Bombay High Court
Esso Easters Industries vs United Commercial Bank And Another on 29 August, 1991
Equivalent citations: 1992(2)BOMCR384, [1993]78COMPCAS763(BOM)
JUDGMENT
A.A. Cazi J.
1. This company application is made by the official liquidator for (a) directing the Commissioner for taking accounts to set aside the portion of workmen's dues of the sale proceeds in view of the provisions of section 529A of the Companies Act, 1956, and to keep it in separate account until the quantum of workmen's dues are ascertained and not to effect the disbursement of sale proceeds to the secured creditors until that time, and (b) in the alternative directing the secured creditors, i.e., the respondents herein to give an undertaking to this court that they would pay proportionate to their security such amounts as are found due and payable to the workmen's portion of the security as per provisions of sections 529 and 529A of the Companies Act, 1956.
2. I need only state the case of respondent No. 1 Respondent No. 1 had a security of the company's movable and immovable properties towards the amount which the company owed to respondent No. 1. Subsequently, on November 15, 1972, the order of winding up of the company was passed in Company Petition No. 27 of 1971. On April 11, 1975, respondent No. 1 filed a suit being Suit No. 703 of 1975, in this court for recovering its dues from the company by enforcing its security. On February 27, 1976, a decree was passed against the company and the decree provided for sale of the secured property for satisfaction of the decretal dues. On April 25, 1989, the movable property of the company was sold for Rs. 3.2 lakhs and the sale certificate was issued on April 11, 1989. On May 24, 1985, there was an amendment to the Companies Act whereby section 529 and 530 were amended and section 529A was added. On April 17, 1989, the official liquidator wrote to the Commissioner for Taking Accounts to keep the sale proceeds of the secured immovable property separately for being disbursed under the provisions of sections 529, 529A and 530 of the Companies Act as amended in 1985. On April 24, 1989, the Commissioner for Taking Accounts replied to the official liquidator stating that he could do nothing in the matter unless orders were obtained by the official liquidator from the court. The official liquidator, therefore, submitted his report dated June 22, 1989, seeking orders of the court for what he desired to have by his dated April 17, 1989, to the Commissioner for Taking Accounts. This court directed the official liquidator to take out a judge's summons. Accordingly, this company application has been made by the official liquidator by taking out the necessary judge's summons and the orders sought for in the judge's summons are those which I have mentioned at the beginning of this order.
3. The respondents are opposing this company application and their case is that their vested rights cannot be affected adversely to them by the Amending Act which came into force on May 24, 1985.
4. Now, it will be seen that the order of winding up was passed on November 15, 1972. At that time the respondents had certain vested rights inasmuch as they had certain securities and they could get their dues paid by enforcement of those securities and by keeping themselves out of the winding up process. If that had happened then their security would have remained unaffected by any claim in respect of the workmen's dues. That vested right of the respondents is affected adversely to them by the Amending Act which came into force on May 24, 1985. This amendment, therefore, cannot have that effect retrospectively so as to disturb the vested rights existing prior to May 24, 1985.
5. Mr. D'Vetre, learned counsel for the official liquidator, urged that the court is posed with only two questions, namely, (1) is the company still in liquidation ? and (2) are the securities of the company available ? He submitted that if the answer to these two question is in the affirmative then the provisions of sections 529 and 529A as amended in 1985 would be applicable. He stresses the fact that section 529A of the Companies Act speaks of the rights "in the winding up of a company" and it is on this basis that he has formulated the first question. It is true that the two question do arise for decision and it is also true that the two questions would be answered in the affirmative. But so far as the second question is concerned, the vested rights prior to may 24, 1985, cannot be adversely affected unless the Amending Act so specifically provides. This is on the basis of the well-settled law.
6. Hence, the company petition is dismissed.
7. No order as to costs.
8. On Mr. D'Vetre's application, the Commissioner for Taking Accounts will not disburse the sale proceeds for a period of four weeks from today.
9. Office to issue certified copy expeditiously.