TMI Blog2011 (3) TMI 1458X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Act, then, bearing in mind the object and purpose sought to be achieved by the said Act and it being latter act and also a special Statute, there was no necessity of taking prior permission or leave of this Court before auctioning and selling the property. section 13(9) have been inserted to cover cases of company in liquidation, whose assets might be secured with secured creditors. In that event, the right exercised by the secured creditors under the Securitisation Act should not ignore the claims of workmen and that is the sole object in making reference to sections 529 and 529A in the subject provisos. company application fails and it is accordingly dismissed. respondent No. 2 ARCIL will have to abide by the provisos to section 13(9) of the Securitisation Act and remit the workmen s dues in terms thereof by giving an appropriate undertaking to the official liquidator. The liquidator shall have the power to call upon ARCIL to abide by it and remit the dues as quantified by him in terms of the applicable proviso. - COMPANY APPLICATION NO. 624 OF 2010 COMPANY PETITION NO. 105 OF 2001 - - - Dated:- 7-3-2011 - S. C. DHARMADHIKARI, J. P.K. Samdani, Gaurav Joshi and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisement thereof and the respondent No. 1 was appointed as provisional liquidator of the company viz., Uniworth Apparels Ltd. 4. The said company was on or about 26-4-2001 referred to the Board of Industrial Finance and Reconstruction (BIFR) and Appellate Authority of Industrial Finance and Reconstruction, (AAIFR) both functioning under the provisions of the Sick Industrial Companies (Special Provisions) Act, 1985. During the pendency of the proceedings, ICICI Ltd., had on or about 14-10-2003 started action against the said company under the provisions of the Securitisation and Reconstruction of Financial Assets Enforcement of Security Interest Act, 2002 by issuing a demand notice under section 13(2) thereof. Thereafter, it appears that on or about 31-3-2004 ICICI Ltd., transferred and assigned the amount owed to it and its rights to recover it, to the respondent No. 2. During the pendency of the proceedings before the AAIFR, the respondent No. 2 issued a notice dated 29-4-2008 under the provisions of section 13(4) of the Securitisation Act and took possession of the properties of the said company. 5. In view of the proceedings adopted under the provisions of the Securi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that the Court is empowered and has jurisdiction to issue directions to respondent No. 2 or any secured creditor which might have invoked section 13(4) of the Securitisation Act. In fact by stepping into shoes of the original petitioner, M/s. ARCIL has submitted to the jurisdiction of this Court. It has not decided to stay out of winding up proceedings. Even otherwise, the respondent No. 2 was precluded from dealing with or selling any of the properties as secured creditors or otherwise and in such circumstances, the sale is illegal and requires to be quashed and set aside. The sale is also sought to be challenged on other grounds and more particularly on those stated in paras 10 to 14 of the affidavit in support of the present company application. 8. M/s. ARCIL (respondent No. 2) has filed an affidavit in reply and has contended that firstly this company application is not maintainable as this Court will have no jurisdiction to entertain and try any proceedings questioning the sale of the immovable property of the company under Securitisation Act. There is a remedy available in law to challenge the same. 9. It is then contended that the applicant has not sought any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tisation Act are not in any manner over-riding the Companies Act, 1956 and particularly when section 37 of the Securitisation Act specifically refers to the Companies Act. Section 34 of the Securitisation Act refers to the term "Civil Court" and not "company court". In these circumstances, the company court can be approached and in no way its jurisdiction is diluted or taken away by any provisions of the Securitisation Act leave alone section 17 thereof. Mr. Samdani has, therefore, contended that the application be allowed and the sale be set aside. 12. In support of his contentions, he relies upon the following decisions : "1. Rajasthan State Financial Corporation v. Official Liquidator [2005] 8 SCC 190; 2. Maharashtra State Financial Corporation, Bombay Ballarpur Industries Ltd. v. Official Liquidator, High Court Bombay Liquidator of Atrois Chemicals (P.) Ltd. AIR 1993 Bom. 392; 3. State Bank of India v. Pro. O.L. of Volvo Steel Ltd. (Stanrose Steel Ltd.) 2004 Comp. Cas. 122; 4. Indian Textiles v. Gujarat State Financial Corpn. 1994 Comp. Cas. 599; 5. Haryana State Industrial Infrastructure Development Corpn. v. Haryana Concast Ltd. [2010] 158 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was conducted prior thereto, then, mere reliance upon other provisions of the Companies Act, 1956 is of no assistance to the applicant. For these reasons, this application is misconceived and must be dismissed. 