Secured Creditor Appeals Granted: Suits Stay in Delhi

The High Court allowed both appeals filed by Corporation Bank, a secured creditor seeking recovery through civil suits in the High Court of Delhi. The court set aside the decision to transfer the suits to another High Court, emphasizing the avoidance of unnecessary expenses for the appellant. It was held that the convenience of the official liquidator should not be the sole consideration, and each party was directed to bear their own costs.

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Issues: Transfer of pending civil suits from one High Court to another High Court, consideration of convenience of official liquidator vs. secured creditor, interpretation of Companies Act.

In this judgment delivered by the High Court of Punjab and Haryana, the court disposed of two appeals against a common judgment dated April 27, 1995, related to Company Appeal No. 16 of 1995 and Company Appeal No. 17 of 1995. The appeals were directed against a decision by the learned company judge in C.P. Nos. 155 and 156 of 1994. The appellant, Corporation Bank, had filed a petition under section 446 of the Companies Act seeking permission to proceed with two civil suits against a company in liquidation pending in the High Court of Delhi. The official liquidator had no objection to the continuation of the suits but suggested transferring them to the High Court where the liquidation proceedings were taking place due to resource constraints. The learned company judge accepted this suggestion and ordered the transfer of the suits to the High Court where the liquidation proceedings were ongoing. The appellant challenged this decision through the present appeals.

The appellant, represented by counsel, argued that being a secured creditor, it would be more just and convenient for the suits to be conducted in the High Court of Delhi where the mortgaged property was located. The appellant contended that the official liquidator's convenience should not be the sole consideration. The appellant relied on a Supreme Court judgment to support its argument. The official liquidator, appearing in person, reiterated the submissions made before the learned company judge. After considering the submissions and perusing the records, the court noted that the appellant was a secured creditor seeking recovery of over eight crores through suits enforcing an equitable mortgage on property in New Delhi. The court opined that transferring the suits to another High Court would lead to unnecessary expenses for the appellant. The court referenced a Supreme Court judgment with similar facts to support its decision that avoiding additional costs for the appellant was crucial.

Consequently, the court allowed both appeals and set aside the part of the judgment directing the transfer of suits to another High Court. The court clarified that it was not interfering with the appellant's permission to continue the suits and ordered each party to bear their own costs.

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