9911796707
TMI Blog1995 (9) TMI 301X X X X Extracts X X X X X X X X Extracts X X X X ..... view of that provision, Canara Bank, the Bihar State Credit Investment Corporation Limited (in short, BIS-CICO) and the ex-managing director of the company have filed applications seeking, in the case of Canara Bank and the ex-managing director, leave to prosecute suits (Title Suits Nos. 104 and 106 of 1991, before the Subordinate Judge, Patna), and in the case of BISCICO, leave to file the suit for recovery of the money against the company. This order will dispose of the said applications. Both the Canara Bank and the BISCICO are secured creditors. It is well settled that the secured creditors stand outside the liquidation proceeding and can realise their respective security without leave of the court but if they file the suit or take u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Companies Act provides that where any company is being wound up by or subject to the supervision of the court, any attachment, distress or execution put in force, against the estate or effects of the company, or any sale of the properties or effects of the company held after the commencement of the winding-up proceeding, without leave of the court, shall be void, except a proceeding for recovery of any tax or impost or any dues payable to the Government. In view of the said provision there cannot be any doubt that the provisions of section 29 of the SFC Act have to be read as subject to the provisions of the Companies Act. Besides, the provisions of section 446 as also sections 529 and 529A give enough indication that a secured credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... repealed Indian Companies Act, 1913, the official liquidator in order to realise and recover the claims and subsisting debts owed to the company had the unenviable fate of filing suits. These suits, as is not unknown, dragged on through the trial court and courts of appeal resulting not only in multiplicity of proceedings but in holding up the progress of the winding-up proceedings. To save the company which is ordered to be wound up from this prolix and expensive litigation and to accelerate the disposal of winding-up proceedings, Parliament devised a cheap and summary remedy by conferring jurisdiction on the court winding up the company to entertain petitions in respect of claims for and against the company. This was the object behind ena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds out of the assets of the company, as may come in under the winding-up, and make such claims against the company as they respectively are entitled to make by virtue of the said provision. Where a secured creditor instead of relinquishing his security and proving for his debt proceeds to realise the security, he shall be liable to pay the expenses incurred by the liquidator for the preservation of the security before its realisation by the secured creditor. Section 529A which came on the statute book by Act 35 of 1985 lays down that notwithstanding anything contained in any other provision of the Companies Act or any other law for the time being in force in the winding-up of the company, workmen's dues and debts due to secured creditors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity or the value of the security, or under section 29 of the SFC Act. But that does not mean that the company's assets in liquidation pursuant to the order of the company court are taken out of the purview of the jurisdiction of the company court. Under section 529A, the workmen's dues and the debts due to the secured creditors to the extent of section 529(1)( c ) have to be worked out in the light of the illustrations given under section 529 and that can be done only by the company court in exercise of the power under section 446(2)( b ) and ( d ) of the Act. I would, accordingly, reject the plea advanced on behalf of the BISCICO for leave to effect sale of the assets of the company under section 29 of the SFC Act. During the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a lesser footing compared to the BISCICO or other like financial institution. Its claim cannot, therefore, stand on any higher legal pedestal. The observations made hereinabove that while the secured creditor has got an option to realise the security outside the liquidation proceedings, such rights are to be exercised subject to the jurisdiction of the company court and the provisions of the Companies Act where the liquidation proceeding with respect to the company has commenced, would apply with equal force if not more in its case as well. On behalf of the Canara Bank, however, reliance was placed on a judgment of this court in the case of United Bank of India v. Official Liquidator, Maksudpur Refrigeration Industries ( P. ) Ltd. [19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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