2006 (9) TMI 283 - SC - Companies Law

Whether if the properties are attached by a Revenue Recovery Court, section 125 of the Act would be applicable? Whether sections 28, 31 and 46B of the State Financial Corporations Act shall prevail over sections 529 and 529A of the Companies Act? Held that - Appeal dismissed. The High Court has committed no error in refusing to exercise its discretionary jurisdiction under section 446 of the Companies Act.

Summary

Issues:
1. Interpretation of provisions of Kerala Revenue Recovery Act and Companies Act regarding recovery of dues from defaulting company.
2. Validity of attachment of properties by Revenue Recovery Court and its impact on creditor's rights.
3. Conflict between special statutes and Companies Act in case of liquidation proceedings.
4. Applicability of section 125 of Companies Act on charges created by orders of attachment.
5. Precedence of statutory provisions in recovery proceedings involving government company.

Analysis:

1. The judgment involves the interpretation of provisions of the Kerala Revenue Recovery Act and the Companies Act concerning the recovery of dues from a defaulting company. The case revolves around a Government company engaged in chitties and its attempt to recover unpaid loans from defaulting entities.

2. The validity of the attachment of properties by the Revenue Recovery Court and its impact on the creditor's rights is a crucial issue. The Court deliberates on whether an attachment creates a charge on the property and the implications of such actions on the creditor's position in the liquidation process.

3. The judgment addresses the conflict between special statutes like the Kerala Revenue Recovery Act and the Companies Act in the context of liquidation proceedings. It examines which set of laws should prevail in determining the rights and priorities of creditors and liquidators in such scenarios.

4. The applicability of section 125 of the Companies Act on charges created by orders of attachment is discussed. The Court considers whether the absence of registration of charges affects the creditor's position and the validity of such claims against the liquidator and other creditors.

5. The precedence of statutory provisions in recovery proceedings involving a government company is analyzed. The Court clarifies that even if the Kerala Revenue Recovery Act is applicable, the dues of a government company do not automatically become government dues under the Companies Act, emphasizing the distinct nature of such debts.

In conclusion, the judgment provides a detailed analysis of the legal intricacies surrounding the recovery of dues from defaulting companies, attachment of properties, conflict between special statutes and general laws, and the impact of statutory provisions on creditor's rights in liquidation proceedings.