State Financial Corporation sale powers allow separate asset sale; workmen's priority under Companies Act does not bar it here.

Section 29 of the State Financial Corporations Act permits a State Financial Corporation to realise secured dues by sale of industrial assets, and it is not confined to selling the concern as a single unit where separate sale of machinery and of land and building better secures recovery. Section 529A of the Companies Act gives workmen's dues overriding preferential status pari passu with secured creditors, but it does not, on these facts, displace the corporation's power under section 29. The result is that separate sale of assets remained legally permissible and the challenge to the exercise of statutory power failed.

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Issues: (i) Whether the State Financial Corporation, while acting under section 29 of the State Financial Corporations Act, 1951, could sell the industrial concern's machinery and equipment separately from the landed property and building. (ii) Whether section 529A of the Companies Act, 1956 overrides the power of the State Financial Corporation under the State Financial Corporations Act, 1951 in the facts of the case.

Issue (i): Whether the State Financial Corporation, while acting under section 29 of the State Financial Corporations Act, 1951, could sell the industrial concern's machinery and equipment separately from the landed property and building.

Analysis: Section 29 confers wide power on the financial corporation to take over management or possession of the industrial concern and to transfer the property by lease or sale for realisation of dues. The provision does not impose any embargo that the assets must always be sold only as one unit. Where sale of the concern as a whole is not feasible and separate sale of machinery and equipment and of the landed property would better secure recovery, the corporation is not prevented from adopting that course.

Conclusion: Yes. Separate sale of the machinery and equipment and the landed property with the building was permissible under section 29.

Issue (ii): Whether section 529A of the Companies Act, 1956 overrides the power of the State Financial Corporation under the State Financial Corporations Act, 1951 in the facts of the case.

Analysis: Section 529A gives workmen's dues overriding preferential status pari passu with secured creditors, but the record showed that the secured creditor had been permitted to proceed under section 29. On the facts, the earlier decision relied on by the appellant did not control the case, and section 529A did not prevent invocation of section 29 in these circumstances.

Conclusion: No. Section 529A did not bar the State Financial Corporation from exercising its power under section 29 on the facts presented.

Final Conclusion: The challenge to the mode of sale and to the exercise of power under the State Financial Corporations Act failed, and the dismissal of the appeal followed.

Ratio Decidendi: A financial corporation acting under section 29 may adopt a mode of sale, including separate sale of assets, that best realises its secured dues when sale of the unit as a whole is not feasible, and section 529A does not exclude that power except to the extent of its statutory priority for workmen's dues.

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