Gujarat High Court
Trust vs The on 1 August, 2008
Author: Jayant Patel
Bench: Jayant Patel
Gujarat High Court Case Information System
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SCA/24426/2007 1/ 4 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 24426 of 2007
To
SPECIAL
CIVIL APPLICATION No. 24427 of 2007
=========================================================
TRUST
FOR REACHING THE UNREACHED & 1 - Petitioner(s)
Versus
THE
STATE OF GUJARAT & 1 - Respondent(s)
=========================================================
Appearance
:
MR
BHUSHAN B OZA for
Petitioner(s) : 1 - 2.
GOVERNMENT PLEADER for Respondent(s) :
1,
NOTICE NOT RECD BACK for Respondent(s) : 1,
NOTICE SERVED
for Respondent(s) :
2,
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CORAM
:
HONOURABLE
MR.JUSTICE JAYANT PATEL
Date
: 01/08/2008
COMMON
ORAL ORDER
The petitioners by this petitions have prayed for the appropriate direction to the respondents to give preference to the petitioners in repayment dues from the sale proceedings of the assets of Gujarat Communications and Electronic Company Limited (G.C.E.L.) treating them at par with the secured creditors. It is alternatively prayed by the petitioners to direct respondents to suitably amend the provisions of the Companies Act, 1956, by making a provision to treat those depositors who are not connected with manufacturing or trade of the company at par with the secured creditors.
Heard Mr. Oza learned Counsel for the petitioners.
The contention raised on behalf of the petitioners is that the State Government should be vicariously made liable, because of non-payment of the deposit by the company in liquidation, which was the Government Company. It is also submitted that since the role of the petitioners in investing the amount in the deposit was as that of secured creditors, they should be treated at par with the preference payment made to them, as provided under Section 529 (A) read with Section 530 of the Companies Act. Therefore, he submitted that this Court may issue appropriate direction.
Having considered the above, it deserves to be recorded that it is an admitted position that the company is ordered to be wound up and the winding up proceedings are going on, and even the petitioner has stated the aforesaid aspect. The contention that there should be at pari passu charge, is not provided, as per the provisions of the Companies Act. It is expressly provided under the Companies Act, for special priority under Section 529 read with Section 529(A) and Section 530. No direction can be issued in favour of the petitioners to consider the matter for giving priority in the payment, contrary to the said Act.
The contention that the role of the petitioners are similar to that of investment made by secured creditors cannot be accepted, for the simple reason that no charge or security interest is created over the property of the company by acceptance of the deposit in favour of the petitioners herein unlike secured creditor. Therefore, if their position is different as per the provisions of the Transfer of Properties Act, they cannot be placed at part with the secured creditors. Even otherwise also this Court in exercise the power under Section 226 of the Constitution would not issue direction to the legislature or the parliament to enact statutory provisions in the company by bringing about the amendment as sought to be canvassed.
The contention that the State should be vicariously held liable cannot be accepted, merely because the State was the promoter of the company in liquidation. It may commercial venture of the State but the right of the parties with the company in liquidation, were governed by provisions of the Companies Act. Unless in the investment made, the State has stood as the guarantor, direction cannot be issued for holding State liable for such purpose on the ground as sought to be canvassed.
In view of the above, no case is made out for interference. Hence, rejected.
(JAYANT PATEL, J.) Suresh* Top