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TMI Blog2003 (7) TMI 585X X X X Extracts X X X X X X X X Extracts X X X X ..... cted him to pass orders on merits giving detailed reasons for acceptance or rejection of the claim of the bank. Accordingly, the Official Liquidator directed the bank to file any proof of their claim for about Rs. 19.98 lakhs. In response thereto, the bank filed documents enclosing charge/modified charge registered with the Registrar of Companies and recovery certificate issued by the Debts Recovery Tribunal (DRT) in O.A. No. 972 of 1999 on the file of the DRT, Hyderabad. After appreciating evidence and also considering the oral submissions made on behalf of the bank, by Notice of Rejection dated 17-6-2002 the Official Liquidator, while recording that Canara Bank is secured creditor, allowed/admitted the claim of the bank to a tune of Rs. 6,74,06,344.45p. and the claim for the balance amount of Rs. 12,80,62,545.40p. was rejected. The Official Liquidator also did not allow any claim which allegedly arose after the date of winding up i.e. , 17-10-1990 and also did not allow any interest subsequent to the date of winding up. 3. In this appeal, learned counsel for the appellant bank Sri Deepak Bhattacharjee submits that the bank is entitled to claim interest as per the contract ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. as on 25-5-1990. The bank did not claim any interest from 25-11-1990, because admittedly the bank accounts were not operated by the company. The suit was filed on 25-9-1990 and this Court ordered winding up of the company on 17-10-1990. By reason of section 34 of the Code of Civil Procedure, 1908 (CPC) as well as order 34, rule 11, it is within their discretion to the civil court as well as DRT to award interest during the pendency of the suit and also for post-decree periods Central Bank of India v. Ravindra AIR 2001 SC 3095. Therefore, it is permissible for the DRT to award interest subsequent to filing of the suit as well as post-decree period till the payment is made. Indeed, a reading of sections 124 and 125 of the Companies Act would show that though a charge, in a given case, is not registered with the Registrar of Companies, such non-registration shall not prejudice any contract or application for repayment of loan secured by the charge. If the security for the loan is continuing security covering interest also, the same is a good ground for the civil Court to award interest either under order 34, rule 11 or under section 34 CPC. The same is, however, not the case in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the learned counsel is accepted, in a given case, one secured creditor, who with the leave of the Court obtains a decree in a suit or proceeding, would knock away the entire sale proceeds realized by selling the assets of the company in winding up. That is not the intention of the Companies Act or the Companies Rules. The amounts realized have to be distributed in accordance with the provisions of section 530 of the Companies Act and Rules 166 to 196 of the Companies (Court) Rules. Therefore, the submission that the recovery certificate issued by DRT is conclusively binding on the OL cannot be accepted. 8. In Allahabad Bank s case ( supra ), the Supreme Court, inter alia , considered the question whether for initiation of various proceedings by the banks and financial institutions under the RDB Act, leave of the company Court is necessary under section 446(1) or 537 of the Companies Act before a winding up order is passed against the company or before a provisional liquidator is appointed; and the question whether in respect of proceedings under the RDB Act, at the stage of adjudication under section 19 of the RDB Act and at the stage of execution of recovery certif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case, special provisions made in the RDB have to be applied. In paragraphs 60 to 76, the Supreme Court considered the right of secured creditors to a share in the sale proceeds before the DRT and the company Court. Insofar as the secured creditors who move the company Court it was held that secured creditor who wishes to come before the OL has to prove his debt and he can prove his debt only if he relinquishes his security for the benefit of the general body of creditors. Insofar as the second class of secured creditors who like to stand outside the winding up, it was held as under : "64. Under sub-clause ( c ) of the proviso to section 529(1), the priority of the secured creditor who stands outside the winding up is confined to the workmen s portion as defined in section 529(3)( c ). Workmen s portion means the amount which bears to the value of the security, the same proportion which the amount of the workmen s dues bears to the aggregate of ( a ) workmen s dues and ( b ) the amounts of the debts due to all the creditors. This is explained in the illustration under the said provision. If the workmen s dues in all are (say) Rs. 1 lakh and the debt due to all secured c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company for voluntary winding up, at the date of passing of such resolution. Nonetheless, as per Rule 156, it is competent for the Official Liquidator to allow interest at the rate not exceeding 4 per cent per annum from the date when the debt becomes payable if such debt is payable by virtue of written agreement." 13. In Rajasthan Financial Corpn. v. Official Liquidator, Jaipur Spg. Wvg. Mills Ltd. [1997] 88 Comp. Cas. 192 , the Rajasthan High Court considered the question as to how much interest could be allowed and observed thus : "In respect of the claim of the appellant for expenses and interest from the order passed by the Official Liquidator, I find that the said order is neither speaking nor the provisions of law have been considered. With regard to expenditure incurred the estimate has to be made in accordance with rule 154 of the Companies (Court) Rules, 1959, and for the purpose of interest provisions exist under rule 156 of the said rules. The responsibility remains of the creditor for providing the debt. In the order of the Official Liquidator though it is mentioned that entries in respect of expenditure are not existing in the books of the company in liqu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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