State Bank of India vs Depro Foods Ltd. and Others

R.N. Mittal, J.—Briefly, the facts are that the applicant had advanced loan to respondent No. 1. The other respondents were guarantors for repayment of the loan. All the respondents had mortgaged their properties with the applicant. The loan was not repaid and the applicant instituted a suit for its recovery against them which was decreed by this court on November 1, 1985. A preliminary decree for recovery of Rs. 69,19,208.76 was passed in favour of the applicant and against the respondents jointly and severally with costs and interest at the rate of 12% per annum from the date of the institution of the suit till the date of realisation. It was also ordered that the decretal amount be paid within four months, failing which the applicant would be entitled to apply to the court for a final decree for sale of the mortgaged properties. The Haryana Financial Corporation had also advanced loans to respondent No. 1. It instituted a suit for recovery of the loan against respondent No. 1 which was decreed on December 3, 1981. In pursuance of that decree, the Haryana Financial Corporation filed a company application for recovery of the decretal amount in this court. In that application it was agreed between the Haryana Financial Corporation and the bank that out of the sale proceeds of the property, 3/4ths be given to the former and the remaining 1/4th to the latter.

The property was got auctioned by this court through the District Judge, Sonepat. Out of the price fetched by sale of the property, expenses of the auction and fee of the auctioneer were paid to the court-auctioneer and 1% of the auction money was credited to the Government. Out of the balance amount, 3/4ths was paid to the Haryana Financial Corporation and remaining 1/4th, the share of the applicant-bank, was sent to this court. The suit of the applicant was pending in this court at that time and the amount was to be paid to it, if the suit was decreed in its favour. The suit was decreed in favour of the applicant on November 1, 1985. as mentioned above. The applicant has now moved this court requesting that its share of sale proceeds be paid to it. The application has been, opposed by the official liquidator.

Mr. Verma, learned counsel for the official liquidator, contends that u/s 451 of the Companies Act, the Central Government is entitled to the prescribed fee out of the said proceeds as the official liquidator started acting as liquidator. He has also made reference to Rule 291(4) of the Companies (Court) Rules, 1959.

I have duly considered the matter, but do not find any substance therein. Sub-section (2) of Section 451 of the Companies Act says that where the official liquidator acts as liquidator, there shall be paid to the Central Government out of the assets of the company, such fee as may be prescribed. Rule 291 prescribes the fees which are required to be credited to the Central Government. Sub-rule (4) prescribes that where the official liquidator realises property for secured creditors, the Central Government is entitled to the fee according to the rates given therein. In the present case, as already mentioned above, the property of the company was auctioned by the court through the District Judge, Sonepat and the auctioneer''s fee was duly paid by the District Judge. The other expenses incurred for auctioning the property were also paid out of the auction money. Thus, the official liquidator did not do anything for the applicant or the other secured creditor. Consequently, the official liquidator cannot derive any benefit from the provisions of Section 451 of the Companies Act and Rule 291 of the Rules.

For the aforesaid reasons, I accept the application and direct that the amount of the sale proceeds of the property lying with the court be paid to the applicant.