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TMI Blog2024 (6) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 529A of the Companies Act, 1956 (For short the, "Act of 1956") and section 31B of the Recovery of Debts and Bankruptcy Act, 1993 (For short the, "Act of 1993). The Court further directed the Recovery Officer to ascertain the amount receivable by the secured creditors and unsecured creditors. 4. The Recovery Officer, accordingly filed report, stating therein that as per section 31B of the Act of 1993, the secured creditors will be entitled to have priority claim over the unsecured creditors. The Recovery Officer then noted that the claim of the secured creditors loan is amounting to Rs.39.36 Crores, whereas the amount available for disbursement, in terms of Court's order, was only Rs.20 Crores. Accordingly, the Recovery Officer opined that the unsecured creditors will be not entitled to any amount. 5. So far as inter se priority amongst the secured creditors is concerned, by relying upon Section 529A of the Act of 1956, the Recovery Officer decided to give priority to the entitlements of the first charge holding secured creditors i.e. ICICI Bank, Kotak Mahindra Bank and IFCI Bank, over the second charge holding secured creditors i.e. Bank of Maharashtra and Bank of India. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs was to be ascertained, keeping in mind the priorities. The Recovery Officer, in its report has, on the basis of the aforesaid provisions opined, and correctly so, that the secured creditors will have priority of claim over the unsecured creditors, and secondly, the first charge holding secured creditors will have priority over the second charge holding secured creditors. Even otherwise, unless entitlement of the creditors and their priorities are ascertained, the limited funds available with this Court could not be disbursed. 11. The Recovery Officer, therefore, has rightly prioritized the entitlement of the claims between the secured and unsecured creditors and also the secured creditors inter se. The sum available for disbursement was Rs.20 Crores, whereas the claim of first charge holding secured creditors was, at the relevant time, amounting to Rs.30.876 Crores and, therefore, the second charge holdings secured creditors will not be entitled to any sum. 12. There is no dispute that ICICI Bank, Kotak Mahindra Bank and IFCI Bank are the first charge holding secured creditors and the Bank of Maharashtra and Bank of India are the second charge holding secured creditors. Accord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rights of priorities over the mortgaged assets, that, in our opinion, would not mean that the provisions of Section 48 of the Transfer of Property Act in relation to a company, which has undergone liquidation, shall stand obliterated. If we were to accept that inter se priority of secured creditors gets obliterated by merely responding to a public notice wherein it is specifically stated that on his failure to do so, he will be excluded from the benefits of the Dividends that may be distributed by the Official Liquidator, the same would lead to deprivation of the secured creditor of his right over the security and would bring him at par with an unsecured creditor. The logical sequitur of such an inference would be that even unsecured creditors would be placed at par with the secured creditors. This could not have been the intendment of the legislation. The provisions of the Companies Act may be a special statute but if the special statute does not contain any specific provision dealing with the contractual and other statutory rights between different kinds of the secured creditors, the specific provisions contained in the general statute shall prevail." 14. Thus, the Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the secured creditors. They have never stated in any of the proceedings that they are relinquishing their securities. On the contrary, they have made it clear that they remain outside the winding up and they participate in the sale proceeds only with a view to facilitate the sale proceeding so as to get the auction proceedings completed as expeditiously as possible. There is also substance in the say of the secured creditors that as soon as the assets of the companies are sold and realization takes place, their securities are converted from the specified assets into cash and they have equal right in cash which is realized on sale of the assets of the company in liquidation. In the above view of the matter, the ratio between the secured creditors and the workmen will have to be determined and the distribution will take place as per the ratio so decided or determined." 17. The above observations were made in the light of the controversy where the workers' claimed priority in the claim over the secured creditors. The High Court held that the claim so made was not tenable. The Court noted the effect of the secured creditors participating in the liquidation proceedings and their opti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 23. Learned counsel for the recovery officer submits by referring to the report dated 6-2-2020 that the claims of first charge holding secured creditors alone is amounting to Rs. 30.876 Crores. Out of the said amount, Rs. 20 Crores has been disbursed under the orders of the Apex Court which was a provisional distribution. The remaining amount of Rs. 10.876 Crores is yet to be paid. 24. The Official Liquidator states that amount available to the credit of company is Rs. 10,46,91,079/-. He further submits that workmens due to the tune of Rs. 55 Lakhs approximately is to be paid. In addition, the amount towards administrative charges and other incidental charges will be required to be deducted. Accordingly, he submits that for the time being, Rs. 9.5 Crores could be released to the recovery officer. He further submits that all the assets of the company have been sold. 25. In the light of above, it will be appropriate to direct the Official Liquidator to release Rs. 9.5 Crores in favour of the recovery officer in terms of the prayer made by him. The amount be released within fifteen working days. Order accordingly. 26. The civil application is disposed of in above terms. 27. At ..... X X X X Extracts X X X X X X X X Extracts X X X X
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