- (1.) This application has been filed by the west Bengal financial Corporation, hereinafter referred to as "the Corporation", under Section 446 of the Companies Act, 1956, inter alia, for the following reliefs :- " a) Leave be given to West Bengal Financial Corporation, the applicant above-named under Section 446 of the Companies Act, 1956 to proceed with the proceedings initiated under Section 29 of the State Financial Corporations Act 1951 and the Official Liquidator arid/or the Corporation be given leave to execute the conveyance in favour of Studio Print Art upon receipt of the balance consideration of Rs. 21,07,500/ - from the highest offerer. b) Leave be given to the applicant to proceed with the suit filed under Section 31 of the State Financial Corporations Act, being Original Suit No. 19 of 1994, pending before the Learned District Judge's Court of Barasat against the guarantors, who are ex-Director of the Company. c) The Official Liquidator be directed to invite claim of the workmen and other secured creditors, if any, and to settle such claims so that the consideration received out of the sale proceeds by the applicant be distributed on pro rata basis in accordance with the provisions contained in Sec. 529-A of the Companies Act, 1956;"
(2.) Appearing in support of the Judges Summons taken out on behalf of the Corporation, Mr. A. C. Kar, learned Advocate, submitted that the Corporation being a secured creditor coming in under the insolvency it had the option of staying outside the winding up proceedings and to realise its security and then prove for the balance. It also had the option of surrendering its security and prove for the whole debt or it could state in its proof the value at which he assessed the security and to prove for the balance after deducting the assessed value.3
(3.) Mr. Kar submitted that prior to the Companies (Amendment) Act, 1985, whereby Section 529 of the Companies Act was amended by introducing the proviso to subsection (1) and also Section 529-A of the said Act, the law relating to insolvency was applicable in respect of the right of secured and unsecured creditors. Subsequent to the introduction of the proviso to sub-section (1) of Section 529 of the said Act, the security of every secured creditor was to be subject to a part 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, the liquidator would be entitled to represent the workmen and to enforce such charge. For the purposes of Section 529-A, it was also indicated that so much of the debt due to such secured creditor, as could not be realised by him by virtue of the abovementioned proviso or the amount of the workmen's portion in his security, whichever was less, would rank pari passu with the workmen's dues.;