Pari passu rights of workmen prevail over secured creditor sale powers in liquidation, requiring court-supervised realisation of assets.

In winding-up proceedings, the secured creditor's power under section 29 of the State Financial Corporations Act, 1951 is subordinate to the overriding pari passu protection for workmen under section 529A of the Companies Act, 1956. Because apportionment of sale proceeds may require determination of amounts due, interest, dates of reckoning, and distribution among secured creditors and workmen, the assets should be realised under court supervision rather than by unilateral action of the financial corporation. Leave to proceed under section 29 was refused, and the official liquidator was directed to conduct the sale under the Court's supervision.

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Issues: Whether leave should be granted to the financial corporation to exercise its powers under section 29 of the State Financial Corporations Act, 1951, or whether the charged assets of the company in liquidation should be sold by the official liquidator under the supervision of the Court having regard to the pari passu rights of workmen under the Companies Act, 1956.

Analysis: Section 29 of the State Financial Corporations Act, 1951 empowers the financial corporation to take over possession or management and to sell secured assets of the industrial concern. However, section 529A of the Companies Act, 1956 creates an overriding preferential claim in favour of workmen's dues pari passu with the claims of secured creditors, and its non obstante clause prevails in case of conflict. The apportionment of proceeds between the secured creditor and the workmen cannot safely be left to the financial corporation itself, since questions may arise regarding the amount due, the date of reckoning, interest, and distribution of proceeds from both movable and immovable assets. A court-supervised sale by the official liquidator is therefore the proper method to safeguard the interests of the financial corporation, workmen, and other creditors.

Conclusion: Leave to proceed under section 29 was refused and the sale was directed to be conducted by the official liquidator under the supervision of the Court.

Ratio Decidendi: In winding-up proceedings, the secured creditor's power under section 29 of the State Financial Corporations Act, 1951 must yield to the overriding pari passu protection afforded to workmen by section 529A of the Companies Act, 1956, and the assets should be realised under court supervision where apportionment of sale proceeds is required.

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