9911796707
|
Home
Issues Involved:
1. Status of the appellant as a secured creditor. 2. Entitlement of the appellant to payment. 3. Applicability of Section 230, Indian Companies Act, 1913. Issue-wise Detailed Analysis: 1. Status of the Appellant as a Secured Creditor: The court examined whether the appellant retained the status of a secured creditor despite the sale of the charged properties and the loss of debenture scrips. The doctrine of substituted security, as per Section 73 of the Transfer of Property Act, was applied, indicating that the charge attached to the sale proceeds of the charged properties. Thus, the appellant continued to hold the charge and retained the status of a secured creditor. The court disagreed with the company judge's view that the appellant's inability to produce the debenture scrips affected his status, emphasizing that the appellant's status as a secured creditor did not depend on the possession of the scrips but on his entry in the company's register and the consideration paid. 2. Entitlement to Payment: The court addressed whether the appellant, who could not produce the debenture scrips, was entitled to payment. The law of insolvency, which applies to winding-up proceedings, does not insist on strict adherence to rules if it results in injustice. The court referred to Section 45A of the Negotiable Instruments Act, 1881, which allows for the issue of duplicate instruments upon loss, provided security is given to indemnify the issuer. The appellant's offer to execute an indemnity bond and furnish a guarantee from a scheduled bank was considered sufficient. Thus, the appellant was entitled to payment upon providing such security. 3. Applicability of Section 230, Indian Companies Act, 1913: Section 230(2)(b) of the Indian Companies Act, 1913, gives priority to certain debts over claims of debenture holders under a floating charge. The court affirmed that the debts listed by the official liquidator were covered under Section 230(1) and had priority over the appellant's debentures. The court rejected the appellant's contention that the debenture trust deed created a hybrid charge, concluding that it constituted a floating charge. The court also dismissed the argument that a floating charge could not be created over immovable property, referencing Palmer's Company Law, which supports floating charges over all company property. Judgment: Special Appeal No. 826 of 1962 was dismissed, affirming that the appellant, though a secured creditor, was postponed to the creditors mentioned in Section 230(1). Special Appeal No. 525 of 1962 was allowed in part, remanding the matter to the company judge with directions to allow payment to the appellant upon execution of an indemnity bond and furnishing a bank guarantee. The guarantee should cover potential claims on the debentures and last for a period fixed by the court. The parties were directed to bear their own costs for both appeals.
|
