2016 (7) TMI 766 - HC - Companies Law

Winding up orders - Held that - The applicant company is entitled to stay outside winding up and realize of the mortgaged assets of the company in winding up as per the Act of 2002. It is however directed that the official liquidator as a representative of the workers of the company in liquidation would be associated with the sale of the immovable assets of the company in winding up-now in possession with the applicant-company under the Act of 2002. The applicant company should inform the official liquidator about the date of sale by registered post at least 10 days prior thereto. And on the sale of assets in issue Section 13(9) of the Act of 2002 would attract.

Summary

Issues:
1. Application by India SME Asset Reconstruction Co. Ltd. to realize secured assets of M/s. Deepak Casting Limited under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
2. Official Liquidator's role in the sale of immovable assets of the company in liquidation.
3. Association of the Official Liquidator with the sale of assets under the Act of 2002.

Analysis:
1. The matter involved an application by India SME Asset Reconstruction Co. Ltd., as an assignee of SIDBI, the secured creditor of M/s. Deepak Casting Limited, seeking to realize the secured assets of the company in liquidation under a winding-up order. The applicant had taken possession of the immovable assets prior to the winding-up order under the Act of 2002. The applicant requested permission to proceed with the sale of the mortgaged assets in compliance with Section 13(9) of the Act of 2002, ensuring funds for workers' dues to the liquidator. The court considered the Apex Court's decision in Pagasus Assets Reconstruction P. Ltd. Vs. Haryana Concast Limited & Ors., supporting the applicant's contentions.

2. The Official Liquidator, representing the workers' interests, acknowledged that the company court must defer to the Act of 2002 when a secured creditor or its assignee takes action regarding mortgaged assets of a company in winding up. However, he proposed that the applicant company should involve the Official Liquidator in the sale process to safeguard workers' interests, as stipulated in Section 13(9) of the Act of 2002. The Official Liquidator suggested that the applicant's application should explicitly mention the intention to involve him in the asset sale.

3. The court, considering the legal position and the Pagasus Assets Reconstruction case, allowed the applicant company to proceed with the sale of the mortgaged assets under the Act of 2002 while directing the association of the Official Liquidator in the sale process. The Official Liquidator was to be informed about the sale date in advance, and Section 13(9) of the Act of 2002 would govern the distribution of funds from the sale. The application was granted in favor of the applicant company, with the condition of involving the Official Liquidator in the sale of the company's immovable assets in liquidation.