INDIAN BANK Vs. V S PERUMAL RAJA

JUDGEMENT

(1.) THIS original side appeal is against the order dated January 19, 1990 , in Company Application No. 569 of 1987 in C. P. No. 58 of 1985 on the file of this court. The applicant therein is the appellant herein. In the said application under section 446 of the Companies Act, 1956 (hereinafter referred to as "the Act"), the applicant sought for leave from this court for it to continue its suit against the fourth respondent-company and the latter's guarantor, on the file of Sub-Court, Tanjore. We are told that the said suit has since been numbered as O. S. No. 57 of 1987. It was filed on April 20, 1986, and it is for recovery of a sum of Rs. 5, 84, 895. 23.

(2.) A winding up order has been passed against the said respondent-company by this court on August 20, 1986, in the abovesaid C. P. No. 58 of 1985 after the institution of the above suit. Therefore, the abovesaid application has been filed. The learned trial judge has granted leave subject to the following terms : (a) The applicant shall, in the event of obtaining a decree in its favour, enforce the same only against the assets that are proved by the applicant to be held in security by it and not against other assets. (b) Since the applicant has chosen to ignore the liquidation and is relying on the security, if there is a deficiency by sale of the securities, the applicant will be excluded from all share in any dividend that may be declared by the official liquidator in the liquidation except and to the extent provided under section 529A of the Companies Act, 1956. (c) In the event of the applicant being declared as a secured creditor in the above suit, the applicant can realise the security and appropriate the same subject to the right of the workmen under sections 529 and 529A of the Companies Act, 1956. Aggrieved by the conditions imposed in granting the above-said leave, this appeal has been preferred.

(3.) THE illustration, to section 529 further makes the position clear by stating as follows :