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Issues: (i) Whether the company court has jurisdiction under section 446 to adjudicate claims, priorities, and related questions of secured creditors who opt to stand outside the winding up; (ii) whether the proviso to section 529(1) and section 529A require the workmen's dues to be ascertained and protected before a secured creditor can realise its security under section 29 of the State Financial Corporations Act, 1951; (iii) whether the secured creditor can independently enforce the security and sell the mortgaged assets without the intervention of the company court.
Issue (i): Whether the company court has jurisdiction under section 446 to adjudicate claims, priorities, and related questions of secured creditors who opt to stand outside the winding up;
Analysis: Section 446(2)(b) and section 446(2)(d) confer wide jurisdiction on the winding-up court to entertain claims and determine questions of priority or other questions of law or fact arising in the course of winding up. That jurisdiction is not lost merely because a secured creditor elects to stand outside the winding up, since the company's assets remain under the court's custody and questions relating to those assets may still arise for adjudication in the winding-up proceedings.
Conclusion: The company court retains jurisdiction over the secured creditor and the secured property for purposes of adjudicating claims and priorities.
Issue (ii): Whether the proviso to section 529(1) and section 529A require the workmen's dues to be ascertained and protected before a secured creditor can realise its security under section 29 of the State Financial Corporations Act, 1951;
Analysis: The amendment to section 529(1) creates a statutory pari passu charge in favour of workmen to the extent of the workmen's portion in the security, and the liquidator is obliged to represent the workmen and enforce that charge. Section 529A gives overriding priority to workmen's dues and to the secured creditor's debt to the extent it ranks pari passu with those dues. These provisions are to be given full effect by the company court, which must first ascertain the workmen's claims and work out the respective portions before permitting realisation of the security.
Conclusion: The workmen's claims must be ascertained and the statutory priorities under sections 529 and 529A worked out before realisation of the security.
Issue (iii): Whether the secured creditor can independently enforce the security and sell the mortgaged assets without the intervention of the company court.
Analysis: The option to stand outside the winding up only preserves the secured creditor's right to realise security subject to the statutory rights of workmen and the court's control over the company's assets in liquidation. In the circumstances of amended sections 529 and 529A, the secured creditor cannot insist on independent enforcement free from the company court's supervision where the workmen's statutory charge and priorities remain to be determined.
Conclusion: The secured creditor cannot independently enforce and sell the assets without the company court's intervention in the manner sought.
Final Conclusion: The company court asserted supervisory jurisdiction, required notice to workmen and ascertainment of their claims, and directed sale of the properties through the official liquidator, leaving the secured creditor's realisation to be worked out in accordance with the statutory priorities.
Ratio Decidendi: Even a secured creditor standing outside the winding up remains subject to the company court's jurisdiction under section 446, and the security must be realised in a manner that first gives effect to the statutory pari passu charge and overriding priority of workmen's dues under sections 529 and 529A.
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