2021 (2) TMI 1386 - HC - Indian Laws

Seeking for a direction against secured creditor, to handover the assets at factory premises in Madanapalle to the Official Liquidator along with inventory - direction also sought to continue to secure the property with the help of security guards till such possession of the property is handed over to the Official Liquidator - HELD THAT - Insofar as the assignment in favour of the applicant in C.A. No.260/2019, admittedly such assignment has been made on 17.11.2017. The assignment is an internal transaction between the Bank of India and the assignee. If the creation of charge by the Bank of India is taken note of, clearly such charge is not affected by the order of winding up passed on 12.04.2019. Even otherwise, Section 529-A of the Companies Act provides for sufficient safeguards insofar as workmen dues are concerned. Section 13(9) of the SARFAESI Act provides for a detailed procedure. Taking note of the law laid down by the Apex Court in the case of Pegasus Assets Reconstruction Private Limited vs. Haryana Concast Limited and another 2015 (12) TMI 1472 - SUPREME COURT wherein the role of the Official Liquidator is clearly detailed while considering the interplay between the Companies Act and the SARFAESI Act, accordingly, no further discussion is warranted in light of the admitted fact of creation of charge by the Bank of India at a point in time earlier to the winding up proceedings. While the applicant in C.A. No.260/2019 is permitted to proceed against its security by standing outside the winding up proceedings, clearly the Official Liquidator's role as enumerated in Section 13(9) of the SARFAESI Act would have to be accommodated in order to ensure interests of the workmen etc. Application disposed off.

Summary

Issues:
1. Official Liquidator seeking direction for asset handover.
2. Maximus ARC Limited seeking permission to sell secured assets.
3. Interconnected issues in C.A.No.199/2019 and C.A. No.260/2019.

Analysis:
1. The Official Liquidator filed C.A.No.199/2019 seeking direction against the assignee of Bank of India to hand over assets at factory premises in Madanapalle along with inventory. The Official Liquidator also requested the 1st respondent to continue securing the property until handover. The Bank of India had registered charges dating back to 2004, and the assignee sought to proceed against the secured assets under the SARFAESI Act, claiming precedence over winding up proceedings.

2. C.A. No.260/2019 was filed by Maximus ARC Limited to sell the secured assets outside the winding up proceedings. The applicant had acquired debts of the Company in liquidation from Bank of India through an Assignment Agreement. The assignee had taken possession of the property and registered its charge with the Registrar of Companies. The Court considered the timing of charge creation and winding up order, emphasizing the need to balance the interests of the assignee and the Official Liquidator.

3. The Court noted the interplay between the Companies Act and the SARFAESI Act, citing the case law of Pegasus Assets Reconstruction Private Limited vs. Haryana Concast Limited. The judgment highlighted the role of the Official Liquidator in such situations and the safeguards provided under Section 529-A of the Companies Act and Section 13(9) of the SARFAESI Act. The Court permitted the applicant in C.A. No.260/2019 to proceed against the secured assets, subject to compliance with the provisions ensuring protection of workmen dues and the Official Liquidator's involvement in post-sale proceedings. The judgment concluded by disposing of both C.A.No.199/2019 and C.A.No.260/2019, clarifying the roles and responsibilities of the parties involved.