Companies Act Case Law Rajasthan Financial Corpn. & Anr. Vs The Official Liquidator & Anr.

CASE NO.:
Appeal (civil) 4055 of 1998

PETITIONER:
RAJASTHAN FINANCIAL CORPN. & ANR.

RESPONDENT:
THE OFFICIAL LIQUIDATOR & ANR.

DATE OF JUDGMENT: 05/10/2005

BENCH:
S.N. VARIAVA,TARUN CHATTERJEE & P.K. BALASUBRAMANYAN

JUDGMENT:
J U D G M E N T

 

 

P.K. BALASUBRAMANYAN, J.
1. Appellant No. 1, The Rajasthan Financial Corporation, is a
corporation constituted under Section 3 of The State Financial
Corporations Act, 1951 (hereinafter referred to as “the SFC Act”).
Appellant No. 2, the Rajasthan State Industrial Development and
Investment Corporation Limited, is a deemed financial institution by
virtue of exercise of power by the Central Government under Section 46
of the SFC Act. The appellants are the secured creditors of M/s Vikas
Woolen Mills Ltd. (hereinafter referred to as, “the company-in-
liquidation”). By an order dated 14.6.1994, the company judge of the
High Court of Bombay ordered the company-in-liquidation to be wound
up. The Official Liquidator was directed to take charge of the assets of
the company-in-liquidation. On 18.4.1995, the Official Liquidator
applied for directions to the company court. He sought permission to get
the property valued by a valuer from the panel of valuers of the Official
Liquidator, and to sell the properties by public auction. He sought the
issue of a direction to the appellants, the secured creditors, to advance
Rs. 25,000/- each to the Official Liquidator to meet the expenses for
selling the assets of the company-in-liquidation on condition that the
amounts would be reimbursed to the appellants on priority basis from the
sale proceeds. The information about the filing of this application was
conveyed by the Official Liquidator to the appellants by communication
dated 21.4.1995. Apparently, the appellants had no notice of the
proceedings in liquidation and they, as secured creditors, now say that
they want to stand outside the winding up. In their reply to the Official
Liquidator, the appellants indicated that they proposed to pursue the
remedies available to them under Section 29 of the SFC Act. The
appellants had obtained a valuation of the properties of the company-in-
liquidation and according to the valuers, the value of the assets came to
Rs. 92,56,000/-. In addition to opposing the report of the Official
Liquidator, the appellants also filed an application praying that as
secured creditors standing outside the winding up, they may be permitted
to realize the securities and apportion the net sale proceeds between
them and the Bank of Baroda, another secured creditor, who was also
entitled to payment pari passu with them. They undertook to pay over
the dues of the workmen on the same being adjudicated by the Official
Liquidator to the extent of the availability of the funds out of the net sale
proceeds of the properties of the company, in accordance with Section
529-A of the Companies Act. The company court rejected the
application of the appellants. The company court took the view that the
right available under Section 29 of the SFC Act had to be exercised
consistently with the right of the workmen represented by the Official
Liquidator who was a charge-holder and ranked pari passu with the
secured creditors, even if they stood outside the winding up. The
company court held that in view of a valuation report already available,
it was not necessary to have a fresh valuation. The Court permitted the
Rajasthan State Financial Corporation, Appellant No.1, to invite offers
for sale of the properties and directed it to finalize the same in
consultation with the Official Liquidator. It was directed that the reserve
price would be fixed by the Company Judge on the report of the Official
Liquidator. The sale proceeds were to be retained by the Official
Liquidator until further orders. The Official Liquidator, in the
meantime, was to invite the claims of the workmen and was to assess the
extent of the claim of the workmen under Section 529 of the Companies
Act. Challenging this order, the appellants filed an appeal before the
Division Bench of the High Court of Bombay. The High Court
dismissed the appeal preferring to follow the earlier decision of that
Court in Maharashtra State Financial Corporation Vs. Official
Liquidator [AIR 1993 Bombay 392]. It is feeling aggrieved by the
dismissal of their appeal by the Division Bench, that the appellants have
filed this appeal by special leave before this Court.

