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Issues involved: Distribution of amount in the account of a company in liquidation among secured creditors and workers, interpretation of provisions of the Companies Act regarding secured creditors' rights, consideration of claims post winding-up order, treatment of secured creditors who have filed affidavits.
Distribution of Amount: The application sought direction for the disbursement of the amount in the company's account in liquidation among secured creditors and workers after deducting expenses. The total amount of Rs. 2,53,48,891 was proposed to be distributed at a ratio of 82.79% for secured creditors and 17.21% for workers. Interpretation of Companies Act: The argument was made that only secured creditors with first charge should be considered for distribution, excluding those with second charge. However, the court rejected this contention, emphasizing that the Act refers to "every secured creditor" and not specifically to those with first charge. Rights of Secured Creditors: Reference was made to a Supreme Court decision regarding the inter se rights of secured creditors with first and second charges. The court clarified that the decision does not exclude the consideration of secured creditors with second charges during distribution, and such rights may need to be addressed separately under the Transfer of Property Act. Treatment of Affidavits by Secured Creditors: It was argued that secured creditors who file affidavits surrender their rights over security and should not be treated as secured creditors during distribution. The court disagreed, stating that filing affidavits does not equate to relinquishing security rights. Consideration of Claims Post Winding-Up Order: A claim by a bank post the winding-up order was questioned, but the court found the claim to be based on a typographical error and confirmed that all claims considered were up to the date of the winding-up order. Disbursement Order: The court permitted the disbursement of the amount among secured creditors, with a specific provision for the amount related to ICICI Bank. The remaining amount was to be distributed among other secured creditors, with a timeline of four weeks for completion. The order was subject to final decisions by appropriate forums regarding rights of recovery. Professional Fees: The court allowed for the payment of the Chartered Accountant's professional fees. Conclusion: The application was disposed of in accordance with the disbursement plan outlined by the court, with a clear directive for the treatment of secured creditors and workers in the liquidation process.
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