- (1.) The extent of right of secured creditors to realise their debts from the assets of a company which is under winding up or has been wound up, by approaching for a other than the company court, is required to be spelt out in these appeals. We have also been called upon to decide as to. when a pending suit or proceeding relating to realisation of the debts by such creditor should be transferred to itself by a company court seized with the winding-up proceeding.
(2.) The foundational premise of the aforesaid points is that it is a settled position by now that a secured creditor stands outside the winding-up proceeding and under the law he can proceed to realise his security without the leave of the winding-up court, if by the time he initiated the action the company has not been wound up. This view has been holding field ever since a three-Judge bench decision of this court in M. K. Ranganathan v. Govt. of Madras. As this legal position has not been assailed by any of the parties, we need not advert to the reasons which led this court in Ranganathan case to hold as above. Despite this being the legal position, there were some provisions in the Indian Companies Act, 1913, which enactment preceded the present Companies Act, 1956 (hereinafter 'the Act') in which also parallel provisions find place, which put some restrictions on the aforesaid power.
(3.) It would be profitable to note these provisions of the Act at the threshold itself. These are S. 446, 529 (1 and (2, 529-A and 537, reading as below: "446.(1 When a winding up order has been made or the Official Liquidator has been appointed as provisional liquidator, no suit or other legal proceeding shall be commenced, or if pending at the date of winding up order, shall be proceeded with, against the company, except by leave of the court and subject to such terms as the court may impose. (2 The court which is winding up the company shall, notwithstanding anything contained in any other law for the time being in force, have jurisdiction to entertain, or dispose of- (a) any suit or proceeding by or against the company; (b) any claim made by or against the company (including claims by or against any of its branches in India) ; 168 (c) any application made under Section 391 by or in respect of the company; (d) any question of priorities or any other question whatsoever, whether of law or fact, which may relate to or arise in course of the winding up of the company; whether such suit or proceeding has been instituted, or is instituted, or such claim or question has arisen or arises or such application has been made or is made before or after the order for the winding up of the company, or before or after the commencement of the Companies (Amendment) Act, 1960. (3 Any suit or proceeding by or against the company which is pending in any court other than that in which the winding up of the company is proceeding may, notwithstanding anything contained in any other law for the time being in force, be transferred to and disposed of by that court. (4 Nothing in Ss. (1 or Ss. (3 shall apply to any proceeding pending in appeal before the Supreme court or a High court. * * * 529. (1 In the winding up of an insolvent company, the same rules shall prevail and be observed with regard to- (a) debts provable; (b) the valuation of annuities and future and contingent liabilities; and (c) the respective rights of secured and unsecured creditors; as are in force for the time being under the law of insolvency with respect to the estates of persons adjudged insolvent: Provided that the security of every secured creditor shall be deemed to be subject to a pari passu charge in favour of the workmen to the extent of the workmen's portion therein, and, where a secured creditor, instead of relinquishing his security and proving his debt, opts to realise his security,- (a) the liquidator shall be entitled to represent the workmen and enforce such charge; (b) any amount realised by the liquidator by way of enforcement of such chaise shall be applied rateably for the discharge of workmen's dues; and (c) so much of the debt due to such secured creditor as could not be realised by him by virtue of the foregoing provisions of this proviso or the amount of the workmen's portion in his security, whichever is less, shall rank pari passu with the workmen's dues for the purposes of Section 529-A. (2 All persons who in any such case would be entitled to prove for and receive dividends out of the assets of the company, may come in 169 under the winding up, and make such claims against the company as they respectively are entitled to make by virtue of this section: Provided that if a secured creditor instead of relinquishing his security and proving for his debt proceeds to realise his security, he shall be liable to pay his portion of the expenses incurred by the liquidator (including a provisional liquidator, if any) for the preservation of the security before its realization by the secured creditor. Explanation.-For the purposes of this proviso, the portion of expenses incurred by the liquidator for the preservation of a security which the secured creditor shall be liable to pay shall be the whole of the expenses less an amount which bears to such expenses the same proportion as the workmen's portion in relation to the security bears to the value of the security. (3 * * * 529-A. (1 Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company- (a) workmen's dues', and (b) debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to Ss. (1 of Section 529 pari passu with such dues. shall be paid in priority to all other debts. (2 The debts payable under clause (a) and clause (b) Ss. (1 shall be paid in full, unless the assets are insufficient to meet them, in which case they shall abate in equal proportions. 537. (1 Where any company is being wound up by or subject to the supervision of the court- (a) any attachment, distress or execution put in force, without leave of the Court, against the estate or effects of the company, after the commencement of the winding up; or (b) any sale held, without leave of the Court, of any of the properties or effects of the company after such commencement; shall be void. (2 Nothing in this section applies to any proceedings for the recovery of any tax or impost or any dues payable to the government. ";