TaxTMI 
TaxTMI 
2013 (6) TMI 836
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....he application and directed the respondents to handover the assets of the company (in liquidation). Being aggrieved by this order respondent s-1 and 2 filed appeal in OSA No.19/2009 and 10/2009. Said appeal came to be disposed of by order dated 07.07.20 11 and both the appeals were allowed by accepting the p lea put forward by the appellants therein namely, that they should be afforded an opportunity before the Company Court to put forth their defence. The matter came to be remanded to the Company Court for consideration afresh. 3. Pursuant to the said order of remand, respondents-1 and 2 have filed their objections to the application. The summary of the objections raised b y first and second respondents are as under: OBJECTIONS OF FIRST RESPONDENT: 3.1) Company (in liquidation) had borrowed loan and a charge had been created over the immovable property by mortgaging the same in favour of Bank and on account of the said company (in liquidation) becoming defaulter O.A.194/1997 was filed for recovery of ₹ 71,03,955/ - with interest and other charges and said application came t o be allowed on 26.06.2000. Pursuant to the said order, recovery certificate came to be issued an....
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....suance of recovery certi ficate and recovery of the amount by executing recovery certifica te or within the exclusive jurisdiction of Tribunal and Rec overy Officer. No other Court or authority can go into said questions relating to liability and recovery as provid ed under DRT Act. The said DRT Act is a special law which o verrides other special law and as such, leave of Company Court under Section 446(1) of Companies Act, 1956 was not necessary nor could the application be transferred to t he Company Court under Section 446(2) of the Companies A ct, 1956. 3.5) Second respondent has also without knowledge o f liquidation proceedings participated in the auction conducted by Recovery officer and is a bonafide purchaser entitled to the ownership and possession of property s old to him particularly when valid consideration has been pai d to Recovery Officer and property having been registered in the name of second respondent and also he being in actual physical possession. On these grounds amongst others , first respondent sought for dismissal of the application. OBJECTIONS OF SECOND RESPONDENT: 3.6) Apart from reiterating the contentions raised by first respondent, second respo....
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.... would also contend that in the case of ALLAHABAD BANK vs CANARA BANK & ANOTHER reported in (2000)4 SCC 406 the examination and interpretation of Section 529-A (1)(a) was not under consideration and i t was the subject matter of consideration by Larger Bench of the Apex Court in ANDHRA BANK vs OFFICIAL LIQUIDATOR & ANOTHER reported in (2005)5 SCC 75 whereunder it has been held that finding recorded in paragraph 76 of the judgment in ALLAHABAD BANK's case does not lay down the correct law and as such, he contends that the dicta l aid down in ALLAHABAD BANK's case need not be considered in view of subsequent larger Bench judgment of ANDHRA BANK's case referred to supra, whereunder it has been hel d that power under Section 446 of the Companies Act, 19 56 can only be exercised upon consideration of respectiv e contentions of the parties raised in a suit or proceedi ng or any claim made by or against company and determinatio n of priorities amongst creditors would also fall for conside ration if parties claiming the same were before the Court. He would also submit that Apex Court in the case of MAHARASHT RA STATE CO-OPERATIVE BANK LIMITED vs ASST.PROVIDENT FUND COMMISSIONER & OTHERS re....
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....DATOR & ANR. 5) AIR 2008 SC 2699- M/S BAKEMANS INDUSTRIES PVT. LTD., V/S M/S NEW CAWNPORE FLOUR MILLS & ORS. 6) (2005)5 SCC 75- ANDHRA BANK V/S OFFICIAL LIQUIDATOR AND ANOTHER 7) (2009)10 SCC 123- MAHARASTHRA STATE CO- OPERTATIVE BANK LIMITED V/S ASSISTANT PROVIDENT FUND COMMISSIONER AND OTHERS 6. Percontra, Sri Nanjunda Reddy, learned Sr.Advocate appearing on behalf of secured creditor would contend that recovery proceedings and sale of property belonging to a creditor is in the domain of DRT and company Court's jurisdiction is ousted. He would contend that DRT Act is a special enactment and Section 34 would clearly indicate that except to the extent of saving clause of sub- section (2) of Section 34 the provisions of DRT Act will have an overriding effect and in view of sub-section (2) no t providing for the application of provisions of Companies Act, 1956 it would be subservient to the special enactmen t or in other words, the provisions of DRT Act will prevail ov er the Companies Act, 1956. He would elaborate his submission by contending that right to sell and right to distribution of sale proceed s being different, the application of Section 529A of Compan ies Act, 1956....
