Gujarat government files appeal in Madras High Court, gets single judge’s order stayed

The case pertains to payments to be made to the liquidator of Everonn Education Limited for a school education project

A Division Bench of the Madras High Court has stayed the operation of an order passed by a single judge, who had directed the Government of Gujarat to pay ₹1.96 crore to the liquidator of Everonn Education Limited (EEL) with 9 percent interest for the default period beginning from February 2017.

The Division Bench of Justices M. Sundar and R. Sakthivel granted the interim stay, until further orders, pursuant to an original side appeal filed jointly by the Gujarat Chief Secretary and the School Education Secretary, challenging the single judge’s order from March 28, 2024.

Representing the appellant, senior counsel Vijay Narayan told the Bench that EEL was wound up on August 29, 2016, by the Company Court (Madras High Court) on the basis of a company petition filed before the court by a creditor (Hewlett Packard Financial Services) in 2014.

On October 10, 2016, the Official Liquidator attached to the Madras High Court was appointed as the provisional liquidator of EEL. Thereafter, the erstwhile management of EEL approached the High Court, seeking permission to complete the ongoing projects undertaken by the company.

The court was informed that EEL was in the process of introducing computer-based education in elementary schools in Gujarat and that failure to complete the project would entail serious consequences of the government encashing the bank guarantee of ₹19.17 crore given by EEL.

Similarly, the erstwhile management sought permission for completing the establishment of satellite-based communication network in Rajasthan in collaboration with the Development and Educational Communication Unit of Indian Space Research Organisation (ISRO).

On October 25, 2016, the High Court permitted the two projects to be concluded under the supervision of the liquidator and made it clear that the bank accounts of EEL shall also be operated only by the liquidator for making payments to the staff and also for receiving the dues.

In 2017, the liquidator reported that the Rajasthan project was completed in full and the payments too were received. However, the Gujarat government had paid only ₹2.74 lakh out of the claimed amount of ₹1.99 crore and there was a balance of ₹1.96 crore, the court was informed.

Allowing the 2017 application in March 2024, the single judge had directed the government to make the balance payment with interest, Mr. Narayan said, and contended that the government could not be forced to make the payment without being convinced that the project had been completed to its satisfaction.

He also referred to the terms of the 2011 contract between EEL and the Government of Gujarat to contend that the project must be completed to the satisfaction of the government. After recording his submissions, the Division Bench called for a report from the liquidator.

Since there was a possibility of the Gujarat Chief Secretary being hauled up for contempt of court if the single judge’s order was not stayed despite the pendency of the present appeal, the Division Bench stayed the operation of the single judge’s order until further orders.

Published - September 21, 2024 04:06 pm IST