2. It has to be noticed that even though the appellants could
have proceeded under Section 29 or under Section 31 of the SFC Act,
neither of the appellants has chosen to actually invoke those provisions
or to approach the concerned District Court under Section 31 of the SFC
Act. In other words, no proceeding under the SFC Act has been set in
motion by the appellants even now. In this situation, it is seen
straightaway that Section 32 (10) of the SFC Act has application. The
said sub-Section reads:-

“32(10). Where proceedings for liquidation in
respect of an industrial concern have commenced
before an application is made under sub-section (1) of
section 32, nothing in this section shall be construed
as giving to the Financial Corporation any preference
over the other creditors of the industrial concern not
conferred on it by any other law.”
On the face of it, it is apparent that no right is acquired by the appellants
or no right has accrued to them or can accrue to them under Section 32
of the Act, unless any such right is conferred on the appellants by any
other law in force. There is no plea that other than the SFC Act, any
other law confers any additional right on the appellants. A mere right to
take advantage of an enactment without any act done towards availing of
that right cannot be deemed a right accrued. [See Abbot Vs. Minister
of Land (1895) AC 425]

3. On the facts of this case, the position is that proceedings in
liquidation of the debtor company are going on and two secured
creditors who could have had recourse to the SFC Act to proceed against
its assets, but who did not, are standing outside the winding up and are
claiming rights under the SFC Act by approaching the company court.
The rights so claimed have to be considered in the light of Section 529-A
of the Companies Act read with Section 529 of that Act.

4. When this appeal came up for hearing before two learned
Judges, it was submitted that there was a conflict between the decisions
in Allahabad Bank Versus Canara Bank and Anr. [(2000) 4 SCC
406] and in International Coach Builders Limited Vs. Karnataka
State Financial Corporation [(2003) 10 SCC 482]. The two learned
Judges taking note of this submission and taking note of the importance
of the question of law involved, placed the matter before a larger bench.
That is how the matter has come up before us.

5. Learned Senior Counsel appearing for the appellants
submitted that the appellants had special rights under the SFC Act and
since there was no notice to them of the proceedings in liquidation and
they were not parties to the order of winding up, they were entitled to
proceed with the enforcement of their rights under the SFC Act and the
company court was not justified in not permitting the appellants to sell
the securities on their own and in directing them to associate the Official
Liquidator in the matter of sale and in the matter of disbursement of the
proceeds among the creditors. Learned counsel submitted that
Allahabad Bank Versus Canara Bank and Anr (supra) was an
authority in support of the proposition that the SFC Act would prevail
over the Companies Act, it being general law as against the special law
protecting corporations, like the appellants, namely, the SFC Act.
Learned counsel submitted that the decision in International Coach
Builders Limited Vs. Karnataka State Financial Corporation (supra)
has not adverted to the earlier decision and had not properly understood
the effect of the provisions of the SFC Act. Section 46B of the SFC Act
gave the provisions of that Act, overriding effect. The claim of the
appellants that they are entitled to sell the properties independent of the
Official Liquidator, therefore, deserves to be accepted. Learned counsel
for the Official Liquidator, on the other hand, submitted that on the facts
and in the circumstances of the case, the High Court was justified in
directing the sale to be held under the supervision of the Official
Liquidator and in directing the Official Liquidator to hold the sale
proceeds until further orders from the company court and that the
proceeds have to be distributed only in terms of Section 529-A of the
Companies Act. Learned counsel further submitted that no interference
was called for with the decision of the High Court.

