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TMI Blog1999 (8) TMI 733X X X X Extracts X X X X X X X X Extracts X X X X ..... on under rule 9 read with rules 147 and 148 of the Companies (Court) Rules, 1959, and sections 529 and 529A of the Companies Act, 1956 (for short "the Act"). It appears that an accident took place wherein seven workmen died, two were seriously injured. An application was filed with the Commissioner for Workmen's Compensation with respect to the seven persons who died. An order was passed on December 20, 1993, awarding compensation. The official liquidator contended that the statement of affairs and books of account were not available, but a letter had been received from the court of the Commissioner for Workmen's Compensation, Kurukshetra, forwarding the claims of the six workmen for Rs. 5,34,298.80. The workmen are stated to have pari passu charge along with the secured creditors as per section 529A of the Act. It was, thus, prayed that the respondent should not be allowed to appropriate the sale proceeds to its claim. Notice of the application had been issued to the corporation. The corporation asserted that it is governed by the provisions of the special enactment, i.e., the State Financial Corporations Act, 1951. One of the objects stated in the Statement of Objects and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his assets before any amount due in respect of any compensation, the liability wherefor accrued before the date of the transfer, has been paid, such amount shall, notwithstanding anything contained in any other law for the time being in force, be a first charge on that part of the assets so transferred as consists of immovable property." In this regard, reference must be made to the provisions of the Companies Act, 1956. Sub-section (1) to section 529, as amended in the year 1985, reads as under: "529. (1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to ( a )debts provable; ( b )the valuation of annuities and future and contingent liabilities; and ( c )the respective rights of secured and unsecured creditors ; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent: Provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen's portion therein, and, where a secured creditor, instead of relinquishing his security, and proving his debt, opts to realise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court, Madras, had filed an application for setting aside the sale of the assets of the company on the ground that it was prejudicial to the interests of the general body of the unsecured creditors and that the same had been concluded with undue haste and without adequate publicity. A prayer was made to restrain the other party from handing over and the third person from taking over the assets purchased by him pending disposal of the application. The Supreme Court held that the secured creditor is outside the winding up proceedings and he can realise his security without the intervention of the court by effecting a sale of the mortgaged premises by private treaty or by public auction. These findings that have been given under the Companies Act, 1913, would certainly apply if by that time the company was not wound up. Once the company is wound up and all its proceeds are taken over, the secured creditors can have nothing to effect the sale of the property. The cited decision in that view of the matter certainly does not come to the rescue of the corporation. To the same effect is the decision of the Delhi High Court in the matter of Mayur Syntex Ltd. ( In Liquidation ) v. Pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d up by or subject to the supervision of the court, any sale held without leave of the court of any of the properties or effects of the company after commencement of the winding up shall be void. A similar provision in the 1913 Act was interpreted by the Supreme Court in M.K. Ranganathan v. Government of Madras [1955] 25 Comp Cas 344 ; AIR 1955 SC 604. It was held that it was only when the intervention of the court was sought either by putting in force any attachment, distress or execution or proceeding with or commencing a suit or other legal proceedings against the company, that the leave of the court was necessary and if no such leave was obtained, the remedy could not be availed of by the secured creditor. Section 537 of the present Act must be interpreted in the same manner. The sale by SICOM having been effected outside the winding up and without the intervention of the court, it is not void." These findings of the Bombay High Court clearly show that where a company is wound up by or subject to the supervision of the court but the sale is held without the leave of the court, the decision in the case of M.K. Ranganathan v. Government of Madras [1955] 25 Comp Cas 344 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Act the company court has no jurisdiction to entertain and adjudicate upon any matter which the Tribunal is empowered to decide or determine under that Act. It is not disputed that the Tribunal has jurisdiction under the Act to entertain and decide matters raised in the petition filed by the corporation under section 15 of the Life Insurance Corporation Act. It must follow that the consequential provisions of sub-section (1) of section 446 of the Companies Act will not operate on the proceedings which be pending before the Tribunal or which may be sought to be commenced before it. Further, the provisions of the special Act, i.e., the Life Insurance Corporation Act will override the provisions of the general Act, viz., the Companies Act which is an Act relating to companies in general." In this regard, there is no controversy that the State Financial Corporations Act, 1951, would be taken to be a special statute vis-a-vis the Companies Act but one cannot ignore the fact that sections 529(1) and 529A of the Companies Act had been amended and added in the year 1985. Section 529A of the Act had a non obstante clause. This had been enacted to protect certain wages particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er law. Section 22(1) also carries a non-obstante clause and says that the said provision shall apply notwithstanding anything contained in the Companies Act, 1956, or any other law. The 1985 Act being a subsequent enactment, the non-obstante clause therein would ordinarily prevail over the non-obstante clause found in section 46B of the 1951 Act unless it is found that the 1985 Act is a general statute and the 1951 Act is a special one. In that event the maxim generalia specialibus non derogant would apply. But in the present case on a consideration of the relevant provisions of the two statutes we have come to the conclusion that the 1951 Act deals with pre-sickness situation whereas the 1985 Act deals with the post-sickness situation. It is, therefore, not possible to agree that the 1951 Act is a special statute vis-a-vis the 1985 Act which is a general statute. Both are special statutes dealing with different situations notwithstanding a slight overlap here and there, for example, both of them provide for grant of financial assistance though in different situations. We must, therefore, hold that in cases of sick industrial undertakings the provisions contained in the 1985 A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditors and above even the dues of the Government. This literal construction of the proviso is in consonance with and promotes the avowed object of the amendment made. On the contrary, the construction of the proviso suggested by learned counsel for the appellant, apart from being in conflict with the plain language of the proviso, also defeats the object of the legislation." At this stage, necessarily reference must be made to the decision of the Supreme Court in Sarwan Singh v. Kasturi Lal, AIR 1977 SC 265. Under the Delhi Rent Control Act, no petition for eviction can be filed unless permission of the competent authority under the Slum Areas (Improvement and Clearance) Act had been obtained if the property was situated in a slum area. Sections 25A, 25B and 25C were inserted in the Delhi Rent Control Act in 1975, with non obstante clauses. The controversy raised was as to if in such like cases, in an eviction application under section 14A of the Delhi Rent Control Act permission of the competent authority under the Slum Areas (Improvement and Clearance) Act was also required or not. Keeping in view that it was having a non obstante clause and the amendment referred to came ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to the debt which has not been realised by the secured creditors and not otherwise. But a view contrary has been expressed by the Bombay High Court in Maharashtra State Financial Corporation and Ballarpur Industries Ltd. v. Official Liquidator, Atrois Chemicals Pvt. Ltd., AIR 1993 Bom 392, wherein it was held that when company is in winding up, its property remains the property of the company. It does not vest in the court or the official liquidator. The court returned the findings as under (page 399): "It was also urged by Mr. Tulzapurkar, learned counsel for the appellants, that under section 46B of the State Financial Corporations Act, the provisions of that Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force, but save as aforesaid, the provisions of that Act shall be in addition to and not in derogation of any other law for the time being applicable to an industrial concern. He submitted that because of section 46B, the provisions of section 29 of the said Act would prevail over the provisions of section 529 of the Companies Act. We, however, do not see any inconsistency between the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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