9911796707
TMI Blog2008 (8) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... his court was appointed as the liquidator of the company in liquidation. The liquidator took possession of the assets of the company on July 23, 1996. Respondent No. 1 company challenged the aforesaid order of winding up in Company Appeal No. 17 of 1996. Though initially, an interim stay was granted, however, the company appeal came to be dismissed vide order dated March 20, 1997. Aggrieved of the dismissal of the appeal, the company preferred a special leave petition before the hon'ble Supreme Court of India. The hon'ble Supreme Court of India vide its order dated January 5, 1998, granted leave and stayed further winding up proceedings. During the pendency of the proceedings before the hon'ble Supreme Court, a settlement came to be arrived at between M/s. Punjab National Bank and the company in liquidation. As a result thereof, the special leave petition was disposed of by the hon'ble Supreme Court of India vide order dated July 18, 2006. During all this period, the property of the company in liquidation taken over by the official liquidator remained in his possession and control. Before the hon'ble Supreme Court of India, M/s. Vedsons Steels and Wires P. Ltd., was impleaded as ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the share of Smt. Raj Rani Anand (C. D. No. 3) aforesaid property. This be served Dasti, Regd. A. D. post. Affixation and by beat of drum in the vicinity. Counsel for CH Bank should file service report by next date of hearing. Objections will be heard on the next date of hearing." 5. It is stated on behalf of the petitioner that when this order came to the notice of the petitioner, he filed objections on behalf of Shri Ashok Anand son of late Shri Ved Pal Anand against the order of attachment, inter alia, pleading therein that the order of attachment has been procured by misstatement of facts in the affidavit of the bank officials. It was, inter alia, pleaded that the property, Plot No. 2853-A, Sector 17-A, Chandigarh, belongs to the Chandigarh Administration and was leased out to M/s. Vedsons Engineers P. Ltd. (in liquidation). This company, lessee of the aforesaid plot is neither a judgment debtor nor a certificate debtor, nor even a guarantor in respect of the loan transaction between respondent No. 3 bank and M/s. Vedsons P. Ltd. It has been further pleaded in the said objection that M/s. Vedsons Engineers P. Ltd. (in liquidation) is a different and distinct company than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td., as guarantor to the bank. 8. In the replication filed by the petitioner, it is denied that Smt. Asha Anand is the shareholder/director in the company (in liquidation). It is specifically stated that Shri Ashok Anand has not inherited any estate or share in the company (in liquidation) from his father, late Shri Ved Pal Anand. It is also mentioned that Shri Ved Pal Anand who was guarantor in case of M/s. Vedsons P. Ltd., never held any share in the company (in liquidation) and hence respondent No. 3 bank is not a creditor of respondent No. 1 company. 9. Since notice of this petition was also issued to the official liquidator. He has also filed a written statement objecting the proceedings against the property in question at the instance of respondent No. 3. It is stated that the property of the company (in liquidation) cannot be sold by respondent No. 2. In paragraph 9 of the reply, the official liquidator has mentioned that in terms of the lease deed Vedsons Engineers P. Ltd. (in liquidation) is the full and absolute owner of the property described Anand Cinema, Sector 17, Chandigarh. He has further stated that there is no record suggesting that Smt. Raj Rani Anand is the ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , etc., of the Companies Act or whether these questions are all within the exclusive jurisdiction of the Tribunal ? (4) Whether, in case it is decided that the distribution of monies is to be done only by the Tribunal, the provisions of section 73 of the Civil Procedure Code and sub-clauses (1) and (2) of section 529, section 530 of the Companies Act also apply-apart from section 529A to the proceedings before the Tribunal under the RDB Act ? (5) Whether in view of provisions in sections 19(2) and 19(19) as introduced by Ordinance No. 1 of 2000, the Tribunal can permit the appellant-bank alone to appropriate the entire sale proceeds realised by the appellant except to the limited extent restricted by section 529A ? Can the secured creditors like the Canara Bank claim under section 19(19) any part of the realisations made by the Recovery Officer and is there any difference between cases where the secured creditor opts to stand outside the winding up and where he goes before the company court ? (6) What is the relief to be granted on the facts of the case since the Recovery Officer has now sold some properties of the company and the monies are lying partly in the Tribunal or partl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the respondents." 14. While considering the purpose of the Companies Act and the Recovery of Debts Due to Banks and Financial Institutions Act, the hon'ble Supreme Court made following observations (page 81 of 101 Comp Cas) : "While it is true that the principle of purposive interpretation has been applied by the Supreme Court in favour of jurisdiction and powers of the company court in Sudarsan Chits (I.) Ltd. v. G. Sukumaran Pillai [1984] 4 SCC 657 ; [1985] 58 Comp Cas 633 , and other cases the said principle, in our view, cannot be invoked in the present case against the Debts Recovery Tribunal in view of the superior purpose of the RDB Act and the special provisions contained therein. In our opinion, the very same principle mentioned above equally applies to the Tribunal/Recovery Officer under the RDB Act, 1993, because the purpose of the said Act is something more important than the purpose of sections 442, 446 and 537 of the Companies Act. It was intended that there should be a speedy and summary remedy for recovery of thousands of crores which were due to the banks and to financial institutions, so that the delays occurring in winding up proceedings could be avoided." 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bts Due to Banks and Financial Institutions Act, 1993, hereunder : "17. Jurisdiction, powers and authority of Tribunals.-(1) A Tribunal shall exercise on and from the appointed day, the jurisdiction, powers and authority to entertain and decide applications from the banks and financial institutions for recovery of debts due to such banks and financial institutions. (2) An appellate tribunal shall exercise, on and from the appointed day the jurisdiction powers and authority to entertain appeals against any order made, or deemed to have been made, by a Tribunal under this Act . . . 