13. Mr. Tulzapurkar relies upon following decisions in support of his contentions : "1. United Bank of India v. Satyawati Tondon [2010] 8 SCC 110; 2. Akola Oil Industries v. State Bank of Maharashtra 2006 (1) Bom. CR 362; 3. Allahabad Bank v. Canara Bank [2000] 4 SCC 406; 4. Mineral Sales (P.) Ltd. Otoklin Plants Equipment Ltd. (In Liqn.) International Asset Reconstruction Co. (P.) Ltd. Official Liquidator [Company Application No. 1170 of 2009 in Company Petition No. 970 of 1997 decided on 26th November, 2009 by learned single Judge of this Court]; 5. Rajasthan Financial Corpn. v. Official Liquidator AIR 2006 SC 755 (Raj.); 6. Kishan Tulpule v. Kishco Mills (P.) Ltd. 1992 Comp. Cas. 89; 7. Pankaj Mehra v. State of Maharashtra 2000 Comp. Cas. 417." 14. For properly appreciating rival contentions, a reference will have to be made to both Companies Act, 1956 and the Securitisation Act. Companies Act, 1956 is an Act to consol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmence at the time of presentation of the petition for winding up. Section 443 enumerates powers of the Court on hearing a petition for winding up and it is specifying the orders that may be passed by the Court. Consequences of the winding up are then provided in section 444 onwards. Sections 446 and 447 falling thereunder read thus : "446. Suits stayed on winding up order. (1) When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of the winding up order, shall be proceeded with, against the company, except by leave of the Court and subject to such terms as the Court may impose. (2) The Court shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of ( a )any suit or proceeding by or against the company; ( b )any claim made by or against the company (including claims by or against any of its branches in India); ( c )any application made under section 391 by or in respect of the company; ( d )any question of priorities or any other question whatsoever, whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r reason may not bear a certain value. 529. Application of insolvency rules in winding up of insolvent companies. (1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to ( a )debts provable; ( b )the valuation of annuities and future and contingent liabilities; and ( c )the respective rights of secured and unsecured creditors; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent; Provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen s portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt, opts to realise his security ( a )the liquidator shall be entitled to represent the workmen and enforce such charge; ( b )any amount realised by the liquidator by way of enforcement of such charge shall be applied rateably for the discharge of workmen s dues; and ( c )so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of this proviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of the death or disablement of any workman of the company; ( iv )all sums due to any workman from a provident fund, a pension fund, a gratuity fund or any other fund for the welfare of the workmen, maintained by the company; ( c )"workmen s portion", in relation to the security of any secured creditor of a company, means the amount which bears to the value of the security the same proportion as the amount of the workmen s dues bears to the aggregate of ( i )the amount of workmen s dues; and ( ii )the amounts of the debts due to the secured creditors; 529A. Overriding preferential payment. Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company ( a )workmen s dues; and ( b )debts due to secured creditors to the extent such debts rank under clause ( c ) of the proviso to sub-section (1) of section 529 pari passu with such dues, shall be paid in priority to all other debts. (2) The debts payable under clause ( a ) and clause ( b ) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal propor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng on the controversy is the Securitisation and Reconstructions of Financial Assets and Enforcement of Securities Act, 2002. That is an Act to regulate securitisation and reconstruction of the Financial reconstruction of Companies. 24. The statement of Objects and reasons of this enactment has been extensively referred to by the Supreme Court in the judgment rendered in the case of Mardia Chemicals Ltd. v. Union of India [2004] 51 SCL 513. In that decision, the Supreme Court dealt with the challenge to the constitutional validity of Securitisation Act. The various definitions that need to be noted together with this object and purpose have already been noted in a decision to which I was a party Alpha Omega Diagnostics India Ltd. v. Asset Reconstruction Co. (I) Ltd. 2010 (6) Mh. L.J. 493. The Division Bench in its judgment has observed thus : "18. The sub-clause ( ia ) came to be inserted by the Act 30 of 2004 with effect from 11th November, 2004. The purpose for this insertion appears to be the enactment of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest and reconstruction of Financial Assets and Enforcement of Security In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st in such company in relation to such financial assets. (3) Unless otherwise expressly provided by this Act, all contracts, deeds, bonds, agreements, powers of attorney, grants of legal representation, permissions, approvals, consents or no objections under any law or otherwise and other instruments of whatever nature which relate to the said financial asset and which are subsisting or having effect immediately before the acquisition of financial asset under sub-section (1) and to which the concerned bank or financial institution is a party or which are in favour of such bank or financial institution shall, after the acquisition of the financial assets, be of as full force and effect against or in favour of the securitisation company or reconstruction company, as the case may be, and may be enforced or acted upon as fully and effectually as if, in the place of the said bank or financial institution, securitisation company or reconstruction company, as the case may be, had been a party thereto or as if they had been issued in favour of securitisation company or reconstruction company as the case may be. (4) If, on the date of acquisition of financial asset under sub-section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any" or "reconstruction company" does not include its "subsidiary." section 13 falling in Chapter III of the Securitisation Act deals with "Enforcement of Security Interest". 