TMI Blog2018 (6) TMI 1773X X X X Extracts X X X X X X X X Extracts X X X X ..... n and entitled to exercise the power under Section 29 of the Act could be granted permission to auction and sale the properties mentioned in schedule at Annexure A, however, with certain directions to safeguard the interest of the workers of the company, if any - applicant is permitted to auction and sell the properties mentioned in the schedule at Annexure A in exercise of the power under Section 29 of the Act - Application disposed off. - R/Company Application No. 314 of 2015 In Company Petition No. 338 of 2013 - - - Dated:- 14-6-2018 - Honourable Mr. Justice C.L. Soni Mr. Jay Kansara For M/s. Wadiaghandy And Co (5679) For The Petitioner(S) No. 1 Appearance Deleted (23) For The Respondent(S) No. 1 Mr. Pavan S. Godiawala (2936) For The Respondent(S) No. 2 Ms. PJ Davawala (240) For The Respondent(S) No. 3 Notice Served By Ds (5) For The Respondent(S) No. 2 Notice Served (4) For The Respondent(S) No. 1 Official Liquidator (16) For The Respondent(S) No. 3 ORAL ORDER 1. The applicant has taken out the Judge s Summons for the following prayer. (A) This Hon ble Court be pleased to grant leave to the Applicant under Section 446 r/w. Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as regards the entitlement of the applicant to exercise the power under Section 29 of the Act is raised by and on behalf of the opponents. 4. Learned advocate Mr. Kansara for the applicant submitted that the applicant is entitled to exercise of the power under Section 29 of the Act in connection with the properties of the company mortgaged with it though the company is ordered to be wound up. He submitted that the applicant has exclusive charge over the mortgaged properties described in schedule at Anneurer-A. He submitted that as per the law laid down by the Hon ble Supreme Court in different decisions, the only right with the Official Liquidator is to ask for the share of the workers dues from the sale proceeds of the mortgaged properties. He, however, fairly states that to protect the interest of the workers and all other secured creditors, the applicant could be ordered to associate the Official Liquidator in the auction proceedings for sale of the mortgaged properties and the applicant is even agreeable to deposit the sale proceeds with the Official Liquidator on completion of the sale proceedings. 5. Learned advocate Ms. Dawavala appearing for the Official Liquidator s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with the properties described in schedule at Annexure A. However, when the company is in liquidation, the applicant Corporation could be asked to comply with certain conditions while dealing with the properties in exercise of power under Section 29 of the Act to safeguard the dues of the workers, if any. 9. In the case of Rajasthan State Finance Corporation Vs. Official Liquidator reported in (2005) 8 SCC 190, the Hon ble Supreme Court has summed up legal position as regards the powers of the State Financial Corporation (SFC) under the Act vis-a-vis the powers of the company court in para-18 as under: 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 and Financial Institutions Act, 1993 would be entitled to order the sale and to sell the properties of the debtor, even if a company-in- liquidation, through its Recovery Officer but only after notice to the Official Liquidator or the liquidator appointed by the Company Court and after hearing him. (ii) A District Court entertaining an application under section 31 of the SFC Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial Corporation case but went on to explain in paragraph 31 as to how the view adopted would not obliterate the difference between a creditor opting to stay outside winding up and one who opts to prove his debt in winding up. Para 31 of the judgment provides thus: 31. Finally, counsel for SFCs urge that the view we are to take would obliterate the difference between a creditor opting to stay outside winding-up and one who opts to prove his debts in winding-up. We are unable to accept. As a result of the amendments made by the Act of 1985 in the Companies Act, 1956, SFCs as secured creditors, must seek leave of the Company Court for the limited purpose 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to receive their wages also as secured creditors on pari passu basis. The control of the Company Judge and the Official Liquidator if authorized, can extent only to ensure that the aforesaid purpose of Section 529A is effectively achieved. Like any other affected person, if the Company represented by the Official Liquidator has reasons to be aggrieved by claims made by a financial corporation under the SFC Act, its remedy would be to initiate appropriate civil proceedings to challenge such claim or debt of a State financial corporation before an appropriate forum and not to assume jurisdiction to sit in adjudication and decide entitlement of the financial corporation when it has opted to stand outside the liquidation proceeding as a secured creditor. As noted earlier, the statutory powers of SFCs have suffered only a limited impediment only to serve the purpose of protecting workers dues. 11. Thus, as held by the Hon ble Supreme Court, the control of the Company Judge and the Official Liquidator, if authorized, can be only to ensure that the purpose of Section 529A is effectively achieved i.e. only to a limited extent and for the limited purpose of securing the right of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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