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....1) of Section 537 is not attracted and hence, sale in favour of second respondent is not void. In support of his submissions, he relies upon the following judgments: (1) (2010) 158 Company Cases 789 (Madras)- SUBHASH KATHURIA SOLE PROPERIETOR, ANITHA INTERNATIONAL V/S DEVE SUGARS LIMITED THROUGH THE OFFICIAL LIQUIDATOR, HIGH COURT AND 2 ORS. (2) AIR 2005 SC 1814- ANDHRA BANK V/S OFFICIAL LIQUIDATOR AND ANR. (3) AIR 2000 SC 1535-ALLAHABAD BANK V/S CANARA BANK AND ANOTHER 8. Having heard the learned Advocates appearing for parties and on perusal of the pleadings as well as case laws pressed into service by respective learned Advocates, I am of the considered view that following points woul d arise for my consideration: (1) Whether Debt Recovery Tribunal through its Recovery Officer under the provisions of Recovery of Debts due to Banks and Financial Institutions Act, 1993 is empowered to sell the assets of a company under liquidation at the instance of secured creditor, without leave of the Company Court or without associating the official liquidator, despite deemed paripassu charge of said assets in favour of official liquidator Under Section 529A of companies Act? (2) ....
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.... to the Official Liquidator . 12. In order to examine the rival contentions, it would be necessary to note the list of dates chronologically with events for answering the points formulated above: Date Events 19.02.1997 Application in O.A.No.194/1997 was filed before DRT, Bangalore by R-1 - Canara Bank 19.06.1999 Winding up petition in Co.P.No.167/1999 was filed against company by a creditor Col.D.B.Singh 30.03.2000 Co.P.No.167/1999 was admitted 26.06.2000 O.A.No.194/1997 was allowed by DRT 23.02.2001 Date of advertisement in Co.P.No.167/1999 27.06.2005 Attachment order by Recovery Officer 02.10.2005 Public notice of auction sale issued by Recovery Officer of DRT, to sell the immovable property. 05.10.2005 Date of auction by DRT 16.11.2005 Confirmation of sale in favour of R-2 02.02.2006 Certificate of sale of immovable property issued by DRT in favour of R-2 29.06.2006 Winding up petition CO.P 167/1999 was allowed 06.03.2008 C.A.190/2008 filed by O.L seeking return of immovable property sold in DRT auction. 25.11.2008 C.A.190/2008 allowed and sale was rendered void 07.07.2011 OSA 19/2009 c/w OSA 10/2009 filed by secured creditor and purchaser came to ....
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....e workmen's portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt, opts to realise his security - (a) the liquidator shall be entitled to represent the workmen and enforce such charge; (b) any amount realised by the liquidator by way of enforcement of such charge shall be applied rateably for the discharge of workmen's dues; and (c) so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of this proviso or the amount of the workmen's portion in his security, whichever is less, shall rank paripassu with the workmen's dues for the purposes of section 529A.] (2) All persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company, may come in under the winding up, and make such claims against the company as they respectively are entitled to make by virtue of this section: [Provided that if a secured creditor instead of relinquishing his security and proving for his debt proceeds to realise his security, he shall be liable to (pay his portion of the expenses) incurred by the liquidator (includin....
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....to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of section 529 paripassu with such dues, shall be paid in priority to all other debts. (2) The debts payable under clause (a) and clause (b) of sub-section (1) shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportion. 537. AVOIDANCE OF CERTAIN ATTACHMENTS, EXECUTIONS ETC., IN WINDING UP BY TRIBUNAL. - (1) Where any company is being wound up by Tribunal- (a) any attachment, distress or execution put in force, without leave of the Tribunal against the estate or effects of the company, after the commencement of the winding up; or (b) any sale held, without leave of the Tribunal of any of the properties or effect of the company after such commencement] shall be void. (2) Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the Government] Offences antecedent to or in course of winding up. RECOVERY OF DEBTS DUE TO BANKS AND FINANCIAL INSTITUTIONS ACT, 1993 19(19): Where a certificate of recovery is issued against a company registered under the Com....
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....he industrial concern not conferred on it by any other law. SECTION 46-B. Effect of Act on other laws:--- The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to and not in derogation of, any other law for the time being applicable to an industrial concern. ANALYSIS OF STATUTORY PROVISIONS 14. The underlying object of Section 446 is to ensure that assets of the Company (under liquidation) are bro ught under the control of the winding up/Company Court to avoid, wherever possible, litigation and to ensure tha t all matters in dispute which are capable of being expeditiously disposed of by the company Court is taken up by that Court. This would subserve an important purpose inasmuch as, it would be the responsibility of the Company Court to ensure that there would be proper winding up and dissolution of such company. The ....