6. There is no doubt that the appellants are financial
corporations within the meaning of the SFC Act conferred with the right
to proceed under that Act, to take over the management and possession
of the assets of the debtor, here the company-in-liquidation, or to enforce
their claims by resort to Section 31 of the SFC Act by approaching the
concerned District Court. The appellants not having invoked the
provisions of the SFC Act, stand only in the shoes of secured creditors
entitled to enforce their security. A liquidation of the company, the
debtor, has intervened and what are the consequences of the order for
winding up is the question to be considered. Once winding up of a
company is resorted to, Sections 529 and 529-A of the Companies Act
get attracted. Section 528 provides for debts of all descriptions to be
admitted to proof. Section 529 makes applicable the rules of insolvency
in the winding up of insolvent companies. The rules with regard to debts
provable, the valuation of annuities and future and contingent liabilities,
and 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 apply. Section 529(1)(c) of the
Act deals with the rights of creditors. The same reads :

“529(1)(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 realize his security, –

(a) the liquidator shall be entitled to
represent the workmen and enforce such
charge;

(b) any amount realized 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 realized by him
by virtue of the foregoing provisions of
this proviso or the amount of the
workmen’s portion in his security,
whichever is less, shall rank pari passu
with the workmen’s dues for the
purposes of Section 529A”

7. The proviso above quoted and Section 529-A of the Act
were inserted by Amendment Act 35 of 1985 with effect from
24.5.1985. Section 529-A also can be set out conveniently at this stage.
It reads :
“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 proportions.

A combined reading of Section 529-A and 529 indicates that
notwithstanding anything contained in any other law for the time being
in force or in the Companies Act itself, there is a preferential payment
provided for workmen’s dues and debts due to the secured creditors to
the extent such debts rank under clause (c) of the proviso to Section
529(1) pari passu with such dues. Therefore, when the assets of the
company are sold and the proceeds realized, the debts by way of
workmen’s dues and that of the secured creditors have to be paid in full
if the assets are sufficient to meet them and if they are not sufficient, in
equal proportions.

8. In Karnataka State Financial Corporation Vs. Patil Dyes
and Chemicals (P) Ltd. and ors. [(1991) 70 Comp. Cas. 38], the
Karnataka High Court held that rights under Section 29(1) of the SFC
Act were available to the corporation only when the company is in
charge and control of its assets and not when the company has lost
control over its assets by the intervention of the company court and the
Official Liquidator. Section 29 of the SFC Act did not justify a
contention that where the creditor is a financial corporation, the assets of
the company-in-liquidation pursuant to the order of the company court
are taken outside the purview of the jurisdiction of the company court.
On a proper construction of Sections 529 and 529A of the Companies
Act, the workmen’s dues and the debts due to the secured creditors to the
extent of clause (c) of sub-Section (1) of Section 529, should be worked
out in the light of the illustration given under Section 529 and that could
be ordered only by the company court in exercise of his powers under
Section 446(2)(b) and (d) of the Companies Act.

9. In Kerala Financial Corporation Vs. Official Liquidator
and anr. [(1991) 71 Comp. Cas. 324], the Kerala High Court held that
Section 529A of the Act prevailed over Section 29 of the SFC Act in
case of a conflict and since the workmen’s dues which rank pari passu
with the dues of the secured creditors will have to be paid from the
proceeds of the assets of the company including the security given to the
secured creditors, any dispute as to the apportionment of workmen’s
dues and the amount due to the financial corporation and other related
questions could not be left to be decided by the financial corporation.
Therefore, in the best interests of all concerned, the sale of the assets had
to be conducted by the Official Liquidator under the supervision of the
company court. It may be noted that in that case, the financial
corporation had sought permission of the company court to initiate
proceedings under Section 29 of the SFC Act.

10. In Maharashtra State Financial Corporation, Bombay
Vs. The Official Liquidator [AIR 1993 BOMBAY 392], the Bombay
High Court took the view that rights conferred on a financial corporation
as a mortgagee under Section 29 of the SFC Act are not obliterated when
the company is in winding up. The statutory right under Section 29 to
sell the property, had to be exercised consistently with the rights of a
pari passu chargeholder in whose favour a statutory charge is created by
the proviso to Section 529 of the Companies Act when the company is in
liquidation. Therefore, such a power can be exercised only with the
concurrence of the Official Liquidator and the Official Liquidator is
required to take the permission of the Court before giving such
concurrence since he is an officer of the Court and is required to act
under the directions of the Court while exercising his powers on behalf
of the workers. The Court held that there was no inconsistency between
the SFC Act and Section 529 read with Section 529A of the Companies
Act and hence Section 46B of the SFC Act was not attracted.

