2008 (2) TMI 616

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....n No. 1609 of 2006, dated July 3, 2007, which is essentially to the following effect : "Since claims are required to be invited by the official liquidator and it is only thereafter can such claims, including that of the appellant, be adjudicated it is appropriated that the Andhra Pradesh State Financial Corporation is directed to deposit a sum of Rs. 50,000 with the official liquidator to enable him to incur the required expenditure in inviting claims. The said amount shall be paid by Andhra Pradesh State Financial Corporation to the official liquidator within a period of two weeks from the date of receipt of copy of this order." Company Application No. 1609 of 2006, has been preferred by the former managing director of the first responde....

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....ideration before a Division Bench of this court Andhra Pradesh State Financial Corporation v. Southern Transformers and Electricals Ltd. [2000] 100 Comp. Cas. 794; [2000] 5 Comp LJ 144, 148 and it has been answered as under (page 798) : "9. The appellant herein who is a secured creditor and who was in no way responsible for the order of reference under section 20 of the Sick Industrial Companies (Special Provisions) Act, 1985, and who did not come forward to support the winding up, cannot be construed to be a petitioner, nor can the appellant be subjected to a legal obligation to deposit the advertisement costs and initial expenses of the official liquidator merely because it is a secured creditor. If at all it is the Board for Industrial ....

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.... Industrial and Financial Reconstruction, are not correctly decided and we hereby overrule the said decisions. At the same time, we make it clear that the appellant is bound to reimburse the official liquidator for the expenses incurred by him in connection with or for the purpose of maintenance and preservation of security. Such amount should be paid without avoidable delay after receiving a statement of expenditure from the official liquidator. The official liquidator can also require the secured creditor to pay in advance regarding the expenditure which he is called upon to incur for this purpose provided sufficient details are notified to the appellant-corporation. If there is any dispute in regard to the quantum of expenses or the just....

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....s of the company." The very purpose of making a provision enabling the official liquidator to draw upon the permanent advance or any other fund provided by the Central Government for incurring the necessary expenses in connection with the winding up of the company in liquidation, which does not have any assets available is only to ensure that the winding up order will be given full effect to and be complied with or without any further loss of time, and at a later point of time, such expenditure can be recouped from out of the proceeds of the assets of the company realised, in priority to the debts of the company. Obviously, the provision under rule 292, as can be visualised, is intended to take care of a contingent situation like the one b....