Law: Companies Ordinance, 1984

Section: 401,404

Law: Provincial Insolvency Act, 1920

Section: 47(2)

Companies Ordinance (XLVII of 1984)-------Ss. 401 & 404---Provincial Insolvency Act (V of 1920), S.47(2)--­Winding up of company---Appointment of Official Liquidator by Court--­Sale under Court's order of the commodity which was pledged with the creditor Bank---Official liquidator deposited the amount realized from the said sale with the creditor Bank in his own name and in shape of Term Deposit Receipt---Creditor Bank refused to encash the said Term Deposit Receipt with interest on the ground that Bank being a secured creditor was entitled' to adjust the amount of Term Deposit Receipt towards the amount of loan advanced to the company under liquidation---Validity---Creditor Bank having entered the liquidation proceedings was to line up with the other creditors to wait and obtain its share from the liquidation proceedings---Cash in question deposited by the Liquidator could not, by any stretch of imagination, be treated as security---Creditor Bank, therefore, was not entitled to retain the amount of Term Deposit Receipt with interest deposited by the liquidator ---High Court directed the Bank to encash the Term Deposit Receipt with interest and deliver to the official liquidator. Moti Ram v. E.H. Rodwell and another AIR 1923 All. 159 ref. ORDER This order will resolve the pending controversy in regard Fto encashment of the amount of TDR alongwith interest accrued thereon as the same was deposited by the official liquidator with the Habib Bank Limited who in turn has refused to encash the same. 2. It has been reported by the official liquidator that an amount of Rs.12 lacs was deposited with Habib Bank Limited vide TDR issued in that behalf, but the said bank has refused to encash the amount alongwith the interest accrued thereon on the ground that they being a secured creditor are entitled to adjust the same towards the amount of loan advanced to the company. The official- liquidator maintained that the amount was deposited by him in his personal name as such and that the refusal on the part of the bank to encash the same is without lawful authority. Learned counsel appearing on behalf of Habib Bank Limited, however, maintained that the bank is entitled to…

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