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CASE NO.:

Appeal (civil) 4055 of 1998

PETITIONER:

RAJASTHAN FINANCIAL CORPN. & ANR.

RESPONDENT:

THE OFFICIAL LIQUIDATOR & ANR.

DATE OF JUDGMENT: 05/10/2005

BENCH:

S.N. VARIAVA,TARUN CHATTERJEE & P.K. BALASUBRAMANYAN

JUDGMENT:

J U D G M E N T

P.K. BALASUBRAMANYAN, J.

1. Appellant No. 1, The Rajasthan Financial Corporation, is a

corporation constituted under Section 3 of The State Financial

Corporations Act, 1951 (hereinafter referred to as "the SFC Act").

Appellant No. 2, the Rajasthan State Industrial Development and

Investment Corporation Limited, is a deemed financial institution by

virtue of exercise of power by the Central Government under Section 46

of the SFC Act. The appellants are the secured creditors of M/s Vikas

Woolen Mills Ltd. (hereinafter referred to as, "the company-in-

liquidation"). By an order dated 14.6.1994, the company judge of the

High Court of Bombay ordered the company-in-liquidation to be wound

up. The Official Liquidator was directed to take charge of the assets of

the company-in-liquidation. On 18.4.1995, the Official Liquidator

applied for directions to the company court. He sought permission to get

the property valued by a valuer from the panel of valuers of the Official

Liquidator, and to sell the properties by public auction. He sought the

issue of a direction to the appellants, the secured creditors, to advance

Rs. 25,000/- each to the Official Liquidator to meet the expenses for

selling the assets of the company-in-liquidation on condition that the

amounts would be reimbursed to the appellants on priority basis from the

sale proceeds. The information about the filing of this application was

conveyed by the Official Liquidator to the appellants by communication

dated 21.4.1995. Apparently, the appellants had no notice of the

proceedings in liquidation and they, as secured creditors, now say that

they want to stand outside the winding up. In their reply to the Official

Liquidator, the appellants indicated that they proposed to pursue the

remedies available to them under Section 29 of the SFC Act. The

appellants had obtained a valuation of the properties of the company-in-

liquidation and according to the valuers, the value of the assets came to

Rs. 92,56,000/-. In addition to opposing the report of the Official

Liquidator, the appellants also filed an application praying that as

secured creditors standing outside the winding up, they may be permitted

to realize the securities and apportion the net sale proceeds between

them and the Bank of Baroda, another secured creditor, who was also

entitled to payment pari passu with them. They undertook to pay over

the dues of the workmen on the same being adjudicated by the Official

Liquidator to the extent of the availability of the funds out of the net sale

proceeds of the properties of the company, in accordance with Section

529-A of the Companies Act. The company court rejected the

application of the appellants. The company court took the view that the

right available under Section 29 of the SFC Act had to be exercised

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consistently with the right of the workmen represented by the Official

Liquidator who was a charge-holder and ranked pari passu with the

secured creditors, even if they stood outside the winding up. The

company court held that in view of a valuation report already available,

it was not necessary to have a fresh valuation. The Court permitted the

Rajasthan State Financial Corporation, Appellant No.1, to invite offers

for sale of the properties and directed it to finalize the same in

consultation with the Official Liquidator. It was directed that the reserve

price would be fixed by the Company Judge on the report of the Official

Liquidator. The sale proceeds were to be retained by the Official

Liquidator until further orders. The Official Liquidator, in the

meantime, was to invite the claims of the workmen and was to assess the

extent of the claim of the workmen under Section 529 of the Companies

Act. Challenging this order, the appellants filed an appeal before the

Division Bench of the High Court of Bombay. The High Court

dismissed the appeal preferring to follow the earlier decision of that

Court in Maharashtra State Financial Corporation Vs. Official

Liquidator [AIR 1993 Bombay 392]. It is feeling aggrieved by the

dismissal of their appeal by the Division Bench, that the appellants have

filed this appeal by special leave before this Court.

