1936 (5) TMI 17

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..... JUDGMENT King, CJ. - This is an appeal against the orders of the Honorable Mr. Justice B.N. Srivastava, dated March 12, 1936, and May 11, 1934. The facts which are necessary for the purposes of this appeal, are that the Lucknow Sugar Works Co., Ltd., which is in liquidation, had dealings with the appellant Bank under the heads of (1) Debenture account on the security of block and machinery, ....

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....or to lease out the mills. Most of the money which is now in the hands of the Liquidator is the money realised from the lease of the mills made from year to year. The question to be decided in this appeal is whether the appellants can claim any right to a share in this money and whether the security to which they are entitled can extend to it. The learned Judge by his order dated May 11, 1934, c....

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....r and, therefore, all the money should be paid to it. The income must form part of the security and that as soon as the order of liquidation was made, the securities were crystalized and it must enure for the benefit of the creditor. The security of the appellants as debenture holder is limited to block and machinery, and whether it is a floating security or fixed security, it creates no new righ....

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.... learned Counsel for the appellants, that the learned Counsel for the Judge should not have given priority and ordered payment in full under section 234(1) (i) of the Indian Companies Act to the other creditors whose claim did not fall under section 230 of the Act. It was urged that the intention of this clause could not be to give priority to creditors who could not bring their claims under eithe....