The judgment established the limited impediment to the rights of secured creditors under Section 529A of the Companies Act, 1956, and the priority of workmen's dues, clarifying the rights of secured creditors to realize their security and receive their full dues, subject to the rights of the workmen to receive their wages on a pari passu basis.

1. By Notice of Motion No. 3710 of 2011, the Plaintiffs -- ICICI Bank Ltd. ICICI Bank) being debenture trustees in respect of 15% non-convertible debentures issued by M/s. Pal Peugeot Ltd.. (PPL) and representing 4.31% of the debenture holders of PPL is seeking the following reliefs:

“(a) That this Hon’ble Court be pleased to direct the Court Receiver, High Court, Bombay to pay to the Plaintiffs (decree holders) from the suit amount a sum of Rs. 29,83,57,444/- and/or any further and other amount (in respect of 4.31% of public holding of the debentures out of 100% debentures, for which the Plaintiffs act as trustee).

(b) that this Hon’ble Court be pleased to direct the Court Receiver, High Court, Bombay, to pay an amount of Rs. 1,86,43,604/- towards the Trustees’ remuneration and other consequential charges as per the decree dated 4th December 2006 till the date of the decree”

2. By Notice of Motion No. 613 of 2014, the Applicant -- Metropolitan Infra Housing Pvt. Ltd. (Metropolitan Housing) which holds the bulk of the debentures (95.69 per cent) in PPL has prayed for the following reliefs:

“(a) That the Applicant being the secured creditor be permitted to intervene in the matter of distribution of sale proceeds in the above mentioned Suit;

(b) That the Respondent [i.e. Court Receiver] be directed to distribute the balance sale proceeds, after payment to the Plaintiff [i.e. ICICI Bank] of his costs, charges and expenses, to the Plaintiff and Applicant in proportion to the debentures held by the public and the Applicant in pari passu in satisfaction of decree dated 4th December, 2006;Alternatively, the balance sale proceeds lying with the Court Receiver, High Court Bombay be handed over to the Plaintiff [Note: i.e. ICICI Bank] with a direction to the Plaintiff to distribute the balance sale proceeds to the debenture holders in pari passu."

3. Since both the Applications pray for similar reliefs and involve common facts and question of law, they are heard together and are disposed of by this common judgment.

4. Briefly set out are the facts relevant for deciding the issues raised in the above Notices of Motion.

4.1 ICICI Bank Ltd. (the Plaintiff in Suit No. 3636 of 1996 and the Applicant in Notice of Motion No. 3710 of 2011) were the Debenture-Trustees in respect of 15% non-convertible debentures issued by PPL under a Trust Deed dated 21st February, 1997. As security for the payment of debentures and interest, PPL created a mortgage in favour of ICICI Bank in respect of its lands situated at villages Gharivali, Usarghar, Sandap, Sagaon and Sonarpada, Taluka Kalyan in the Registration District and Sub-District of Thane, Maharashtra and a charge over its moveable and immoveable properties.

4.2 PPL failed to make payments upon maturity of its non-convertible debentures. The above Suit being No. 3636 of 1999 was therefore filed by ICICI Bank, being the debenture trustees, to recover the unpaid principal and interest amounts under the said Trust Deed and to enforce the said mortgage and charge. By an order dated 30 June, 1999, the Court Receiver, High Court Bombay was appointed as receiver inter alia of the secured assets of PPL. By a subsequent order dated 8 February, 2002, the Court Receiver was directed to sell the secured properties by public auction.

4.3 The Court Receiver held four unsuccessful public auctions from about June 2002 to January 2004.

4.4 By an order dated 26 September, 2005 in Company Petition No. 110 of 2000, the said Company, PPL was ordered to be wound up and the Official Liquidator was appointed as Liquidator of PPL (hereinafter referred to as the Company in liquidation).

4.5 ICICI Bank, the debenture-trustees, opted to remain outside the winding up, as secured creditors. They applied for and obtained leave u/s 446 of the Companies Act 1956 from the Company Court to continue the said suit. The plaint was allowed to be amended and the Official Liquidator was joined as a Defendant in the said Suit No. 3636 of 1999.