9911796707
TMI Blog2001 (8) TMI 1320X X X X Extracts X X X X X X X X Extracts X X X X ..... .e., the respondent-company under section 433( e ) and ( f ) of the Companies Act, 1956, on July 3, 1997. On February 10, 1999, Company Petition No. 96 of 1997 was allowed by the passing of a winding up order against Shree Diwan Steels (India) Ltd., i.e., the respondent-company. The official liquidator attached to this court was appointed as the liquidator to take charge of the respondent-company, its properties, assets and records. It would be pertinent to mention that MSTC Ltd., the petitioner-company had also filed a winding up petition against the respondent-company, i.e., Company Petition No. 40 of 1997. The winding up petition filed by the petitioner-company was disposed of on February 10, 1999, in view of the order passed in Company Petition No. 96 of 1997. After the winding up order had been passed, the liquidator was required to satisfy the liabilities of the creditors (to the extent possible) out of the assets of the company (wound up). The prayer of MSTC Ltd., i.e., the petitioner in the instant case is that certain properties should be excluded from the assets of Shree Diwan Steels (India) Ltd., while satisfying debts due to creditors other than the petitioner- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had issued instructions to their banker to stop payment against the said cheques. Thereupon, the petitioner-company issued a notice under section 138 of the Negotiable Instruments Act, 1881 (as amended) to the respondent-company. The petitioner-company then filed criminal complaints against the respondent-company and its directors before the Additional Chief Metropolitan Magistrate, Patiala House Courts, New Delhi under section 138 of the Negotiable Instruments Act, and sections 403, 406 and 420/34 of the Indian Penal Code, 1860, as the respondent-company did not make any payments despite the aforesaid notice. The aforesaid proceedings are stated to be pending even now. In addition to the criminal complaints filed by the petitioner-company, it initiated proceedings under the Criminal Law (Amendment) Ordinance, 1944 (hereinafter referred to as the 1944 Ordinance). The aforesaid proceedings were initiated before the District Judge, Ludhiana on September 26, 1998. The same came to be registered as Criminal Miscellaneous No. 409A/September 28, 1998. On September 28, 1998, the District Judge, Ludhiana passed an ad interim attachment order in respect of the properties of the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid order. In my view, the answer to the aforesaid question emerges from rule 54 of Order 21 of the Code of Civil Procedure. The aforesaid rule is being extracted here-under: "54. Attachment of immovable property. (1) Where the property is immovable, the attachment shall be made by an order prohibiting the judgment-debtor from transferring or charging the property in any way, and all persons from taking any benefit from such transfer or charge. [(1A) The order shall also require the judgment-debtor to attend court on a specified date to take notice of the date to be fixed for settling the terms of the proclamation of sale.] (2) The order shall be proclaimed at some place on or adjacent to such property by beat of drum or other customary mode, and a copy of the order shall be affixed on a conspicuous part of the property and then upon a conspicuous part of the court-house, and also where the property is land paying revenue to the Government, in the office of the Collector of the district in which the land is situate [and, where the property is land situate in a village, also in the office of the Gram Panchayat, if any, having jurisdiction over that village ;] [where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the territory of India immediately before the commencement of the Constitution of India would remain in force until altered/repealed/amended by a competent legislature/authority. It has also been brought to the notice of this court that the validity of the 1944 Ordinance has been upheld by a Constitution Bench of the Supreme Court in State of West Bengal v. S.K. Ghosh, AIR 1963 SC 255 and also by this court in G.L. Salwan v. Union of India, AIR 1960 Punj 351. It is pertinent to mention that learned counsel for the respondent-company did not dispute the assertions made by learned counsel for the petitioner-company in respect of the validity of the 1944 Ordinance. In view of the position expressed above, there is certainly no impediment in determining the claim of the petitioner-company by accepting that the 1944 Ordinance is valid and has the force of law. The provisions of the 1944 Ordinance are applicable only in respect of certain offences. The offences in respect of which the Ordinance is applicable have been delineated in the schedule attached thereto. A perusal of the schedule reveals that the 1944 Ordinance is applicable, inter alia, in respect of offences punis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r has not been varied, withdrawn, modified or revoked till date. It is contended that the aforesaid property must be deemed to be attached so as to secure the claim of the petitioner-company to the extent of Rs. 1.50 crore. The case made out on behalf of the petitioner-company is that the order of attachment passed by the District Judge, Ludhiana on September 28, 1998, when read with sections 12 and 13 of the 1944 Ordinance would lead to the conclusion that the order of the District Judge creates a charge on the attached property whereby the petitioner-company has the right to effect the recovery of the value of