2. It has to be noticed that even though the appellants could

have proceeded under Section 29 or under Section 31 of the SFC Act,

neither of the appellants has chosen to actually invoke those provisions

or to approach the concerned District Court under Section 31 of the SFC

Act. In other words, no proceeding under the SFC Act has been set in

motion by the appellants even now. In this situation, it is seen

straightaway that Section 32 (10) of the SFC Act has application. The

said sub-Section reads:-

"32(10). Where proceedings for liquidation in

respect of an industrial concern have commenced

before an application is made under sub-section (1) of

section 32, nothing in this section shall be construed

as giving to the Financial Corporation any preference

over the other creditors of the industrial concern not

conferred on it by any other law."

On the face of it, it is apparent that no right is acquired by the appellants

or no right has accrued to them or can accrue to them under Section 32

of the Act, unless any such right is conferred on the appellants by any

other law in force. There is no plea that other than the SFC Act, any

other law confers any additional right on the appellants. A mere right to

take advantage of an enactment without any act done towards availing of

that right cannot be deemed a right accrued. [See Abbot Vs. Minister

of Land (1895) AC 425]

3. On the facts of this case, the position is that proceedings in

liquidation of the debtor company are going on and two secured

creditors who could have had recourse to the SFC Act to proceed against

its assets, but who did not, are standing outside the winding up and are

claiming rights under the SFC Act by approaching the company court.

The rights so claimed have to be considered in the light of Section 529-A

of the Companies Act read with Section 529 of that Act.

4. When this appeal came up for hearing before two learned

Judges, it was submitted that there was a conflict between the decisions

in Allahabad Bank Versus Canara Bank and Anr. [(2000) 4 SCC

406] and in International Coach Builders Limited Vs. Karnataka

State Financial Corporation [(2003) 10 SCC 482]. The two learned

Judges taking note of this submission and taking note of the importance

of the question of law involved, placed the matter before a larger bench.

That is how the matter has come up before us.

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5. Learned Senior Counsel appearing for the appellants

submitted that the appellants had special rights under the SFC Act and

since there was no notice to them of the proceedings in liquidation and

they were not parties to the order of winding up, they were entitled to

proceed with the enforcement of their rights under the SFC Act and the

company court was not justified in not permitting the appellants to sell

the securities on their own and in directing them to associate the Official

Liquidator in the matter of sale and in the matter of disbursement of the

proceeds among the creditors. Learned counsel submitted that

Allahabad Bank Versus Canara Bank and Anr (supra) was an

authority in support of the proposition that the SFC Act would prevail

over the Companies Act, it being general law as against the special law

protecting corporations, like the appellants, namely, the SFC Act.

Learned counsel submitted that the decision in International Coach

Builders Limited Vs. Karnataka State Financial Corporation (supra)

has not adverted to the earlier decision and had not properly understood

the effect of the provisions of the SFC Act. Section 46B of the SFC Act

gave the provisions of that Act, overriding effect. The claim of the

appellants that they are entitled to sell the properties independent of the

Official Liquidator, therefore, deserves to be accepted. Learned counsel

for the Official Liquidator, on the other hand, submitted that on the facts

and in the circumstances of the case, the High Court was justified in

directing the sale to be held under the supervision of the Official

Liquidator and in directing the Official Liquidator to hold the sale

proceeds until further orders from the company court and that the

proceeds have to be distributed only in terms of Section 529-A of the

Companies Act. Learned counsel further submitted that no interference

was called for with the decision of the High Court.

6. There is no doubt that the appellants are financial

corporations within the meaning of the SFC Act conferred with the right

to proceed under that Act, to take over the management and possession

of the assets of the debtor, here the company-in-liquidation, or to enforce

their claims by resort to Section 31 of the SFC Act by approaching the

concerned District Court. The appellants not having invoked the

provisions of the SFC Act, stand only in the shoes of secured creditors

entitled to enforce their security. A liquidation of the company, the

debtor, has intervened and what are the consequences of the order for

winding up is the question to be considered. Once winding up of a

company is resorted to, Sections 529 and 529-A of the Companies Act

get attracted. Section 528 provides for debts of all descriptions to be

admitted to proof. Section 529 makes applicable the rules of insolvency

in the winding up of insolvent companies. The rules with regard to debts

provable, the valuation of annuities and future and contingent liabilities,

and 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 apply. Section 529(1)(c) of the

Act deals with the rights of creditors. The same reads :

"529(1)(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 realize his security, -

(a) the liquidator shall be entitled to

represent the workmen and enforce such

charge;

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(b) any amount realized by the liquidator by

way of enforcement of such charge 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 realized 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 529A"

7. The proviso above quoted and Section 529-A of the Act

were inserted by Amendment Act 35 of 1985 with effect from

24.5.1985. Section 529-A also can be set out conveniently at this stage.

It reads :

"529A. Overriding preferential payment. \026

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 \026

(a) workmen's dues; and

(b) debts due to secured creditors to the extent such

debts rank under clause (c) of the proviso to

sub-section (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) of sub-section (1) shall be paid in full, unless the

assets are insufficient to meet them, in which case

they shall abate in equal proportions.