22. It would not be out of place, if reference is made to a decision of the Supreme Court in the case of Merdia Chemicals Ltd. v. Union of India 2004 AIR SCW 2541 wherein constitutional validity of Securitisation Act was considered. While referring to the object and purpose of the Act and analysing its various provisions, this is what the Supreme Court has observed in paras 34, 35, 66 and 67 as under : 34. Some facts which need be taken note of are that the banks and the financial institutions have heavily financed the petitioners and other industries. It is also a fact that a large sum of amount remains unrecovered. Normal process of recovery of debts through courts is lengthy and time taken is not suited for recovery of such dues. For financial assistance rendered to the industries by the financial institutions, financial liquidity is essential failing which there is a blockade of large sums of amounts creating circumstances which retard the economic progress followed by a large number of other conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fact that the Reserve Bank of India had classified the advances of a bank, one category of which was bad debts/doubtful debts. It then mentions that according to the international practice, an asset is treated as non-performing when the interest is overdue for at least two quarters. Income of interest is considered as such, only when it is received and not on the accrual basis. The Committee suggested that the same should be followed by the banks and financial institutions in India and an advance is to be shown as non-performing assets where the interest remains due for more than 180 days. It was further suggested that the Reserve Bank of India should prescribe clear and objective definitions in respect of advances which may have to be treated as doubtful, standard or sub-standard, depending upon different situations. Apart from recommending to set up of Special Tribunals to deal with the recovery of dues of the Advances made by the banks, the Committee observed that impact of such steps would be felt by the banks only over a period of time, in the meanwhile, the Committee also suggested for reconstruction of assets saying "the Committee has looked at the mechanism employed unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions more particularly when financing is through banks and financial institutions utilising the money of the people in general namely, the depositors in the banks and public money at the disposal of the financial institutions. Therefore, wherever public interest to such a large extent is involved and it may become necessary to achieve an object which serves the public purposes individual rights may have to give way. Public interest has always been considered to be above the private interest. Interest of an individual may, to some extent, be affected but it cannot have the potential of taking over the public interest having an impact in the socio-economic drive of the country. The two aspects are intertwined which are difficult to be separated. There have been many instances where existing rights of the individuals have been affected by legislative measures taken in public interest. Certain decisions which have been relied on behalf of the respondents, on the point are MANU/SC/0045/1951:1951 SCR 292, Ramaswamy Aiyengar v. Kailasa Thevar. In that case by enacting the Madras Agriculturist s Relief Act, relief was given to the debtors who were agriculturists as a class, by scalin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Act was enacted. Undoubtedly, such a legislation would be in the public interest and the individual interest shall be subservient to it. Even if a few borrowers are affected here and there, that would not impinge upon the validity of the Act which otherwise serves the larger interest. 23. In our view, considering that the Securitisation Act came to be enacted later than RDB Act and it provides for not only securitisation and reconstruction of assets [section 2( zc )] and for that purpose defining the terms and concepts of reconstruction and securitisation widely, then, the narrow interpretation of the provisions of the RDB Act as placed by Mr. Samdani cannot be accepted." 