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SARLA CHANDRA

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PETITIONER:

ALLAHABAD BANK

Vs.

RESPONDENT:

CANARA BANK & ANOTHER

DATE OF JUDGMENT: 04/04/2000

BENCH:

M.J.Rao, N.S.Hegde

JUDGMENT:

M.JAGANNADHA RAO,J.

Leave granted.

The case raises issues relating to the impact of the

provisions of the Recovery of Debts due to Banks and

Financial Institutions Act, 1993 (hereinafter called the RDB

Act ) on the provisions of the Companies Act, 1956. The

immediate dispute before us is between two nationalised

Banks, the Allahabad Bank (appellant) on the one hand which

has obtained a simple money decree against the

debtor-company (M/s M.S.Shoes (East) Co. Ltd. from the

Debt Recovery Tribunal at Delhi under the RDB Act and the

Canara Bank on the other, whose claim as a secured creditor

is still pending before the same Tribunal at Delhi against

the same company. The Allahabad Bank has appealed before us

against an order passed by the learned Company Judge under

sections 442 and 537 of the Companies Act, (in a winding up

petition by Ranbaxy Ltd.) staying the sale proceedings taken

out by the Allahabad Bank before the Recovery Officer under

the RDB Act. Applications for winding up the defendant

company are pending in the Delhi High Court. As yet no

winding up order has been passed nor a provisional

liquidator appointed as contemplated by section 446(1).

Point has been raised by the respondent - Canara Bank that

the appellant Allahabad Bank is obliged to seek leave of the

Company Court under the Companies Act, 1956 and the Company

Court can stay these proceedings as aforesaid under Sections

442 and 537 for the ultimate purpose of deciding the

priorities, in the event of a winding up order or other

order appointing a provisional liquidator being passed under

section 446(1) of the Companies Act, 1956. After the

appellant obtained decree from the Debt Recovery Tribunal,

some properties of the company have been sold by the

Recovery Officer. Appellant contends that the Tribunal

under the RDB Act can itself deal with the question of

appropriation of sale proceeds in respect of sales of the

company properties held at the instance of the appellant and

the priorities and that the appellant alone is entitled to

all the sums so realised. The matter was argued and

judgment was reserved. Thereafter, our attention was

invited by the learned counsel for the respondent - Canara

Bank to the Amending Ordinance(Ordinance 1 of 2000) which

came into force with effect from 17.1.2000. The effect of

the Ordinance and in particular section 19(19) then fell for

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consideration. Question of distribution of the sale

proceeds by Company Court/Tribunal and method of working out

priorities among creditors was argued. The facts of the

case are as follows: The appellant Bank filed O.A.No.109 of

1995 before the Debt Recovery Tribunal, Delhi under section

19 of the RDB Act, 1993 for recovery of Rs.21,49,29,520 and

a simple money decree was passed on 13.1.1998 with interest

at 18% and interest tax levy at 0.75% p.a. Recovery Case

(R.C.No.9 of 98) was filed by the Allahabad Bank for

recovery before the Recovery Officer. The debtor Company

filed appeal No.270 of 1998 before the appellate Tribunal

and there was no stay inasmuch as there was default in

deposit of the money directed to be deposited. O.A. No.784

of 1996 was filed by the Canara Bank also under the RDB Act

in the Debt Recovery Tribunal, Delhi for a decree for

Rs.14,40,05,982.98 plus interest and it was said that a sum

of about Rs.25 crores was due from the same company. The

said O.A. of Canara Bank is pending in the Delhi Tribunal

under the RDB Act. The Canara Bank filed interlocutory

application before the Recove