Liquidator enforcement powers: may recover decretal debts and, on non-payment, execute and sell mortgaged company property.

Official liquidator established the indebtedness under secured loan accounts by documentary and oral evidence and the respondents were held liable to pay the assessed decretal sums with interest; respondent title documents did not discharge the debt. The note clarifies that, within winding up procedure, the liquidator may, after non-payment within the directed period, transmit the decree for execution, take possession of mortgaged company property and sell it by public auction to realise the decretal amount for distribution to creditors. The application by the liquidator was allowed and enforcement authorised.

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Issues: (i) Whether the respondents are liable to pay the sums claimed by the official liquidator under two loan accounts secured by mortgage/equitable mortgage; (ii) Whether the official liquidator is entitled to recover the decretal amount and, if necessary, take possession and sell the mortgaged property under the Companies Act.

Issue (i): Liability of respondents for amounts claimed under account Nos. HO-264 and HO-265.

Analysis: The Court examined the documentary evidence (registered mortgage deed, promissory note, receipts, bank letters, ledger entries) and oral testimony of the official liquidator (PW1), and compared these with the respondents' evidence (sale deeds and an unregistered will). The documents and testimony collectively established the execution and delivery of the mortgage deed, promissory note, deposit of title deeds, and payments/receipts evidencing the loans. The respondents' sale deeds and will did not satisfactorily discharge or negate the indebtedness. The Court also considered earlier intermediary orders and the scheme reducing interest, but found the substantive claim remained disputed and was finally adjudicated on the evidence before the master and the Court.

Conclusion: The respondents are liable to pay the sum claimed by the official liquidator, assessed at Rs. 20,72,989 with further interest on the balance principal amounts from 8-11-2002 until realisation.

Issue (ii): Authority of the official liquidator to enforce the decree, take possession and sell the mortgaged property in the event of non-payment.

Analysis: The Court interpreted the winding up regime as a self-contained procedure empowering the liquidator to collect company assets and debts for distribution to creditors. Relying on statutory provisions governing winding up and liquidator powers, the Court found that, following non-payment within the directed period, the official liquidator may take possession of the mortgaged property, transmit the decree to the appropriate execution court, and proceed with sale by public auction to satisfy the decretal amount and further interest.

Conclusion: The official liquidator is entitled, upon the respondents' failure to pay within the stipulated time, to take possession of the mortgaged property through execution and to sell the property by public auction to satisfy the decree.

Final Conclusion: The application by the official liquidator is allowed: the respondents' liability is established and enforced, and the official liquidator is authorized to execute the decree and sell the mortgaged property in accordance with the Companies Act.

Ratio Decidendi: In winding up proceedings the official liquidator, empowered by the Companies Act, has authority to establish and enforce debts due to the company, and to obtain possession and sell mortgaged company property through execution and public auction to realise sums due for distribution to creditors.

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