TaxTMI 
TaxTMI 
2019 (6) TMI 219
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....licant with an undertaking to be given by applicant to return the same on such terms as may be directed by this Court. 2. In the above company application, the Official Liquidator has filed the Official Liquidator's Report ("OLR") seeking directions inter alia to change the status of applicant from being adjudicated as a secured creditor, to an unsecured creditor and to permit the Official Liquidator to modify its certified list dated 21st January 2016 to remove the name of applicant from the list of secured creditors. The question that arises for consideration in the present proceedings is ­ Whether Applicant is an unsecured creditor or a secured creditor? 3. It is the stand of applicant that it is a secured creditor inter alia by operation of law and under a decree/order of the Co-­operative Court inter alia directing attachment, possession and sale of an immovable property of the Company which was earlier mortgaged to applicant. It is the stand of the Official Liquidator that (i) decree/order did not create a charge on the assets of the Company and applicant is not a secured creditor, and (ii) as there is no charge created by the Company which has been registered as ....
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..... The Panchnama dated 1st December 2005 ("Panchnama") notes that the said property mentioned therein was being attached in pursuance of the Decree/Recovery Certificate. The Panchnama identifies the property which was being seized, which seizure in turn was done for facilitating sale of the property as directed by the Decree/Recovery Certificate. This was a step, Shri Cama submitted, taken in furtherance of the specific provisions of Section 156 of the Act and Rule 107 of the Rules as had been ordered by the Decree/Recovery Certificate. 9. Thereafter, in accordance with Rule 107 (11) of the Rules, a pre-­auction notice dated 17th March 2005 was sent to the Company which notice identified the property and notified the Company that upon failure to pay the decretal dues within 30 days from the receipt of the notice, the property would be sold by public auction. Shri Cama submitted, this is consistent with Rule 107 (11) (c) of the Rules which provides the Recovery Officer shall sell the property in execution of the Decree/Recovery Certificate. 10. Shri Cama said all of the aforesaid steps took place in the year 2004/2005, much prior to the winding up order dated 19th July 2007 and....
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...., the Regional Director, Western Region, condoned the delay on the part of Applicant in registering the charge. On 7th November 2014, the Company paid a sum of Rs. 10,000/­ towards penalty for delay in filing the application for registration of charge. (f) On 17th November 2014, even though the Company had been ordered to be wound up by this Court, the RoC registered the charge of Applicant to secure the loan amount of Rs. 1,25,00,000/­. On the same day, as the RoC issued the certificate for registration of charge, Applicant addressed a letter to the Official Liquidator intimating that the charge was registered and their claim should be considered as a secured creditor. (g) On 29th May 2015, the Official Liquidator adjudicated the claim of Applicant at Rs. 2,29,30,687/­ and Official Liquidator mistakenly, categorized Applicant as a secured creditor. (h) On 21st January 2016, the Official Liquidator filed a certified list with the office of the Prothonotary & Senior Master, High Court, Bombay. The said list included, and Official Liquidator says erroneously, Applicant's name in the list of secured creditors. (i) On 13th December 2016, Applicant filed company appl....
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....s that no separate application is required in the event of a certificate issued under sub­-section 1 of Section 101 of the Act. sub-­rule 11 of Rule 107 of the Rules thereafter provides that a demand notice be issued by the Recovery Officer to the defaulting party stipulating the property to be sold and putting a defaulting party to notice of the sale in the event of non-­payment of the decretal dues. sub-­rule 11(c) of Rule 107 of the Rules is of considerable importance and provides a mandatory direction that the Recovery Officer "shall proceed to attach and sell, or sell without attachment, as the case may be, the immovable property...". Thus, upon non-­payment by the defaulting party, there is a peremptory order and a specific direction for sale of the immovable property pursuant to the Decree/Recovery certificate. This being the case, it is clear from the Scheme of the Act and the Rules that upon a Decree/Recovery Certificate being issued, as in the present case, the mechanism under Section 156 of the Act read with Rule 107 of the Rules automatically comes into play and on account of the nonpayment by the defaulting party, there is ipso facto by operation ....