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.... creditor is conferred on the workman by operation of law i.e., by virtue of Section 529, 529A and 530 conferring substantial rights and benefits on the workmen of a closed undertaking and such workmen would get pari-passu charge over the assets of t he Company (in liquidation) along with the secured credi tors. Perusal of Section 537 would indicate that if any attachment, distress or execution is put in force with out leave of the Company Court against the estate or effe cts of the Company (in liquidation) after commencement of w inding up or any sale held of any of the properties or effects of such company without leave of the Company Court same woul d be void. However, the exception is relating to proceeding s initiated for recovery of any tax or dues payable to t he Government. 16. To recover any debt due from any person, an application to jurisdictional tribunal Under Section 1 9 of DRT Act in the prescribed form can be filed by a Bank or a financial institution. After issuing notice to the other side and on examination of pleadings and scrutiny of mate rial evidence tribunal would adjudicate the claim. If the claim is admitted Tribunal will issue Recovery Certificate in favo....
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....riority under section 446 (2) and (3) read with sections 529, 529A and 530 etc. of the Companies Act or whether these questions are all within the exclusive jurisdiction of the Tribunal? (4) Whether, in case it is decided that the distribution of monies is to be done only by the Tribunal, the provisions of section 73 CPC and sub-section (1) and (2) of section 529, section 530 of the Companies Court also apply - apart from section 529A - to the proceedings before the Tribunal under the RDB Act? (5) Whether in view of provisions in section 19(2) and 19(19) as introduced by Ordinance 1/2000, the Tribunal can permit the appellant Bank alone to appropriate the entire sale proceeds realised by the appellant except to the limited extent restricted by section 529A? Can the secured creditors like the Canara Bank claim under section 19(19) any part of the realisations made by the Recovery Officer and is there any difference between cases where the secured creditor opts to stand outside the winding up and where he goes before the Company Court? (6) What is the relief to be granted on the facts of the case since the Recovery Officer has now sold some properties of the company and the mon....
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....on of the Recovery Officer is Exclusive. Now a procedure has been laid down in the Act for recovery of the debt as per the certificate issued by the Tribunal and this procedure is contained in Chapter V of the Act and is covered by Sections 25 to 30. It is not the intendment of the Act that while the basic liability of the defendant is to be decided by the Tribunal under Section 17, the Banks/Financial institutions should go to the Civil Court or the Company court or some other authority outside the Act for the actual realisation of the amount. The certificate granted under Section 19(22) has, in our opinion, to be executed only by the Recovery Officer. No dual jurisdictions at different stages are contemplated. Further, section 34 of the Act gives overriding effect to the provisions of the RDB Act. That section reads as follows: "Section 34 (1): Act to have over- riding effect- (1) Save as otherwise provided in sub- section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act. (2) The provisions of ....
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....ection 529A as also the w ords " subject to provisions of Section 529A" found in Section 530, omission of proviso to sub-section (2) of Section 530 and insertion of clause (bb) to sub-section (8) of Sectio n 530 were carried out simultaneously by Companies (Amendment) A ct, 1985 i.e., (Act 35 of 1985). Whereas, sub-section (1 9) of Section 19 of DRT Act came to be introduced by Ordinance i.e., subsequent to insertion of proviso to Section 5 29 and introduction of Section 529A. In this background, Ap ex Court examined as to which law would prevail over the other namely when monies are realised by secured creditor unde r the DRT Act, it has been held that question of prio rities among the banks and financial institutions and othe r creditors can be decided only by a Tribunal under the D RT Act and in accordance with Section 19(19) read with S ection 529A of Companies Act. It has been further held tha t leave of the Company Court is not necessary for initiating or continuing the proceedings under the DRT Act. After analysing the provisions above referred to it has been held by the Apex Court as under: "45. The decision of the Delhi High Court in Mayur Syntex Ltd. Vs. Punjab and Sind....