11. In International Coach Builders Ltd. (In Liquidation)
Vs. Karnataka State Financial Corporation [(1994) 81 Comp.Cas.19],
a Division Bench of the Karnataka High Court held that the right of a
secured creditor of a company-in-liquidation, there the Karnataka State
Financial Corporation, to realize its security by taking possession of
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
529-A of the Companies Act, 1956 by Act 35 of 1985. It was held that
the permission granted to the Karnataka State Financial Corporation, a
secured creditor of the company-in-liquidation, to sell the assets of the
company which constituted security for repayment of loans advanced by
the Corporation to the Company and which the Corporation had already
taken into possession before the winding up was ordered, and the
permission to realize the dues of the Corporation subject to payment of
the workmen’s dues as undertaken by it, by standing outside the winding
up, was well in accordance with the provisions of Section 529, as
amended, and Section 529-A as inserted in the Companies Act, 1956,
and Section 29 and Section 46B of the SFC Act.

12. In Gujarat State Financial Corporation Vs. Official
Liquidator and ors. [(1996) 87 Comp. Cas. 658], the Gujarat High
Court doubted the correctness of the decision of the Kerala High Court
in Kerala Financial Corporation Vs. Official Liquidator and anr.
(supra) and followed the decision of the Karnataka High Court in
International Coach Builders Ltd. (In Liquidation) Vs. Karnataka
State Financial Corporation (supra). The Court held that the right of
the secured creditor to deal with his security and realize the same
without intervention of the court, remains unaffected notwithstanding
such vesting, or property coming in the custody of the company court.
To the extent of the charge or mortgage, the property does not come to
the court and is not available for distribution of dividends generally
unless the mortgagee relinquishes it or the surplus, if any, comes to the
court. Enforcement of such right remains outside the insolvency
proceedings or winding up proceedings. It was held that the power of
recovery of loans by State Financial Corporations under Section 29 of
the SFC Act was not in conflict with Section 529A of the Companies
Act, 1956.

13. In Industrial Credit and Investment Corporation of
India Ltd. Vs. Srinivas Agencies and ors. [(1996) 4 SCC 165], while
considering the question as to when should a company court grant leave
to a secured creditor to proceed with his suit against the company after
an order of winding up was made, and on what conditions the permission
should be granted, this Court held that in the case of conflict in power
between the Official Liquidator appointed by the company court and the
Receiver appointed by the Civil Court in a suit filed by the secured
creditor, the interest of the Official Liquidator should have precedence.
The Court observed that the liquidator looks after the interests of a large
segment of creditors along with that of workmen, whereas the Receiver
appointed in a creditor’s suit confines his concern to the interest of the
particular secured creditor at whose instance, the Receiver had been
appointed.