the goods obtained by the respondent-company from the petitioner-company by the commission of offences mentioned in the schedule. Sections 12 and 13 of 1944 Ordinance are being extracted hereunder for facility of reference : "12. Criminal courts to evaluate property procured by scheduled offences. (1) Where before judgment is pronounced in any criminal trial for a scheduled offence it is represented to the court that an order of attachment of property has been passed under this Ordinance in connection with such offence, the court shall, if it is convicting the accused, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attachment, order such security to be returned. (3) Where the final judgment or order of the criminal court is one of conviction, the District Judge shall order that from the property of the convicted person attached under this ordinance or out of the security given in lieu of such attachment, there shall be forfeited to the Government such amount or value as is found in the final judgment or order of the criminal courts in pursuance of section 12 to have been procured by the convicted person by means of the offence, together with the costs of attachment as determined by the District Judge and where the final judgment or order of the criminal courts has been imposed or upheld a sentence of fine on the said person (whether alone or in conjunction with any other punishment), the District Judge may order, without prejudice to any other mode of recovery, that the said fine shall be recovered from the residue of the said attached property of the security given in lieu of attachment. (4) Where the amounts ordered to be forfeited or recovered under sub-section (3) exceed the value of the property of the convicted person attached, and where the property of any transferee of the convic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oney procured by the accused by means of the aforesaid offences. If the conviction becomes final, it would be open to the petitioner-company to apply to the District Judge, Ludhiana, under section 13 of the 1944 Ordinance to recover out of the property attached by the order of the District Judge, Ludhiana, dated September 28, 1988 a sum of money equal to the value of the goods procured by the accused as determined by the criminal court. In the facts and circumstances of the instant case, the petitioner-company can be allowed to recover a maximum of Rs. 1.50 crores from the attached property in view of the express stipulation to the aforesaid effect in the order of the District Judge, Ludhiana. Learned counsel appearing for the official liquidator has sought to repell the contention advanced on the basis of the 1944 Ordinance by placing reliance on section 14( b ) of the 1944 Ordinance. Section 14 is being extracted here-under for facility of reference : "Bar to other proceedings: Save as provided in section 11 and notwithstanding anything contained in any other law : ( a )no suit or other legal proceeding shall be maintainable in any court: ( i )in respect of any other prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich would have the effect of nullifying/altering/modifying the order of attachment, it is not possible for this court to hold that the order of attachment passed by the District Judge, Ludhiana dated September 28, 1998, has been diluted in any manner as against the interest of the petitioner-company. In any case, the order of the winding up passed by this court in Company Petition No. 96 of 1997 against the respondent-company on February 10, 1989, does not affect the order of attachment passed by the District Judge, Ludhiana on September 28, 1998, in any manner whatsoever. In the aforesaid view of the matter, I find no merit in the first contention of learned counsel appearing for the official liquidator. The next contention of learned counsel appearing for the official liquidator is that the initiation of winding up proceedings ipso facto has the effect of staying pending legal proceedings. In this behalf, reliance has been placed on section 446 of the Companies Act, 1956, which mandates that any legal proceedings commenced or pending on the date of the winding up order, shall not be proceeded with against the company which has been wound up, except with the leave of the court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government as also the Central Government by securing through attachment under section 4 of the 1944 Ordinance, the properties of a person, who has allegedly committed a scheduled offence to procure money or other property from the State Government. It is, therefore, not possible for this court to accept that the petitioner-company should be treated as an ordinary creditor and not as a secured creditor. On an interpretation of sections 12 and 13 of the 1944 Ordinance, it has already been held hereinabove that the petitioner-company would be a secured creditor for the recovery of its dues subject to the conviction of the directors of the respondent-company for one or more of the scheduled offences and further subject to the criminal court finding under section 12 of the 1944 Ordinance that the petitioner-company is entitled to the value of the goods in terms of money. For the reasons recorded above, the instant petition is partly allowed. The claim of the petitioner-company that it be treated as a secured creditor in respect of the property of the respondent-company attached by the order of the District Judge, Ludhiana, dated September 28, 1998, subject to a maximum of Rs. 1.50 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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