Court confirms guarantors not liable for company debt in liquidation. Applicant to prove debt. Further payment possible.

The Court upheld the original adjudication by the Official Liquidator, stating that a decree against guarantors does not create a decretal debt against the company in liquidation. The Applicant was directed to submit proof of debt for safeguarding assets, with the Official Liquidator instructed to adjudicate the claim promptly. The Court rejected certain prayer clauses, allowing the Applicant to seek further payment if surplus funds arise. The Official Liquidator was also required to consider the Applicant's response to a show cause notice in their report, with no costs awarded.

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Issues:
1. Setting aside the adjudication of the Applicant's claim by the Official Liquidator.
2. Entitlement of the Applicant to recover any sum against the company in liquidation based on a decree obtained against the guarantors.
3. Declaration of the claim towards safeguarding of the assets of the Company in liquidation.

Analysis:
1. The Applicant sought to set aside the adjudication of their claim by the Official Liquidator based on a subsequent decree obtained against the guarantors of the company. The Court clarified that the decree against the guarantors does not create a decretal debt against the company in liquidation. The Official Liquidator must adhere to the Companies Act and Rules for debt adjudication. Interest can only be paid if surplus funds are available after settling debts of secured creditors and workers. As there are no surplus funds currently, the original adjudication by the Official Liquidator was upheld.

2. Regarding the claim for safeguarding the assets of the Company in liquidation, the Applicant was instructed to submit proof of debt to the Official Liquidator for adjudication. The Official Liquidator was directed to adjudicate this claim within three weeks and submit a final report to the Court for proper distribution of dues in accordance with the law. The Applicant could apply for further payment if surplus funds are identified after settling dues of secured creditors and workers.

3. The Court disposed of the Company Application by rejecting certain prayer clauses and directing the Applicant to submit proof of debt for the safeguarding claim. The Official Liquidator was tasked with adjudicating this claim and preparing a report for the Court's review. The Applicant was given the opportunity to seek additional payment if surplus funds were available. The Official Liquidator was also instructed to consider the Applicant's response to a show cause notice in their report. No costs were awarded in this matter.

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