Secured Creditor's Priority Upheld in Sale Proceeds Dispute

The applicant, a secured creditor, was affirmed as such by the DRT and DRAT, entitling them to recover a specified amount with interest from PSIDC's sale proceeds. The winding-up order's retroactive effect preserved the applicant's security interest despite prior asset sales. The Tribunal had exclusive jurisdiction over creditor priority issues, including those under the Companies Act. The applicant's recovery entitlement was subject to the workmen's rights under the Companies Act, necessitating reimbursement to the official liquidator for any due workmen's claims.

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Issues Involved:
1. Whether the applicant is an unsecured creditor and required to lodge its claim before the official liquidator for adjudication.
2. Whether the DRT under the RDB Act will have jurisdiction in respect of the proceedings initiated by the applicant, though secured assets were put to sale by PSIDC prior to the order of the winding up.
3. Whether the proceedings before the DRT are in respect of the money realized by the secured creditors.
4. Whether the claim of the applicant being a secured creditor is subject to the rights of the other secured creditors, including the claim of the workmen under section 529A of the Companies Act, 1956.

Issue-wise Detailed Analysis:

Question No. 1:
The applicant is a secured creditor. The DRT held that the applicant-bank is a secured creditor as its charge has been duly registered with the Registrar of Companies. This finding was affirmed by the DRAT, which noted that the applicant-bank's officials were present and signed the proceedings when PSIDC took over the fixed assets, including plant and machinery, of the borrower company. The DRAT held that the applicant is entitled to recover an amount of Rs. 1,41,83,391.33 with pendente lite and future interest at 9% per annum till actual recovery from PSIDC. The argument that the applicant is an unsecured creditor due to the sale of assets by PSIDC before the winding up is misconceived. The winding up order relates back to the date of filing of the winding-up petition, and the sale proceeds from the secured assets remain security against which a secured creditor can proceed.

Question No. 2:
In Allahabad Bank v. Canara Bank, it was held that sections 17 and 18 of the RDB Act confer exclusive jurisdiction to the Tribunal for adjudication of liability and execution of recovery certificates, and no leave of the company court is necessary. The Supreme Court also held that the Tribunal has jurisdiction to decide questions of priorities among creditors in accordance with section 19(19) of the RDB Act read with section 529A of the Companies Act. Therefore, the Tribunal alone has jurisdiction to entertain the question of priorities.

Question No. 3:
The contention that the Tribunal has jurisdiction only in respect of money realized from the sale of assets is untenable. The discussion in Allahabad Bank's case was specific to its facts, where the unsecured creditor had sold the property of the company based on a money decree. The Tribunal's jurisdiction extends beyond merely the money realized.

Question No. 4:
The Supreme Court in Allahabad Bank's case distinguished between secured creditors who go before the company court and those who stand outside the winding up to realize their security. The applicant falls into the latter category and is entitled to recover the amount adjudicated by the DRT and modified by the DRAT from the sale proceeds lying with PSIDC. However, this entitlement is subject to the rights of the workmen under section 529A of the Companies Act, 1956.

Conclusion:
The applicant is a secured creditor and entitled to recover Rs. 1,41,83,391.33 with pendente lite and future interest at 9% per annum till actual recovery from the sale proceeds with PSIDC. This recovery is subject to the rights of the workmen as adjudicated by the official liquidator. The applicant must furnish an undertaking to reimburse the official liquidator for the workmen's claims found due and payable.

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