TaxTMI 
TaxTMI 
2011 (3) TMI 1460
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....ed loan of Rs. 200 lakhs to the company in liquidation vide Subscription Agreement dated 4-8-1992. In accordance with the said agreement, the company in liquidation was to allot Non-Convertible Debentures ('NCDs') after complying with the SEBI guidelines and other pre-requisites like appointment of trustees, creation of security etc. 3. However, despite various reminders, the company in liquidation neither issued NCDs to the appellant nor paid interest or other charges in accordance with the agreement. The company also failed to create security as required. 4. Consequently, the appellant filed an application under section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 for recovery of Rs. 2,96,22,963 along wi....
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....es not amount to a mortgage, the latter person is said to have a charge on the property; and all the provisions hereinbefore contained [which apply to a simple mortgage shall, so far as may be, apply to such charge]. Nothing in this section applies to the charge of a trustee on the trust-property for expenses properly incurred in the execution of his trust, [and, save as otherwise expressly provided by any law for the time being in force, no charge shall be enforced against any property in the hands of a person to whom such property has been transferred for consideration and without notice of the charge]." 8. In this connection, Mr. Patnaik, learned counsel relied upon the following judgments:- (i) Smt. Bela Dibya v. Ramkisore Mohanty AI....
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.... a consequence of non-registration of charge under Part V of the Act, a creditor may not be able to enforce the charge against the properties of the company as a secured creditor in the event of liquidation of the company as the charge becomes void against the liquidator and the creditor, yet he will be entitled to recover the debt due by the company on par with other unsecured creditors. It is also evident that section 125 applies to every charge created by the company on or after the 1st day of April, 1914. But where the charge is by operation of law or is created by an order or decree of the Court, section 125 has no application" .... Reverting to the facts of this case, on the construction of the decree we have already held that the ch....
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....s not entitle an unsecured creditor to be treated as a secured creditor. The Supreme Court in Textile Labour Association v. Official Liquidator [2004] 51 SCL 791 has held as under:- "8......Under section 529A the dues of the workers and debts due to the secured creditors are to be treated pari passu and have to be treated as prior to all other dues. 9. Therefore, the law is clear on the matter as held in UCO Bank case [(1994) 5 SCC 1] that section 529A will override all other claims of other creditors even where a decree has been passed by a court." [Emphasis supplied] 11. From the judgments cited by Mr. Patnaik, it is apparent that to claim the status of a secured creditor, either the charge is to be created by the parties or the charg....