1991 (10) TMI 251 - HC - Companies Law

Winding up Suits stayed on winding-up order, Powers of liquidator , Power to apply to court to have questions determined or powers exercised

Summary

Issues:
Determining the validity of an ex parte decree obtained by a bank in a voluntary liquidation scenario and whether the bank should be considered a secured creditor.

Analysis:
The appeal was filed by a company in liquidation against an order dismissing their petition to delete a bank from the list of creditors. The company voluntarily went into liquidation, and the bank was listed as a creditor. The liquidator challenged an ex parte decree obtained by the bank, alleging it was for fraudulent preference. The company sought to remove the bank from the list of creditors.

The key issue was whether the bank's decree should be considered void and if the bank could be deemed a secured creditor. The single judge framed the issue regarding the applicability of various sections of the Companies Act to the petition. The company argued that the bank needed to prove its status as a secured creditor, but the judge found the fact of the decree was admitted and did not require further evidence.

The judgment referred to a Supreme Court case discussing secured creditors' rights in winding up proceedings. It highlighted that a decree-holder with a charge over property or goods would be considered a secured creditor. The judgment emphasized that until the ex parte decree is set aside, it remains binding and establishes the bank as a secured creditor.

The judgment also addressed the liquidator's authority to declare a decree void. It referenced a decision stating that judgments obtained through admission could be questioned by the liquidator. However, in this case, the decree was not based on admission, and the court affirmed the bank's status as a secured creditor based on the decree obtained.

The judgment concluded that the bank's decree established its position as a secured creditor, and the company's appeal was dismissed. The court emphasized that the bank's status as a secured creditor would remain until the ex parte decree was set aside. The legal principles governing secured creditors were reiterated, and the judgment clarified that the bank could not be removed from the list of secured creditors at that stage.

In summary, the judgment upheld the bank's status as a secured creditor based on the decree obtained and the legal principles governing such creditors. It emphasized the binding nature of the decree until set aside and dismissed the company's appeal to remove the bank from the list of creditors.