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TMI Blog1982 (7) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... s of law and fact as well as they are inter-connected. For purposes of disposal of Company Application No. 128 of 1977 made by the official liquidator, the facts stated therein may be taken as the main application. The prayer in the said application is : 1.for a declaration that the: pledge of certain machinery by the company in liquidation, namely, M/s. Sriranga Fertiliser and Industries P. Ltd., in favour of Challam, who is respondent No. 5 in that application, is a fraudulent preference ; 2.for a declaration that the pledget is void as against the official liquidator ; and 3.for a direction to respondent No. 6, Gnanashekharan, to return the pledged machinery to the official liquidator, he having purchased the same from respondent N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication No. 30 of 1978 was filed by the official liquidator for condonation of the delay in filing Company Application No. 128 of 1977. Having regard to the decision to be rendered in this common order, Company Application No. 40 of 1978 is allowed and the delay is condoned. The question which falls for determination is whether the pledge of certain machineries of the company in liquidation with Challam was fraudulent preference. What was pledged was the goods that were originally hypothecated to the Indian Overseas Bank, Residency Road, Bangalore, which is also one of the respondents in one of the applications. In order to discharge the amount due on that hypothecation, the machineries were pledged with the aforementioned Challam, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the machineries pledged would be sold if they were not redeemed. If the company failed to redeem and the pledgee not being a creditor acted on his rights as a pledgee, it will not be open to the official liquidator to claim that the pledge in his favour was a preferential treatment of a creditor. For the above reasons, the prayers made in the Company Application No. 128 of 1977 are required to be rejected. It is contended that the Indian Overseas Bank has been described as a preferential creditor. This does not appear to be the correct position. In any event, the transaction between the bank and the company in liquidation was a transaction against the hypothecation of the machinery and in that position, if it was a secured credito ..... X X X X Extracts X X X X X X X X Extracts X X X X
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