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....by the Hon'ble Supreme Court as stated above, was a case where by a consent order a sum of Rs. 1.45 lakhs was held to be payable. A sum of Rs. 50,000/­, which had earlier been deposited in the Court pursuant to the winding up proceedings instituted by petitioner therein, was ordered to be retained as security for the purpose of satisfaction of the decree in the event that the judgment debtor defaulted in paying the decretal amount. It was urged by petitioning creditor that petitioner, upon winding up, was a secured creditor to the tune of Rs. 50,000/­ and there was no requirement for registration of a charge created by the order of the Court. The Hon'ble Calcutta High Court, Shri Cama submitted, laid down certain principles that form a guide as to what would constitute a charge created by a decree or order, and the same may be summarised as under: (i) there must be a decree or order for a certain identified amount; (ii) a mode for payment of the money must be indicated; and (iii) there must be a provision in the order that permits the creditor to proceed against an identified security for the purpose of executing the decree/order. Once these three requisites are ful....
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....sale of the property to satisfy the decree. It is thus clear from the scheme of the Act and Rules, the Recovery Certificate itself, and in any event the Panchnama and pre-­auction notice read with the Recovery Certificate, constitutes an order for sale of the property towards satisfying the decree. Thus such an order for sale of the identified property in execution of the decree constitutes a charge on the subject property of the company, i.e., the plots and building thereon, which charge does not require registration. In the present case, the Panchnama and the pre-auction notice, both clearly identify the property which is attached and which is notified and directed to be sold. Applicant is thus, a charge holder/secured creditor to the extent of the value of the land and building sold, and is entitled to claim as a secured creditor in the present winding up proceedings. 17. Shri Engineer, per contra submitted as under: A). Applicant cannot rely on the charge created by the Mortgage Deed dated 23 rd January 2004 to claim the status of a secured creditor since the charge was registered with the Registrar of Companies subsequent to the winding up of the Company. (i) Section 1....
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....e of an effectual legal right." Tulsidas Jasraj Parekh v. Industrial Bank of Western India, 32 BLR 953. Similarly, in Re Anglo­Oriental Carpet Manufacturing Company, [1903] 1 Ch. 914, it was held that even where a company had executed a trust deed and issued debentures creating a charge on its assets but the charge had not been registered as required by the Companies Act by the time the company had passed an extraordinary resolution for voluntary winding-­up the debenture­holders were not, as against the joint body of creditors, secured creditors. 32. It is thus well established that once a winding-­up order is passed the undertaking and the assets of the company pass under the control of the liquidator whose statutory duty is to realise them and to pay from out of the sale­ proceeds its creditors. Such creditors acquire on such order being passed the right to have the assets realised and distributed among them pari passu. No new rights can thereafter be created and no uncompleted rights can be completed, for doing so would be contrary to the creditors' right to have the proceeds of the assets distributed among them pari passu..." (iv) In the present c....
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....aught, Applicant cannot seek to avoid the legal consequence merely by stating that they are not going to rely on the Mortgage Deed. The very fact that the charge was registered with the RoC after the winding up at the behest/instruction of Applicant would warrant dismissal of their Application for withdrawal of the money lying with the Official Liquidator. (vii) The aforesaid clearly shows that Applicant cannot claim to be a secured creditor on the basis of the Mortgage Deed. B). Reliance on Sections 47 and 48 of the Act is completely misconceived and is wholly inapplicable in the facts of the present case, and therefore, Applicant is not a secured creditor. (i) Section 47 of the Act reads as follows: "47. Prior claim of society:­ (1) Notwithstanding anything in any other law for the time being in force, but subject to any prior claim of Government in respect of land revenue or any money recoverable as land revenue and to the provisions of sections 60 and 61 of the Code of Civil Procedure, 1908. (a) any debt or outstanding demand, owing to a society by any member or past member or deceased member, shall be a first charge; (i) upon the crops or other agricultural pro....