18. Bar of jurisdiction.-On and from the appointed day, no court or other authority shall have, or be entitled to exercise, any jurisdiction, powers or authority (except the Supreme Court and a High Court exercising jurisdiction under articles 226 and 227 of the Constitution) in relation to the matters specified in section 17 . . . 34. Act to have over riding effect.-(1) Save as provided under sub-section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the movable or immovable properties of the defendant." 18. The aforesaid provisions of the Act empowers the Recovery Officer to recover the debts by any of the modes prescribed in clauses (a) to (c). However, the emphasis in all these clauses is upon the property of the defendant in the suit. The attachment and sale of the movable and immovable property of the defendant alone can be attached by the Recovery Officer in exercise of the jurisdiction and authority under section 25 of the Act. It is in this context that the contention of the petitioners in the present case needs to be examined. It is not in dispute that M/s. Vedsons Engineers P. Ltd., company in liquidation the petitioner was neither a defendant in the suit filed by respondent No. 3 bank nor is a judgment debtor in the decree or a certificate debtor in the proceedings before respondent No. 2. This fact is admitted by respondent No. 3 in its written statement referred to hereinabove. Respondent No. 2 is, however, enforcing the decree against the property which is claimed by and admittedly belong to the company in liquidation. No material has been placed on record by respondent No. 3 to show that the company in liqui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of shares, becomes entitled to the assets of the company and has any share in the property of the company. A shareholder has got no interest in the property of the company though he has undoubtedly a right to participate in the profits if and when the company decides to divide them. The interest of a shareholder vis-a-vis the company was explained in the Sholapur Mills case-Charanjitlal Chaudhari v. Union of India [1951] 21 Comp Cas 33 ; AIR 1951 SC 41, at pages 54 and 55. That judgment negatives the position taken up on behalf of the appellant that a shareholder has got a right in the property of the company. It is true that the shareholders of the company have the sole determining voice in administering the affairs of the company and are entitled, as provided by the articles of association, to declare that dividends should be distributed out of the profits of the company to the shareholders but the interest of the shareholder either individually or collectively does not amount to more than a right to participate in the profits of the company. The company is a juristic person and is distinct from the shareholders. It is the company which owns the property and not the shareholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation on the ground that the Punjab State Industrial Development Corporation Ltd., holds 46.23 per cent shares in the Punjab National Fertilizers and Chemicals Ltd., the hon'ble Supreme Court held that even though PSIDC is a shareholder, it cannot be fastened with the liability on behalf of the company in liquidation being a distinct entity. 22. Section 34 of the Companies Act, 1956, deals with the effect of registration of a company which reads as under : "34. Effect of registration.-(1) On the registration of the memorandum of a company, the Registrar shall certify under his hand that the company is incorporated and, in the case of a limited company that the company is limited. (2) From the date of incorporation mentioned in the certificate of incorporation, such of the subscribers of the memorandum and other persons, as may from time to time be members of the company, shall be a body corporate by the name contained in the memorandum, capable forthwith of exercising all the functions of an incorporated company, and having perpetual succession and a common seal, but with such liability on the part of the members to contribute to the assets of the company in the event of its bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urities, in order to facilitate the transfer thereof : Provided that if within a period of six months from the date on which the shares or securities are transferred by the company to, or are first held by the company in the name of, the State Bank of India or a Scheduled Bank as aforesaid, no transfer of such shares or securities takes place, the company shall, as soon as practicable after the expiry of that period, have the shares or securities re-transferred to it from the State Bank of India or the Scheduled Bank or, as the case may be, again hold the shares or securities in its own name ; or (b) from depositing with, a or transferring to, any person any shares or securities, by way of security for the repayment of any loan advanced to the company or the performance of any obligation undertaken by it ; (c) from holding investments in the name of a depository when such investment are in the form of securities held by the company as a beneficial owner. (6) The certificate or letter of allotment relating to the shares or securities in which investments have been made by a company shall, except in the cases referred to in sub-sections (4) and (5), be in the custody of such comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded that any property held in the name of the company belongs to the company and in the event of winding up has to be distributed in accordance with the preferential claims and other claims of its secured creditors, the entire property vests with the official liquidator as its trustees, custodian and manager. During the pendency of the winding up proceedings, it is the statutory obligation of the company court to protect the company in liquidation, except to distribute its sale proceeds, etc., for the purpose and for the benefit of the secured creditors, workmen and other creditors and if any amount still survives to be left with the shareholders/contributory members. 25. Proceedings initiated by respondent No. 2 may be valid in so far against the properties and assets of the judgment debtors are concerned, but by no stretch of imagination respondent No. 2 can be permitted to take over or sell the properties of the company (in liquidation) without the company being a debtor much less a judgment debtor. 26. Since it has been brought to the notice of respondent No. 2 that the property sought to be attached belongs to the company (in liquidation) and respondent No. 2 has already ..... X X X X Extracts X X X X X X X X Extracts X X X X
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