1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION COMPANY APPLICATION NO. 255 OF 2010 IN COMPANY PETITION NO. 1013 OF 1997 Oman International Bank SAOG ... Applicant Vs Shree Mahaganesh Texpro Ltd.(In liqn.) ... Respondent Mr. Ismail Nasikwala with Ms. Prachi Mhatre and Ms. Kadambari Surve i/b M.S. Bodhanwala & Co. for the Applicant. Dr. T. Pandian – Deputy Official Liquidator present. Mr. Sameer R. Bhalekar for Greater Bombay Co-operative Bank Ltd. CORAM : S.J. VAZIFDAR, J. DATED : 13TH JULY, 2010. P.C. : 1. The Applicant is a secured creditor. The present application is limited to the extent of the sale proceeds of the properties which were secured in favour of the Applicant for the repayment of its dues. 2 2. The Applicant’s claim is based on and established by the orders of the Debts Recovery Tribunal (DRT) and the Debts Recovery Appellate Tribunal (DRAT). The order of the DRT dated 17th February, 2004, allowed the Applicant’s claim in a sum of Rs. 91,82,618.43 together with interest at 20.40 per cent per annum from the date of filing of the application till realisation. Being aggrieved by the order insofar as it rejected the application for enforcing the securities, the Applicant filed an Appeal before the DRAT. The DRAT allowed the same. 3. In the circumstances, the claim as well as the Applicant’s right to recover the same from the sale proceeds of the said securities is established. 4. The Official Liquidator submits that the claim for interest after the date of the winding up order dated 14th July, 2005, has been rejected in view of Rule 154 of the Companies (Court) Rules, 1959. The learned counsel appearing on behalf of the Applicant rightly relied upon the judgment of the Supreme Court in the case of State Bank of Patiala vs. Northland Sugar Complex Ltd., 2004 55 SCL, 92. 3 Punj. & Har. Paragraphs 29 and 30 of the said judgment read as under:- “29. Now the question which remains to be decided is whether interest can be claimed by the secured creditors after the date of winding up order or not. Rule 154 of the Companies (Court) Rules on which counsel for the official liquidator has put reliance is not applicable in respect of the secured creditors who stand outside the winding up. Since the secured creditors stand outside the winding up on the strength of their security, the consortium of banks are entitled to realize the interest in terms of the order passed by the Court of competent jurisdiction. The date of winding up is relevant only for those creditors whose claim is required to be settled by the official liquidator. Since the claim of the consortium of banks is not required to be adjudicated upon by the official liquidator, they are entitled to execute the order inclusive of interest against the sale proceeds of their securities. However, such realization would be subject to the dues of the workmen as and when finalized in respect of which the banks shall furnish undertaking aforesaid. 30. To conclude, it is held that :- (i) by virtue of the provisions of Section 11 of the Contract Act, the applicant bank had lien over the amount lying deposited under the orders of this Court in respect of its dues irrespective of the fact that the sale proceeds represents the sale of goods secured by the banks under the cash credit accounts; (ii) the applicant-Bank are entitled to interest in terms of the orders passed by the Debts Recovery Tribunal up to the date of realization; and (iii) the applicant-Bank shall furnish undertaking to 4 reimburse the Official Liquidator to the extent of the workmen’s claims found due and payable without any demur or objection.” In view of the above judgment, the finding of the Official Liquidator is set aside. 5. In the circumstances, the Company Application is made absolute in terms of prayer (a). Needless to clarify that the DRT will not disburse the amounts till the dues of all the creditors entitled to share in the sale proceeds, including the workers, are determined. The same shall be done on or before 16th August, 2010. The Company Application is, accordingly, disposed of.