Recovery certificate enforcement in liquidation is confined to statutory remedies; proof-of-debt claims remain subject to winding-up rules.

A recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 is binding on the company and the Official Liquidator, but it cannot be enforced through proof-of-debt proceedings, which are not a mode of execution under that statute. In liquidation, the Official Liquidator may admit or reject claims only in accordance with the Companies Act, 1956 and the Company (Court) Rules, 1959, including valuing debts as on the winding-up date and limiting interest under the prescribed winding-up rules. The Company Court's jurisdiction under section 446 does not extend to executing the certificate, or to reopening charge-registration or alleged relinquishment issues that would trench upon the tribunal's determination.

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Issues: (i) Whether secured creditors holding a recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 can enforce the full certificate amount in proof-of-debt proceedings before the Official Liquidator; (ii) whether the Official Liquidator can restrict such claims to the winding-up date and limit subsequent interest under the Company (Court) Rules, 1959; (iii) whether the Company Court has jurisdiction under section 446 of the Companies Act, 1956 to enforce the recovery certificate or determine issues of charge registration and alleged relinquishment of security.

Issue (i): Whether secured creditors holding a recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 can enforce the full certificate amount in proof-of-debt proceedings before the Official Liquidator.

Analysis: The recovery certificate obtained from the Debts Recovery Tribunal is binding on the company and the Official Liquidator, but its enforcement must follow the modes prescribed under the recovery statute. Proof-of-debt proceedings before the Official Liquidator under rule 163 are not a mode of execution under that Act. In winding-up administration, the Official Liquidator can only examine the claim to the extent it fits the Companies Act, 1956 and the Company (Court) Rules, 1959.

Conclusion: The secured creditors were not entitled to enforce the full certificate amount in the proof-of-debt proceedings.

Issue (ii): Whether the Official Liquidator can restrict such claims to the winding-up date and limit subsequent interest under the Company (Court) Rules, 1959.

Analysis: Under rule 154, the value of debts is to be estimated as on the date of the winding-up order. Under rules 156 and 179, interest is restricted to a rate not exceeding 4 per cent per annum in the relevant winding-up administration. Rule 163 empowers the Official Liquidator to admit or reject proof in whole or in part. Therefore, when secured creditors lodge claims before the Official Liquidator, he must apply the winding-up rules and can accept the claims only to that limited extent.

Conclusion: The Official Liquidator was competent to restrict the claims to the winding-up date and to limit interest accordingly.

Issue (iii): Whether the Company Court has jurisdiction under section 446 of the Companies Act, 1956 to enforce the recovery certificate or determine issues of charge registration and alleged relinquishment of security.

Analysis: The jurisdiction to adjudicate debt liability and execute a recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 lies exclusively with the Tribunal and the Recovery Officer. The Company Court cannot, under section 446, undertake execution of that certificate or reopen questions decided by the Tribunal. Questions whether charges were properly registered under sections 125 and 132, or whether securities were relinquished, are not to be decided in these proceedings when they would trench upon the certificate and its enforcement. The Company Court's role remains confined to matters consistent with sections 529 and 529A and the winding-up rules.

Conclusion: The Company Court had no jurisdiction to enforce the certificate, reopen charge-registration issues, or decide alleged relinquishment of security in these proceedings.

Final Conclusion: The challenge to the Official Liquidator's determination failed, the limited admission of claims under the winding-up rules was upheld, and the secured creditors were left to pursue enforcement of the full recovery certificate under the remedies available in law.

Ratio Decidendi: In winding-up proceedings, a recovery certificate under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 cannot be executed through proof-of-debt proceedings before the Official Liquidator or under section 446 of the Companies Act, 1956, and claims lodged in liquidation remain subject to the Companies Act and the winding-up rules to the extent they govern distribution and admission of debts.

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