a) The Court ordered sale of secured properties of Borrowers Company by public auction. Later on, company was ordered to be wound up but the Bank opted to remain outside the winding up, as secured creditor.
b) Secured creditors submitted that no part of surplus amount could be paid to the unsecured creditors as long as there is an unpaid balance amount due to the secured creditors.
c) Official Liquidator argued that the secured creditors who opted to remain outside the winding up were not entitled to surplus amount for realizing their dues aer date of winding up.
The High Court held as under:
i. Official liquidator was not justified in holding that payment of interest was to be made only to such parties whose claims were admitted and adjudicated by him and not to those creditors who remained outside the winding up
ii. Secured creditors were entitled to surplus amount for realizing their dues and interest earned thereon after date of winding up, even though all claims against company including that of unsecured creditors were not satisfied. -  77 taxmann.com 25 (Bombay)