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....e by the Company Court under Section 442 read with section 537 or under Section 446 of the Companies Act, 1956. In respect of the monies realised under the RDB Act, the question of priorities among the Banks and financial institutions and other creditors can be decided only by the Tribunal under the RDB Act and in accordance with section 19(19) read with section 529A of the Companies Act and in no other manner. The provisions of the RDB Act, 1993 are to the above extent inconsistent with the Provisions of the Companies act, 1956 and the latter Act has to yield to the provisions of the former. This position holds good during the pendency of the winding up petition against the debtor-company and also after a winding up order is passed. No leave of the Company Court is necessary for initiating or continuing the proceedings under the RDB Act, 1993. Points 2 and 3 are decided accordingly in favour of the appellant and against the respondents." In the above said case, dispute was between two Nationalised Banks namely, Allahabad Bank which had obtained a money decree against the Debtor company M/s.M.S.Shoes (East) Company Limited from DRT, Delhi under the DRT Act and Canara Bank whose cl....
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....lahabad Bank's case) came to be doubted. Hence, in Andhra Bank's case the Hon'ble Apex Court formulated the following points for its determination. "(i) whether the statement of law contained in para 76 of the judgment of this Court in Allahabad Bank does not lay down a good law; (ii) whether the impugned judgment could have been passed by way of an ad hoc measure in view of the fact that the Company was sold as a going concern and the workers' dues were to be paid from the sale proceeds of the assets of the Company; and (iii) whether any payment could be made to the parties to the winding-up proceedings only upon considering the claims of all the creditors and in terms of the certificate issued by the Debts Recovery Tribunal under the RDB Act." After examining the purport and meaning of section 529A, Apex Court has held that finding recorded in Allahabad Bank's case at paragraph 76 does not lay do wn the correct law, in view of the fact that a stray obse rvation had been made in Allahabad Bank's case to the effect that the "Workmens' dues" have priority over all other creditors secured and unsecured. It has also been held because of section 529A(1)(a) such a question did no....
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....e of section 529-A(1)(a). such a question did not arise in the case as Allahabad Bank was indisputably an unsecured creditor." "26. Such an observation was, thus, neither required to be made keeping in view the fact situation obtaining therein nor does it find support from the clear and unambiguous language contained in Section 529-A (1)(a). We have, therefore, no hesitation in holding that finding of this court in Allahabad Bank to the aforementioned extent does not lay down the correct law." 22. In the case of RAJASTHAN FINANCIAL CORPORATION AND ANR VS OFFICIAL LIQUIDATOR AND ANR REPORTED IN AIR 2006 SC 755 the Hon'ble Apex Court took note of the submission that there was a conflict between the decisions in ALLAHABAD BANK VS CANARA BANK reported in (2000)4 SCC 406 and INTERNATIONAL COACH BUILDERS LIMITED VS KSFC reported in 2003 AIR SCW 1524 and in this background the legality of the order passed by High Court of Bombay came to be examined b y a larger Bench of three Hon'ble Judges after being referred to by two Hon'ble learned Judges. In this context it ha s been observed by the Apex Court at paragraph 4 as under: "4. When this appeal came up for hearing before two learned ....
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.... assets of the company ( in liquidation). Said application filed by Rajasthan F inancial Corporation came to be rejected by holding even if the secured creditor stood outside the winding up, their rig ht available under Section 29 of SFC Act has to be exerc ised consistently with the right of the workmen, represented by OL who was a charge holder and ranked pari-passu with th e secured creditors. The Hon'ble Apex Court having taken note of Allahabad Bank's case has held that there is no conflict on the question of the applicability of se ction 529A read with section 529 of the Companies Act to cases where debtor is a company and is in liquidation. It has b een further held that conflict, if any, is in the view wh ether DRT could sell the properties of a company (in liquidatio n) in terms of the Recovery of Debts Act. It was also not iced with approval that finding recorded in Allahabad Bank's cas e that DRT Act being a subsequent legislation and being a special law would prevail over the general law, the Companies Act. However, this argument was not accepted insofar as SFC Act is concerned since 529A was introduced by Act 35 of 1 985 52 and the overriding provision therein would pr....
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.... for initiating proceedings under the Recovery of Debts Act. Even the priorities among various creditors, could be decided only by the Debts Recovery Tribunal in accordance with Section 19(19) of the Recovery of Debts Act read with Section 529-A of the Companies Act and in no other manner. The Court took into account the fact that Recovery of Debts Due to Banks and Financial Institutions Act, 1993 was a legislation subsequent in point of time to the introduction of Section 529A of the Companies Act by Act 35 of 1985 and it had overriding effect. But it noticed that by virtue of Section 19(19) of the Recovery of Debts Act, the priorities among various creditors had to be decided by the Recovery Tribunal only in terms of Section 529A of the Companies Act and Section 19(19) did not give priority to all secured creditors. Hence, it was necessary to identify the limited class of secured creditors who have priority over all others in accordance with Section 529- A of the Companies Act. The Court also held that the occasion for a claim by a secured creditor against the realization by other creditors of the debtor under Section 529A read with proviso (c) to Section 529(1) of the Companies ....
