2008 (9) TMI 991 - HC - Indian Laws

Summary

Issues Involved:
1. Requirement of leave u/s 446 of the Companies Act for proceedings under ULC Act.
2. Validity of possession claimed by the State Government under ULC Act.
3. Protection of possession by the Official Liquidator under ULC Repeal Act.

Summary:

1. Requirement of Leave u/s 446 of the Companies Act:

The Court examined whether the competent authority under the ULC Act needed to obtain leave u/s 446 of the Companies Act before initiating proceedings under the ULC Act, particularly from the stage of Section 10(5) onwards. The Company Court determined that pendency of proceedings under the Companies Act does not bar the provisions of the ULC Act, referencing the Apex Court's decision in Allahabad Bank Vs. Canara Bank and another and State of West Bengal and others Vs. Pranob Kumar Sur and others.

2. Validity of Possession Claimed by State Government:

The Court addressed whether the alleged possession acquired by the State Government under the ULC Act could be sustained despite the actual and physical possession of the land being with the Official Liquidator. The Company Court's decision was quashed and set aside, and the matter was remanded for de novo adjudication, emphasizing that the Official Liquidator functions under the Company Court's directions to protect the interests of the workmen.

3. Protection of Possession by Official Liquidator under ULC Repeal Act:

The Court considered whether the actual and physical possession with the Official Liquidator could be protected by the provisions of the ULC Repeal Act. The Court highlighted the overriding effect of Section 529-A of the Companies Act, which ensures that workers' dues and debts due to secured creditors rank pari passu and are paid in priority to all other debts. This provision overrides the ULC Act, which was enacted earlier.

Conclusion:

The impugned order dated 28th March 2008 was quashed and set aside, and the matter was remanded to the Company Court for fresh adjudication in accordance with the law. The Court emphasized the importance of considering the provisions of Section 529-A of the Companies Act in every matter involving the assets of a company in liquidation. The appeals were allowed, and related civil applications were rendered infructuous and rejected accordingly.