TaxTMI 
TaxTMI 
2015 (3) TMI 508
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....etition No. 204/2003. The appellant Punjab State Power Corporation Limited (hereinafter referred to as "the PSPCL") is aggrieved by the directions in the impugned order and in respect of payment of electricity charges for the period the premises were under control of the first respondent (hereinafter referred to as "CBIL") during liquidation proceedings. 2. For the purposes of this appeal, only the brief facts need to be re-counted. Sixteen separate winding up petitions were initiated by the creditors of M/s Bakemans Industries Pvt. Ltd. On 06.04.2004, one of those petitions was admitted and citations were published. A secured creditor i.e. State Industrial Corporation of Maharashtra Limited (hereinafter referred to as "the SICOM") had i....
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....order also rejected an application for impleadment of PSPCL i.e. CA No. 1458 of 2008. Eventually on 20.12.2010, the company court made an elaborate order covering several issues. The CBIL was directed to re-install some equipments which it had taken away to Sri Lanka; at the same time the Court held that CBIL was entitled to a refund of certain amount by financial institutions along with interest upon the re-installation of the equipments in operational state. Counsel for CBIL and PSPCL highlight different parts of the same order; whereas CBIL heavily relies on Para 46 of that judgment; PSPCL, on the other hand, relies on Para 44 and 45 of the same judgment. 4. In the background of these facts, when the impugned order was made, the Compa....
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....s is erroneous. 6. Counsel for CBIL and SICOM argue that the Company Judge has not expressed any final view as to the status of the amount payable to PSPCL. Therefore, they contend that this court should refrain from expressing its views and rather leave to the official liquidator to decide the issue in the circumstances of the case. 7. It is apparent from the above narration that the company was directed to be wound up long back; proceedings commenced on 08.05.2003 with the filing of the winding up petition; a provisional liquidator was appointed on 06.04.2004. The auction resulted in CBIL purchasing the properties in 2004 which was set aside by the Supreme Court in 2008. There is no dispute about the payment of dues for the period C....
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.... notice the relevant provisions. Section 476 of the Companies Act reads as follows:- "476. Power to order costs. The Court may, in the event of the assets being insufficient to satisfy the liabilities, make an order for the payment out of the assets, of the costs, charges and expenses incurred in the winding up, in such order of priority inter se as the Court thinks just." Rule 338 of the Companies (Court) Rules 1959 reads as follows: "338. Cost and expenses payable out of the assets in a winding-up by the Court. (1) The assets of a company in a winding-up by the Court remaining after payment of the fees and expenses properly incurred in preserving, realizing or getting in the assets including, where the company has previously comm....
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....en duly sanctioned. (3) Nothing contained in this rule shall apply to or affect costs which, in the course of legal proceedings by or against the company which is being wound-up by the Court, are ordered by the Court in which such proceedings are pending, to be paid by the company or the liquidator, or the rights of the person to whom such costs are payable." 10. The above provisions specially bear out PSPCL's submissions that an order with respect to costs, charges and expenses to be incurred in the winding up of a company follow their own pattern of priority and do not depend on Section 529A. Section 529A - which was introduced in 1998 spells out the order of priority in making preferential payments. Section 529A(1)(b) states that t....
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.... where secured creditor, instead of relinquishing his security and proving for his debts, proceeded to realize his security and for that purpose the liquidator to bear the expenses for preservation of security before its realization. The workmen cannot be treated to be secured creditors, who do not relinquish their security and proceed to realize their debts as security." 11. It is, thus, clear that the amounts paid or payable towards maintenance and other allied expenses, necessary to keep the asset or assets in good repair or protect them, cannot be characterized as secured debts so as to be covered by Section 529A. They are undoubtedly expenses within the meaning of Section 476. In the present case, the impugned order of the Single Ju....