14. In Allahabad Bank Vs. Canara Bank & anr. (supra), the
question of jurisdiction of the Debts Recovery Tribunal under the
Recovery of Debts Due to Banks and Financial Institutions Act, 1993,
vis-`-vis the company court arose for decision. This Court held that
even where a winding up petition is pending, or a winding up order has
been passed against the debtor Company, the adjudication of liability
and execution of the certificate in respect of debts payable to banks and
financial institutions, are respectively within the exclusive jurisdiction of
the Debts Recovery Tribunal and the Recovery Officer under that Act
and in such a case, the company court’s jurisdiction under Sections 442,
537 and 446 of the Companies Act stood ousted. Hence, no leave of the
company court was necessary for initiating proceedings under the
Recovery of Debts Act. Even the priorities among various creditors,
could be decided only by the Debts Recovery Tribunal in accordance
with Section 19(19) of the Recovery of Debts Act read with Section 529-
A of the Companies Act and in no other manner. The Court took into
account the fact that Recovery of Debts Due to Banks and Financial
Institutions Act, 1993 was a legislation subsequent in point of time to the
introduction of Section 529A of the Companies Act by Act 35 of 1985
and it had overriding effect. But it noticed that by virtue of Section
19(19) of the Recovery of Debts Act, the priorities among various
creditors had to be decided by the Recovery Tribunal only in terms of
Section 529A of the Companies Act and Section 19(19) did not give
priority to all secured creditors. Hence, it was necessary to identify the
limited class of secured creditors who have priority over all others in
accordance with Section 529-A of the Companies Act. The Court also
held that the occasion for a claim by a secured creditor against the
realization by other creditors of the debtor under Section 529A read with
proviso (c) to Section 529(1) of the Companies Act could arise before
the Debts Recovery Tribunal only if the concerned creditor had stood
outside the winding up and realized amounts and if it is shown that out
of the amounts privately realized by it, some portion had been rateably
taken away by the liquidator under clauses (a) and (b) of the proviso to
Section 529(1). The Court has not held that Section 529-A of the
Companies Act will have no application in a case where a proceeding
under the Recovery of Debts Act has been set in motion by a financial
institution. The Court here was essentially dealing with the jurisdiction
of the Debts Recovery Tribunal in the face of Sections 442, 537 and 466
of the Companies Act.

15. In A.P. State Financial Corporation Vs. Official
Liquidator [(2000) 7 SCC 291], this Court held that the Company
Judge, while permitting the financial Corporation to stay outside the
liquidation proceedings, rightly imposed conditions to ensure that the
Corporation would : (i) discharge its liability due to workers under
Section 529-A of the Companies Act, (ii) inform the Official Liquidator
in advance about the proposed sale of properties of the indebted
companies, and (iii) would obtain the Court’s permission before
finalizing the tenders. This Court specifically overruled the view taken
by the High Court that it was not necessary for the Financial
Corporations to seek permission of the company court to stay outside the
winding-up proceedings. It was held that Sections 529(1) and 529-A of
the Companies Act had overriding effect and the 1985 amendment being
later in point of time, the non-obstante clause therein would prevail over
the non-obstante clause contained in Section 46B of the SFC Act.

16. In International Coach Builders Limited Vs. Karnataka
State Financial Corporation [(2003) 10 SCC 482], this Court
considered the correctness of the views expressed by the Karnataka High
Court and the Gujarat High Court. This Court held that a right is
available to a financial corporation under Section 29 of the SFC Act
against a debtor, if a company, only so long as there is no order of
winding up. When the debtor is a company in winding up, the rights of
financial corporations are affected by the provisions in Sections 529 and
529-A of the Companies Act. It was also held that the proviso to Section
529 of the Companies Act creates a “pari passu’ charge in favour of the
workmen to the extent of their dues and makes the liquidator the
representative of the workmen to enforce such a charge. The decision of
the Bombay High Court in Maharashtra State Financial Corpn. Vs.
Ballarpur Industries Ltd. [AIR 1993 Bom 392] was approved. The
reference to a larger bench was occasioned by the fact that the decision
in Allahabad Bank Versus Canara Bank and Anr (supra) was not
adverted to in this decision. This decision recognizes that, whether a
creditor is standing outside the winding up or not, the distribution of the
proceeds has to be in terms of Section 529 of the Companies Act read
with Section 529A of that Act in a case where the debtor is a company-
in-liquidation. As far as we can see, there is no conflict on the question
of the applicability of Section 529A read with Section 529 of the
Companies Act to cases where the debtor is a company and is in
liquidation. The conflict, if any, is in the view that the Debts Recovery
Tribunal could sell the properties of the Company in terms of the
Recovery of Debts Act. This view was taken in Allahabad Bank
Versus Canara Bank and Anr (supra) in view of Recovery of Debts
Act being a subsequent legislation and being a special law would prevail
over the general law, the Companies Act. This argument is not available
as far as the SFC Act is concerned, since Section 529A was introduced
by Act 35 of 1985 and the overriding provision therein would prevail
over the SFC Act of 1951 as amended in 1956 and notwithstanding
Section 46B of the SFC Act. As regards distribution of assets, there is
no conflict. It seems to us that whether the assets are realized by a
secured creditor even if it be by proceeding under the SFC Act or under
the Recovery of Debts Act, the distribution of the assets could only be in
terms of Section 529A of the Act and by recognizing the right of the
liquidator to calculate the workmen’s dues and collect it for distribution
among them pari passu with the secured creditors. The Official
Liquidator representing a ranked secured creditor working under the
control of the company court cannot, therefore, be kept out of the
process.

