9911796707
TMI Blog2001 (7) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... r of winding-up against the respondent-company. 2. The Punjab Scheduled Caste Land Development Finance Corpn. ( the Corpn. ) has filed the instant petition with a prayer that it should be permitted to execute recovery proceedings initiated by it, consequent upon the judgment and decree passed by the Civil Judge (Junior Division), Chandigarh dated 9-9-1999 vide which the Corporation has been found entitled to a sum of Rs. 7,42,27,312 from Punwire. Alternatively, it is prayed that this Court should transfer the execution proceedings to itself and to execute the judgment and decree passed by the Civil Judge (Junior Division), Chandigarh on 9-9-1999 in favour of the Corporation. 3. Before dealing with the claim of the Corporation, it would be necessary to narrate the facts on the basis of which the Corporation is making the instant claim. In this behalf, it would be pertinent to point out that the Corporation filed a civil suit on 31-7-1999 at Chandigarh for the recovery of Rs. 7,42,27,312 along with future interest. During the pendency of the aforesaid suit, the Corporation filed an application under Order XXXVIII rule 5 of the Code of Civil Procedure attachment of movable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 and 59 read with section 151 of the Code of Civil Procedure. The objections filed by the respondent-company, i.e., Punwire were dismissed by the Executing Court on 29-1-2000. 5. The necessity for filing the instant petition by the Corporation has arisen as a consequence of the provision of section 446 of the Act, which, inter alia, postulates that after a winding-up order has been passed or after the official liquidator has been appointed as the provisional liquidator; no suit or legal proceedings pending shall be proceeded with (against the Company in respect of which either of the aforesaid orders have been passed) except with the leave of the Court. It is in these peculiar circumstances that the instant petition has been filed with a prayer that the execution proceedings initiated by the Corporation before the Executing Court be allowed to be proceeded with or alternatively to transfer the execution proceedings to this Court for its disposal. 6. According to the learned counsel for the Corporation, the mandate of section 125 of the Companies Act, 1956 does not obstruct the continuation of the proceedings initiated by the Corporation before the Executing Court. Acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel for the petitioner on In re Overseas Aviation Engg. (G.B.) Ltd. [1963] 33 Comp. Cas. 315. (Ch). In the aforesaid case J. Jarvis Sons Ltd. were held to be entitled to recover a sum of Pounds 8,300 besides Pounds 19 as costs. J. Jarvis Sons Ltd. obtained a charge in respect of certain lease-hold lands owned by Overseas Aviation Engineering (G.B.) Ltd. s case ( supra ) in respect of the amount of Pounds 8,319. After notice, the aforesaid charge was made absolute. The order of the Court was not registered with the registrar of companies in accordance with the provisions of section 95 of the Act (Section 125 of the Companies Act, 1956). By virtue of an extraordinary resolution passed by the board of directors of Overseas Aviation Engineering (G.B.) Ltd., it went into creditors voluntary liquidation. The liquidators opposed the claim of J. Jarvis Sons Ltd. The question to be determined was ( i ) whether, the charge order was ( a ) valid and enforceable against the judgment debtors i.e., Overseas Aviation Engineering (G.B.) Ltd. s case ( supra ) and/or the liquidators or ( b ) was void by reasons of non-registration pursuant to the provisions of section 95 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded that if a charge is created by the Court, the same does not require registration under the provisions of section 125 of the Act, and, therefore, a charge created by the court is enforceable in law by treating the concerned party as a secured creditor vis-a-vis the charge. 11. On behalf of the company in Liquidation, two submissions have been addressed to counter the claim of the Corporation. Firstly, it is contended that attachment proceedings were not initiated validly as they had been initiated after the commencement of winding-up. In this behalf, the attachment proceedings being invalid, no rights can be claimed by the Corporation on the basis thereof. Secondly, it is contended that the order of attachment does not create a charge and since no charge is created, the Corporation cannot be considered to be a secured creditor for the recovery of the decretal amount. 12. So far as the first contention is concerned, the same is based upon a collective reading of sections 441(2) and 537(1) of the Act. The aforesaid provisions are being extracted hereunder : "441. Commencement of winding up by Court : ( 1 ) ****** ( 2 ) In any other case, the winding up of a compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase No. 25 of 1999, a formal order of attachment was passed on 6-12-1999 attaching the same properties. The question to be considered is whether the properties in question came to be attached vide the order dated 17-8-1999 or vide order dated 6-12-1999. In case, the former order is the effective order of attachment, then the submission advanced by the learned counsel for the respondent-com-pany based on the presentation of the winding-up petition by H.S. Oberoi Associates on 23-9-1999 would be of no consequence as the order of attachment was passed on 17-8-1999, i.e., prior to the initiation of winding-up proceedings against Punwire. On the contrary, the argument would have some force if the order of attachment is considered to have been passed on 6-12-1999. In my view, the answer to the aforesaid question lies in rules 11 and 11A of order XXXVIII of the Code of Civil Procedure. The aforesaid rules are being extracted hereunder : 11. Property attached before judgment not to be re-attached in execution of decree - Where property is under attachment by virtue of the provisions of this order and a decree is subsequently passed in favour of the plaintiff, it shall not be n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he attaching creditor. It does not make him a secured creditor, nor does it confer any title on him. Until the property is actually sold the position of the attach- ing creditor is not higher than that of one, who has a more money claim against the judgment-debtor. At the crucial date, therefore, the respon-dent-bank has no preferential right in law or in equity to realize his decretal money from the attached house, and it seems to me that it would be going against the statutory provisions of section 207 to allow the execution to proceed. I hold therefore, that there are no special circumstances to justify a departure from the ordinary rule, which governs the exercise of discretion in such cases." (p. 590) 17. To the same effect is the decision rendered by the Gujarat High Court in Ananta Mills Ltd. (In Liquidation) v. City Dy. Collector [1972] 42 Comp. Cas. 476. Therein, it was held as under : "What effect can then be given to an attachment levied by a creditor who, but for the attachment, would stand in company with all other creditors similarly situated. In my opinion, the short answer to the question would be to ignore the attachment or, as a winding-up court, raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions transfer from the judgment-debtor, from the date of the order of attachment, and as against others from the time they had knowledge of the passing of the order of attachment or from the date of Proclamation, whichever is earlier". 19. After the perusal of the aforesaid rule, it clearly emerges that the only effect of the order of attachment is that the property attached cannot be transferred nor a third party right can be created therein, in other words, no right, whatsoever, is created in the decree-holder vis-a-vis the property attached. It is, therefore, natural to conclude that an order of attachment creates no interest in favour of the decree-holder. Therefore, the attachment of property of the respondent-company, i.e., Punwire, vide orders dated 17-8-1999 and 6-12-1999 does not have the effect of creating any charge in favour of the Corporation in respect of the attached property. Mulla in the Code of Civil Procedure, 13th edition, at page 318 has observed as under : "Attachment creates no charge on lien upon the attached property. It only confers a right on the decree-holder to have the attached property kept in custodia legis for being dealt with by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
