Recovery Officer to Assess Claims, Prioritize Creditors in Liquidation Case; Report Due in Four Months with Rs.20 Crore Allocation.

The court directed the Recovery Officer to determine the entitlement of secured and unsecured creditors in a liquidation case, considering priorities under Section 529A of the Companies Act, 1956, and Section 31B of the RDB Act. An amount of Rs.20,00,00,000 was allocated for disbursement. Unsecured creditors were given one month to file claims, while secured creditors could submit or update claims within the same period. The Recovery Officer was instructed to submit a report within four months, resolving the entitlement dispute between the parties.

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Issues involved: Determination of entitlement of secured and unsecured creditors in a liquidation case.

In the judgment, it was noted that an objection was raised by unsecured creditors, including Collector, Wardha, State Sales Tax Department, and Central Excise and Customs Department, claiming that secured creditors had waived their right to make further claims after adjudication by the Official Liquidator, citing Rule 163 of the Company (Court) Rules and a previous judgment. On the other hand, secured creditors argued that they were entitled to enforce their full claim based on a certificate under Section 19(22) of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The court acknowledged the dispute between the parties and directed the Recovery Officer to determine the entitlement of both secured and unsecured creditors, considering the priorities under Section 529A of the Companies Act, 1956, and Section 31B of the RDB Act. The Recovery Officer was instructed to provisionally determine the entitlement, with an amount of Rs.20,00,00,000 available for disbursement. The unsecured creditors were given one month to file their claims, and the Recovery Officer was tasked to submit a report within four months, taking into account claims from both secured and unsecured creditors. Secured creditors were also allowed to submit their claims or fresh claims within the specified timeframe.

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