Karnataka State Financial Corporation Vs the Oficial Liquidator

THE OFFICIAL LIQUIDATOR, M/S. VIORYL (INDIA) LTD. (IN LIQUIDATION), ATTACHED TO HIGH COURT OF KARNATAKA, CORPORATE BHAVAN, NO.26-27, 12TH FLOOR, RAHEJA TOWERS, M.G.ROAD, BANGALORE-560 001.

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…RESPONDENT

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(BY SMT.KRUTIKA RAGHAVAN, ADVOCATE)

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THIS ORIGINAL SIDE APPEAL IS FILED UNDER SECTION 483 OF COMPANIES ACT, 1956, PRAYING TO THIS HON’BLE COURT TO CALL FOR RECORDS IN COP NO.107/1989 AND SET ASIDE THE ORDER DATED 01.03.2023 IN CA NO.1/2022 IN

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COP NO.107/1989 AND DIRECT THE OL TO TREAT THE APPELLANT AS SECURED CREDITOR AND ALLOW CA NO.1/2022, IN THE INTEREST OF JUSTICE AND EQUITY AND ETC.

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THIS APPEAL, COMING ON FOR ADMISSION, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

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CORAM: HON'BLE MR. JUSTICE JAYANT BANERJI and HON'BLE MR. JUSTICE K. V. ARAVIND

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ORAL JUDGMENT

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(PER: HON'BLE MR. JUSTICE JAYANT BANERJI)

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Heard the learned counsel for the parties.

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This appeal under Section 483 of the Companies Act, 1956 has been preferred with a prayer to set aside an order of 01.03.2023 passed on C.A.No.1/2022 in C.O.P. No.107/1989 with a direction to the Official Liquidator to treat the appellant as secured creditor and allow the C.A.No.1/2022.

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Evident it is from the order impugned that the Company application had been filed seeking a direction to respondent – Official Liquidator to accept Form No.69 filed by the applicant and also to treat the applicant as secured creditor in view of the registration of its claim under Section 124 and

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125 of the Companies Act, 1956 before the Registrar of Companies and direct the Official Liquidator to pay the expenses and proceeds of the sale to the Corporation as secured creditor. The Court found that the statutory mandate under Section 125 of the Companies Act, 1956, was not complied with inasmuch as charge created by the appellant company was not registered in terms of Section 125. Therefore the claim of payment of expenses and proceeds of sale could not be considered.

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The contention of the learned counsel for the appellant is that sale was conducted by the appellant of the secured property on the directions of Official Liquidator. It is stated that the expenses incurred in the sale are liable to be paid and moreover, the Official Liquidator having acknowledged the appellant as secured creditor proceeds of sale are also liable to be paid.

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Learned counsel for the Official Liquidator has referred to From No.69 issued by the Assistant Official Liquidator to the Managing Director of the appellant – Corporation (page No.62 of the paper book) by means of

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which, the claim of the appellant as a secured creditor was rejected on the ground that no proof had been submitted by the appellant with Form No.8 regarding the charge, if any, made by the company in liquidation to show that such charge is registered with the Registrar of Companies as per Section 125 of the Companies Act, 1956. In that letter it is mentioned that the claim of the appellant is admitted as an unsecured creditor.

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Another document has been placed which is at page No. 34 of the paper book written by the Official Liquidator in response to the letter of the appellant dated 16.12.1993 in which security charges have been claimed from the appellant.

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Once admittedly no documentary evidence has been produced by the appellant demonstrating registration of charge under Section 125 of the Act, 1956 with the Registrar of Companies pertaining to company in liquidation, no such security charges as intimated by the Official Liquidator in response to the letter of the appellant dated 16.12.1993 would be payable.

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Be that as it may, the application moved by the appellant under Rule 151 of the Companies (Courts) Rules, 1959 in Form No.66 did not contain any proof of the registration with the Registrar of Companies under Section 125. Therefore, the Form No.66 was rejected.

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