DCM FINANCIAL SERVICES LTD. versus NEEL KAMAL PLASTICS LTD. & ANR.

Citation: [2008] 12 S.C.R. 40 · Decided: 13-08-2008 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Dismissed
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Judgment (excerpt)

[2008] 12 S.C.R. 40 
A 
DCM FINANCIAL SERVICES LTD. 
i-
...-
v. 
NEEL KAMAL PLASTICS LTD. & ANR. 
(Civil.Appeal No.2801 of 2002) 
B 
AUGUST 13, 2008 
[P. SATHASIVAM AND AFTAB ALAM, JJ.] 
r 
Companies Act, 1956 - ss. 433, 434, 529A and 530 -
Winding up petition - By one of the creditors of debtor com-
c pany- Interim order restraining sale of property of debtor- Nev-
ertheless. sale of property by the debtor and its sister cpncern 
in different proceedings before Debts Recovery Tribunal and 
in a suit in a different High Court - Out of court settlement be-
tween the debtor, purchaser and the creditor for payment of cer-
D tain amount by the purchaser to creditor- Company Court was 
informed that sale of the property was permitted in the proceed-
[ 
ings in the suit - Company Court vacating the interim order -
.,.... 
Pursuant to application by another creditor, Company court re-
1--
calling its order vacating the restraint for sale and directing the 
E creditor to deposit the entire amount with the court - Order up-
held by Division Bench of High Court - On appeal, held: Com-
i 
pany court rightly directed the creditor to deposit the amount 
F 
with the court since the money was legally bound to come to 
the court- The payment was directly within purview of the Com-
pany Court - Proceedings for liquidation of company is distinct 
F from intra-party suit for recovery of money - Unlike such suit, in 
a liquidation proceeding, it is not open to the creditor to accept 
A-
money outside the court towards satisfaction of its_ claim - The 
party initiating liquidation proceedings does not enjoy any pref-
erential claim - Proceeds from the sale of the assets of the 
G company under liquidation should be disposed of in terms of 
scheme provided under ss. 529A and 530. 
The appellant, one of the creditors of respondent No. 
~ 
2-debtor company filed a petition for putting the debtor 
H 
40 
-.-
DCM FINANCIAL SERVICES LTD. v. NEEL KAMAL 
41 
PLASTICS LTD. & ANR. 
-t 
. company under liquidation in terms of ss. 433 and 434 of A 
.... 
Companies Act before High Court of Punjab and Haryana .. 
By an interim o·rder, the debtor company was restrained 
from alienating or disposing of any of its properties with-
out the permission of the court. During the pendency of 
the petition, the debtor company sold one of its proper-
8 
ties pursuant to order in another proceeding before Debt 
,\ 
Recovery Tribunal. In yet another suit pending before High 
Gourt of Delhi, a sister concern of the debtor company 
sold some property to the same vendee. At this stage 
debtor company, the purchaser and the appellant came c 
to an arrangement whereby the purchaser agreed to pay 
to the appellant a sum of Rs. 1.95 crores out of the con-
sideration money. This arrangement was reported to the 
company judge in Punjab and Haryana High Court and it 
was also told that High Court of Delhi had permitted to D 
sell the properties of the debtor company and its sister 
7'. 
concern. The Company Court, in view of the fact that the 
~ 
sale had been confirmed by High Court of Delhi and that 
1 
the purchaser had handed over two post dated cheques 
of Rs. one Crore and Rs. 95 Lakhs respectively to the ap-
E 
pellant, vacated its interim order restraining the debtor 
company from selling its property. However, High Court 
of Delhi declined the request to allow the purchaser to 
make any payment to anyone else other than the Income 
Tax Department and directed to deposit the rest of the 
amount with the court. 
F 
-A 
Thereafter respondent No. 1 (another creditor of 
debtor company) filed an application before company 
court in Punjab and Haryana High Court seeking a direc-
tion to restrain the debtor Company from making any G 
payment to any creditor in preference to other creditors 
f--. 
and further direction to refund the amount of Rs. 1.95 
Crores received by the appellant. The Company Court in 
view of the facts brought to its notice, took the view that 
the order vacating the interim restraint was obtained on a 
H 
42 
SUPREME COURT REPORTS 
[2008] 12 S.C.R. 
A complete misrepresentation of the orders passed by High 
i-
....,;.:-
Court of Delhi and directed the appellant to deposit the 
entire amount with the court. In appeal, Division Bench 
of High Court affirmed the order of company court. Hence 
the present appeal. 
8 
Appellant contended that it was not open to the High 
Court of Punjab and Haryana (company court) to ask the 
~ 
appellant to deposit the
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