated 20th May, 2011 while holding Shri Shetty guilty of dereliction of duty and concealment of fact of removal of the machines belonging to Al-Qahtani which has prompted the Official Liquidator to recommend termination of services.
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By an office order dated 25th November, 2004 issued by the Official Liquidator, Shri Shetty was suspended with immediate effect till outcome of the findings of the enquiry which was to go on. Shri Shetty has been suspended with effect from 25th November, 2004. As subsistence allowance, he was initially paid half salary which was subsequently revised to 75%. Shri Shetty filed a writ petition challenging the order of suspension and praying that he be resumed in his regular employment. The said petition came to be disposed by an order dated 16th January, 2006 whereby this court directed the Union of India through Official Liquidator to pay full salary to Shri Shetty towards subsistence allowance but declined to grant the prayer of resumption in regular employment. Since 25th November, 2004 Shri Shetty has been under suspension and as on date it is more than 11 years and he is getting 100% subsistence allowance.
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As per the report filed by the Official Liquidator, Deputy Official Liquidator - Shri N. Chinnachamy was appointed as Enquiry Officer pursuant to an order dated 10th February, 2011 passed by this court read with Official Liquidator's office order dated 15th February, 2011. This was almost 8 years after the incident. The enquiry officer has filed a report dated 20th May, 2011. He has admitted that no formal charge sheet was issued to Shri Shetty. The conclusions are in paragraph 15 of the report which reads as under:-
15. Based on the statement made by Mr. S.M. Shetty on 16th April, 2011, the statement made by Mr. C.L. Saraiya on 2nd May, 2011, the statements made by Shri A.W. Ansari and Shri S.R. Kom the then Officers of the Official Liquidator and on examination of documents available in the files of the company in liquidation, while delivering the leased machines to Court Receiver belongs to CBL and during the same period the machines of Al-Qahtani were also been removed by the dismantling agent of the CBL when Shri S.M. Shetty was present at the site, thus Mr. Shetty did not discharged his duties entrusted to him as per the direction of the Hon'ble High Court order dated 10th April, 2003. Apart from that Shri S.M. Shetty in his explanation dated 6th January, 2004 submitted to the Official Liquidator, he admitted that there was lapse on his part in discharging his duty while delivering the leased machines to the Court Receiver belongs to the CBL. As a result, the machines belongs to Al-Qahtani have also been removed by the dismantling agent of the CBL. In this manner Mr. Shetty derelict his duty and concealed the fact of removal of the machines belongs to Al-Qahtani from the site.
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I have heard the counsels and considered the enquiry report and documents...
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