TaxTMI 
TaxTMI 
TaxTMI 
2006 (1) TMI 249
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.... It is now a statutory corporation constituted by and under the Oil and Natural Gas Commission Act (Central Act 43 of 1959, hereinafter referred to as 'the Act'). The Act provides for the establishment of a Commission for the development of petroleum and petroleum products produced by it and for matters connected therewith. Section 2(f) of the Act defines petroleum as having the same remaining as in the Petroleum Act, 1934 (Act 30 of 1934) and as including natural gas. The Commission established under the Act took over the previously existing organization with effect from 18-9-1959. 2.2 In the course of its drilling and exploration of oil, ONGC discovered oil-bearing fields in Cambay and Ankleshwar region in 1959 and 1961 respectively. In most of the oil fields situated in Gujarat, gas comes out along with crude oil and is commonly known as associated gas. In Cambay area, gas is unaccompanied by crude oil and is known as free gas. This is easily combustible and can be used as domestic as well as industrial fuel. We are concerned here with both these commodities which are generally known as natural gas and we shall refer to them compendiously as gas. 2.3 At that time, there were v....
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.... contracts. As the said price was heavy, industries were not satisfied. 2.5 In view of the rise in price, an association of gas consumers was formed and ultimately a society registered under the Co-operative Societies Act. They filed petition before this Court being Special Civil Application No. 833 of 1979 and others praying to issue appropriate writ directing the respondent to supply the break-up and data on the basis of which price structure was arrived at by O.N.G.C., for supply of the gas etc. These matters were finally decided by a Division Bench of this Court. The judgment in the case of Association of Natural Gas Consuming Industries of Gujarat v. O.N.G.C. 24(2) GLR 1437. In para 36 of the judgment on page 1460 the Division Bench has given certain directions and in para 37 of the judgment the Division Bench set aside the price demanded by O.N.G.C. leaving it open to deal with the question of price fixation in any one of the modes suggested in para 36. The petition was, therefore, partly allowed and rule was made absolute accordingly in the petitions with costs. 2.6 Being aggrieved and dissatisfied with the said judgment, O.N.G.C., preferred appeal before the Hon'ble Supre....
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..... The respondent No. 10 company further undertakes to make available all its immovable assets in the event of discharging the liabilities which may arise on account of the difference between the price at which all the Gas being supplied in the company during the pendency of the proceedings in this connection and the price which may be determined by the Hon'ble Court while disposing of the present appeals finally. 2.8 Thereafter, the matter was heard by the Hon'ble Supreme Court finally. The Hon'ble Supreme Court delivered the final judgment on 4-5-1990 (since reported in Oil & Natural Gas Commission v. Association of Natural Gas Consuming Industries of Gujarat AIR 1990 SC 1851). The Hon'ble Apex Court, as regards the price fixation, had set aside direction given in para 36 of the judgment of the High Court. The Hon'ble Supreme Court did not approve the same and ultimately in para 40 sub-para (iii) on page 440 of the judgment the Hon'ble Supreme Court has given certain directions by observing as under (at p. 1878 of AIR). 2.8a(viii) On behalf of the ONGC, it has been pointed out that a sum of Rs. 14.35 crores is outstanding for the period from December, 1982 to August, 1989 from e....
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.... 151 of paper book). It may be noted that at that time the company was before BIFR. 2.10 It may be noted from the record that the Hon'ble Supreme Court by its order dated 29-4-1993 (page 154 of the paper book) granted the prayer of ONGC that ONGC would also be entitled to take steps regarding disconnecting the supply of gas. 2.11 From the record it appears that the matter was again heard by the Hon'ble Supreme Court on 10-8-1993, by that time as far as the present respondents are concerned, BIFR order was already obtained on 28-5-1993 and after obtaining order from the BIFR the learned counsel for the present respondents made a statement that the liberty be granted for sale not only of Vatva land but also Unit No. 1, at Kankaria referred to in the order of BIFR to enable the company to first pay entire dues of the ONGC and thereafter utilize remaining surplus for other purposes as mentioned in the order of BIFR and the Hon'ble Supreme Court has accepted the submission of the learned counsel for the respondent in this behalf and accordingly the Hon'ble Supreme Court has granted the liberty to the company to take necessary steps in accordance with the orders of the BIFR for sale of....
