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2001 Supreme(P&H) 894
PUNJAB AND HARYANA HIGH COURT
J.S. Khehar, J.
M/s. MSTC Ltd. - Petitioner
Versus
M/s. Shree Diwan Steels (India) Ltd. - Respondent
C.P. No. 310 of 1999 in Company Petition No. 40 of 1997.
Decided On : 22 August, 2001
For the Official Liquidator :Mr. Sumit Malhotra, Advocate.
For the Petitioner:Mr. Prabir Chaudhary, Advocate.
The main legal point established in the judgment is the determination of the petitioner-company's status as a secured creditor under the 1944 Ordinance, subject to the final determination of the criminal proceedings and the Criminal Court's finding under Section 12 of the 1944 Ordinance.
Headnote:
Companies Act - Winding up - 617 Companies Act, 1956 - Rule 54 of Order 21 of the Code of Civil Procedure - Criminal Law (Amendment) Ordinance, 1944 - Sections 12 and 13 of the 1944 Ordinance
Fact of the Case:
M/s MSTC Ltd, a government company, filed a winding up petition against M/s Shree Diwan Steels (India) Ltd. The petitioner claimed exclusive rights to certain properties of the respondent-company for the satisfaction of its claim. The respondent-company had issued post-dated cheques to the petitioner for the purchase of scrap, but later stopped payment. The petitioner initiated criminal and civil proceedings against the respondent-company.
Finding of the Court:
The court found that the order of attachment passed by the Delhi High Court did not create a charge in favor of the petitioner-company. It also held that the 1944 Ordinance was valid and applicable to the petitioner-company's claim against the respondent-company. The court determined that the petitioner-company would be a secured creditor for the recovery of its dues, subject to the final determination of the criminal proceedings and the Criminal Court's finding under Section 12 of the 1944 Ordinance.
Issues: The main issue was whether the properties of the respondent-company, attached by the District Judge, Ludhiana and the Delhi High Court, should be exclusively applied to discharge the debt owed by the respondent-company to the petitioner-company.
Ratio Decidendi: The court held that the order of attachment passed by the Delhi High Court did not create a charge in favor of the petitioner-company. It also determined that the 1944 Ordinance was valid and applicable to the petitioner-company's claim against the respondent-company. The court concluded that the petitioner-company would be a secured creditor for the recovery of its dues, subject to the final determination of the criminal proceedings and the Criminal Court's finding under Section 12 of the 1944 Ordinance.
Final Decision: The petition was partly allowed, granting the petitioner-company the status of a secured creditor in respect of the property of the respondent-company attached by the order of the District Judge, Ludhiana, subject to a maximum of Rs. 1.50 Crores, upon the final determination of the criminal proceedings and the Criminal Court's finding under Section 12 of the 1944 Ordinance. The claim of the petitioner-company to treat it as a secured creditor in respect of the property attached by the order of the Delhi High Court was held to be devoid of merit.
J.S. Khehar, J. - M/s MSTC Ltd, the petitioner, is a government Company incorporated under Section 617 of the Companies Act, 1956, the Government of India holds about 90% of its shares. The registered office of the petitioner company is located in Calcutta. According to the averments made in the petition, the petitioner-company is carrying on the business of import, selling, auctioning of various categories of scraps, materials and allied products to various customers like government departments, corporations, companies, firms and individuals throughout the country.
2. M/s Shree Diwan Steels (India) Ltd., the respondent-company had its registered office at Ludhiana. M/s. Surjit Finance Ltd. filed Company Petition No. 96 of 1997 praying for the winding up of M/s. Shree Diwan Steels (India) Ltd. i.e. the respondent company under Section 433 (e) and (f) of the Companies Act, 1956 on 3.7.1997. On 10.2.1999, Company Petition No. 96 of 1997 was allowed by the passing of a winding up order against M/s. Shree Diwan Steels (India) Ltd., i.e. the respondent-company. The Official Liquidator attached to this Court was appointed as the Liquidator to take charge of the respondent-company, its properties, assets and records. It would he pertinent to mention that M/s. MSTC Ltd., the petitioner-company had also filed a winding up petition against the respondent-company, i.e. Company Petition No. 40 of 1997. The winding up petition filed by the petitioner-company was disposed of on 10.2.1999 in view of the order passed in Company Petition No. 96 of 1997.
3. After the winding up order had been passed, the liquidator was required to satisfy the liabilities of the creditors (to the extent possible) out of the assets of the company (wound up). The prayer of M/s. MSTC Ltd. i.e. the petitioner in the instant case is that certain properties should be excluded from the assets of M/s. Shree Diwan Steels (India) Ltd., while satisfying debts due to creditors other than the petitioner-company claims exclusive right for the satisfaction of its claim from the respondent-company out of some of the assets of the respondent-company. The assets of the respondent- company over which the petitioner-company claims exclusive rights are the properties of the respondent-company, which were ordered to be attached by the Distt. Judge, Ludhiana in Criminal Misc. No. 409-A/28.9.1998 vide order dated 28.9.1998 as well as the properties of the respondent-company attached by the Delhi High Court vide order dated 17.11.1998. The details of the basis on which the petitioner-company has made the aforesaid claim are being narrated in the following paragraphs.
4. M/s Shree Diwan Steels (India) Ltd., i.e. the respondent-company through its Directors entered into a contract for the purchase of 1000 MT of scrap. The aforesaid agreement was executed between the parties at the regional office the petitioner-company located in New Delhi in December, 1995. On the basis of an understanding between the parties, the respondent-company issued post-dated cheques to the petitioner-company towards the payment of the said scrap. In all three cheques were issued. Two of the said cheques each valuing Rs. 32, 76, 000/- dated 27.4.1996 and 20.7.1996 were in lieu of the purchased material, whereas the third cheque valuing Rs. 96, 935/- dated 30.4.196 was towards interest on account of deferred payment.
5. Consequent upon the receipt of the post-dated cheques, the petitioner- company on 12.1.1996 sent through courier all the required shipping documents. On the basis of the said shipping documents, M/s. Shree Diwan Steels (India) Ltd., i.e. the respondent-company received the delivery of scrap from the Kandla Port.
6. It would be pertinent to mention that the respondent-company furnished a corporate guarantee and in addition thereto the Managing Director of the respondent-company executed a personal guarantee bond wherein it was agreed that the Managing Director of the respondent-company would
