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2013 (2) TMI 596 - HIGH COURT OF KERALAOverriding preferential payments - Whether the petitioners are entitled to restrain the proceedings initiated under the SARFAESI Act or to claim priority in distribution with respect to amounts realised in proceedings under the SARFAESI Act or under the RDBFI Act. The fourth respondent-company availed financial assistance from the first respondent-bank by mortgaging its assets, including the factory building and land appurtenant thereto – directors of the company are co obligants in the loan transaction and properties belonging to them were also mortgaged – Consequent to default committed by the fourth respondent in repayment, respondents Nos. 1 and 2 initiated proceedings under SARFAESI Act and the assets of the fourth respondent-company were put to auction – petitioners are seeking to quash the proceedings under the SARFAESI Act as well as the proceedings initiated by the first respondent-bank before the Debts Recovery Tribunal, Chennai – On the alternative the petitioners are seeking directions for payment of benefits due to them, in case of closure of the company. Held that:- Section 13(9) clears that the workmen of a company, who claim priority in distribution of assets by virtue of section 529A of the Companies Act, are not entitled to raise any objection against proceedings initiated by the secured creditor against the secured assets of the company, unless the company is ordered to be wound up or any proceedings for winding up of the company is pending – Further in Allahabad Bank v. Canara Bank [2000 (4) TMI 757 - SUPREME COURT OF INDIA] held that if a company, which is implicated as a defendant in a proceedings under the RDBFI Act, against which no order of winding up has been issued, is only like any other defendant, and priority in distribution should be decided bearing in mind only the principles underlying in section 73 of the Code of Civil Procedure, 1908. Further section 22 of the RDBFI Act confers wider powers on the Tribunals to decide such questions of priorities, subject only to principles of natural justice – In a case where there is no proceedings pending before the company court or in case where the company is not under liquidation, any claimant or the workmen, that too with respect to un-liquidated amounts, are not entitled to cause any hindrance against proceedings under the SARFAESI Act or under the RDBFI Act - Therefore the writ petition deserves no merit and the same is accordingly dismissed.
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