9911796707
TMI Blog2000 (2) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... 999 towards the preliminary expenses. The appellant is also aggrieved by the direction to advertise the factum of passing winding up order and to file proof of publication. 2. The first respondent company was directed to be wound up by the learned Company Judge on a reference made by BIFR under section 20(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 ( the Act ). The appellant is a statutory corporation which advanced loans to the companies concerned on obtaining securities including the assets of the company. Thus, the appellant is in the position of a secured creditor. The appellant is endowed with the power of take over and sale of assets to realize its outstanding dues under the provisions of the State Financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... make the deposit to put into effect the order of winding up. It is also made clear that if the Official Liquidator incurs any expenditure for safeguarding the assets of the company on taking charge of the same pursuant to the winding up order, the appellant has no objection to advance or reimburse the amount to that extent if proper account is furnished. It is also pointed out that the appellant is already taking care of the security (assets) in its own interest after take over of the Unit and there is very little role for the Official Liquidator to play. 4. The crux of the objection is as to the deposit of the so-called preliminary expenses with the Official Liquidator and to meet advertisement expenses to put into effect the winding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated, the learned single Judge relied on the proviso to rule 292 in his order dated 24-2-1999 in RCC No. 3 of 1998. But, the proviso only provides for reimbursing the amount advanced to the Official Liquidator by the petitioner or a creditor or a contributory out of the assets of the company on preferential basis. It does not cast a positive obligation on the part of the contributory to advance certain money towards preliminary expenses to the Official Liquidator. Even by necessary implication, it cannot be said that a duty is cast on a secured creditor like the petitioner who did not even make a request for winding up the company to advertise and advance the preliminary expenses. The possibility of subsequent reimbursement cannot be a g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aying the preliminary expenses or the advertisement of the order. After referring to the case of A.P. State Financial Corpn. v. Official Liquidator [1995] 2 ALT 406 decided by a Division Bench of this Court, the learned single Judge concluded as follows : "Having regard to this principle enunciated by the Division Bench of this Court, it follows that the Company Court may direct the other secured creditors whether it is a Financial Corporation or any other creditor to contribute his share of expenses in the expenses incurred by the Official Liquidator in preserving and maintaining the security. Such preservation and maintenance of security so far as he is concerned, it is for the benefit of the workmen, who are pari passu secured cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comes incumbent on the petitioner to have it published in the newspapers, as required by rule 113. 8. The appellant herein who is a secured creditor and who was in no way responsible for the order of reference under section 20 and who did not come forward to support the winding up, cannot be construed to be a petitioner, nor can the appellant be subjected to a legal obligation to deposit the advertisement costs and initial expenses of the Official Liquidator merely because it is a secured creditor. If at all it is BIFR which has referred the case to the High Court, that will broadly answer the description of the petitioner under rule 113. It would be wholly inappropriate to require a third party creditor who would like to remain outsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceiving a statement of expenditure from the Official Liquidator. The Official Liquidator can also require the secured creditor to pay in advance regarding the expenditure which he is called upon to incur for this purpose provided sufficient details are notified to the appellant-corporation. If there is any dispute in regard to the quantum of expenses or the justification thereof, either the Official Liquidator or the secured creditor can move the Court. 10. It is unfortunate that BIFR has not put in its appearance despite service of notice. In our view, BIFR which for all practical purposes is in the position of a petitioner as far as section 20 and rule 113 are concerned, is bound to advertise the order of winding up. Therefore, whenev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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