TMI Blog1996 (5) TMI 378X X X X Extracts X X X X X X X X Extracts X X X X ..... Industrial Credit and Investment Corporation of India ; ( ii ) Industrial Development Bank of India ; and ( iii ) the Industrial Finance Corporation of India ("the applicants" in short) in pursuance of the request made by the company (in liquidation) had advanced to the said company a term loan of Rs. 277 lakhs in consortium between the applicants. The company (in liquidation) executed a loan agreement in favour of the applicants in respect of the aforesaid term loan. By a joint deed of hypothecation the company (in liquidation) also hypothecated in favour of the applicants the movables (save and except the book debts and the bankers goods) to secure repayment on account of the aforesaid term loan. The company (in liquidation), however, failed and neglected to pay off the loan. Consequently, the applicants jointly filed a suit for recovery of their dues in the High Court of Judicature at Bombay which was numbered as Suit No. 2789 of 1995- I.C.I.C.I. v. Sidco Leathers Limited. As the company had already come into liquidation by the time the suit was filed an application under section 446 of the Companies Act, 1956 ("the Act" in short), was filed before this court. By order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reditor of a company (in liquidation) to realise his security by taking possession of the properties of the company subjected to security and selling them by standing outside the winding up cannot be said even remotely to be affected by the amendment of section 529 and the insertion of section 529A of the Companies Act, 1956, by the Act No. 35 of 1985. So far as these decisions are concerned, they have been considered and reconsidered by various High Courts including this court. The law which seems to have crystallised is to the effect that by the amendment brought about in section 529 and section 529A by Act No. 35 of 1985, the official liquidator as a representative of the workmen has a pari passu charge on the properties of the company over which a security is created in favour of a creditor even though the said creditor opts to realise its security by standing outside the winding up. The property, therefore, cannot be sold outright ignoring the official liquidator of the court. A Division Bench of the Bombay High Court, speaking through Justice Sujata Manohar in the case of Maharashtra State Financial Corporation v. Official Liquidator AIR 1993 Bom 392 ; [1995] 82 Comp. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he earlier decisions requires reconsideration. He has further submitted that certain authorities were not considered by this court while passing the earlier orders. Attention has been invited by counsel to paragraph 1157, volume VII (2) Halsbury's Laws of England, where it is observed as follows : "The power of the secured creditor to appoint a receiver under his security may be exercised, assuming that all conditions necessary for the appointment have been satisfied, at any time the creditor chooses; and as regards timing he owes guarantors to select any time other than one which suits his own convenience. In making it is under no duty to refrain from so doing because this may cause loss to the company, its unsecured creditor, as for example where a liquidator who could do all that a receiver could do as already appointed." Learned counsel has also referred to the decision of the Chancery Division in Potters Oils Limited, In re [1986] 1 All ER 890 (Ch D), where it was held that a debenture holder was entitled to appoint a receiver to protect his own interest and was fully entitled to form his opinion that his interest would not be fully protected by the liquidator and coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nted by the court in the suit mentioned above. The secured creditor's plea was that the official liquidator be directed to make over possession of the mortgaged properties to the receiver. The contention was that in section 175(6) of the 1913 Act, the word "assets" means the assets of the company, and the property which was subject to a charge could not be within the section the assets of the company. It was held that the contention was not correct. It was very definite and clear that the intention of the provision was to avoid any question of competition between a receiver and an official liquidator, and to construe it in such a way as to give preference to the receiver appointed in a suit brought by a secured creditor would result in defeating its apparent object. The assets were and must be held to be the assets of the company though subject to a charge. This provision precludes the court from appointing a receiver to oust the possession of the liquidator at the instance of a secured creditor. The court relied upon the decision in Joshua Stubbs Limited, Barnery v. Joshua Stubbs Limited [1891] 1 Ch 475, wherein it was held that where there is a question of competition between ..... X X X X Extracts X X X X X X X X Extracts X X X X
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