TMI Blog2015 (8) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... im of a secured creditor who has been permitted by the Company Judge to stand outside the liquidation proceeding with liberty to pursue its remedy as per statutory rights available under the SFC Act, subject only to the conditions imposed by the court - no doubt the changes brought about in the Companies Act through amendments of 1985 impede even the statutory powers available to a secured creditor like SFCs under Section 29 and the other relevant sections of the SFC Act but the impediment is indeed of a limited nature; its specific purpose being to protect the pari passu charge of the workmen’s dues. After ensuring that this purpose is achieved or ensured, the State Financial Corporations can continue to enjoy their statutory rights as sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial Liquidator the question of law arising for consideration is whether the Official Liquidator can claim any power or jurisdiction in itself to adjudicate and quantify the claim of statutory corporations such as respondent no.1, A.P. Industrial Development Corporation and respondent no.2, A.P. State Financial Corporation when the Company Judge has permitted them to stand outside the liquidation proceeding subject to certain conditions under which the respondent Corporations may pursue the powers available to them under Section 29 of the State Financial Corporations Act, 1959 (for brevity referred to as the SFC Act ). 2. The relevant facts are not at all under dispute and to answer the issue of law indicated above it is not necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king confirmation of sale of the mortgage assets of the company, the learned Single Judge vide order dated 19.11.2003 noted the contention of all the parties and finding that there was no objection to sale of the properties either by the second charge holder or by the Official Liquidator, confirmed the sale of land, buildings, plant and machinery in favour of M/s. Sri Venkataswara Industries represented by Sri Adarsha Gupta for a sum of ₹ 86 Lacs and carding machine in favour of M/s. Supreme Associates, Coimbatore for a sum of ₹ 2.45 Lacs. However, the learned Single Judge made the order of confirmation subject to the following conditions : Before the applicant and 2nd respondent seek to appropriate the sale proceeds for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision Bench in our view came to a correct conclusion that the Official Liquidator does not have jurisdiction to ascertain or adjudicate the claim of a secured creditor who has been permitted by the Company Judge to stand outside the liquidation proceeding with liberty to pursue its remedy as per statutory rights available under the SFC Act, subject only to the conditions imposed by the court. The reasons for such a view are apparent on a perusal of the following three judgments of this Court : 1. A.P. State Financial Corporation v. Official Liquidator (2000) 7 SCC 291; 2. International Coach Builders Ltd. v. Karnataka State Financial Corpn. (2003) 10 SCC 482; and 3. Rajasthan State Financial Corpn. v. Official Liquidator (2005) 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of ensuring that the pari passu charge in favour of the workmen is safeguarded by imposition of suitable conditions under the supervision of the Company Court. If this amounts to impeding their hitherto unimpeded rights, so be it. Such is the parliamentary intendment, according to us. This impediment is of a limited nature for the specific purpose of protecting the pari passu charge of the workmen s dues and subject thereto, SFCs can continue to exercise their statutory rights as secured creditors without being reduced to the status of unsecured creditors required to prove their debts in insolvency and stand in line with other unsecured creditors. Neither is the apprehension expressed justified, nor the contention sound. 8. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed view, the rights of a financial corporation available under the provisions of the SFC Act have been compromised or impeded by the amendment of 1985 in the Companies Act, particularly the proviso added to Section 529(1) and Section 529A, only to a limited extent and for the limited purpose of securing the right of the workers for distribution of their wages as pari passu charge. But such limited impediment to their rights under the SFC Act will not alter the status of State financial corporations as secured creditors and they will not be required to prove their debt which they are entitled to realize under the provisions of the SFC Act subject to right of the workers to receive their wages also as secured creditors on pari passu basis. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