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....ourt (Coram : S. Rajendra Babu, Dr. AR. Lakshmanan and G.P. Mathur, JJ.) considered its various earlier judgments and also section 529 and section 529A of the Companies Act and ultimately observed as under: (pages 56-57 of the paper book) Textile Labour Association's case (supra) the judgment was delivered on 12-4-2004 (relevant page No. 509/510) : 2.14A The effect of sections 529 and 529A is that the workmen of the company become secured creditors by operation of law to the extent of the workmen's dues provided there exists secured creditor by contract. If there is no secured creditor then the workmen of the company become unsecured preferential creditors under section 529A to the extent of the workmen dues. The purpose of section 529A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the company and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. There is no other statutory provision overriding the claim of the secured creditors except section 529A. This section overrides preferential claims under sectio....
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....arned Single Judge by his Judgment and order dated 1-10-2004 in paragraphs 39 and 40 observed as under : (Paras 41-42 of the paper book). 2.16A ONGC therefore cannot claim any preferential right on the basis of the order of 17-10-1997 in priority to the secured creditors and the workmen taking into consideration the provisions of sections 529 and 529A of the Act. Such preferential claim, if falling under section 530 of the Act would follow the claims of Secured Creditors and the Workmen under sections 529 and 529A of the Act. In case the claim of ONGC is not proved to be preferential under section 530 of the Act they would therefore fall for consideration along with all other claims of other creditors as ONGC, on its own saying, is a decree-holder. 2.16B In view of what is stated hereinbefore this application cannot be granted at this stage, i.e., before claims of Secured Creditors and workmen are proposed under sections 529 and 529A of the Act. Despite categorical statement at the Bar, under instructions, that ONGC did not want to lodge any claim before the Official Liquidator, it will be open to ONGC to lodge its claim in accordance with law and seek its satisfaction when claim....
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....ltimately a decision was given by this Court in 1983. Thereafter, though the respondent succeeded in High Court but in appeal of ONGC before the Hon'ble Supreme Court, the Hon'ble Supreme Court has passed categorical order and pursuant to that undertaking was also given by the respondents in the appeal before the Hon'ble Supreme Court. The judgment of the Hon'ble Supreme Court was delivered on 4-5-1990. On that day onwards, the respondents were liable to pay the amount of gas which they have consumed. That amount was crystallized and ONGC was in place of decree-holder and the respondents were bound to pay the said amount. 3.4 It was further submitted that in view of the order of the Hon'ble Supreme Court and in view of the sale of gas made by ONGC during the period in question, ONGC has to receive from and be paid by the said company, i.e., the company now in liquidation, an amount of Rs. 1799.367 lakhs as on 28-2-1998 which has on 30-9-2004 reached to the tune of about Rs. 37,22,52,211.20 with interest and on the said amount further interest is also payable till the date of realization and ONGC is entitled to claim and receive the aforesaid amount with further interest till the d....
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....an extremely inequitable situation, and, therefore, the doctrine of actus curiae neminem gravabit would be attracted, and the ONGC would be entitled to its dues. 3.8 The learned counsel submitted that in view of the aforesaid development of the matter ONGC would be a secured creditor of the Company in liquidation as security in favour of the appellant was created by various orders of the Hon'ble Supreme Court particularly the order dated 15-4-1987. The orders per se create security in favour of the appellant. The need for creation of such security was the fact that the appellant was directed to supply gas under directive orders of the Hon'ble Supreme Court at a price lower than what was fixed by the appellant and what was actually due to it. 3.9 Before the learned counsel for the appellant argued the matter, he made further legal submission. He had invited our attention to certain statutory provisions of the Companies Act as well as the provisions of the Insolvency Act. 3.10 One of the provisions section 125 of the Companies Act reads as under: "125. Certain charges to be void against liquidator or creditors unless registered.-(1) Subject to the provisions of this Part, every c....
