2010 (9) TMI 1308 - HC - Companies Law

Summary

Issues:
1. Application seeking directions to handover possession of mortgaged/hypothecated property.
2. Secured creditor's claim for outstanding dues.
3. Prohibition on transfer of secured assets under Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
4. Official Liquidator's role in possession of assets during winding up proceedings.
5. Disbursement of sale proceeds in compliance with Companies Act provisions.

Analysis:
The judgment pertains to an application filed by a secured creditor, along with other secured creditors, seeking directions to take possession of mortgaged/hypothecated assets of a company in liquidation to realize outstanding dues. The Company Court had previously ordered winding up of the company and appointed the Official Liquidator to take over. The applicant had also initiated proceedings before the Debts Recovery Tribunal for recovery of dues. Despite being outside the winding up proceedings, the applicant sought possession of assets from the Official Liquidator, who requested permission from the Company Court under section 446 of the Companies Act.

The Official Liquidator submitted a status report detailing outstanding dues of financial institutions/secured creditors, with consent letters from all secured creditors except one. The court noted the consents and directed the Official Liquidator to hand over the assets to the applicant. The Official Liquidator agreed to hand over possession on payment of expenses incurred, which were paid by the applicant. The court emphasized that sale proceeds must be disbursed in accordance with sections 529 and 529A of the Companies Act, regardless of creditors' involvement in winding up proceedings.

The court acknowledged the need for proper disbursement and directed the Official Liquidator to transfer the assets to the applicant without delay. It mandated that sale proceeds be disbursed as per Companies Act provisions, with the Official Liquidator being informed and involved in the process. The judgment clarified that the Official Liquidator would retain the company's records while the assets were transferred to the applicant. With these directions, the application was disposed of, ensuring compliance with legal requirements and protecting the interests of all parties involved in the liquidation process.