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....ops or other agricultural produce, cattle, fodder for cattle, agricultural or industrial implements or machinery, raw materials for manufacture, workshop, etc. supplied to or purchased by such member from any loan made to the member by the society; or any moveable property which may have been hypothecated, pledged or mortgaged by a member to the society. It is evident that in the present case, none of these situations exist. The Company does not have any crops or agricultural produce, it has not purchased any fodder or any other specified item from the loan it raised from Applicant, and it has not hypothecated or pledged any moveable property to Applicant. Therefore, no charge within the meaning of Section 47(1)(a) can be said to exist. (iii) Furthermore, as regards a charge under Section 47(1)(b), a charge is created in the member's interest in the immoveable property belonging to the society, and not in the immoveable property of the Company. Therefore, under Section 47 a charge is created on the member's interest in the immoveable property of the society and not on the immoveable property of the member who is borrowing. Therefore, no charge exists on any property of the Company....
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....e amount borrowed by a member is paid the society with the approval of the Central Bank to which it may be indebted may, on an application from the member, release from the charge created under the declaration made under clause (a) or (b), such part of the movable or immovable property specified in the said declaration, as it may deem proper, with due regard to the security of the balance of the amount remaining outstanding from the member: (e) any alienation made in contravention of the provisions of clause (d) shall be void (f) Subject to all claims of the Government in respect of land revenue or any money recoverable as land revenue, and all claims of the Co-­operative Agriculture and Rural Multipurpose Development Bank in respect of its dues, in either case whether prior in time or subsequent, and to the charge (if any) created under an award made under the Bombay Agricultural Debtors Relief Act, 1947 or any corresponding law for the time being in force in any part of the State, there shall be a first charge in favour of the society on the land or interest specified in the declaration made under clause (a) or (b), for and to the extent of the dues owing by the member on....
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....by Section 48(g) read with Rule 48(5) of the Rules, which reads as under: "48. Form of declarations be made by members borrowing loans from certain societies and conditions on which any charge in favour of a society shall be satisfied: ... (1)... ... (5) Where a charge is created by a member on his land or on his interest in any land as a tenant by declaration under section 48, the society shall record or cause to record such particulars of charge in the Record of Rights maintained by the village officers of the village where such property is situated. Such recording of the Charge in the Record of Rights of the village shall be treated as a reasonable notice of such charge created under section 48." (emphasis added) (e) The mandatory nature of registration of charge created under Section 48 of the Act pursuant to Section 48(g) of the Act and Rule 48(5) of the Rules has been upheld by this Court in Gajanan Eknath Sonankar V/s. Shegaon Shri Agrasen Co­op. Credit Society Ltd. (2015) 1 MhLJ 579, where the Court held as follows: "8. A careful reading of Section 48 of the MCS Act and Rule 48 of the Rules framed there under, to my mind, manifests that for knowledge to th....
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....at are found to be payable are recoverable as a secured creditor. On the contrary, Section 101(3) of the Act makes it clear that the effect of a recovery certificate under Section 101 is that the amount so stated to be due shall be recoverable "according to the law for the time being in force as arrears of land revenue". (ii) The fact that the amount under the Recovery Certificate was recoverable from the Company "as arrears of land revenue" as per the provisions of Maharashtra Land Revenue Code, 1966 also does not create a charge and does not make Applicant a secured creditor. In the decision of a Division Bench of this Hon'ble Court in SICOM Limited V/s. State of Maharashtra (2010) 6 Bombay Case Reporter, 749, the company in liquidation owed sales tax dues to the State Government. One of the issues that arose for the Court's consideration was whether the sales tax dues, which were recoverable as arrears of land revenue, made the State Government a secured creditor of the company in liquidation. This Court answered the question in the negative. It held that there is a distinction between a sum which is recoverable as land revenue and a sum which is recoverable as arrears of land ....
