1980 (3) TMI 227 - HC - Companies Law

Summary

Issues Involved:
1. Whether the Union of India should be treated as a secured creditor for its claim of Rs. 2.02 crores.
2. Whether the official liquidator should be directed to execute a deed of assignment and/or reconveyance in favor of the Union of India.
3. Whether the delay in filing proof of debt and/or preferring the petitioner's claim for Rs. 43.17 lakhs as an ordinary creditor should be condoned.
4. Whether an injunction restraining the respondents from making any disbursement to any creditor out of the money lying with the official liquidator should be granted.

Detailed Analysis:

1. Treatment of Union of India as a Secured Creditor:
The Union of India filed a combined application under sections 457(3), 528, and 539(7)(f) of the Companies Act, 1956, seeking to be treated as a secured creditor for its claim of Rs. 2.02 crores. The claim arose from an agreement between the company and the State Bank of India (SBI) for cash credit accommodation, which was guaranteed by the President of India. The Union of India paid the entire claim of SBI after the company was wound up and obtained a deed of assignment from SBI, thereby stepping into the shoes of SBI as a secured creditor. The court determined that the Union of India is a secured creditor for a sum of Rs. 1 crore 40 lakhs and has the right to pursue the claim preferred before the official liquidator as a secured creditor to that extent.

2. Execution of Deed of Assignment and/or Reconveyance:
The Union of India sought a direction for the official liquidator to execute a deed of assignment and/or reconveyance in its favor. The court noted that the title deeds of the immovable properties were handed over to the official liquidator to enable him to execute a reconveyance in favor of the Union of India. However, since the properties had already been sold and the securities had shifted to the sale proceeds, the court held that there was no question of returning the title deeds by the official liquidator to the Union of India.

3. Condonation of Delay in Filing Proof of Debt:
The Union of India also sought condonation of the delay in filing proof of debt for Rs. 43.17 lakhs as an ordinary creditor. The court noted that the Union of India made an application for condonation of delay on 28th March 1977, and by an order dated 30th March 1977, it was given leave to file the proof of debt before the official liquidator by 13th May 1977. The Union of India filed its proof of debt on or about 13th May 1977. The court did not find any issue in condoning the delay and allowed the Union of India to file its proof of debt.

4. Injunction Against Disbursement to Creditors:
The Union of India sought an injunction restraining the respondents from making any disbursement to any creditor out of the money lying with the official liquidator. The court did not specifically address this issue in the judgment but focused on the determination of the Union of India's status as a secured creditor and the execution of the deed of assignment.

Conclusion:
The court determined that the Union of India is a secured creditor for a sum of Rs. 1 crore 40 lakhs and has the right to pursue its claim as a secured creditor. The official liquidator was directed to retain the costs of the application out of the assets in his hands and to pay the Union of India as the secured creditor. The delay in filing proof of debt was condoned, and the Union of India was allowed to file its proof of debt. The court did not specifically address the injunction against disbursement to other creditors.