TaxTMI 
TaxTMI 
2000 (8) TMI 986
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.... Judge of the High Court. The above two companies obtained loans from the appellant and for realisation of dues, the appellant invoked the provisions of section 29 of Act of 1951. As both the companies were under liquidation, the appellant filed two separate applications under section 446(1) of the Companies Act, read with sections 29 and 46 of the Act of 1951 before the learned company Judge of the High Court for staying outside the liquidation proceeding. The learned Judge passed two similar orders in respect of both the companies and granted permission to the appellant to stay outside the liquidation proceedings subject to the following conditions : "1. The petitioner will undertake to discharge its liability due to the workers, if any,....
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....the right to take over the management or possession or both of the industrial concerns, as well as the right to transfer by way of lease or sale and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation." "529. Application of insolvency rules in winding up of insolvent companies.-(1) In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to- (a )debts provable; (b)the valuation of annuities and future and contingent liabilities; and (c )the respective rights of secured and unsecured creditors; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent : Provided that the security of every ....
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....29 by the amending Act of 1985 The Legislature has provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen's portion therein and, where a secured creditor; instead of relinquishing the security and proving the debt opts to realise security- (a)the liquidator shall be entitled to represent the workmen and enforce such charge; (b)any amount realised by the liquidator by way of enforcement of such charge; and (c)so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of the proviso or the amount of the workmen's portion in the security, whichever is less, shall rank pari passu....
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....9 of the Act of 1951 has to be exercised with the rights of pari passu charge to the workmen created by the proviso to section 529. Under the proviso to sub-section (1) of section 529, the liquidator shall be entitled to represent the workmen and force the above pari passu charge. Therefore, the Company Court was fully justified in imposing above conditions to enable the Official Liquidator to discharge his function properly under supervision of the Company Court as the new section 529A confers upon a Company Court a duty to ensure that the workmen's dues are paid in priority to all other debts in accordance with provisions of the above section. The Legislature has amended the Companies Act in 1985 with a social purpose viz. to protect dues....