TaxTMI 
TaxTMI 
2010 (7) TMI 826
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....that for execution of the recovery certificate it shall obtain permission of this court. 2. Respondent No. 1 was ordered to be wound up by this court vide order dated 9-10-1997. The applicant had granted a term loan of Rs. 1 crore to the company (in liquidation) against the security of plant and machinery. vide order dated 18-9-1998, passed by this court in C. P. No. 40 of 1998, the applicant was granted permission to continue with the suit. However, it was directed that the Tribunal may pass decree, but such decree shall not be executed against the assets of the company without the leave of this court. O.A. No. 145 of 2001 filed by the applicant was allowed by the Debts Recovery Tribunal (for short "the DRT") on 27-6-2002. The applicant was found entitled to recover an amount of Rs. 1,41,83,391.53 against the defendants therein jointly and severally along with interest at 19.5 per cent per annum with quarterly rests from the date of filing of the suit till its realisation. A finding was returned that respondent No. 2 has sold the entire unit including the assets, such as, plant and machinery though not entitled to do so. The appeals against the aforesaid orders passed by the DR....
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....y of the provisions of the Companies Act and does not entitle the holders to recover the full amount so adjudged. The applicant is required to lodge its claim with the official liquidator, which shall be adjudicated as per the provisions of the Companies Act, as and when the amount is ordered to be disbursed by this court. 6. Respondent No. 2 in its reply has stated that it has taken over the plant and machinery under section 29 of the State Financial Corporations Act, 1951 and that the representatives of the bank were present and signed the proceedings. No objection was raised by the bank at that time nor at the time when the plant and machinery were sold. It is also pointed out that respondent No. 2 has filed a writ petition before this court challenging the order of the Debts Recovery Appellate Tribunal. It is not disputed that PSIDC has surplus of Rs. 21,26,15,094.78. 7. Respondent Nos. 5 to 8 in their reply have referred to a communication made by the consortium of banks including the applicant on 2-8-1997, in view of the advertisement brought out by the PSIDC for sale of factory, land, building, plant and machinery, to the effect that consortium banks are secured credit....
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....rgued that the applicant is an unsecured creditor and its claim is required to be adjudicated upon by the official liquidator. The recovery certificate issued by the DRT under the RDB Act does not confer any priority of rights to recover the amount from the sale of the assets including the plant and machinery. It is contended that the RDB Act has no application as the secured assets were put to sale before the order of winding up was passed by this court. It is also contended that the applicant is not entitled to recover any amount over and above the amount due to the applicant on the date of winding up of the company. 10. A few other facts which are relevant are that the petition for winding up was filed before this court on 9-5-1996 and that in the public interest litigation, this court issued certain directions on 27-9-1996, in respect of payment of dues to the growers of sugar cane and utilisation of nearly 22 lakhs quintals of sugar cane standing in the fields. This court constituted a Committee for sale of sugar molasses (bagasse) with a direction that the expenses to be borne by the concerned bank-PSIDC and the company subject to further directions as may be issued. Subse....
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....nd thus, it is required to lodge its claim before the official liquidator for adjudication ? (2) Whether the DRT under the RDB Act, will have the jurisdiction in respect of the proceedings initiated by the applicant, though secured assets were put to sale by PSIDC prior to the order of the winding up ? (3) Whether the proceedings before the DRT are in respect of the money realised by the secured creditors ? (4) Whether the claim of the applicant being a secured creditor, is subject to the rights of the other secured creditors including the claim of the workmen under section 529A of the Companies Act, 1956 ?" Question No. 1 14. It has been held by the DRT in its order annexure P2 that the applicant is a secured creditor. The Tribunal held to the following effect : "Thus, their contention is also rejected. In case, any separate amount is lying deposited with the Hon'ble High Court, the applicant-bank shall be at liberty to take steps in accordance with law to lay hands on the same too. It is also held that the bank is a secured creditor as its charge has been duly registered with the Registrar of Companies, as is evident from exhibit A5, the charge certificate." ....
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....e secured creditor has initiated proceedings under the RDB Act, but has not been granted any certificate of recovery. It was held that sections 17 and 18 of the RDB Act, are exclusive in respect of the question of adjudication of the liability. It was also held that the leave of the company court is not necessary as the jurisdiction of the Tribunal is exclusive. It was also held that section 19(19) of the RDB Act is inconsistent with section 446 and other provisions of the Companies Act, 1956 and only section 529A is attracted to the proceedings before the Tribunal and thus, on the question of execution and working out priorities, the special provisions made in the RDB Act, have to be applied. It was held to the following effect (page 88) : "For the aforesaid reasons, we hold that at the stage of adjudication under section 17 and execution of the certificate under section 25 etc., the provisions of the RDB Act, 1993, confer exclusive jurisdiction in the Tribunal and the Recovery Officer in respect of debts payable to banks and financial institutions and there can be no interference by the company court under section 442 read with section 537 or under section 446 of the Companies....
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.... has obtained a decree or an order of adjudication from the Tribunal and also complied with other conditions laid down under section 73 of the Code of Civil Procedure. It was, thus, concluded that Canara Bank in the aforesaid case, is not in a position to invoke the provisions underlying section 73 of the Code of Civil Procedure, 1908, because it has not obtained any decree or adjudication from the Tribunal. Thus, in view of the judgment of the hon'ble Supreme Court in Allahabad Bank's case (supra) it is the Tribunal and the Tribunal alone, which would have jurisdiction to entertain the question of priorities in terms of section 22 of the RDB Act. Question No. 3 20. hri Kansal has vehemently argued that the Debts Recovery Tribunal has the jurisdiction only in respect of money realised from the sale of the assets of the defaulters. Reference was made to paragraphs 54 and 56 of the judgment. 21. However, I find that the contention of Shri Kansal is wholly misconceived. The discussion in the aforesaid paras is in respect of the facts of the case. Allahabad Bank, as an unsecured creditor, has sold property of the company on the strength of a money decree obtained from the DRT.....