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....ther, all that it purports to do is to indicate that after receiving the certificate from the Income Tax Officer, the Collector has to proceed to recover the arrears in question as if the said arrears were arrears of land revenue. We have already seen that other alternative remedies for the recovery of arrears of land revenue are prescribed by sub­-sections (3) and (5) of Section 46. In making a provision for the recovery of arrears of tax, it cannot be said that Section 46 deals with or provides for the principle of priority of tax dues at all; and so, it is impossible to accede to the argument that Section 46 in terms displaces the application of the said doctrine in the present proceedings." Therefore, it is clear that the Recovery Certificate under Section 101 is only in the nature of a money decree and only makes the amount recoverable as arrears of land revenue and that does not make the amount a secured debt. Therefore, the Recovery Certificate does not change the nature of the claim from an unsecured one to a secured one. (iii) The reference to Section 156 of the Act and Rule 107 of the Rules is not sufficient to create a charge, since neither of these two provisions ....
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....t is only if the charge is created by operation of law /decree that Section 125 would not be attracted. As can be seen, there is no charge created by law/decree. The Recovery Certificate under Section 101 read with Section 156 of the Act read with Rule 107 of the Rules does not create a charge. The Recovery Certificate is akin to a money decree and Section 156 read with Rule 107 is just a mode of execution. The property is merely attached, and attachment has been held not to constitute a charge. (vi) That being so, clearly there is no charge created by the Recovery Certificate. D). Merely because pursuant to the Recovery Certificate a property was attached, no charge is created. (i) It is also well­-settled that attachment of properties of a company does not create a charge on the company's properties. The Hon'ble Supreme Court reiterated this principle in Kerala State Financial Enterprises (Supra). In the said case, properties of a company were attached on account of the company's failure to pay its loan pursuant to the Kerala Revenue Recovery Act, 1968. Subsequently, the company went into liquidation. The appellant sought leave under Section 446 of the Companies Act, 1956....
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....h Court in Mahadeo Saran Sahu (Supra) where the Court following the Full Bench ruling in Frederick Peacock V/s. Madan Gopal. I.L.R. 29 Cal 428. and the dictum of the Judicial Committee in Motilal V/s. Karrabuldani, I.L.R. 25 Cal 179 (1897), held that it was impossible to contend that plaintiff in that case 'acquired any title or charge upon the property by reason of the attachment in question'." (iii) In light of the aforesaid position of law, Applicant's contention that the attachment of the Company's property creates a charge and makes it a secured creditor cannot be accepted. 18. On the judgements cited by Shri Engineer, Shri Cama submitted as under: (i) Kerala State Financial Enterprises Limited (Supra) - the Official Liquidator relied upon paragraph 14 of this judgment to urge that a mere attachment would not be sufficient to constitute a charge. This submission is inapplicable in the facts of the present case as applicant's case is not merely one of an attachment, but is a case where there is an order/decree for attachment coupled with sale of an identified property to satisfy the decretal dues. Such an order of sale is not a mere attachment and in fact constitutes a char....
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.... second question viz., the interplay between the State Financial Corporations Act and other similar statutes on the one hand, and the Companies Act, 1956 on the other hand. Thus, the finding of the Hon'ble Kerala High Court on the order creating a charge has been in no manner been interfered with or differed from by the Hon'ble Supreme Court. (ii) J. K. (Bombay) Private Limited (Supra) - This judgment has no application, as applicant is not seeking to complete any transaction after the order of winding up. The order/decree creating a charge in the present case was of 2004, much prior to the winding up order of 19th July 2007. By the date of the winding up order, the charge already stood crystalized and only the ministerial act of actually selling the property took place under the order of this Hon'ble Court on 21st March 2014. It is pertinent to note that in paragraph 26 of this judgment, the Hon'ble Supreme Court has noted that no particular form of words is necessary to create a charge and all that is necessary is that there must be an intention to make a property security for payment of money in praesenti. This judgment assists applicant as it is clear from the above facts tha....