A combined reading of Section 529-A and 529 indicates that

notwithstanding anything contained in any other law for the time being

in force or in the Companies Act itself, there is a preferential payment

provided for workmen's dues and debts due to the secured creditors to

the extent such debts rank under clause (c) of the proviso to Section

529(1) pari passu with such dues. Therefore, when the assets of the

company are sold and the proceeds realized, the debts by way of

workmen's dues and that of the secured creditors have to be paid in full

if the assets are sufficient to meet them and if they are not sufficient, in

equal proportions.

8. In Karnataka State Financial Corporation Vs. Patil Dyes

and Chemicals (P) Ltd. and ors. [(1991) 70 Comp. Cas. 38], the

Karnataka High Court held that rights under Section 29(1) of the SFC

Act were available to the corporation only when the company is in

charge and control of its assets and not when the company has lost

control over its assets by the intervention of the company court and the

Official Liquidator. Section 29 of the SFC Act did not justify a

contention that where the creditor is a financial corporation, the assets of

the company-in-liquidation pursuant to the order of the company court

are taken outside the purview of the jurisdiction of the company court.

On a proper construction of Sections 529 and 529A of the Companies

Act, the workmen's dues and the debts due to the secured creditors to the

extent of clause (c) of sub-Section (1) of Section 529, should be worked

out in the light of the illustration given under Section 529 and that could

be ordered only by the company court in exercise of his powers under

Section 446(2)(b) and (d) of the Companies Act.

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9. In Kerala Financial Corporation Vs. Official Liquidator

and anr. [(1991) 71 Comp. Cas. 324], the Kerala High Court held that

Section 529A of the Act prevailed over Section 29 of the SFC Act in

case of a conflict and since the workmen's dues which rank pari passu

with the dues of the secured creditors will have to be paid from the

proceeds of the assets of the company including the security given to the

secured creditors, any dispute as to the apportionment of workmen's

dues and the amount due to the financial corporation and other related

questions could not be left to be decided by the financial corporation.

Therefore, in the best interests of all concerned, the sale of the assets had

to be conducted by the Official Liquidator under the supervision of the

company court. It may be noted that in that case, the financial

corporation had sought permission of the company court to initiate

proceedings under Section 29 of the SFC Act.

10. In Maharashtra State Financial Corporation, Bombay

Vs. The Official Liquidator [AIR 1993 BOMBAY 392], the Bombay

High Court took the view that rights conferred on a financial corporation

as a mortgagee under Section 29 of the SFC Act are not obliterated when

the company is in winding up. The statutory right under Section 29 to

sell the property, had to be exercised consistently with the rights of a

pari passu chargeholder in whose favour a statutory charge is created by

the proviso to Section 529 of the Companies Act when the company is in

liquidation. Therefore, such a power can be exercised only with the

concurrence of the Official Liquidator and the Official Liquidator is

required to take the permission of the Court before giving such

concurrence since he is an officer of the Court and is required to act

under the directions of the Court while exercising his powers on behalf

of the workers. The Court held that there was no inconsistency between

the SFC Act and Section 529 read with Section 529A of the Companies

Act and hence Section 46B of the SFC Act was not attracted.

11. In International Coach Builders Ltd. (In Liquidation)

Vs. Karnataka State Financial Corporation [(1994) 81 Comp.Cas.19],

a Division Bench of the Karnataka High Court held that the right of a

secured creditor of a company-in-liquidation, there the Karnataka State

Financial Corporation, to realize its security by taking possession of

properties of the company subjected to security and selling them by

standing outside the winding up, cannot be said even remotely to be

affected by the amendment of Section 529 and the insertion of Section

529-A of the Companies Act, 1956 by Act 35 of 1985. It was held that

the permission granted to the Karnataka State Financial Corporation, a

secured creditor of the company-in-liquidation, to sell the assets of the

company which constituted security for repayment of loans advanced by

the Corporation to the Company and which the Corporation had already

taken into possession before the winding up was ordered, and the

permission to realize the dues of the Corporation subject to payment of

the workmen's dues as undertaken by it, by standing outside the winding

up, was well in accordance with the provisions of Section 529, as

amended, and Section 529-A as inserted in the Companies Act, 1956,

and Section 29 and Section 46B of the SFC Act.