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....ads as under : "Where a secured creditor realises his security he may prove for the balance due to him; after deducting the net amount realised." 3.14 After relying on these statutory provisions, the learned counsel made submission as to why ONGC to be treated as secured creditor. 3.14A The appellant who was under no obligation to supply gas at a rate lower than that fixed by it was virtually compelled to supply gas at a price lower than fixed by it. The Hon'ble Supreme Court was therefore aware that the appellant was being placed into a disadvantageous position and therefore found it necessary to protect the appellant's interest in the case of its ultimate success vis-a-vis its entitlement to price of gas. It is in such circumstances that the order of 15-4-1987 came to be passed and the said order has to be deemed as a creation of a procedural security/Court ordered security in favour of the appellant. The same, therefore, is adequate for the appellant being considered a secured creditor entitled to a pari passu charge with other secured creditors and workmen. 3.14B This fact is also recognized by the Hon'ble Supreme Court in final judgment dated 4-5-1990 while deciding the ma....
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....plaintiff and the plaintiff cannot be treated as a holder of simple money decree entitled to claim only after distribution to the secured creditors. Thus, in the said case, it was held that a charge would stand created in favour of the plaintiff irrespective of absence of a contractual charge or its registration. 3.14H The learned counsel has also relied on the judgment in the case of U.P. Union Bank Ltd. v. Dina Nath Raja Ram AIR 1953 All. 637. 3.15 The learned counsel therefore submitted that in any view of the matter ONGC is a Secured Creditor and when the Official Liquidator disburses the amount out of realisation, the ONGC is in pari passu with the amount of workers as per section 529A of the Companies Act and ONGC cannot become unsecured creditor and is entitled to recover the money in line with unsecured creditor. 3.16 In support of the aforesaid submissions the learned counsel first invited our attention to the judgment of the Madras High Court in the case of K. Saradambal v. Jagannathan & Bros. [1972] 42 Comp. Cas. 359 particularly the Court has observed as under : "Though the expression insolvent companies not defined, obviously it refers to a company which has been o....
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.... Having regard to these circumstances, I am of the view that in the interest of justice and for the purpose of closing the administration of the insolvent-company, it is necessary that the machineries, which are in the possession of the applicant company, are ordered to be sold in public auction by the applicant company after due publicity so as to enable the applicant company to adjust its dues including the cost of sale out of the sale proceeds. If there is any balance left, it shall be paid over to the official liquidator. The application is ordered in these terms. No order as to costs." 3.17A The learned counsel has further relied on the judgment of the Calcutta High Court in the case of Praga Tools Ltd. v. Official Liquidator of Bengal Engineering Co. (P.) Ltd. [1984] 56 Comp. Cas. 214 in which the Court has held as follows : "In my view both the arguments of Mr. Nag with regard to the subject-matter of the decree or order and with regard to the compromise are sound and should be accepted. I hold that the security created in favour of Mr. Nag's client by the order of S.K. Roy Chowdhury, J. (as his Lordship then was), dated August 1, 1978, cannot be said to be unenforceable i....
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.... an order or decree of the Court, section 125 has no application." (p. 2114) 4.2 In the Hon'ble Supreme Court has further held as follows AIR 1998 SC 2111 : "In Praga Tools Ltd. v. Official Liquidator of Bengal Engineering Co. (P.) Ltd. [1984] 56 Comp. Cas. 214 (Cal.) a consequent decree for repayment of money was passed against the Bengal Engineering Company on the suit filed by Praga Tools Company. The decree provided, inter alia, that in the event of non-payment of the decreed amount, the Praga Tools Company would be entitled to execute the decree and in the event of execution of the decree, the security furnished by the Bengal Engineering Company with the Registrar under an earlier order of the Court to the extent of Rs. 53,000 would continue as security for the decree. That decree was not registered. Thereafter, Bengal Engineering Company went into liquidation and its entire assets were sold by the Official Liquidator. The Praga Tools Company applied claiming to be a secured creditor to the extent of Rs. 50,000. A learned Single Judge of the Calcutta High Court held that as the charge was created by an order of the Court, it would not require registration under section 125 o....
