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1982 DIGILAW 143 (KAR)

OFFICIAL LIQUIDATOR v. VISWANATHAN

1982-07-08

M.P.CHANDRAKANTARAJ

body1982
M. P. CHANDRAKANTARAJ, J. ( 1 ) THE above applications filed in company Petition No. 6 of 1973 are disposed of by the following order as they substantially involve common questions of law and fact as well as they are interconnected. For purposes of disposal of company application No. 128 of 1977 made by the Official Liquidator, the facts stated therein, may be taken as the main application. The prayer in the said application is : (1) for a declaration that pledge of certain machinery by the Company in liquidation namely, M/s. Sriranga Fertiliser and Industries Private Ltd. , in favour of Chellam who is respondent-5 in that application, is a fraudulent preference ; (2) for a declaration that the pledge is void as against the Official Liquidator ; and (3) for a direction to respondent-6 gnanashekharan to return the pledged machinery to the Official Liquidator, he having purchased the same from respondent-5 Chellam. ( 2 ) I must straight-away state that these prayers cannot be granted as I shall give the reasons after briefly setting out the facts leading to these series of applications. ( 3 ) IN company petition No. 6 of 1973, M/s. Sriranga Fertiliser and Industries Private Ltd. , by an order made by this Court was directed to be wound up. In Coy. Appln. No. 76 of 1974, the official liquidator prayed for a direction of this Court to summon all the Directors and other respondents therein and direct them to deliver all assets of the company to their possession. In Company application No. 293 of 1976, the Offl. Liqr. in Coy. Petn. No. 6 of 1973, prayed for a direction to respondent no. 2 P. S. V. Challam to deliver the machinery which the company in liquidation had pledged with the said Challam. In Company Application No. 211 of 1975, the Official Liquidator prayed for a direcction to the said Challam to deposit Rs. 56,000 being the value of the machineries sold to respondent No. 2 therein and deliver all the moveable assets to the official Liquidator. In Company Application No. 211 of 1975, the Official Liquidator prayed for a direcction to the said Challam to deposit Rs. 56,000 being the value of the machineries sold to respondent No. 2 therein and deliver all the moveable assets to the official Liquidator. Company Application 128 of 1977 was filed by the official liquidator for a declaration that the pledge of the machinery by the company in favour of the 5th respondent therein was a fraudulent preference and further to declare that the pledge of the machinery was void as against the official liquidator with a direction to respondent No. 6 therein to deliver the machinery pledged to the official liquidator. Company Application No. 30 of 1978 was filed by the official liquidator for condonation of delay in filing Company Application 128 of 1977. ( 4 ) HAVING regard to the decision to be rendered in this common order company Application 30 of 1978 is allowed and the delay is condoned. ( 5 ) THE question which falls for determination is whether the pledge of certain machineries of the company in liquidation with Challam was a fraudulant preference. What was pledged was the goods that were originally hypothecated to the Indian Overseas Bank, Residency Road, Bangalore, which is also one of the respondents in one of the applications. In order to discharge the amount due on that hypothecation, the machineries were pledged with the afore-mentioned Challam, who obtained a discharge of the. hypothecation debt by the company in liquidation from the Indian Overseas Bank, At that point of time, Coy. Petn. 6 of 1973 had been dismissed on the ground that it was not pressed. It was only later, on 30-8-1973 by a curious procedure, the petition was revived and the order of winding up of the company came to be made. It is not disputed that the pledge took place when there were no proceedings pending against the company in liquidation. It was only later, on 30-8-1973 by a curious procedure, the petition was revived and the order of winding up of the company came to be made. It is not disputed that the pledge took place when there were no proceedings pending against the company in liquidation. In any event, the transaction took place when no petition was pending and the official liquidator cannot elaim that transaction as a fraudulent preference was made in favour of the aforementioned Challam, The official liquidator gets jurisdiction only after the order to wind up the company is made the transactions anterior to the winding up order within the prescribed period of six months under S. 531 of the Companies Act, would be hit by the provisions of that section only when one of the creditors of the company has been preferred by the Directors in discharging the debts of that company. In the instant case, it is nobody's case that P. S. V. Challam was a creditor of the company. Under the agreement of pledge, he had the liberty to sell the machinery in case the pledge was not redeemed within the stipulated time therein. In accordance with the term in the agreement he subsequently sold the machineries pledged with him after complying with the requirements of law by issuing notice that the machineries pledged would be sold if it was not redeemed. If the company failed to redeem and the pledgee not being a creditor acted on his rights as a pledgee, it will not be open to the official liquidator to claim that the pledge in his favour was a preferential treatment of the creditor, ( 6 ) FOR the above reason, the prayers made in the company application 128 of 1977 are required to be rejected. ( 7 ) IT is contended that the Indian overseas Bank, has been described as a preferential creditor. This does not appear to be the correct position. In any event, the transaction between the bank and the company in liquidation was a transaction against the hypothecation of the machinery and in that position, if it was a secured creditor and it ceased to be the secured creditor the moment the pledged machineries were redeemed by the mode of pledging the same to mr. In any event, the transaction between the bank and the company in liquidation was a transaction against the hypothecation of the machinery and in that position, if it was a secured creditor and it ceased to be the secured creditor the moment the pledged machineries were redeemed by the mode of pledging the same to mr. Challam and Challam discharging the debt to the Bank, Therefore, the creditor-debtor relationship itself with the Bank and the company in liquidation had ceased, I must not fail to make a reference to the fact that in a petition under S. 433 of the Act, a party should be cautious when the Company petition is closed, before the same is allowed to be revived as in the instant case. With these observations, all the company applications are disposed of as not maintainable. --- *** --- .