12. In Gujarat State Financial Corporation Vs. Official

Liquidator and ors. [(1996) 87 Comp. Cas. 658], the Gujarat High

Court doubted the correctness of the decision of the Kerala High Court

in Kerala Financial Corporation Vs. Official Liquidator and anr.

(supra) and followed the decision of the Karnataka High Court in

International Coach Builders Ltd. (In Liquidation) Vs. Karnataka

State Financial Corporation (supra). The Court held that the right of

the secured creditor to deal with his security and realize the same

without intervention of the court, remains unaffected notwithstanding

such vesting, or property coming in the custody of the company court.

To the extent of the charge or mortgage, the property does not come to

the court and is not available for distribution of dividends generally

unless the mortgagee relinquishes it or the surplus, if any, comes to the

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court. Enforcement of such right remains outside the insolvency

proceedings or winding up proceedings. It was held that the power of

recovery of loans by State Financial Corporations under Section 29 of

the SFC Act was not in conflict with Section 529A of the Companies

Act, 1956.

13. In Industrial Credit and Investment Corporation of

India Ltd. Vs. Srinivas Agencies and ors. [(1996) 4 SCC 165], while

considering the question as to when should a company court grant leave

to a secured creditor to proceed with his suit against the company after

an order of winding up was made, and on what conditions the permission

should be granted, this Court held that in the case of conflict in power

between the Official Liquidator appointed by the company court and the

Receiver appointed by the Civil Court in a suit filed by the secured

creditor, the interest of the Official Liquidator should have precedence.

The Court observed that the liquidator looks after the interests of a large

segment of creditors along with that of workmen, whereas the Receiver

appointed in a creditor's suit confines his concern to the interest of the

particular secured creditor at whose instance, the Receiver had been

appointed.

14. In Allahabad Bank Vs. Canara Bank & anr. (supra), the

question of jurisdiction of the Debts Recovery Tribunal under the

Recovery of Debts Due to Banks and Financial Institutions Act, 1993,

vis-`-vis the company court arose for decision. This Court held that

even where a winding up petition is pending, or a winding up order has

been passed against the debtor Company, the adjudication of liability

and execution of the certificate in respect of debts payable to banks and

financial institutions, are respectively within the exclusive jurisdiction of

the Debts Recovery Tribunal and the Recovery Officer under that Act

and in such a case, the company court's jurisdiction under Sections 442,

537 and 446 of the Companies Act stood ousted. Hence, no leave of the

company court was necessary for initiating proceedings under the

Recovery of Debts Act. Even the priorities among various creditors,

could be decided only by the Debts Recovery Tribunal in accordance

with Section 19(19) of the Recovery of Debts Act read with Section 529-

A of the Companies Act and in no other manner. The Court took into

account the fact that Recovery of Debts Due to Banks and Financial

Institutions Act, 1993 was a legislation subsequent in point of time to the

introduction of Section 529A of the Companies Act by Act 35 of 1985

and it had overriding effect. But it noticed that by virtue of Section

19(19) of the Recovery of Debts Act, the priorities among various

creditors had to be decided by the Recovery Tribunal only in terms of

Section 529A of the Companies Act and Section 19(19) did not give

priority to all secured creditors. Hence, it was necessary to identify the

limited class of secured creditors who have priority over all others in

accordance with Section 529-A of the Companies Act. The Court also

held that the occasion for a claim by a secured creditor against the

realization by other creditors of the debtor under Section 529A read with

proviso (c) to Section 529(1) of the Companies Act could arise before

the Debts Recovery Tribunal only if the concerned creditor had stood

outside the winding up and realized amounts and if it is shown that out

of the amounts privately realized by it, some portion had been rateably

taken away by the liquidator under clauses (a) and (b) of the proviso to

Section 529(1). The Court has not held that Section 529-A of the

Companies Act will have no application in a case where a proceeding

under the Recovery of Debts Act has been set in motion by a financial

institution. The Court here was essentially dealing with the jurisdiction

of the Debts Recovery Tribunal in the face of Sections 442, 537 and 466

of the Companies Act.

