Assignment after winding-up order cannot confer secured-creditor status or justify substitution in liquidation proceedings.

An assignee of debts under a registered assignment deed could not be substituted for the assignor in winding-up proceedings where the assignment was executed after the winding-up order and creditor rights had crystallised. The application was also tied to a claim of secured-creditor status and SARFAESI remedies, but the assignee was neither a bank, financial institution, securitisation company nor reconstruction company, and therefore lacked the statutory standing to proceed as a secured creditor under that regime. The transaction was viewed in the context of liquidation protection, competing claims of secured creditors and workmen, and public interest. Substitution was rightly refused.

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Issues: Whether the assignee of debts under a registered deed of assignment could be substituted in place of the assignor in winding-up proceedings and claim the status of secured creditor, and whether such substitution was permissible in the factual setting of the case.

Analysis: The assignment was executed after the winding-up order, when the rights of creditors had crystallized and the Official Liquidator had control over the assets of the company in liquidation. The application for substitution was not a simple transfer of a claim in isolation but was linked to a claim of secured-creditor status and invocation of remedies under the SARFAESI regime. The applicant was neither a bank, financial institution, securitisation company, nor reconstruction company, and therefore could not claim the statutory status necessary to proceed as a secured creditor under that enactment. The Court also took into account that the transaction appeared commercially unconscionable in the context of the outstanding dues, the interests of other secured creditors and workmen, and the need to protect public interest in liquidation proceedings. The precedents relied upon by the appellant were distinguished on facts.

Conclusion: The prayer for substitution was rightly rejected and no interference was called for.

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