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Issues Involved:
1. Whether the Official Liquidator passed an order of rejection under rule 159 of the Companies (Court) Rules, 1959, which is clearly wrong requiring adjudication by this Court acting as Appellate Court under rule 164 of the Companies (Court) Rules, 1959? 2. Whether the appellant/SFC can be treated as a secured creditor for the purpose of winding up of the company? Issue-wise Detailed Analysis: 1. Rejection of Claim by Official Liquidator: The Court examined whether the Official Liquidator's decision to reject the SFC's claim was erroneous. Rule 164 of the Companies (Court) Rules allows a creditor to appeal to the Company Court if dissatisfied with the Official Liquidator's decision. The Court emphasized that it can only interfere with the Official Liquidator's findings if such findings are clearly wrong. The Court referred to precedents such as Laxminarayan v. Returning Officer and Baburao Bagaji Karemore v. Govind, which underscore the limited scope of appellate review in such matters. The facts revealed that the SFC did not initially file a claim petition as required under rule 151. Even when allowed to file the claim later, the SFC did not provide sufficient documentary proof, such as a registered charge in Form No. 8. The Official Liquidator's rejection was based on the absence of such proof. The Court found no grave error in the Official Liquidator's decision, noting that the SFC failed to produce necessary documents despite being given multiple opportunities. 2. Status as Secured Creditor: The Court examined whether the SFC could be considered a secured creditor. Section 124 of the Companies Act defines a charge, and section 125 mandates that a charge must be registered with the Registrar of Companies to be valid against the liquidator or any creditor. The SFC did not register any charge in Form No. 8, unlike Canara Bank, which had a registered charge. The Court referred to the Supreme Court's judgment in International Coach Builders Ltd. v. Karnataka State Financial Corpn., which clarified that the rights of secured creditors are subject to the pari passu charge of workmen under sections 529 and 529A of the Companies Act. The Court concluded that without a registered charge, the SFC could not claim to be a secured creditor. The SFC's reliance on documents such as the hypothecation deed and pari passu agreements was insufficient without registration. The Court also noted that the guarantee agreement had expired and did not provide continuity of security. The claim was to be treated as an unsecured loan. Conclusion: The Court upheld the Official Liquidator's decision, finding no error in treating the SFC's claim as unsecured. The SFC's failure to provide necessary proof and register the charge as required by law was decisive. The appeals were dismissed with costs assessed at Rs. 5,000.
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