15. In A.P. State Financial Corporation Vs. Official

Liquidator [(2000) 7 SCC 291], this Court held that the Company

Judge, while permitting the financial Corporation to stay outside the

liquidation proceedings, rightly imposed conditions to ensure that the

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Corporation would : (i) discharge its liability due to workers under

Section 529-A of the Companies Act, (ii) inform the Official Liquidator

in advance about the proposed sale of properties of the indebted

companies, and (iii) would obtain the Court's permission before

finalizing the tenders. This Court specifically overruled the view taken

by the High Court that it was not necessary for the Financial

Corporations to seek permission of the company court to stay outside the

winding-up proceedings. It was held that Sections 529(1) and 529-A of

the Companies Act had overriding effect and the 1985 amendment being

later in point of time, the non-obstante clause therein would prevail over

the non-obstante clause contained in Section 46B of the SFC Act.

16. In International Coach Builders Limited Vs. Karnataka

State Financial Corporation [(2003) 10 SCC 482], this Court

considered the correctness of the views expressed by the Karnataka High

Court and the Gujarat High Court. This Court held that a right is

available to a financial corporation under Section 29 of the SFC Act

against a debtor, if a company, only so long as there is no order of

winding up. When the debtor is a company in winding up, the rights of

financial corporations are affected by the provisions in Sections 529 and

529-A of the Companies Act. It was also held that the proviso to Section

529 of the Companies Act creates a "pari passu' charge in favour of the

workmen to the extent of their dues and makes the liquidator the

representative of the workmen to enforce such a charge. The decision of

the Bombay High Court in Maharashtra State Financial Corpn. Vs.

Ballarpur Industries Ltd. [AIR 1993 Bom 392] was approved. The

reference to a larger bench was occasioned by the fact that the decision

in Allahabad Bank Versus Canara Bank and Anr (supra) was not

adverted to in this decision. This decision recognizes that, whether a

creditor is standing outside the winding up or not, the distribution of the

proceeds has to be in terms of Section 529 of the Companies Act read

with Section 529A of that Act in a case where the debtor is a company-

in-liquidation. As far as we can see, there is no conflict on the question

of the applicability of Section 529A read with Section 529 of the

Companies Act to cases where the debtor is a company and is in

liquidation. The conflict, if any, is in the view that the Debts Recovery

Tribunal could sell the properties of the Company in terms of the

Recovery of Debts Act. This view was taken in Allahabad Bank

Versus Canara Bank and Anr (supra) in view of Recovery of Debts

Act being a subsequent legislation and being a special law would prevail

over the general law, the Companies Act. This argument is not available

as far as the SFC Act is concerned, since Section 529A was introduced

by Act 35 of 1985 and the overriding provision therein would prevail

over the SFC Act of 1951 as amended in 1956 and notwithstanding

Section 46B of the SFC Act. As regards distribution of assets, there is

no conflict. It seems to us that whether the assets are realized by a

secured creditor even if it be by proceeding under the SFC Act or under

the Recovery of Debts Act, the distribution of the assets could only be in

terms of Section 529A of the Act and by recognizing the right of the

liquidator to calculate the workmen's dues and collect it for distribution

among them pari passu with the secured creditors. The Official

Liquidator representing a ranked secured creditor working under the

control of the company court cannot, therefore, be kept out of the

process.

17. Thus, on the authorities what emerges is that once a

winding up proceeding has commenced and the liquidator is put in

charge of the assets of the company being wound up, the distribution of

the proceeds of the sale of the assets held at the instance of the financial

institutions coming under the Recovery of Debts Act or of financial

corporations coming under the SFC Act, can only be with the association

of the Official Liquidator and under the supervision of the company

court. The right of a financial institution or of the Recovery Tribunal or

that of a financial corporation or the Court which has been approached

under Section 31 of the SFC Act to sell the assets may not be taken

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away, but the same stands restricted by the requirement of the Official

Liquidator being associated with it, giving the company court the right to

ensure that the distribution of the assets in terms of Section 529A of the

Companies Act takes place. In the case on hand, admittedly, the

appellants have not set in motion, any proceeding under the SFC Act.

