TMI Blog2013 (5) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... unreasonable condition of requiring a secured creditor to forsake his security before he asserts a right to urge that a company which is unable to pay its debts should be wound up. The Respondent has stated before the learned Company Judge, when the petition for winding up came up for hearing that it was not possible for the Respondent to recover her dues by the sale of the land in respect of which a security has been created in favour of the Respondent. The claim of the Respondent is still to be proved in the course of the winding up proceedings. A secured creditor who has a mortgage, charge or lien on the property of the company as security for her debt may either: (a) enforce the security and prove in the winding up for the balance of the debt after deducting the amount realised; or (b) surrender the security to the Liquidator and prove for the whole of the debt as an unsecured creditor; or (c) estimate the value of the property subject to her security, and prove for the balance of the debt after deducting the estimated value; or (d) rely on the security and not prove in the winding up proceedings. A secured creditor has the option of relinquishing his security and/or proving th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed to the company on 1 May, 2010. In a reply dated 13 May, 2010, the company contended that it was not liable to pay any amount inter alia on the ground that the Respondent did not hold a licence from the Reserve Bank and the documents were fabricated. A Petition for winding up was filed before the Company Court on the ground that the company was unable to pay its debts. An affidavit opposing admission was filed on 13 April, 2011 contending that since the Respondent was a secured creditor, a Company Petition for winding up at its behest was not maintainable. This defence was rejected by the Company Judge, while relying upon a judgment of a Division Bench of this Court in Bharat Overseas Bank Ltd. v. Shree Arcee Steels P. Ltd. [1985] 58 Comp. Cas. 174 (Bom.).The Division Bench had held in that case, relying upon judgments of the Madras and Calcutta High Courts, that a Company Petition for winding up could not be dismissed at the stage of admission on the ground that the debt was secured. The Company Petition was admitted and advertised. 4. Prior to the filing of the petition for winding up, proceedings under section 138 of the Negotiable Instruments Act, 1888 were instituted bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present settlement deed, Mrs. Goyal further undertakes to withdraw Complaint Case No. 2034 of 2010 u/s. 138 NIA before the Court of ld. M.M. Shri Dhiraj Mittal (Court room No.509), District Courts, Saket, New Delhi and Company Petition No.455 of 2010 u/s 433 of the Companies Act, 1956 before the Hon'ble High Court of Bombay. Mr. Monish Mukkar undertakes to withdraw the Criminal Misc. (Main) No.1835 of 2011 filed before the Delhi High Court u/s. 482 CrPC and Mrs. Bubbles Goel undertakes to withdraw the counter-affidavit filed by her on 22.10.2011 in the Criminal Misc. (Main) No.1835 of 2011 before the Hon'ble High Court. E. Further, Mrs. Bubbles Goyal and Mr. Munesh Kumar undertake to make a statement to the Hon'ble High Court of Delhi in accordance wit the terms of the present settlement deed in Criminal Misc. (Main) No.1835 of 201 immediately on the signing of the present settlement deed. 9. By signing this Agreement the parties hereto state and admit that they have no further claims or demands against each other of any nature whatsoever and all the disputes and differences have been amicably settled by the Parties hereto through the process of Mediation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) since the Respondent stands in the position of a secured creditor, it was necessary for the Respondent to state before the Company Court, when the Petition came up for final hearing, as to whether she wished to stand outside the proceedings for winding up and realise her security or, if the security was inadequate to cover the entirety of the claim, the extent of the claim which would be proved in the course of the winding up proceedings; (iii) such a disclosure was not made by the Respondent before the Company Judge when the Petition was heard and the Court has wrongly placed the burden on the Appellant to establish that the value of the property in respect of which a charge has been created is not sufficient to meet the claim of the Respondent; and (iv) the order for winding up suffers from an error apparent since it was the obligation Respondent to disclose whether she stood outside the proceedings for winding up or in the alternative to specify the extent to which her claim was not covered by the value of the security. 7. On the other hand, it has been urged on behalf of the Respondent that: (i) a Petition for winding up is maintainable at the behest of a creditors, whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e parties to settle the dispute. On June, 2012 leave was granted by the Division Bench to amend the Memo of Appeal. On 5 October, 2012 when the Appeal came up, the amendment was still to be carried out. An adjournment was sought on behalf of the Appellant to carry out the amendment. Noting that no amendment had been carried out despite the lapse of time, a final opportunity was granted by the Division Bench on 5 October, 2012. On 1 November, 2012 a statement was made on behalf of the Appellant that it was in a position to pay the dues of the Respondent, but that the Appellant needed to dispose of its property of which the title deeds were lying in deposit with the Registry of the Delhi High Court. A statement was made on behalf of the Appellant before the Court that the intending purchaser proposes to inspect the original title deeds and to enter into an agreement to purchase the property by paying 20% of the sale consideration and that as soon as a deposit on account of earnest is received, it shall be lodged with the Prothonotary Senior Master. On this statement which was made on behalf of the Appellant, an ad-interim stay of the judgment of winding up was granted by the Divisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled as of right to file a petition for winding up as an unsecured creditor. The judgment of the Madras High Court is also authority for the proposition that the rule in bankruptcy that before a secured creditor can file a petition for insolvency he has to abandon his security or to value the security and aver that after giving credit to such value there would be a balance due and payable to him, does not apply in winding up. The Madras High Court held that the general rule is that a creditor who cannot get paid has a right to a winding up order, whether he be a secured or an unsecured creditor. However, this right of the creditor is always subject to the discretion of the Court and the Court may in an appropriate case refuse to make a winding up order, having regard to the wishes of a majority of the creditors. A similar view has been taken by a Division Bench of the Calcutta High Court in Techno Metal India (P.) Ltd. v. Prem Nath Anand [1973] 43 Comp. Cas. 556. In Bharat Overseas Bank Ltd. (supra) Division Bench of this Court followed these well-settled principles by observing as follows:- "We are of the opinion that bearing in mind the clear provisions of the Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciple that the scheme of the provisions relating to winding up, particularly those in sections 528 and 529 would indicated that stage of proving a claim of a debt arises after an order of winding up passed. In Canffin Homes Ltd., this Court held as follows:- "15. The secured creditor who seeks to prove the whole of his debt in the course of the proceedings of winding up must before he can prove his debt relinquish his security for the benefit of the general body of the creditors. If he surrenders his security for the benefit of the general body of creditors, he may prove the whole of his debt. If the secured creditor has realised his security, he may prove for the balance due to him after deducting the net amount that has been realised. The stage for relinquishing security arises when a secured creditor seeks to prove the whole of his debt in the course of winding up. If, he elects to prove in the course of winding up the whole of the debt due and owing to him, he has to necessarily surrender his security for the benefit of the general body creditors." Having regard to the position in law as consistently followed in the judgments of the Madras, Calcutta and Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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