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of <h1>Official Liquidator authorized to sell property free of bank's claim, time extension denied, preferential creditor status decision deferred.</h1> <h3>Dinshaw & Co., Ltd., In re</h3> The court granted the Official Liquidator permission to sell the property free of the Chartered Bank's encumbrance, dismissed the Bank's application for ... Charges – Rectification of register of Issues:Application for permission to sell property free of encumbrance of Chartered Bank, validity of order under section 120 of Companies Act, extension of time for registration, preferential creditor status.Analysis:The judgment involves an application by the Official Liquidator of a bank to sell a property free of encumbrance of the Chartered Bank, which held a mortgage deed on the property. The Chartered Bank had filed an application for extension of time under sections 120 and 234 of the Indian Companies Act, claiming preferential creditor status. The District Judge initially granted the extension ex parte, but later, upon the Liquidator's application, recalled the order. The Liquidator sought permission to sell the property without the encumbrance of the Chartered Bank.The first issue addressed was the validity of the District Judge's order under section 120 of the Companies Act. The Chartered Bank argued that the District Judge had no authority to review his order, citing the absence of a review provision in the Act. However, the judgment clarified that the District Judge, acting as a Court of Civil Jurisdiction, had the inherent power to vacate his previous order if necessary for justice. The judgment distinguished this case from precedents under other Acts where review powers were absent.The next issue was the extension of time for registration under section 120. The judgment highlighted that even if formalities under section 109 were met, the delayed registration due to the vacated extension order rendered the registration invalid. The judgment referenced cases under the Companies Act, emphasizing that extensions post-liquidation could prejudice creditors' rights and were thus impermissible.Regarding the Chartered Bank's claim for preferential creditor status, the judgment acknowledged the Bank's loan as a creditor claim but deemed the request premature. The judgment clarified that preferential creditor status could only be determined after the Bank's claim was admitted during the preparation of the schedule of creditors.In conclusion, the judgment granted the Liquidator permission to sell the property free of the Chartered Bank's encumbrance, dismissed the Bank's application for time extension, and deferred a decision on preferential creditor status. No costs were awarded in the case.
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