Court-supervised realisation attracts Official Liquidator fees and proportionate expense sharing among secured creditors and workmen.

Where a company's assets are realised under Court supervision by the Official Liquidator, the liquidation expenses may be apportioned among stakeholders according to their respective interests. Security expenses for protecting the factory premises were not to fall solely on the applicant bank; the Court directed proportionate recovery from other secured creditors and workmen. Valuation charges were treated as first-priority expenses, while professional fee and advertisement charges were retained subject to supporting bills and records. Workmen's dues were left for final determination before any refund. The Official Liquidator's fee under rule 291 was held payable because the realisation occurred through the Court process, notwithstanding that the secured creditor remained outside the winding up.

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Issues: (i) whether security expenses incurred by the Official Liquidator could be borne entirely by the applicant bank or had to be apportioned among secured creditors and workmen; (ii) whether valuation charges, professional fee, advertisement charges, and workmen dues were liable to be deducted from the realised amount; and (iii) whether the Official Liquidator's fee under the Companies (Court) Rules was payable when the secured creditor had remained outside the winding up proceedings but the property was realised under the supervision of the Court and the Official Liquidator.

Issue (i): whether security expenses incurred by the Official Liquidator could be borne entirely by the applicant bank or had to be apportioned among secured creditors and workmen

Analysis: The liability for security expenses already incurred for protecting the factory premises could not be reopened on merits, but the applicant was entitled to the details of such expenses. Since the realisation covered both immovable and movable assets and other secured creditors also had an interest in the realised movables, the burden of security expenses had to be apportioned. The Court held that the applicant bank would bear the expenses except to the extent of 1.3 per cent, which was to be recovered from the other secured creditors, and the workmen were to bear 1.5 per cent of the security expenses in view of their pari passu claim.

Conclusion: The security expenses were not to be borne solely by the applicant bank; they were to be proportionately apportioned, with directions for recovery from the other secured creditors and workmen to the extent indicated.

Issue (ii): whether valuation charges, professional fee, advertisement charges, and workmen dues were liable to be deducted from the realised amount

Analysis: Valuation expenses were treated as first-priority expenses, and the applicant bank was directed to bear them except to the extent of 1.3 per cent to be borne by the other secured creditors. The professional fee of the approved valuer was not disallowed, but the Official Liquidator was directed to produce the bills and justify the claim. Advertisement charges were also not rejected, but the Official Liquidator was required to place the supporting material for ratification. As to workmen dues, the Court held that the claim had to be examined and communicated first, and no refund could be directed until the claim was finally determined.

Conclusion: The valuation charges were upheld with limited apportionment, the professional fee and advertisement charges were kept subject to supporting proof, and the workmen dues were not ordered to be refunded at that stage.

Issue (iii): whether the Official Liquidator's fee under the Companies (Court) Rules was payable when the secured creditor had remained outside the winding up proceedings but the property was realised under the supervision of the Court and the Official Liquidator

Analysis: By reference to the scheme of section 529 of the Companies Act and the relevant insolvency principles, the Court held that realisation of the company's assets through the Official Liquidator under Court supervision attracted the fee prescribed under rule 291 of the Companies (Court) Rules. The fact that the secured creditor remained outside the winding up did not negate the duty performed by the Official Liquidator in relation to sale, confirmation, possession, and execution of conveyance. The argument based on the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 was rejected because the property was in the possession of the Official Liquidator and the realisation took place through the Court process, not independently under that statute.

Conclusion: The Official Liquidator's fee was held payable under rule 291, and the retained amount was to be adjusted accordingly before any surplus could be returned.

Final Conclusion: The application succeeded only to the limited extent of securing disclosure, apportionment, and adjustment directions, while the applicant's broader challenge to the deductions and the Official Liquidator's entitlement to fee was substantially rejected.

Ratio Decidendi: Where assets of a company in liquidation are realised through the Official Liquidator under Court supervision, the statutory fee prescribed for such realisation remains payable even if a secured creditor has stayed outside the winding up, and related expenses may be proportionately apportioned according to the respective interests involved.

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