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....e created by the debtor by writing under his hand. A short passage in Mulla's Code of Civil Procedure (14th Edn.), Vol. II at Page 1510 is instructive and it reads thus : There is no provision in the Code for charging orders, but on the Original Side of the High Courts, which has inherited the older jurisdiction of the Court of Chancery, it is the practice in cases where it is considered undesirable to grant immediate execution to make a charging order in the form made in the case of Kewney v. Attrill [1886] 34 Ch. D 345 : 55 LT 805 : 35 WR 191. When the assets require nursing, the advantage of a charging order is that it enables the Court on the one hand to gain time and on the other hand to protect the decree-holder. It also avoids the confusion that might ensue if the Court were to allow a direct attachment while it is administering the assets of the partnership. The effect of a charging order is to constitute the decree-holder a secured creditor although he undertakes to deal with the charge subject to the further orders of the Court." (p. 194) 6. The learned counsel has further relied on the judgment of the Allahabad High Court in the case of Munna Lall & Sons v. Official Re....
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....d against him is required to be subjected to either deposit of amount in Court or furnishing a bank guarantee for the decretal dues. The afore referred also obviously is an act meant to protect and secure interest of the decree holder in case if upon hearing of the appeal the Court holds against the appellant. Submission to assail the judgment/finding of the learned Single Judge : 8. Further relying upon the aforesaid authorities, the learned counsel for the appellant made the following submissions and tried to demonstrate that the reasoning of the learned Single Judge of this Court in the impugned order and judgment is not correct and this Court may allow the appeal of the appellant. 8.1 It was submitted that the learned Judge failed to appreciate that there was no question of ONGC being required to show that there was a mortgage charge or lien. Before attacking the judgment/order of the learned Single Judge, he has invited our attention to certain provisions of Transfer of Property Act and the Companies Act particularly section 125 of the Companies Act which provides charge to include mortgage in this Part. Section 58 of the Transfer of Property Act defines mortgage. The learn....
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....order of the Hon'ble Supreme Court right from 15-4-1987 ONGC has been treated as a secured creditor and that therefore ONGC should be given preferential treatment as a secured creditor and even amongst secured creditors in the matter of recovery of its outstanding dues over all other creditors who claim to be secured creditors and workmen and financial institutions. It was further submitted that the learned Judge ought to have appreciated that ONGC supplied the gas pursuant to the order of the Hon'ble Supreme Court and hence ONGC is required to be treated as preferred secured creditor and at least secured creditor in terms of section 529/529A of the Companies Act by virtue of the conditional orders passed by this Court as well as Hon'ble Supreme Court. 8.6 The learned Judge ought to have appreciated that way back in 1993 the Hon'ble Supreme Court vide an order dated 6-4-1993 had prescribed the mode and manner in which ONGC was entitled to recover amounts due to it from various industries including the company in liquidation and that subsequently vide an order dated 17-10-1997 the Hon'ble Supreme Court directed that ONGC was to be paid off first out of the assets of the company now....
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....t to have appreciated that in the peculiar facts and circumstances of the present case, such a view could not have been taken since ONGC had not supplied gas of its own free volition but under the orders of the Hon'ble Supreme Court (i.e. under compulsion). Such a supply could, by no stretch of imagination, be equated with the act of a businessman, unsecured creditor or a secured creditor, who of free volition and with the sole intent of earning profit, had entered into the business transaction with the company in liquidation. 8.12 The learned counsel further submitted that security in favour of ONGC had been created by this Court's order as well as order of the Hon'ble Supreme Court and after creation of such a security, charge, or lien, the same cannot be diluted or watered down or washed away on the ground that rights of the workmen and secured creditors would have priority over the same. 8.12A In the alternative and without prejudice to the aforesaid contention, the learned Single Judge ought to have held that the ONGC had a pari passu right and therefore a pro rata entitlement from the amounts to be distributed. 8.13 It was submitted that the learned Single Judge ought to h....
