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2008 (5) TMI 399 - HC - Companies LawWhether the sum available, from the sale proceeds of the security of a secured creditor, after meeting the principal dues of the secured creditor with interest at the contracted rate till the date of winding up, and the dues of the workmen, can be utilised to pay the secured creditor interest at the contracted rate from the date of winding up till the date of sale of the secured assets or should it be applied for repayment of the principal dues of the unsecured creditors and, only thereafter, for payment of interest at 4 per cent, per annum to all creditors, both secured and unsecured ? Whether the rate of interest payable to the workmen, along with their principal dues, in the absence of an agreement for payment of interest ? Held that:- The plant and machinery of the company under liquidation was hypothecated in favour of the Industrial Development Bank of India. They assigned their debt later to Stressed Assets Stabilization Fund. ₹ 83.35 lakhs, realised from the sale of plant and machinery, has been paid to them in its entirety. The balance due to them, which is in excess of ₹ 350 lakhs, has necessarily to be treated as unsecured debt and, in accordance with sections 47(3), 48 and 61(6) of the Provincial Insolvency Act, 1920, read with rule 179 of the Companies (Court) Rules, 1959, the Industrial Development Bank of India would be entitled for payment of interest at 6 per cent, per annum, or 4 per cent, per annum, as the case may be, from the date of winding up, in case any surplus is available after payment in full of the principal due to both the secured and the unsecured creditors. The official liquidator's request that he be permitted to pay 86.56 per cent, to the unsecured creditors, without paying interest at the contracted rate of 15 per cent, per annum to the State Bank of India (the sole charge holder of the fixed assets of the company under liquidation and buildings), from the date of winding up till the date of sale of assets must, therefore, be rejected. In view of the proviso to section 529(1), the security of the secured creditor is deemed to be subject to a pari passu charge in favour of the workmen also. For all practical purposes, a workman is treated as a co-chargeholder along with the secured creditor and would, therefore, be entitled to claim same rate of interest from the assets of the company under liquidation as has been contracted to by the secured creditor which, in the present case, is 15 per cent, per annum. The amount liable to be paid as interest to the State Bank of India is required to be computed by the official liquidator. It is only thereafter, and after the amount required to be set apart to the State Bank of India, the workmen and other dues as detailed hereinabove, are determined, would the official liquidator be in a position to arrive at the sum still available with him which can, in turn, be utilised for payment of other dues.
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