{"id":177422,"date":"1996-01-09T00:00:00","date_gmt":"1996-01-08T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/the-tamil-nadu-industrial-vs-the-tamil-nadu-textile-on-9-january-1996"},"modified":"2018-05-31T06:48:02","modified_gmt":"2018-05-31T01:18:02","slug":"the-tamil-nadu-industrial-vs-the-tamil-nadu-textile-on-9-january-1996","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/the-tamil-nadu-industrial-vs-the-tamil-nadu-textile-on-9-january-1996","title":{"rendered":"The Tamil Nadu Industrial &#8230; vs The Tamil Nadu Textile &#8230; on 9 January, 1996"},"content":{"rendered":"<div class=\"docsource_main\">Madras High Court<\/div>\n<div class=\"doc_title\">The Tamil Nadu Industrial &#8230; vs The Tamil Nadu Textile &#8230; on 9 January, 1996<\/div>\n<div class=\"doc_citations\">Equivalent citations: 1996 (1) CTC 269<\/div>\n<div class=\"doc_author\">Author: Srinivasan<\/div>\n<div class=\"doc_bench\">Bench: Srinivasan, S A Wahab<\/div>\n<\/p>\n<pre><\/pre>\n<p>ORDER<\/p>\n<p>Srinivasan, J.<\/p>\n<p>1. The only question that arises for consideration in this appeal is, whether the appellant can be treated as a secured creditor under section 529A of the Companies Act. For this purpose, learned counsel for the appellant relies on Section 29-D of the Industries (Development and Regulation) Act, 1951 (Act 65 of 1951). Section 29-D of the said Act reads as follows: &#8211;\n<\/p>\n<p>&#8220;29-D Debts incurred by the authorised person to have priority: Every debt arising out of any loan obtained by the authorised person, for carrying on the management of, or exercising functions of control in relation to, an industrial undertaking or part thereof, the management of which has been taken over under section 18-A or section 18AA or section 18FA,-\n<\/p>\n<p>(a) shall have priority over all other debts, whether secured or unsecured, incurred before the management of such industrial undertaking was taken over;\n<\/p>\n<p>(b) shall be a preferential debt within the meaning of Section 530 of the Companies Act, 1956 (1 of 1956);\n<\/p>\n<p>and such debts shall rank equally among themselves and be paid in full out of the assets of the industrial undertaking unless such assets are insufficient to meet them, in which case they shall abate in equal proportions.&#8221;\n<\/p>\n<p>2. It is contended that clause (a) above will apply to the appellant. There is no merit in this contention. Clause (a) can come into play only if the debts were incurred before the taking over of the management of the industrial undertaking under Section 18A or 18AA or 18FA. In this case, admittedly, the debts were incurred only subsequent to the taking over of the Industrial undertaking. Hence, clause (a) will not apply. Clause (b) merely says that the debt shall be a preferential debt, within the meaning of Section 530 of the Companies Act.\n<\/p>\n<p>3. Learned counsel contends that when Section 29-D was introduced in 1971, Section 529A of the Companies Act, was not in the Statute Book and therefore, the provision for treating the debt as a preferential debt would tantamount to treating it as a secured debt. We are unable to accept this contention. Even though Section 529A was introduced only in 1985, it has become operative since then and when the company went into liquidation, Section 529A of the Companies Act was very much in existence. Hence, in the course of winding up, Section 529A of the Companies Act would be attracted. Section 529A refers to only secured creditors in clause(b). In so far as the present claim is concerned, it is admitted that the mortgage in favour of the appellant was not registered under section 125 of the Companies Act. Under that section, if it is not registered as per the provisions of the Act with the Registrar, the charge is void as against the liquidator. Hence, the claim of the appellant that the debt should be treated as a secured debt and that the appellant should be treated as a secured creditor, cannot be accepted.\n<\/p>\n<p>4. The view expressed by the learned Judge that the appellant can have only a preference under section 530 of the Companies Act, is correct. There is no merit in the appeal and the same is dismissed. No costs. We fix the fee of the counsel for the Official Liquidator at Rs. 1500.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Madras High Court The Tamil Nadu Industrial &#8230; vs The Tamil Nadu Textile &#8230; on 9 January, 1996 Equivalent citations: 1996 (1) CTC 269 Author: Srinivasan Bench: Srinivasan, S A Wahab ORDER Srinivasan, J. 1. The only question that arises for consideration in this appeal is, whether the appellant can be treated as a secured [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[8,13],"tags":[],"class_list":["post-177422","post","type-post","status-publish","format-standard","hentry","category-high-court","category-madras-high-court"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>The Tamil Nadu Industrial ... vs The Tamil Nadu Textile ... on 9 January, 1996 - Free Judgements of Supreme Court &amp; High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/the-tamil-nadu-industrial-vs-the-tamil-nadu-textile-on-9-january-1996\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Tamil Nadu Industrial ... vs The Tamil Nadu Textile ... on 9 January, 1996 - Free Judgements of Supreme Court &amp; 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