Winding up of a company

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.”  

 

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

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

Pfa;

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

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

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?

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... 

Thank you so much sir for your valuable answer. 

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