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....the Recovery of Debts Act. This view was taken in Allahabad Bank Versus Canara Bank and Anr (supra) in view of Recovery of Debts Act being a subsequent legislation and being a special law would prevail over the general law, the Companies Act. This argument is not available as far as the SFC Act is concerned, since Section 529A was introduced by Act 35 of 1985 and the overriding provision therein would prevail over the SFC Act of 1951 as amended in 1956 and notwithstanding Section 46B of the SFC Act. As regards distribution of assets, there is no conflict. It seems to us that whether the assets are realized by a secured creditor even if it be by proceeding under the SFC Act or under the Recovery of Debts Act, the distribution of the assets could only be in terms of Section 529A of the Act and by recognizing the right of the liquidator to calculate the workmen's dues and collect it for distribution among them pari passu with the secured creditors. The Official Liquidator representing a ranked secured creditor working under the control of the company court cannot, therefore, be kept out of the process." "17. Thus, on the authorities what emerges is that once a winding up proceed....
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.... being wound up, can only be in terms of Section 529-A read with Section 529 of the Companies Act. After all, the liquidator represents the entire body of creditors and also holds a right on behalf of the workers to have a distribution pari pasu with the secured creditors and the duty for further distribution of the proceeds on the basis of the preferences contained in Section 530 of the Companies Act under the directions of the company court. In other words, the distribution of the sale proceeds under the direction of the company court is his responsibility. To ensure the proper working out of the scheme of distribution, it is necessary to associate the Official Liquidator with the process of sale so that he can ensure, in the light of the directions of the company court, that a proper price is fetched for the assets of the company in liquidation. It was in that context that the rights of the Official Liquidator were discussed in International Coach Builders Limited (supra). The Debt Recovery Tribunal and the District court entertaining an application under Section 31 of the SFC Act should issue notice to the liquidator and hear him before ordering a sale, as the representative of....
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....In above referred judgment the Hon'ble Apex Court has clarified that there is no inconsistency bet ween the decisions in ALLAHABAD BANK vs CANARA BANK & ANOTHER and INTERNATIONAL COACH BUILDERS LTD vs KSFC reported in (2000)4 SCC 406 and 2003 AIR SCW 152 4 respectively in respect of applicability of Sections 529 & 529A of the Companies Act in the matter of distribution among the creditors. It has been noticed by Hon'ble Apex Court in the said case that once winding up proceedings has commenced and liquidator is put in charge of the assets of the company being wound up, the distribution of proceeds of the sale of the assets held at the instance of fina ncial institutions coming under the DRT Act or SFC Act, can only be with the association of OL and under the supervisi on of Company Court. It has been further held that right of a financial institution or of the DRT or that of a fin ancial corporation or the Court which has been approached under Section 31 of SFC Act to sell the assets may not be taken away, but same stands restricted with the requirement of OL being associated with it, giving the company Cou rt the right to ensure distribution of assets and ensuring tha t distributi....
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....ale proceeds and the distribution thereof among the creditors in terms of Section 529A and Section 529 of the Companies Act. iv) In a case where proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 or the SFC Act are not set in motion, the concerned creditor is to approach the company court for appropriate directions regarding the realization of its securities consistent with the relevant provisions of the Companies Act regarding distribution of the assets of the company-in- liquidation." 25. Thus, it can be seen the legal position with regard to right to sell under the State Financial Corpora tion Act or under the DRT Act by a creditor coming within th ose Acts and standing outside the winding up proceedings is different from the distribution of the proceeds of the sale of the security and the distribution in a case where the debtor is a company in the process of being wound up and it can be only after notice to OL or the liquidator appointed by the Company Court is heard. 26. In INTERNATIONAL COACH BUILDER's case, issue was with regard to the right of SFC exercisable u nder Section 29 of SFC Act against debtor. It has been h eld therein th....
