9911796707
TMI Blog2006 (6) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation sold the assets of the Company to the 11th respondent. This sale took place prior to orders of winding up passed by the Court. The appellant-State Bank of India is one of the creditors of the Company-in-liquidation and it advanced amounts to the Company-in-liquidation against the security of current assets like raw-materials and semi-finished goods. 2. The case of the appellant before the Company Court was that the respondent Company-in-liquidation had pledged goods in favour of the Bank, within the meaning of expression under section 172 of the Indian Contract Act, 1872 ( the Contract Act ). The goods pledged were lying in the factory premises of the Company-in-liquidation when the sale took place. The 11th respondent, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in terms of the Contract Act, the bank was a pledgee and amounts advanced to the Company-in-liquidation were secured and section 529A of the Companies Act, 1956 ( the Companies Act ) had no application. It is contended by learned Counsel appearing for the appellant that such a question is already concluded by a judgment of the Supreme Court in Bank of Bihar v. State of Bihar AIR 1971 SC 1210, which was not appreciated by the learned Company Judge. 4. Section 172 of the Contract Act defines Pledge , Pawnor and Pawnee , and according to this section, the bailment of goods as security for payment of a debt or performance of a promise is called "pledge". The bailor is in this case called the "pawnor". The bailee is called "pawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be paid in priority to all other debts. (2) The debts payable under clause ( a ) and clause ( b ) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions." 7. The question that is to be answered is whether the goods pawned in favour of the appellant could be taken as the property of the Company under winding up, or they are the goods, which, by virtue of pledge, all along belong to the pawnee i.e., the bank. 8. The learned Counsel for the appellant submits that even under section 125(4)( e ) of the Companies Act, pledge is excluded from application under sections 125 and 126 of the Companies Act, which shows that it was never intended that pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich finally was determined by the Supreme Court was : "Was the sugar seized by the Government in possession of the Bank as a pledgee at the time of the seizure and have the rights of the Bank as such pledgee been determined by the seizure in question?" (p. 1211) 10. The question before this Court would be, whether the goods, which are pledged, are the property of the bank or the property of the Company under liquidation. If the pledged goods are held to be the property of the bank, then obviously they cannot be subject-matter of distribution under section 529A of the Companies Act, but if the goods are held to be the property of the Company under liquidation, then certainly even the pledged goods could be subject-matter of distributi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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