25. The Division Bench referred to even section 13 which falls under Chapter III entitled "Enforcement of security interest". Sub-section (9) of section 13 to the extent it is relevant reads thus : "13 (9) In the case of financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to sub-section (4) unless exercise of such right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bill which is as under : "13(9) Sub-clause ( 9 ) of this section provides that in the case of financing of a financial asset by more than one secured creditors or joint financing of a financial asset by secured creditors, no secured creditor shall be entitled to exercise any or all of the rights conferred on him under or pursuant to sub-clause ( 4 ) unless exercise of such right is agreed upon by the secured creditors representing not less than three-fourth in value of the amount outstanding as on a record date and such action shall be binding on all the secured creditors. The expression "record date" has been defined in the Explanation to this sub-clause. However, in the case of a company in liquidation, the amount realised from the sale of secured assets shall be distributed in accordance with the provisions of section 529A of the Companies Act, 1956. In the case of a company being wound up on or after the commencement of the proposed legislation, the secured creditor of such a company, who opts to realise his security instead of relinquishing his security and proving his debt under proviso to sub-section (1) of section 529 of the Companies Act, 1956, may retain the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the creditor shall be liable to pay balance of the workmen s dues or entitle to receive excess amount, if any, deposited by the secured creditor with the Liquidator. The last proviso contemplates that secured creditor shall furnish undertaking to the Liquidator to pay all the workmen s dues, if any. 27. The question that is raised before me is whether the secured creditor while selling and disposing of and transferring the secured assets by taking recourse to the Securitisation Act is obliged to seek prior approval or permission of the Company Court in case the secured assets belong to a company in liquidation and if such a sale is held without any such approval, intimation or permission, is it void? 28. According to Mr. Tulzapurkar, learned Senior Counsel appearing for ARCIL, this issue is squarely covered by the Division Bench decision of this Court in Akola Oil Industries v. State Bank of India [2006] 66 SCL 147. 29. On the other hand, Mr. Samdani, learned Senior Counsel submits that the Division Bench judgment does not notice a binding precedent viz., the judgment of the Supreme Court in the case of Rajasthan State Financial Corporation (RSFC) v. Offici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isation Act will prevail till the company is ordered to be wound up. After the winding up order it is not open to a secured creditor to proceed under the provisions of the Securitisation Act. ( ii )The properties that can be sold under the Securitisation Act are only secured properties. In other words, if the charge is registered under section 125 of the Indian Companies Act. In the instant case, there is no charge registered in respect of the second mortgage. Insofar as the purported mortgage created on 21-8-1991 at the highest it is an agreement to mortgage, and at any rate not being registered is void as against the liquidator and as such it was not open to the respondent to sell the property under the provisions of the Securitisation Act. 5. Insofar as the first issue is concerned, we may gainfully refer to the judgment of the Apex Court in the case of Allahabad Bank v. Canara Bank [2000] 101 Comp. Cas. 64, where a similar issue came up for consideration. The issue was the provisions of the Companies Act and the R.D.B. Act. The point which arose was, if there be two legislation, both Central Acts, which would prevail. The provisions of the two Acts were then considered, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have exclusive jurisdiction even after winding up order is passed. The only question is whether the position is the same under the provisions of the Securitisation Act. We may consider some provisions of the Securitisation Act. Section 34 reads as under: No Civil Court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which a Debts Recovery Tribunal or the Appellate Tribunal is empowered by or under this Act to determine and no injunction shall be granted by any Court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (51 of 1993)." Section 35 reads as under : "The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." Similarly, section 37 of the Securitisation Act needs to be reproduced and reads as under: "The provisions of this Act or the rules made thereunder shall be in addition to and not in derogation of, the Companies Act, 1956 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel drew our attention to the observations of the Apex Court in State Bank of Hyderabad v. Pennar Paterson Ltd. [2003] 114 Comp. Cas. 66, where the Apex Court has observed that Allahabad Bank may have to be re-examined insofar as jurisdiction of the Company Court and Tribunal under R.D.B. Act. The Apex Court, however, chose not to answer the issue and considering the law as it stands it is immaterial at what stage the official liquidator is appointed. If that be the position, we have no doubt in our mind that, considering the provisions of the Securitisation Act, and the provisions of the Companies Act, the provisions of the Securitisation Act will prevail and no leave of the company Court is required either before winding up or after winding up for selling the secured assets. The respondent, therefore, even if had preferred an application for leave or moved under the provisions of the Securitisation Act, that really was not required. No leave was also required under the provisions of the R.D.B. Act. It was open to the respondent to initiate proceedings