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....t was to hold that applicant had a charge on par with secured creditors and workers and applicant is not seeking any priority over secured creditors/workers. 19. Shri Engineer also submitted that the Recovery Certificate issued under Section 101 of the Act is in the nature of a statutory form being Form V and that this statutory form does not in any manner create a charge on the assets of the Company, which would equate the position of applicant to that of a secured creditor. He further urged that Section 156 of the Act sets out the powers qua attachment and sale and that the exercise of these powers would not confer any right on applicant higher than that of an unsecured creditor. 20. In response Shri Cama submitted that there was fallacy in the argument of Shri Engineer because the Decree read with the Recovery Certificate has all the ingredients of an order creating a charge. In any event, applicant has not only placed reliance on the Recovery Certificate to contend that a charge has been created on the assets of the Company by operation of law; it has been the consistent stand of applicant that the Recovery Certificate read with the Panchanama as well as the pre-­auction ....
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.... "charge" means an interest or lien created on the property or assets of a company or any of its undertakings or both as security and includes a mortgage; Section 101 of the Maharashtra Co-­operative Societies Act, 1960 :­ "101. Recovery of arrears due to certain societies as arrears of recovery of land revenue. (1) Notwithstanding anything contained in section 91, 93 and 98, on an application made by a resource society undertaking the financing of crop and seasonal finance as defined under the Bombay Agricultural Debtors Relief Act, 1947 or advancing loans for other agricultural purposes repayable during a period of not less than eighteen months and not more than five years for the recovery of arrears of any sum advanced by it to any of its members on account of the financing of crop or seasonal finance or for other agricultural purposes as aforesaid or by a crop­ protection society for the recovery of the arrears of the initial cost or of any contribution for obtaining services required for crop ­protection which may be due from its members or other owners of lands included in the proposal (who may have refused to become members) or by a lift irrigation so....
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....ificate for the recovery of the amount stated therein, to be due as arrears and such a certificate shall be deemed to have been issued as if on an application made by the society Concerned. (3) A certificate granted by the Registrar under sub­-section (1) or (2) shall be final and a conclusive proof of the arrears stated to be due therein, and the same shall be recoverable according to the law for the time being in force, as arrears of land revenue. A revision shall lie against such order or grant of certificate, in the manner laid down under Section 154 and such certificate shall not be liable to be questioned in any court. (4) It shall be lawful for the Collector and the Registrar to take precautionary measures authorised by Sections 140 to 144 of the Bombay Land Revenue Code, 1879 or any law or provisions corresponding thereto for the time being in force, until the arrears due to the concerned society, together with interest and any incidental charges incurred in the recovery of such arrears, are paid, or security for payment of such arrears is furnished to the satisfaction of the Registrar." Section 156 of the Maharashtra Co-­operative Societies Act, 1960 :­ ....
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....er sub­-sections (1) or (2) of Section 101 or under sub­-section (1) of Section 137 together with interest, if any, due on such amount or sum and the costs of process by the attachment and sale or by sale without attachment of the property of the person against whom such decree, decision, award or order has been obtained or passed, shall apply to the Recovery Officer within whose jurisdiction the debtor resides or the property of the debtor is situated. In the case of a society, a copy of the resolution of the committee of the society authorising any of the members to make and sign the application on its behalf, shall accompany the application]: [Provided that no such application shall be necessary in respect of a certificate given under sub­-section (1) or (2) of Section 101 of the awards or orders referred to in Rule 84.]" "Rule 107. (8) (i) to (iii) (i) Where the property to be attached is a decree either for the payment of money or for sale in enforcement of a mortgage or charge, the attachment shall be made, if the decree sought to be attached was passed by the Registrar or by any person to whom a dispute was transferred by the Registrar under Section 93 by a....
