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Issues:
1. Application under section 530 of the Companies Act, 1956 for priority in recovering debt. 2. Interpretation of section 35 of the State Aid to Industries Act, 1915 for recovery of arrears of land revenue. 3. Rights of secured creditors under section 529 of the Companies Act, 1956. 4. Priority of debts under section 530 of the Companies Act, 1956. 5. Effect of non-registration of a mortgage under section 109 of the Indian Companies Act, 1913. Analysis: 1. The judgment pertains to an application by the Punjab State under section 530 of the Companies Act, 1956, seeking priority in recovering a loan advanced to a company. The State sought permission to recover the amount due as arrears of land revenue ahead of other debts of the company without waiting for winding-up proceedings. The loan was provided under the State Aid to Industries Act against security, but no refund was made by the company. 2. The State relied on section 35 of the State Aid to Industries Act, 1915, which allows recovery of amounts due to the State as arrears of land revenue with the State Government's sanction. The argument emphasized the State's entitlement to recover its dues promptly under this provision. 3. The rights of secured creditors were discussed under section 529 of the Companies Act, 1956. The counsel for the State highlighted the precedence given to secured creditors in realizing their security, irrespective of insolvency proceedings, citing relevant legal provisions and precedents supporting the secured creditor's rights. 4. The judgment analyzed the priority of debts under section 530 of the Companies Act, 1956. The respondent argued that the State's claim did not fall under the specified debts entitled to priority under this section, emphasizing that the State's scheme for loan refund was not included in the prioritized debts. 5. The impact of non-registration of a mortgage under section 109 of the Indian Companies Act, 1913, was also deliberated. The respondent contended that the State, despite being a secured creditor, could not benefit from the security as the mortgage was not registered as required by law, leading to the loss of any advantage the State would have had as a secured creditor. In conclusion, the judgment dismissed the State's application, stating that the State could not claim benefits as a secured creditor due to the non-registration of the mortgage. The court held that the State's claim did not fall under the prioritized debts specified in section 530 of the Companies Act, 1956, and the parties were directed to bear their own costs.
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