What we have is only a liquidation proceeding pending and the secured

creditors, the financial corporations approaching the company court for

permission to stand outside the winding up and to sell the properties of

the company-in-liquidation. The company court has rightly directed that

the sale be held in association with the Official Liquidator representing

the workmen and that the proceeds will be held by the Official

Liquidator until they are distributed in terms of Section 529A of the

Companies Act under its supervision. The directions thus, made, clearly

are consistent with the provisions of the relevant Acts and the views

expressed by this Court in the decisions referred to above. In this

situation, we find no reason to interfere with the decision of the High

Court. We clarify that there is no inconsistency between the decisions in

Allahabad Bank Versus Canara Bank and Anr (supra) and in

International Coach Builders Limited Vs. Karnataka State

Financial Corporation (supra) in respect of the applicability of Sections

529 and 529A of the Companies Act in the matter of distribution among

the creditors. The right to sell under the SFC Act or under the Recovery

of Debts Act by a creditor coming within those Acts and standing

outside the winding up, is different from the distribution of the proceeds

of the sale of the security and the distribution in a case where the debtor

is a company in the process of being wound up, can only be in terms of

Section 529-A read with Section 529 of the Companies Act. After all,

the liquidator represents the entire body of creditors and also holds a

right on behalf of the workers to have a distribution pari passu with the

secured creditors and the duty for further distribution of the proceeds on

the basis of the preferences contained in Section 530 of the Companies

Act under the directions of the company court. In other words, the

distribution of the sale proceeds under the direction of the company

court is his responsibility. To ensure the proper working out of the

scheme of distribution, it is necessary to associate the Official Liquidator

with the process of sale so that he can ensure, in the light of the

directions of the company court, that a proper price is fetched for the

assets of the company in liquidation. It was in that context that the rights

of the Official Liquidator were discussed in International Coach

Builders Limited (supra). The Debt Recovery Tribunal and the District

court entertaining an application under Section 31 of the SFC Act should

issue notice to the liquidator and hear him before ordering a sale, as the

representative of the creditors in general.

18. In the light of the discussion as above, we think it proper to

sum up the legal position thus:-

i) A Debt Recovery Tribunal acting under the Recovery

of Debts Due to Banks and Financial Institutions Act,

1993 would be entitled to order the sale and to sell

the properties of the debtor, even if a company-in-

liquidation, through its Recovery Officer but only

after notice to the Official Liquidator or the liquidator

appointed by the Company Court and after hearing

him.

ii) A District Court entertaining an application under

Section 31 of the SFC Act will have the power to

order sale of the assets of a borrower company-in-

liquidation, but only after notice to the Official

Liquidator or the liquidator appointed by the

Company Court and after hearing him.

iii) If a financial corporation acting under Section 29 of

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the SFC Act seeks to sell or otherwise transfer the

assets of a debtor company-in-liquidation, the said

power could be exercised by it only after obtaining

the appropriate permission from the company court

and acting in terms of the directions issued by that

court as regards associating the Official Liquidator

with the sale, the fixing of the upset price or the

reserve price, confirmation of the sale, holding of the

sale proceeds and the distribution thereof among the

creditors in terms of Section 529A and Section 529 of

the Companies Act.

iv) In a case where proceedings under the Recovery of

Debts Due to Banks and Financial Institutions Act,

1993 or the SFC Act are not set in motion, the

concerned creditor is to approach the company court

for appropriate directions regarding the realization of

its securities consistent with the relevant provisions

of the Companies Act regarding distribution of the

assets of the company-in-liquidation.

19. Now reverting back to the case on hand, we find that the

directions issued by the company court are in the interest of all the

creditors and are well within its jurisdiction. But we find merit in the

submission that the company court was not justified in not ordering a

fresh valuation of the properties. Having regard to the lapse of time, we

are satisfied that a fresh valuation is necessary. We direct the company

court to get a fresh valuation done by a valuer from the panel of valuers

of the High Court. The other directions issued by the company court are

affirmed.

21. The appeal is thus disposed of affirming the directions

issued by the company court, but with a modified direction for getting a

fresh valuation of the properties as indicated in the earlier paragraph.

22. We make no order as to costs.