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....time to the defaulter for payment of the amount due by him and the property of the defaulter shall be attached forthwith. (c) If the defaulter fails to pay* the amount specified in the demand notice within the time allowed, the Recovery Officer shall proceed to attach and sell, or sell without attachment, as the case may be, the immovable property noted in the application for execution in the following manner." Rule 107 (12) Where prior to the date fixed for a sale, the defaulter or any person acting on his behalf or any person claiming an interest in the property sought to be sold tenders payment of the full amount due together with interest, batta and other expenses incurred in bringing the property to sale, including the expenses of attachment, if any, the Recovery Officer shall forthwith release the property after cancelling, where the property has been attached, the order of attachment." 26 'Charge' is defined in Section 124 of the Companies Act, 1956 to include a mortgage. Section 124 and the relevant provisions of Section 125 read as follows: "124. 'Charge' To Include Mortgage In This Part: In this Part, the expression 'charge' includes a mortgage. 125. Certain Ch....
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.... not have been done and is of no legal effect. Shri Cama in fact submitted that Applicant is not relying on the Mortgage Deed at all to claim the status of a secured creditor; (ii) Applicant is not relying on Section 47 of MCS Act to claim the status of a secured creditor as Section 47 is inapplicable; (iii) Applicant is not relying on Section 48 of MCS Act to claim the status of a secured creditor as it is inapplicable; 28. Therefore, the only submission urged by Applicant, that remains for this Court's consideration, is that the Recovery Certificate under Section 101 read with the attachment of the Company's properties and the pre-­auction sale notice, read with Section 156 of the MCS Act and Rule 107 of the MCS Rules has the effect of creating a charge by operation of law/decree. 29. Applicant's submissions were, to re­cap: (i) They have a Recovery Certificate under Section 101 of the Act. (ii) The Recovery Certificate specifies that the amounts shall be recoverable under Section 156 read with Rule 107 without any further order. (iii) Section 156 read with Rule 107 contemplate the attachment and sale of assets/properties. (iv) The Company's property wa....
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....t a secured debt. Therefore, the Recovery Certificate does not change the nature of the claim from an unsecured one to a secured one. (iii) The reference to Section 156 of the Act and Rule 107 of the Rules is not sufficient to create a charge, since neither of these two provisions contain any term that would create a charge on the Company's properties pursuant to the issuance of a recovery certificate. Section 156 and Rule 107 merely provide for the mode of execution of a recovery certificate issued under Section 101 of the Act. They are akin to the provisions for execution under Section 51 read with Order 21 of the CPC. They can in no manner be construed so as to create a charge on the assets of the Company for the purposes of execution of a Recovery Certificate. (iv) The plain language of Section 156 and Rule 107 shows that what they contemplate is the 'attachment' of a property and thereafter the sale of the property as the means of executing/enforcing the Recovery Certificate. It is settled law as laid down in the case of Kerala State Financial Enterprises (Supra) and Board for Industrial and Financial Reconstruction (B.I.F.R.) vs Coromandel Garments (Supra) that an attachm....
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....f law that a decree-­holder is not a secured creditor for the purposes of Section 529A of the Companies Act. The Hon'ble Supreme Court has upheld this principle in Textile Labour Association & Anr. V/s. Official Liquidator & Anr. (2004) 9 SCC 741 , where the Hon'ble Court held (in paragraphs 8 and 9) as follows: "8. The effect of Sections 529 and 529­A is that the workmen of the company become secured creditors by operation of law to the extent of the workmen's dues provided there exists secured creditor by contract. If there is no secured creditor then the workmen of the company become unsecured preferential creditors under Section 529­A to the extent of the workmen dues. The purpose of Section 529­A is to ensure that the workmen should not be deprived of their legitimate claims in the event of the liquidation of the company and the assets of the company would remain charged for the payment of the workers' dues and such charge will be pari passu with the charge of the secured creditors. There is no other statutory provision overriding the claim of the secured creditors except Section 529­A. This Section overrides preferential claims under Section 530 ....
