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of <h1>Company Court's Expanded Powers in Winding-Up Cases: Workmen's Dues Priority Upheld</h1> The court clarified the jurisdiction of the company court under sections 446(2)(b) and (d) of the Companies Act, emphasizing the court's expanded powers ... Winding up – Application of insolvency rules Issues Involved:1. Scope of section 446(2)(b) and section 446(2)(d) of the Companies Act, 1956.2. Effect of the proviso to section 529(1) of the Companies Act, 1956.3. Object and effect of section 529A of the Companies Act, 1956.4. Rights and powers of KSFC u/s 29 of the State Financial Corporations Act, 1951, in the context of standing outside the winding-up proceedings.Summary:Scope of Section 446(2)(b) and Section 446(2)(d):The court examined the jurisdiction of the company court under section 446(2)(b) and (d) of the Companies Act, 1956. It was observed that section 446(2) empowers the company court to entertain and dispose of any claim made by or against the company and any question of priorities or any other question of law or fact arising in the course of winding-up. The court referenced the Supreme Court's ruling in Sudarsan Chits (I.) Ltd. v. G. Sukumaran Pillai, which emphasized the expanded jurisdiction of the company court to facilitate the disposal of winding-up proceedings and avoid prolix and expensive litigation.Effect of the Proviso to Section 529(1):The proviso to section 529(1) creates a pari passu charge in favor of workmen on the security of every secured creditor. The court noted that the liquidator is entitled to represent the workmen and enforce such charge. The court emphasized that the secured creditor must acknowledge this charge and the liquidator must take necessary steps to enforce it. This ensures that the workmen's dues are protected and paid in priority as per section 529A.Object and Effect of Section 529A:Section 529A gives overriding preferential payment to workmen's dues and debts due to secured creditors to the extent they rank pari passu with workmen's dues. The court highlighted that this provision was introduced to protect the rights of workmen and ensure their dues are paid in priority. The court must determine the workmen's portion in the security and the secured creditors' portion to give effect to section 529A.Rights and Powers of KSFC u/s 29 of the SFC Act:KSFC sought to realize its security by standing outside the winding-up proceedings and selling the assets u/s 29 of the SFC Act. The court held that even if a secured creditor stands outside the winding-up, the company court retains jurisdiction over such creditor and the property. The court emphasized that the secured creditor's right to realize the security is subject to the claims of the workmen, and the company court must ensure that the priorities under section 529A are respected.Conclusion:The court directed the official liquidator to submit the claims of the workmen within four weeks and to take steps to sell the properties by public auction. If no claims from workmen are forthcoming, KSFC may proceed to sell the assets subject to further orders of the court. The court's decision ensures that the rights of workmen are protected and that the priorities under sections 529 and 529A are duly enforced.
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