1991 (8) TMI 268 - HC - Companies Law

Summary

Issues:
1. Application by official liquidator under sections 529 and 529A of the Companies Act, 1956 for setting aside workmen's dues from sale proceeds and seeking undertaking from secured creditors.
2. Adverse effect of the Amending Act of 1985 on vested rights of respondents with securities.
3. Applicability of sections 529 and 529A as amended in 1985 to the company still in liquidation.

Analysis:
The judgment pertains to an application by the official liquidator under sections 529 and 529A of the Companies Act, 1956. The liquidator sought directions to set aside workmen's dues from sale proceeds and requested secured creditors to undertake payment proportionate to their security for workmen's dues. The respondents, secured creditors, opposed the application, contending that their vested rights could not be adversely affected by the Amending Act of 1985. The court analyzed the situation, considering the order of winding up issued in 1972 and the subsequent amendments to the Companies Act in 1985. The court acknowledged the vested rights of the respondents at the time of winding up, emphasizing that these rights could not be retrospectively disturbed by the amended provisions.

The court addressed the arguments presented by the official liquidator's counsel, focusing on whether the company was still in liquidation and if the securities of the company were available. While affirming these aspects, the court highlighted that the vested rights of the respondents prior to the amended Act of 1985 could not be adversely affected unless specifically provided by the legislation. The court emphasized the principle of law that vested rights cannot be disturbed without explicit statutory provisions. Consequently, the court dismissed the company petition, ruling in favor of the respondents.

In conclusion, the court dismissed the company petition, emphasizing the protection of vested rights and the limitations on retrospective application of amended laws. The judgment underscores the importance of upholding established legal principles concerning vested rights and statutory amendments. The court also directed the Commissioner for Taking Accounts to withhold disbursement of sale proceeds for a specified period and ordered the issuance of a certified copy promptly.