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.... pari passu charge along with other secured creditors and the workmen. 8.17 U.P. Union Bank Ltd. v. Dina Nath Raja Ram AIR 1953 All. 637 provides that by reason of this section rules which are in force under the law of insolvency have been made applicable to winding up proceedings. The word 'rules' has been used in this section as meaning the principles which regulate the affairs of insolvency proceedings. 8.18 Section 109 of Indian Companies Act, 1913 (corresponding to section 125 of the Companies Act, 1956) applies to a mortgage or charge created by the Company by contract and not to a charge arising by operation of law. What is position of the Secured Creditor : 8.19 The learned counsel has also relied on the judgment of the Bombay High Court in the case of Canfin Homes Ltd. v. Lloyds Steel Industries Ltd. [2001] 106 Comp. Cas. 521 where the definition of Secured Creditor has been explained. The said judgment the Bombay High has observed as under : "The secured creditor who seeks to prove the whole of his debt in the course of the proceedings of winding up must before he can prove his debt relinquish his security for the benefit of the general body of the creditors. If he s....
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..... Counsel appears. He has invited our attention that in this case this Court has given judgment on 30-7-1983 and thereafter in January, 1984. He stated that Sadashiv Pimplaskar, Chief Manager, ICICI has filed affidavit in reply dated 18-7-2005 which is on page 181 of the paper book for which affidavit of IFCI Ltd., 5-9-2005 has been filed. Further affidavit of ICICI dated 26-9-2005 has been filed. He has invited our attention to the affidavit on page 181 of the paper book. 9.2 The learned counsel further submitted that the contention on behalf of ONGC that it has superior right even by virtue of the order of the Hon'ble Supreme Court including order dated 17-10-1997 is discussed and has been rightly negatived by the learned Single Judge. 9.3 As the learned Sr. Advocate has made elaborate submissions, we would take up his contentions first. He has invited our attention to the affidavit filed by the Chief Manager of ICICI Ltd. He has referred to various amounts advanced by ICICI Ltd., and other financial institutions right from 24-3-1982. He has stated that in respect of first rupee term loan, the Company has executed a Joint Mortgage Deed dated 20-1-1984 creating a legal mortgage ....
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.... the order of the Hon'ble Supreme Court dated 15-4-1987 is similarly misconceived and contrary to facts and applicable law. In support of the aforesaid, the learned counsel has made the following submissions : 9.8 The order dated 15-4-1987 of the Hon'ble Supreme Court of India does not create a charge on the properties of the Company in favour of ONGC since the order by itself does not make the immovable properties of the Company a security for the payment of money to ONGC particularly since it does not crystallize the liability of the Company whereby the ONGC became entitled to realise a determined sum from the company and neither does the order stipulate that a charge would be created on the properties of the company and that in default of payment of the amount, the ONGC was authorised to apply to the Court for the sale of the company's property and realisation of the decretal amount. 9.9 In fact the said order dated 15-4-1987 is merely an order of injunction restraining the ONGC from disconnecting supply of gas to the company for non-payment of the differential amount of price, on condition that the company gives an undertaking to the Court as stipulated in the order. The orde....
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....rphy, J.) wherein on page 18 of the said judgment it has held that attaching creditor is not a secured creditor, an attachment creates on charge in favour of the attaching creditor but it merely prevents and avoids alienation and confers no right on the attaching creditor and further on the judgment it is observed as under : "...Under those circumstances his present application to be treated as a secured creditor in respect of this engine and to be paid out of proceeds of the engine in priority to the other creditors, is misconceived and must be dismissed...." (p. 21) 9.12 In the alternative, if the undertaking furnished by the company is treated as creating a charge on the properties of the company, then in that case it is an undertaking voluntarily given by the company and therefore a charge created by the company which is required to be registered either by the company or by ONGC under section 125 read with section 134 of the Companies Act, failing which it would be void against the Liquidator or creditors of the company and since such purported charge has not been registered either by the Company or by ONGC, the same is unenforceable. 9.13 In the case of Praga Tools Ltd. (su....
