Civil Procedure Code (CPC)

Winding up of a company


What happens to a secured creditor if he is standing out of the winding up process?

 

 
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FIN

You may find the attachments:

The stacking order of priorities in secured lending, And Supreme Court of India :Central Bank Of India vs State Of Kerala & Ors.  Relevant and useful.

 

{A}  The stacking order of priorities in secured lending: Supreme Court ruling in Central Bank of India vs. State of Kerala

 

Assuming the value of assets of an entity is Rs 10 crores, and the entity has the following outstandings: •  Dues to banks, holding charges over the assets: Rs 15 crores •  Excise dues: Rs.1 crore •  Sales-tax dues Rs.1 crore •  EPF dues Rs.1 crore •  Workmen’s Compensation dues Rs.1 crore •  Workmen’s dues Rs.3 crore Assuming the company is under liquidation, the order of priorities will run as follows: 1.  EPF dues – Rs.1 crores

2.  Workmen’s Compensation Dues – Rs.1 crores

3.  Sales Tax Dues – Rs.1 crores

4.  Dues to Banks (pari passu with Workmen’s Dues) – Rs.5.83 crores

 

5.  Workmen’s Dues (pari passu with Bank Dues) – Rs.1.17 crores

 

{B} Supreme Court of India Central Bank Of India vs State Of Kerala & Ors. on 27 February, 2009 “If the secured creditor of such company opts to realize its security instead of relinquishing the same and proving its debt under Section 529(1) of the Companies Act,then it can retain sale proceeds after depositing the workmen's dues with the liquidator in accordance with Section 529A. The third proviso requires the liquidator to inform the secured creditor about the dues payable to the workmen in terms of Section 529A. If the amount payable to the workmen is not certain, then the liquidator has to intimate the estimated amount to the secured creditor. The fourth proviso lays down that in case the secured creditor deposits the estimated amount of the workmen's dues, then such creditor shall be liable to pay the balance of the workmen's dues or entitled to receive the excess amount, if any, deposited with the liquidator. In terms of fifth proviso, the secured creditor is required to give an undertaking to the liquidator to pay the balance of the workmen's dues, if any.” “Companies Act, 1956: "529A. Overriding preferential payments.-- Notwithstanding anything contained in any other provision of this Act or any other law for the time being in force, in the winding up of a company -(a) workmen's dues; and (b) debts due to secured creditors to the extent such debts rank under clause (c) of the proviso to sub-section (1) of section 529 pari passu with such dues, shall be paid in priority to all other debts.”  

 

 

 


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FIN

Supreme Court of India Central Bank Of India vs State Of Kerala & Ors

https://indiankanoon.org/doc/857240/

 


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FIN

Pfa;

Supreme Court of India Central Bank Of India vs State Of Kerala & Ors

https://indiankanoon.org/doc/857240/

 


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Thank you so much sir. I want to ask one question- if the liquidation process has begun, then the assets are with the liquidator. what can the secured creditor do if he wants to opt out and proceed with the selling of the property which has been mortgaged to him?

 
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FIN

As per stacking order it is at stacking order 4....

Let the legal cell of the secured lender opine.

The Para posted for you fro Apex Court Judgment is otherwise, self explanatory... 

 

 
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Thank you so much sir for your valuable answer. 

 
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FIN

Similar query has been discussed in many threads that you can ‘SEARCH’ in ‘SEARCH’ option on middle of right hand side of this web page in Experts section and in ‘SEARCH’ option on bottom of right hand side of the web page in Form section…………….

 

You can also ‘SEARCH in other sections e.g; Articles, Judgments, Files………… And download even citations, judgments, procedures etc etc ………

 

Avoid posting photos/names/email id/phone numbers/addresses etc etc or attaching any document containing photos/names/email id/phone numbers/addresses etc etc and erase photos/names/email id/phone numbers/addresses etc etc while sending any documents to anyone, anywhere except your own very able senior LOCAL counsel of unshakable repute and integrity specializing in such/company matters and having successful track record in handling such matters thru courts of law and with concerned authorities.

 

 

 
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FIN

There are many threads and publications at LCI also narrating unsuspecting querists from Republic of India, having been allured and fleeced by posers, impostors that advertise the photo of a very old/sick persons posing as some Chief Lawyer (while actually LIAR) and flaunting unknown Firms as LAW Firms (while actually LIAR’s Firms)…………………..and having multiple fake ID’s to post Salutes from one fake ID to another fake ID…………………and falling for even Rs.50/- ( Pachaas Rupalli)………………. Such posers and impostors might be having their roots, origins, asal, asla and/or rooted in Tribal Bad Lands of Pakistan and may even approach your employer and share your details for few rupees.

 

 

Online portals are not substitute for in person discussions with very able senior LOCAL counsel as explained above and are for mere getting details and directions, and guidance and for FREE. As the cause at LCI is social service and Noble cause. You are not to pay any monies for it to any IT.

 
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FIN

You are welcome.

 
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