Winding-up custody and secured creditor rights limit interference with sale of assets already taken over for enforcement.

In winding-up proceedings, assets of the company in liquidation are generally deemed to be in the custody of the court, while section 529 preserves the position of a secured creditor enforcing its security. Where the winding-up order itself excludes assets already taken over under section 29 of the State Financial Corporations Act, those assets fall outside the liquidator's custody. The court held that the challenge to the corporation's exercise of sale power could not be examined in that proceeding and declined to determine the separate dispute over whether the buildings formed part of the security. The application to restrain the sale and require sale through the official liquidator was not maintainable and was dismissed.

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Issues: Whether, after an order of winding up, the company court could restrain the State Financial Corporation from selling assets taken over under section 29 of the State Financial Corporations Act, 1951, or direct the official liquidator to conduct the sale under his supervision.

Analysis: Assets of a company in liquidation are deemed to be in the custody of the court under section 456 of the Companies Act, 1956, and section 529 recognises the position of a secured creditor who realises his security. At the same time, where the winding-up order itself excludes assets already taken over by the Corporation under section 29 of the State Financial Corporations Act, 1951, those assets are outside the liquidator's custody. The challenge to the Corporation's exercise of power under section 29 could not be examined in this proceeding, and the court also declined to decide the subsidiary dispute regarding whether the buildings formed part of the security.

Conclusion: The application to restrain the sale and to require sale through the official liquidator was not maintainable and was dismissed.

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