2008 (7) TMI 571 - HC - Companies Law

Liability of the company in liquidation - right of secured creditor to recover the amount from the company in liquidation - Held that - These applications are allowed. The applicants are impleaded as secured creditors to the extent of amounts paid by them to the Haryana Financial Corporation and the State Bank of India, respectively on behalf of the company in liquidation as they have stepped into the shoes of the secured creditors.

Summary

Issues:
- Company application filed by Parkash Aggarwal and Purnima Aggarwal regarding their status as guarantors for a company in liquidation.
- Dispute over settlement amounts with State Bank of India and Haryana Financial Corporation.
- Claim by Haryana Financial Corporation for the entire amount from the company in liquidation.
- Opposition by Haryana Financial Corporation to applications filed by Parkash Aggarwal and Purnima Aggarwal.
- Settlement amounts paid by Parkash Aggarwal and Purnima Aggarwal to secured creditors.
- Legal position regarding guarantors stepping into the shoes of secured creditors.

Analysis:
The judgment by the High Court of Punjab and Haryana addressed the applications filed by Parkash Aggarwal and Purnima Aggarwal, who were guarantors for a company in liquidation that had secured loans from the State Bank of India and the Haryana Financial Corporation. Parkash Aggarwal claimed to have made significant payments to the creditors, including amounts to the official liquidator for advertisement costs and outstanding dues. On the other hand, Purnima Aggarwal asserted her payments under the one-time settlement scheme with the State Bank of India. The Haryana Financial Corporation contended that it had the first charge over the company's assets and demanded the entire outstanding amount, despite having settled for a lesser sum previously.

The State Bank of India acknowledged the settlement with the company, while the Haryana Financial Corporation opposed the applications by Parkash Aggarwal and Purnima Aggarwal. The court noted the previous settlements and the amounts paid by the ex-directors to the creditors. Additionally, it highlighted the legal dispute between the Haryana Financial Corporation and the official liquidator, which had been subject to appeal and dismissal by the court.

In a similar case precedent, the court referred to a judgment involving the Punjab State Industrial Development Corporation Ltd., where the issue of substitution of a guarantor as a secured creditor was considered. The court held that the guarantor stepping into the shoes of the original creditors could be recognized as a secured creditor. Applying this principle, the court allowed the applications by Parkash Aggarwal and Purnima Aggarwal, impleading them as secured creditors based on the amounts they had paid to the State Bank of India and the Haryana Financial Corporation on behalf of the company in liquidation.

In conclusion, the judgment clarified the legal position regarding guarantors becoming secured creditors and upheld the applications by Parkash Aggarwal and Purnima Aggarwal, recognizing their payments to the creditors and allowing them to be treated as secured creditors in the liquidation proceedings.