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.... Consumer Fora. Such provisions include 13(4), in which the Consumer Protection Act, 1986 vests those powers vested in a civil court under the CPC to the District Forum. However, according to the principle of expressio unius, because the legislature expressly made the aforementioned provisions of the CPC applicable to the consumer proceedings, the legislature is, therefore, deemed to have intentionally excluded all other provisions of the CPC from applying to the said proceedings. This is particularly true since, as explained above, the Consumer Protection Act, 1986 sets forth an exhaustive list of procedures, distinguishable from those required under the CPC, that the consumer redressal fora must follow. Therefore, since the Consumer Protection Act does not state that Section 86 applies to the Consumer Fora's proceedings, that section of CPC should be held to be not applicable." (vii) In the present case, therefore, in the absence of the Act providing for an automatic creation of a charge pursuant to a recovery certificate granted under Section 101 of the Act, no such charge can be deemed to have been created. The only deeming fiction stipulated for the amount due under a re....
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.... specific sum of Rs. 50,000/­ that would be considered as security. In the present case, the Recovery Certificate does not anywhere specify the asset of the Company which ought to be considered as security in the event of default in payment of the amount due under the Recovery Certificate. Indeed, in similar circumstances, in the absence of any identification of property which is rendered as security, the Hon'ble Supreme Court in Oil and Natural Gas Corporation Limited (Supra) held that there was no intention to create a charge and no charge had been created on the company's property. The Court held (in paragraph 26) as follows: "26. The undertaking given by the company in liquidation in this case was as under: 3. I state that Respondent No. 10 Company undertakes that none of immovable assets of the company will be further charged and encumbered hereafter with effect from 15-­04-­1987, i.e. from the date of order of this Hon'ble Court except with the leave of this Hon'ble Court. 4. I state that Respondent No. 10 Company further undertakes not to alienate any of its immovable assets hereinafter with effect from 15­-04-­1987 except with the leave of ....
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....e entitled to apply to the court for passing a final decree for sale of the property which was given as security in an equitable mortgage. In the present case, the Recovery Certificate neither refers to the creation of a charge in respect of the amount due therein nor does the Recovery Certificate state that any property of the Company shall be treated as a security for the purposes of execution of the Recovery Certificate or that it may be attached/sold in the event of default in payment of amount due. The Recovery Certificate is akin to a money decree which simply orders the Company to pay the sum adjudicated therein to applicant. (b) The argument that the Panchnama attaching the property and the pre-­auction notice stipulates that if the amount is not paid the attached properties would be sold and that the same would demonstrate that a charge had been created is also misconceived. The Panchnama and the pre-­auction notice are not judgments/orders/decrees. They are mere steps in execution of the Recovery Certificate. If applicant's contention is to be accepted, it would tantamount to a situation where any unsecured decree-­holder could contend that merely becaus....
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.... Enterprises (Supra) and this Hon'ble Court in this Hon'ble Court in Board for Industrial and Financial Reconstruction (B.I.F.R.) vs Coromandel Garments (Supra) have held that the attachment of a property does not create a charge. 32. Moreover, the fact that the Company's properties have been attached prior to the winding up order dated 19th July 2007 is totally irrelevant. The Hon'ble Supreme Court in Bank of Maharashtra V/s. Pandurang Keshav Gorwardkar (2013) 7 SCC 754, has held that the relevant date on which the legal status of parties for the purposes of Sections 529 and 529­A of the Companies Act, 1956 are determined is the date of the winding-­up order. The Hon'ble Court further held that even if the assets of the company in liquidation have been sold (let alone attached) prior to the date of the winding-­up order, if the proceeds of the sale have not been realized by the secured creditor as of the date of the winding-­up order, such sale proceeds cannot be said to belong exclusively to the secured creditor and the workmen will have a pari passu charge on the company's assets, including the sale proceeds, as of the date of the winding-­up order. The Hon'....