BY THE COURT

This Company Application under Rule 9 of the Companies (Court) Rules, 1959 (hereinafter “the Rules of 1959”) has been filed by the Official Liquidator (hereinafter “OL”) with the prayer that the respondent—Rajasthan Financial Corporation (hereinafter “RFC”) be directed to deposit the auction amount received by it from the sale, which was confirmed by the Company Court on 28.07.2011, of the immovable assets of the company in liquidation.

To address the prayer made, it is necessary to state the factual background.

M/s. Shield Shoe Company Private Ltd. (hereinafter “the Company in liquidation”) was ordered to be wound up by this Court on 12.05.1989 in S.B. Company Petition No.12/1987 (titled as Registrar of Companies Vs. M/s. Shield Shoe Company Pvt. Ltd.). Under the said order, the powers under Section 457(1) of the Companies Act, 1956 (hereinafter “the Act of 1956”) were conferred on the O.L. At the time of passing of the winding up order, the assets of the company in liquidation were under lock and key of a secured creditor i.e. Central Bank of India commencing the year 1986. Following the winding up order and the appointment of the O.L. as the liquidator of the company in winding up, the said fixed assets of the company in liquidation came into the O.L.'s custody by virtue of Section 456(2) of the Act of 1956 and also were taken possession by the O.L. putting his lock over the existing lock of the Central Bank of India on the unit in issue.

RFC moved an application before this Court bearing Company Application No.22/1991 under Section 446(2)(b) & (d) read with Section 529(2) of the Act of 1956 read with Rule 9 of the Rules of 1959, praying that the Central Bank of India be directed to remove its lock over the unit of the company (in liquidation), the inventory of assets be prepared and the OL be directed to handover the assets of the company in liquidation to RFC (emphasis mine) as the Corporation was purportedly entitled to the possession of the mortgaged assets of the company in liquidation under Section 29 of the State Financial Corporation Act, 1951 (hereinafter “the Act of 1951”) with a right to sell them to recover its outstanding dues. Vide order dated 9.12.1991, the Company Court recorded that even though as a secured creditor, RFC could ordinarily invoke Section 29 of the Act of 1951 for taking possession of the mortgaged assets of a defaulting company, yet as the O.L. attached to the Company Court had been appointed as liquidator of the company in liquidation following the winding up order dated 12.05.1989 and had “taken possession of the assets of the Company”, it was not appropriate or otherwise warranted in the facts of the case to allow RFC to exercise its powers under Section 29 of the Act of 1951 and take possession of the assets. The Company Court by its order dated 09.12.1991 thus dismissed RFC's application. Consequently RFC could not take over the assets of the company in liquidation in its possession which remained with the Central Bank of India as a secured creditor and the O.L. as the statutory custodian of the assets of the company in winding up.

That several years subsequent to the dismissal of RFC's application vide order dated 09.12.1991, the O.L. took the view in circumstances, not made clear by the counsel for the parties despite a specific query, that to facilitate the sale of the assets and proceed with the dissolution of the company under winding up, it would be desirable to require RFC to sell the fixed assets of the company in liquidation. He moved an application bearing No.52/1995 before the Company Court praying that for that purpose, the possession of the factory with land and building in his custody be handed over to RFC. The assets were then handed over to RFC. In its order dated 24.07.1997, which is on record, the Company Court observed that the fixed assets i.e. plant and machinery of the company in liquidation in possession of RFC following the earlier order dat