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....ere the rights created by the company cannot be exercised to the full extent together, each later created right would be subject to the rights previously created. 9.18 There is no special contract or reservation binding the earlier transferees and in fact there is an express stipulation in the undertaking furnished by the company that it will not further encumber or alienate its properties which therefore acknowledges previous transfer by way of mortgage in favour of ICICI and others and therefore the ONGC would only be a subservient charge holder. 10. As regard TLA, Mr. Vasavada appears. He has stated that sections 529 and section 529A have been interpreted by the Hon'ble Supreme Court in various cases. For that he has relied on the decision of the Hon'ble Supreme Court in the case of UCO Bank (supra) in which the Hon'ble Supreme Court has held that the workers have a right to be heard. He has also relied on the judgment of the Hon'ble Supreme Court in the case of A.P. State Financial Corpn. (supra) where also scope of section 529 has been considered and also the judgment of the Hon'ble Supreme Court in the case of International Coach Builders Ltd. v. Karnataka State Financial C....
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....ssed recent and detailed judgment. 10.2 We have also considered the submissions of Mr. J. T. Trivedi, learned advocate on behalf of respondent No. 2 Bank of India. He has relied on affidavit dated 20-9-2004 filed by Shri K.K. Nair, Assistant General Manager, Ahmedabad Recovery Branch. From the record it is submitted that Bank of India, one of the Secured Creditors, had filed a Review Petition in the Hon'ble Supreme Court and there were number of Review Petitions filed by different Secured Creditors. This submission was made in context of the contention raised by the learned Additional Advocate General that a Review Petition filed by ICICI came to be dismissed as withdrawn on 16-10-2001. The learned counsel submitted that Review Petition being I.A. Nos. 300 to 310 of 2002 were filed by Bank of India and the same came up for hearing on 21-1-2003 wherein notice has been issued and thereafter ONGC has been granted time to file reply. It is submitted that the Review Petition is still pending. Regarding the undertaking filed by the Management of the Company in liquidation before the Hon'ble Supreme Court, it was submitted by the learned counsel that the property in question was already ....
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....8. It was further stated by the Company that under the Loan Agreements in respect of the loans together with interest, liquidated damages, premia on prepayment, costs, expenses and all other monies, the Company executed in favour of IFCI Ltd., and others. Deed of Hypothecation dated 24-3-1982 in respect of first loan thereby creating a first charge on all its movable properties, pertaining to the Textile Division and also executed in favour of IFCI Ltd., and others Deed of Hypothecation dated 8-6-1988 in respect of second loan thereby creating a first charge on the whole of its movable properties. The Company also executed Joint Mortgage Deed dated 20-1-1984 to secure the first loan and subsequently created mortgage by deposit of title deeds to secure the second loan thereby mortgaging on first charge basis, in favour of IFCI Ltd., on all its immovable properties more particularly described in the Third Schedule attached thereto. It is therefore stated that the first loan and second loan were granted by IFCI Ltd., under Project Finance Participation Scheme in participation with ICICI Bank, IDBI Ltd., and IIBI. All the original documents are in the custody of ICICI Bank and hence IC....
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....iquidation considering the decisions rendered by the Apex Court in favour of ONGC. 11.3 In view of the aforesaid facts and circumstances of the case, the ONGC was permitted to raise the contention especially in the light of the fact that ONGC specifically based its claim on various orders made by the Hon'ble Supreme Court and did not want to lodge any claim before the Official Liquidator, as categorically stated at the Bar by the learned Additional Advocate General under instructions. We are of the view that the learned counsel is right that ONGC was already held to be entitled to recover its dues from the Company in liquidation in the light of the fact that ONGC had established before the Hon'ble Apex Court that it had supplied goods for which it was entitled to charge at a higher rate and the consumers having undertaken to discharge such a liability. 11.4 We are also of the view that the learned Single Judge was right in holding that once an order of winding up came to be made on 17-1-1997 in Company Petition No. 121 of 1995 with Company Petition No. 66 of 1998 and others, ONGC was required to either seek leave of the Company Court or obtain orders from the Company Court for th....
