FEDERAL BANK Vs. OFFICIAL LIQUIDATOR

JUDGEMENT

(1.) The question that is posed for consideration in this case is whether a decree obtained by a secured creditor standing outside the winding up proceedings could be satisfied fully along with the interest in the event of there being surplus after payment in full all the claims admitted to proof by the liquidator.

(2.) Travancore Ogale Glass Manufacturing Company Ltd. (hereinafter called the Company) was sought to be wound up by a contributory by filing C.P. No. 3 of 1984 under S.433 of the Companies Act on the ground that the Company was commercially insolvent. Provisional liquidator was appointed on 7.2.1984. Federal Bank Ltd., secured creditor was impleaded in the proceedings as per order dated 17.2.1984 in C.A. No. 37 of 1984. Employees Association representing the workers also got impleaded in C.A. No. 46 of 1984 on 1.3.1984. Federal Bank filed statement on 13.3.1984 informing the Company Court that the Bank would keep outside the winding up proceedings. On 7.6.1985 Bank filed another statement stating that if the Company was ordered to be wound up, necessary direction might be given to safeguard the rights of the Bank to proceed against the assets of the Company for realisation of the amount due to the Bank. Bank also filed C.A. No. 291 of 1984 under S.446 of the Companies Act for sanction to institute a civil suit to enforce their security. The Company Court granted the prayer by order dated 11.2.1985.

(3.) The Company Court later ordered winding up of the Company by order dated 10.6.1985. Federal Bank after obtaining leave of the Court instituted O.S. No. 3 of 1986 before the Sub Court, Ernakulam against the Company. The Company as well as the Official Liquidator were arrayed as defendants in the suit. Suit was compromised and the Sub Court passed a decree in terms of the compromise on 30.1.1988 allowing the plaintiff Bank to realise a sum of Rs. 1,48,23,388.73 from the Company with interest at 10% on the amount from the date of suit till realisation. Bank was allowed to realise the amount by sale of the properties mortgaged. Other incidental reliefs were also granted.