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TMI Blog2006 (2) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... 29 of the State Financial Corporations Act, 1951 (hereinafter to be referred as "the Act"). The petitioner has also sought permission to sell the mortgaged property of the company-in-liquidation. 2. The petitioner has advanced a term loan of Rs. 45.59 lakhs and another financial assistance of Rs. 8 lakhs for setting up of an industry for manufacturing of copper wire. The said financial assistance was secured by mortgage deed dated 12-12-1989. Since the company failed to repay the loan, the petitioner took over the possession of the land measuring 8 kanals situated at village Jassi on 27-1-2000. The petitioner issued a notice for the sale of unit which published in the newspaper on 22-2-2004. Notice of such sale was issued to the promot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued notice to the managing director and guarantors of the company-in-liquidation under section 13 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. Bank has claimed that total dues to the bank are more than Rs. 2.5 crores and, therefore, interest of the bank be kept safe for just, proper and complete realization of the arrears. 4. Another petition has been filed by the Union of India, i.e., C.P. No. 87 of 2005, for a direction to the Official Liquidator to liquidate the properties of the company and to release the Government dues in priority to all other dues payable to the creditors, secured and unsecured. 5. It is the stand of the Official Liquidator that after selling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y that the secured creditor may frustrate the pari passu right of the workmen. 7. In the later judgment in International Coach Builders Ltd. v. Karnataka State Financial Corpn. [2003] 114 Comp. Cas. 614 2 , the Hon ble Supreme Court considered the aforesaid judgment and held that the rights of pari passu charge holders would run equally, temporally and potently, with the rights of the secured creditors. The Official Liquidator, as representative of the workmen, to enforce such pari passu charge would have the rights of representing the workmen equally with the rights of the secured creditors. It was held that the statutory right to sell the property under section 29 of the Act has now to be exercised in tandem with the rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations to realise their security, without recourse to the court, no longer holds true as the right vested in the Official Liquidator is a statutory impediment to such exercise and has to be reckoned with. And since the Official Liquidator can do nothing without the leave or concurrence of the court, all necessary applications must, therefore, come to the Company Court. We do not really see a conflict between section 29 of the State Financial Corporations Act and the Companies Act at all, since the rights under section 29 were not intended to operate in the situation of winding up of a company. Even assuming to the contrary, if a conflict arises, then we respectfully reiterate the view taken by the Division Bench of this Court in A.P. Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dator [2005] 128 Comp. Cas. 387 1 . After considering all the judgments on the subject, it has been held that once a winding up proceedings has commenced and the liquidator is put in charge of the assets of the company being wound up, the distribution of the proceeds of the sale of the assets at the instance of the financial institutions under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, or of financial corporations under the State Financial Corporations Act, 1951, can only be with the association of the Official Liquidator and under the supervision of the Company Court. The right of the financial corporations stands restricted by the requirement of the Official Liquidator being associated with it, giving the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secured creditors. The sale shall be subject to confirmation of this Court. The Official Liquidator shall take steps to complete the sale process within a period of four months from today in association of secured creditors at every stage of the sale process. 14. In terms of rule 147 of the Companies (Court) Rules, 1959, the Official Liquidator is also permitted to invite claims from the workers and other unsecured creditors by inserting advertisement in The Indian Express (Chandigarh edition), Jagbani, Ajit and Official Gazette of the Punjab Government. The requirement of issuing individual notices under rule 148 of the abovesaid rules is dispensed with. 15. Both the petitions stand disposed of accordingly. - - TaxTMI - T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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