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....ion of the Secured Creditor does not improve from what it was originally and the priority of the Secured Creditor would not extend to its entire unrealized sums which might be in excess of the value or the price realised from his security. 11.9 In view of the aforesaid facts and circumstances of the case, we are of the view that the learned Single Judge was right in observing that even on this count ONGC cannot be permitted to seek priority over the Secured Creditors in light of the statutory Scheme laid down under section 529 read with section 529A of the Act. Even if ONGC is to be treated as Secured Creditor ONGC will have to first of all permit a pari passu charge to the extent of workmen's portion from the realisation of its security and only thereafter ONGC will be entitled to make a claim to the extent ONGC has given up the workmen's portion from the amount realised from its security. 11.10 It may be noted that the learned Sr. Advocate Mr. Kamal Trivedi has not only tried to assail the judgment of the learned Single Judge but he has tried to submit that in view of the judgment of the Hon'ble Supreme Court a security has been created in favour of ONGC and therefore, ONGC may....
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....mit ONGC to act beyond the provisions of the Act. If such exercise is not permissible for the Apex Court while exercising powers under Article 142 of the Constitution by no stretch of imagination can it be stated that the Company Court would have any such jurisdiction. Because the Apex Court exercises jurisdiction under Article 142 of the Constitution to do complete justice between the parties, and while doing so ordinarily cannot disregard a statutory provision governing a subject except for joining out the creases. Such powers cannot be exercised by this Court. The conflicting claims of Secured Creditors, other creditors and the overriding statutory preference qua the workmen and ONGC have to be balanced. We have considered the submissions of Mr. Vasavada, learned counsel, particularly the judgment in the case of A.P. State Financial Corpn. v. Official Liquidator [2000] 7 SCC 291 and from the said judgment it appears that if the statutory provision in State Financial Corporation Act, 1951 cannot prevail over provisions of the Companies Act, it is not possible to accept the contention raised on behalf of the ONGC that it has any superior right on the basis of orders made by the Ho....
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....920. It is admittedly not a mortgage. In fact, no specific submission as to whether such undertaking is a mortgage or a charge or a lien was advanced on behalf of ONGC. The question is if it is to be treated as a charge the same has to be specifically registered under section 125 of the Act in absence of which the same would be void against Liquidator and any Creditor of the Company. 11.16 Though much reliance has been placed on various orders, however, on the facts of the case we are of the view that the learned Single Judge was right in holding that ONGC has failed to show that there is an instrument by which the charge is created or evidenced and copy thereof verified in the prescribed manner filed with the Registrar of Companies for Registration in the manner required by the Companies Act within 30 days after the date of its creation. The Court exercising jurisdiction as a Company Court in winding up proceedings is bound by the provision of the Act and the relevant rules. In this situation, we are of the view that it is not possible to State that ONGC has been able to establish that any charge was created in its favour and that such charge had been duly registered as required ....
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....reer or other bailee for the purpose of transmission to the buyer without reserving the right of disposal of the goods; (b)when the buyer or his agent lawfully obtains possession of the goods; (c )by waiver thereof. 2. The unpaid seller of goods, having a lien thereon, does not lose his lien by reason only that he has obtained a decree for the price of the goods." (Re : Pollock and Mulla on Sale of Goods Act, 6th Edition, Chapter 5, page 327 relevant page 342) Loss of lien the seller's lien depends upon possession hence when the vendor has given the buyer possession under the contract of sale, all his rights in the goods are completely gone; he must recover the price exactly as he would recover any other debt, and has no longer any claims on the goods sold, superior to those of any other creditor. The delivery and acceptance of possession completes the sale, and given the buyer the absolute unqualified and indefeasible rights of property and possession in the things sold, though the price be unpaid and the buyer insolvent, unless, indeed the whole transaction is vitiated by actual fraud. (Blackburn on Sale, third edn. p. 341). Benjamin considered that : Whenever the property h....
