R. BALIA, A. R. DAVE, J.

( 1 ) AS will be presently noticed all the three appeals are inter connected relating to same transaction between the company in liquidation and the Bank of Maharashtra and end relief claimed are integrally interdependent, we have heard and propose to decide them simultaneously by a common order.

( 2 ) A winding up order was made on 17. 7. 77 in Company Petition No. 59 of 1975 for winding up of Navjivan Trading Finance Private Limited, which petition was filed on 8. 7. 1995 by some creditors of the company. The Bank of Maharashtra is the companys banker with whom the company has multiple dealings. It had 4 different accounts with Gorgeon Branch numbered as 1, 2, 3 and 4. In Account No. 3 of Girgaon branch, company has availed facilities of overdraft. Company had taken out as many as 50 FDRs in the period between March 1975 and July 1976 all prior to the date of order of winding up. Apart from these FDRs, company in various other accounts had small credit balance. The company has during this period utilised 46 FDRs, totalling for a sum of Rs. 9,76,000. 00 by way of security, by pledging the same with the bank for availing overdraft facility, which facility the bank has sanctioned prior to filing of winding up petition in June 1975. Official Liquidator on being appointed Liquidator of the company in liquidation had called upon the bank to deliver to him the said FDRs, for which Company Application No. 146 of 1997 had been moved.

( 3 ) IN the first instance, in response to that petition, the bank has claimed that it has adjusted amount payable under FDRs against outstanding of the company under the overdraft account which exceeded the amount payable under the FDRs on 25. 8. 77. On an issue having been raised that most of the FDRs were pledged after the commencement of winding up proceedings, that is to say with effect from presentation of the winding up petition as envisaged under Section 441 of the Companies Act, 1956 (Hereinafter called the Act of 1956) the said disposition is void unless validated by the court in view of the provisions of Section 536 (2) of the Act of 1956, those adjustment entries were reversed and Company Application No. 36 of 1978 was filed by the bank seeking to validate the transaction of pledging of FDRs with the bank as security for repayment of amount payable by company in liquidation under overdraft account. In the alternative, it was also prayed that in any case bank is entitled to set off the amount payable by the bank under the FDRs to the company as its debtor against amount due to it as creditor of the company under overdraft account.

( 4 ) THE Company Application No. 146 of 1977 was decided on 8. 5. 79. The application was disposed of with a direction that the entries of adjustment shall be treated as rescinded and in respect of amounts payable under FDRs for one year bearing the date of winding up order shall be issued in the name of Official Liquidator in his capacity as receiver. This direction was made in respect of all the 50 FDRs. The court also directed to issue FDRs in respect of various amounts standing to the credit of the company in different accounts, with the same branch or other branches, in the name of Official Liquidator in his capacity as a receiver. The Official Liquidator was directed to hold the FDRs as receiver, subject to decision of the court in regard to banks claim and/or lien which is the subject matter of Company Application No. 36 of 1978. We are told that all these FDRs renewed in pursuance of the aforesaid order are in the custody of Registrar of this Court on behalf of receiver.

( 5 ) COMPANY Application No. 185 of 1995 was moved by Official Liquidator seeking a direction to the bank to renew the FDRs which have been issued in terms of order made in Company Application No. 146 of 1977 and are lying in custody of Registrar of High Court. The bank raised objection to this prayer by contending that the claim against the bank for principal amoun

Click Here to Read the rest of this document