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....and Financial Institutions Act, 1993 (RDB Act) nor can be Company Court transfer to it (or) otherwise interfere with such proceedings. 4) Xxx 5) Xxx 6) Xxx 7) Xxx 8) Xxx 9) When should a company Court grant leave to secured creditor to proceed with the suit against the company after winding up order was made and when should a company Court transfer the dues of such suit during the pendency of winding up proceedings, would depend upon facts and circumstances of each case having regard to the position of the plaintiff secured credit vis-à-vis other secured creditors. (emphasis supplied by me) It has been further held in the facts of the said cas e that secured creditor need not get any leave from the company Court to proceed with the sale proceedings but it should be held after notice to OL. It has be en held therein as under: 46. I am unable to accept the submission for the reason that now the law has been settled by Honourable Supreme Court that the secured creditor need not get any leave from company Court to proceed with the sale proceedings of the assets of the company in liquidation. What is mandatory is that the OL should be a party and notice should b....
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....of SFC A ct should issue notice to the liquidator before ordering sale of the assets of the company as the OL would be the representative of the creditors in general. 30. As already noticed herein above, the secured creditors in Rajasthan Financial Corporation's case int ended to stand outside the winding up and pursue their remedies available under Section 29 of SFC Act and had sought permission of Company Court to realise the securities and apportion the net sale proceeds between them and Bank of Baroda, (another secured creditor), who was entitled to payment pari pasu with them. They had also undertake n to pay over the dues of the workmen on the same being adjudicated by OL to the extent of availability of funds out of the net sale proceeds of the properties of the company , in accordance with Section 529A of the Companies Act. However, the Company Court had issued direction to associate the OL for sale of the property belonging t o the company in liquidation since he represents the workmen and said direction came to be affirmed by the Apex Court with modification regarding valuation only. 31. In the light of discussion made hereinabove the following conclusions can be drawn.....
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....body of the creditors and also hold the right on behalf of the workers. (xii) At the time of conducting the sale of the assets of the company in liquidation by the Tribunal or its recovery officer, the official liquidator has to be necessarily associated in such process of sale. (xiii) In the event of the official liquidator being notified, heard and associated in the sale of the asset of the company (in liquidation) by the Tribunal or the recovery officer and in the event of official liquidator being aggrieved by such sale, he would be entitled to challenge the same by filing an appeal as provided under the DRT Act. 32. In the light of analysis of case law as discus sed herein above, when the facts on hand are examined, it would emerge that on the date of order allowing the applicat ion for recovery of debt came to be passed by the DRT in OA 194/1997 i.e., on 26.06.2000 the winding up petitio n had already been filed against the company (in liquidati on) and it was ordered to be advertised on 02.02.2001 and accordin gly advertisement had been carried out which came to be accepted by the Company Court. The order of the DRT allowing the application came to be passed on 26.06 .2....
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....t too by affidavits, only to sustain their inaction" 12. Section 537 of the Act, provides for avoidance of certain attachments, executions, etc., in winding up by or subject to supervision of Court. The winding up proceedings would commence from the date of presentation of the petition before this court for winding up of the company as envisaged under Section 433 of the Act and other similar provisions under the Act. Once such proceedings are initiated, any assets of the Company cannot be meddled without the leave of the Court. This settled legal proceedings, time and again is stated by various High Courts and also the Highest Court. An elaboration of this settled legal principle, in our view, is only wholly unnecessary. 33. In the case on hand, the secured creditor had filed O.A.No.194/1997 on 19.02.1997. Said application came to be allowed by DRT on 26.06.2000. Duringthi s interregnum period, winding up petition came to be fil ed by a creditor under Section 433(e) of Companies Act on 19.06.1999 and said petition was admitted on 30.03. 2000 and advertisement was published on 23.02.2001. After five years after allowing of the application by DRT, its Recovery Officer ordered for ....
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....n order of winding up is made, even though the actual process of winding up starts from the date of the order, the winding up of the company is deemed to hav e commenced from the date of filing of the petition fo r winding up, where the order of winding up is made under Section 433(b) to (f) of the Companies Act. Thus, relating b ack the order of winding up to the date of presentation of the petition for winding up, will occur only where the order of windi ng up is made under Section 433(b) to (f) in a winding up petition. The secured creditor in the instant case had initiated proceedings under the DRT Act to realise the dues recoverable from the company (in liquidation). In view of proviso to Section 529(1) and 529A, the workmen's due s would rank pari-pasu with the debt due to the secured creditor in the winding up of a company. In other word s, the Official Liquidator would step into the shoes of th e secured creditor to the extent of workmen's dues since by deem ing provision he represents the workmen and amounts due to them would be on par with the secured creditor to be distributed in accordance with 529(d) of the Compani es Act. His presence for sale of assets of the company....