KARNATAKA STATE FINANCIAL CORPORATION REPRESENTED BY ITS MANAGING DIRECTOR Vs. SHIVAMONI STEEL TUBES LIMITED (IN LIQUIDATION) REPRESENTED BY THE OFFICIAL LIQUIDATOR AND OTHERS

JUDGEMENT

(1.) THE Application is filed by Karnataka State Financial Corporation (hereinafter refered to as "Corporation" for the case of brevity) under Section 442(2)(B) of the Companies Act, 1956 read with Rule 9 of Companies (Court) Rules, 1959 seeking following prayers: a) To permit the Applicant KSFC to stand outside the winding up proceedings. b) To issue direction to the 1st and 2nd Respondents to pay to the Applicant -Corporation its share out of the sale proceeds realized from the sale of the assets of 1st Respondent company, in accordance with pari -pasu among secured creditors, within reasonable time to be fixed by this Hon'ble Court.

(2.) THE application came to be adjudicated by this Court by order dated 16.12.2004 and direction sought for was not granted. In other words prayer south for by the Applicant was refused. Aggrieved by the said order, an appeal in OSA 33/2005 came to be preferred by the Corporation. After considering the contentions raised by the Corporation as well as Official Liquidator and other parties who appeared in the said appeal, Division Bench by order dated 3.1.2011 allowed the appeal by setting aside the order dated 16.12.2004 passed by the Company Judge with following directions: 1) The appeals are allowed. 2) The impugned order passed by the learned Company Judge dated 16.12.2004 in Company Application Nos. 741/2003, 220/2003, 694/2002 c/w 447/2004 and 1234/2002 in Company Petition Nos. 157/1992 and 49/1994 is hereby set aside.

(3.) ) It is made clear, that before distributing the sale proceeds, the Official Liquidator has to ensure that the sale proceeds realized out of the assets were legally secured by the secured creditors and that they would be entitled to pari passu distribution of the amount so realized. Any dispute in the regard may be agitated by the aggrieved person before the Company Court.