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.... subject to his security and prove in the winding up for the balance of his debt after deducting the amount realised, or (b)surrender his security to the liquidtor and prove for the whole of his debt as an unsecured creditor, or (c)estimate the value of the property subject to his security, and prove for the balance of his debt after deducting the estimated value, or (d)rely on his security and not prove in the winding up. (Re : Penington's Company Law, 5th Edition, page 941) 11.23B It is thus well-established that once a winding up order is passed the undertaking and the assets of the company pass under the control of the liquidator whose statutory duty is to realise them and to pay from out of the sale proceeds its creditors. Such creditors acquire on such order being passed the right to have the assets realised and distributed among them pari passu. No new rights can thereafter be created and no uncompleted rights can be completed, for doing so would be contrary to the creditors' right to have the proceeds of the assets distributed among them pari passu. But Mr. Sen's argument was that the appellants had acquired under the scheme a vested right to have a second mortgage whi....
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.... enter up his judgment retrospectively to meet the justice of the case; and, therefore, if one party to an action dies during a curia advisari vult, judgment may be entered nunc pro tunc, for the delay is the act of the Court, for which neither party should suffer. (Re : Broom's Legal Maxims, 10th Edition, The Mode of Administering Justice, page 73). 11.26 The learned counsel for the banks have relied on the judgment of the Hon'ble Supreme Court in the case of Allahabad Bank v. Canara Bank [2000] 4 SCC 406 where the Hon'ble Supreme Court has considered the provisions of Companies Act and the DRT Act and made certain observations in relation to provisions of section 529A. However, we must at this stage take into consideration the recent judgment of the Hon'ble Supreme Court in the case of Andhra Bank v. Official Liquidator [2005] 5 SCC 75 where the Hon'ble Supreme Court has explained after considering the provisions of sections 529A, 529 and 446 of the Companies Act and inter se priority between workmen's dues and debts due to secured creditors and also considering its earlier judgment in Allahabad Bank's case (supra), in paragraph No. 23 on pages 86-87 as under : "The language of....
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....ight of the facts and circumstances available on record. For that we rely on the judgment of the Hon'ble Supreme Court in the case of Textile Labour Association (supra). 11.30 The judgment of the Apex Court which we have extracted earlier states that the claim under section 529A of the Workmen and the Secured Creditors would override such preferential claim under section 530 even if the claim of ONGC is treated as preferential claim under section 530. As a consequence the claims of ONGC are to be worked out in accordance with sections 529 and 529A of the Act and the use of the words as well denotes that the same will fall in the category of all other claims of other creditors even where a decree has been passed by the Court. In the conclusion when the Apex Court observed that the order of 17-10-1997 will have to be read subject to provisions of sections 529 and 529A of the Act, it only means that as first step the Secured Creditors will have to exercise the option as envisaged under section 529 of the Act; as second step in case the Secured Creditors opt to stay out of winding up the Official Liquidator will enforce the pari passu charge to the extent of workmen's portion; and thi....
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.... taken up for consideration for distribution of the funds which may be available at that time. 11.34 In view of the submissions which we have noted we have to consider what is definition of secured creditors and whether ONGC falls within the term 'secured creditors'. 11.35 The net result of the orders passed by the Hon'ble Supreme Court and also of the facts on records is as under : 1.A direction is given that dues of ONGC should be paid first and no further direction is given for securing this payment presumably because the fact that the immovable properties of Ambica Mills were encumbered in favour of banks at earlier point of time was brought to the notice of the Hon'ble Supreme Court. 2.The undertaking given by Ambica Mills not to create any further charge or to transfer the immovable properties has been accepted by the Hon'ble Supreme Court. 3.The order passed by the Hon'ble Supreme Court on 17-10-1997 is to be read subject to the provisions of sections 529 and 529A of the Companies Act in view of the judgment in the case of Textile Labour Association (supra). 11.36 Admittedly, no charge is created on the properties of Ambica Mills for securing the dues of ONGC. The givi....