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 coming under the Recovery of Debts Act or of financial
corporations coming under the SFC Act, can only be with the association
of the Official Liquidator and under the supervision of the company
court. The right of a financial institution or of the Recovery Tribunal or
that of a financial corporation or the Court which has been approached
under Section 31 of the SFC Act to sell the assets may not be taken
away, but the same stands restricted by the requirement of the Official
Liquidator being associated with it, giving the company court the right to
ensure that the distribution of the assets in terms of Section 529A of the
Companies Act takes place. In the case on hand, admittedly, the
appellants have not set in motion, any proceeding under the SFC Act.
What we have is only a liquidation proceeding pending and the secured
creditors, the financial corporations approaching the company court for
permission to stand outside the winding up and to sell the properties of
the company-in-liquidation. The company court has rightly directed that
the sale be held in association with the Official Liquidator representing
the workmen and that the proceeds will be held by the Official
Liquidator until they are distributed in terms of Section 529A of the
Companies Act under its supervision. The directions thus, made, clearly
are consistent with the provisions of the relevant Acts and the views
expressed by this Court in the decisions referred to above. In this
situation, we find no reason to interfere with the decision of the High
Court. We clarify that there is no inconsistency between the decisions in
Allahabad Bank Versus Canara Bank and Anr (supra) and in
International Coach Builders Limited Vs. Karnataka State
Financial Corporation (supra) in respect of the applicability of Sections
529 and 529A of the Companies Act in the matter of distribution among
the creditors. The right to sell under the SFC Act or under the Recovery
of Debts Act by a creditor coming within those Acts and standing
outside the winding up, is different from the distribution of the proceeds
of the sale of the security and the distribution in a case where the debtor
is a company in the process of being wound up, can only be in terms of
Section 529-A read with Section 529 of the Companies Act. After all,
the liquidator represents the entire body of creditors and also holds a
right on behalf of the workers to 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 Limited (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 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 will have the power to
order sale of the assets of a borrower company-in-
liquidation, but only after notice to the Official
Liquidator or the liquidator appointed by the
Company Court and after hearing him.

iii) If a financial corporation acting under Section 29 of
the SFC Act seeks to sell or otherwise transfer the
assets of a debtor company-in-liquidation, the said
power could be exercised by it only after obtaining
the appropriate permission from the company court
and acting in terms of the directions issued by that
court as regards associating the Official Liquidator
with the sale, the fixing of the upset price or the
reserve price, confirmation of the sale, holding of the
sale proceeds and the distribution thereof among the
creditors in terms of Section 529A and Section 529 of
the Companies Act.

iv) In a case where proceedings under the Recovery of
Debts Due to Banks and Financial Institutions Act,
1993 or the SFC Act are not set in motion, the
concerned creditor is to approach the company court
for appropriate directions regarding the realization of
its securities consistent with the relevant provisions
of the Companies Act regarding distribution of the
assets of the company-in-liquidation.

19. Now reverting back to the case on hand, we find that the
directions issued by the company court are in the interest of all the
creditors and are well within its jurisdiction. But we find merit in the
submission that the company court was not justified in not ordering a
fresh valuation of the properties. Having regard to the lapse of time, we
are satisfied that a fresh valuation is necessary. We direct the company
court to get a fresh valuation done by a valuer from the panel of valuers
of the High Court. The other directions issued by the company court are
affirmed.

21. The appeal is thus disposed of affirming the directions
issued by the company court, but with a modified direction for getting a
fresh valuation of the properties as indicated in the earlier paragraph.

22. We make no order as to costs.

 

 

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