before the Tribunal under the Debts Recovery Act or for realisation of the security under the provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... up they had to exercise the right in accordance with the right of the workmen represented by the liquidator. However, the Court permitted the RSFC to invite offers for sale of properties and directed it to finalise the same in consultation with the liquidator. It was directed that the reserve price would be fixed by the Company Judge on the report of the liquidator and the sale proceeds would be retained by the liquidator until further orders. The liquidator in the meantime invited claims of workmen and was to assess the extent of the same. An appeal was filed challenging this order before the Division Bench of this Court, which appeal came to be dismissed and that is how the matter was carried in appeal to the Supreme Court. 35. The Supreme Court while disposing of the appeal noted the view taken earlier by several High Courts as also by the Supreme Court and in paras 17 and 18 held thus : "17. Thus, on the authorities what emerges is that once a winding up proceeding has commenced and the liquidator is put in charge of the assets of the company being wound up, the distribution of the proceeds of the sale of the assets held at the instance of the financial institutions co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have a distribution pari passu with the secured creditors and the duty for further distribution of the proceeds on the basis of the preferences contained in section 530 of the Companies Act under the directions of the company court. In other words, the distribution of the sale proceeds under the direction of the company court is his responsibility. To ensure the proper working out of the scheme of distribution, it is necessary to associate the Official Liquidator with the process of sale so that he can ensure, in the light of the directions of the company court, that a proper price is fetched for the assets of the company in liquidation. It was in that context that the rights of the Official Liquidator were discussed in International Coach Builders Ltd. ( supra ). The Debt Recovery Tribunal and the District court entertaining an application under section 31 of the SFC Act should issue notice to the liquidator and hear him before ordering a sale, as the representative of the creditors in general. 18. In the light of the discussion as above, we think it proper to sum up the legal position thus : ( i )A Debt Recovery Tribunal acting under the Recovery of Debts Due to Banks an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34 of the Securitisation Act, when the Companies Act is not over-ridden, then all the more, the supervision of the sale by the Company Court is necessarily read into the Securitisation Act. He submits that on a winding up order being made, the custody and control of the assets and properties is with the Company Court through the official liquidator. The Secured Creditor may opt to stay outside winding up but if it proceeds to sell the properties to realise its dues, such a sale is void under the Companies Act. The leave of company court is condition precedent and that is how the Supreme Court has construed this provision. 37. It is not possible to accept any of these contentions for more than one reason. Firstly, a binding precedent cannot be ignored merely because some argument was not noticed or another facet of the controversy before the Larger Bench is now placed forward. In a judgment in Director of Settlement A.P. v. M.R. Apparao AIR 2002 SC 1598 in relation a binding precedent, this is what is observed : "7. So far as the first question is concerned, Article 141 of the Constitution unequivocally indicates that the law declared by the Supreme Court shall be bindin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment in RSFC's case ( supra ) even then, with respect, in my view its conclusion in law is unassailable. 39. In later decisions of the Supreme Court the point has been succinctly explained. The provisions such as section 529A of the Companies Act are attracted when a liquidator intervenes and not otherwise. The decisions in both RSFC s case ( supra ) and a prior decision in Textile Labour Association v. Official Liquidator [2004] 51 SCL 791 (SC), have been rendered when both sections i.e., 529 and 529A were attracted. These provisions are attracted when a liquidator had intervened. The Supreme Court explained the decision in Allahabad Bank s case ( supra ), which is referred to by the Supreme Court in the case of RSFC ( supra ) in its subsequent decisions. In ICICI Bank Ltd. v. SIDCO Leathers Ltd. [2006] 67 SCL 383 (SC) a Two Judge Bench of the Supreme Court referred to both Allahabad Bank s case ( supra ) and RSFC's case ( supra ) held thus : "30. In Allahabad Bank ( supra ), Jagannadha Rao, J., referring to the Tiwari Committee Report, 1981 as regard framing of the Recovery of Debts due to Banks and Financial Institutions Act, 1993 Act ( RDB Act ), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 33. This legal position was considered by a Bench of this Court in Rajasthan State Financial Corpn. v. Official Liquidator [(2005) 8 SCC 190] wherein one of us (Balasubramanyan, J.) was a member. It was stated : ** ** ** 34. Allahabad Bank ( supra ), therefore, is not an authority for the proposition that in terms of section 529A of the Companies Act the distinction between two classes of secured creditors does no longer survive. The High Court, thus, in our considered opinion, was not correct in that behalf. 35. In fact in Allahabad Bank ( supra ), it was categorically held that the Adjudication Officer would have such powers to distribute the sale proceeds to the banks and financial institutions, being secured creditors, in accordance with inter se agreement/arrangement between them and to the other persons entitled thereto in accordance with the priority in law." 40. The controversy before the Supreme Court in this case was whether the right to recover the monies lent, by enforcing the mortgage is taken away by enacting section 529A in the Companies Act or the same is preserved. Holding that such a right is preserved, the Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tyre and Rubber Co. of India (P.) Ltd. v. Management [1973] 1 SCC 813] 47. 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. " [Emphasis supplied] 41. In the earlier paragraphs viz, paras 30 to 34, both decisions rendered earlier have been explained. If there was any doubt about this aspect, that is clarified by the subsequent decision of the Supreme Court rendered in the case of Bakeman s Industries (P.) Ltd. v. New Cownpore Flour Mills [2008] 84 SCL 489. In this decision, the Supreme Court decided the controversy as to whether the right given by the State Financial Corporation Act, 1951 and particularly section 29 thereof will prevail over the general powers of the Company Judge under the Companies Act? Holding that it will so prevail, this is what is held :- "39. The 1951 Act indisputably is a special statute. If a financial corporation intends to exercise a statutory power under section 29 of the 1951 Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part in the proceedings without any demur whatsoever, it actively participated therein. It is only at its instance that the bid was held. The other bidders were also brought in. It is, therefore, not a case where the learned Company Judge had no jurisdiction to exercise supervision of sale of the assets of the appellant on behalf of SICOM in terms of the provisions of section 29 of the 1951 Act or otherwise. Respondents even never insisted to get the question of jurisdiction determined as a preliminary issue, although raised by it specifically. It, thus, for all intent and purport waived its right. " 42. In para 40 itself, the Supreme Court made a reference to RSFC s case ( supra ) and in the facts of the case before the Supreme Court held that since SICOM submitted itself to the jurisdiction of the Company Judge to conduct the sale that is why it cannot argue that its right under section 29 of the Act is intact and unaffected and the sale is not a nullity. "42. The official liquidator brought to the court s notice the claims of the other creditors. The Company Judge having been exercising its jurisdiction under section 433 of the Companies Act was, thus, under a statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... priority over all other debts." In A.P. State Financial Corporation v. Official Liquidator [2000] 7 SCC 291, this Court held : Under the proviso to sub-section (1) of section 529, the liquidator shall be entitled to represent the workmen and force the above pari passu charge. Therefore, the Company Court was fully justified in imposing above conditions to enable the Official Liquidator to discharge his function properly under supervision of the Company Court as the new section 529A of the Companies Act confers upon a Company Court a duty to ensure that the workmen s dues are paid in priority to all other debts in accordance with provisions of the above section. The Legislature has amended the Companies Act in 1985 with a social purpose viz., to protect dues of the workmen. If conditions are not imposed to protect the right of the workmen there is every possibility that secured creditor may frustrate the above pari passu right of the workmen." "At this stage we may also notice a decision of Three-Judge Bench of this Court in Andhra Bank ( supra ) wherein this Court had to consider the correctness of the decision in Allahabad Bank ( supra ). The questions therei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... came to be enacted. The distinction as made by Mr. Samdani, therefore, has no basis in law. Further, his faint attempt to suggest that M/s. ARCIL has submitted to the jurisdiction of the Company Court by substituting itself as a petitioner in the winding up petition also is devoid of any substance. By such substitution alone without anything more, M/s. ARCIL has not waived its rights under the Securitisation Act to sell the secured assets and it was entitled to do so in law. Therefore, the sale is not vitiated on that count. Of course, ARCIL is bound by the mandate of section 13(9) of the Securitisation Act, 2002. 44. I am in agreement with Mr. Tulzapurkar that section 529A is attracted only in the event of winding up and particularly while determining proof and ranking of claims under chapter V entitled "provisions applicable to every mode of winding up". It is in such circumstances that I am of the opinion that the sale conducted by the respondent No. 2 ARCIL cannot be said to be void. Once, the sale conducted by the ARCIL is in terms of Securitisation Act, then, bearing in mind the object and purpose sought to be achieved by the said Act and it being latter act and also a s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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