Interim sale of company assets permitted to prevent loss and secure creditor claims via public tender and court deposit.

A court may order interim disposition of a company's assets pending winding up admission to prevent further loss and protect creditors; Section 536(2) does not preclude such orders and Rule 9 preserves inherent judicial power. The legal principle applied is that interlocutory relief under the court's inherent jurisdiction and provisions permitting interim measures (including Section 443(1)(c) as cited) can authorise public tender and sale where liabilities exceed assets, operations have ceased, and delay would prejudice creditors. Operative effect: public advertisement, tender process, deposit of sale proceeds in court for creditor payment, and recovery of advertisement and sale expenses from the company are permissible measures.

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Issues: Whether the Court can, pending a winding up petition (after admission but before formal winding up order and advertisement), order the interim sale/transfer of the company's assets to prevent further loss and mitigate mounting liabilities.

Analysis: The petition and supporting facts establish that the company has been non-operational, has sustained heavy losses, liabilities exceed assets, parties are deadlocked and liabilities (including interest) are accruing daily. Section 536(2) permits that dispositions of company property after commencement of winding up are void unless the court otherwise orders; this provision does not on its face restrict the court to ordering transfers only after a formal winding up order. Section 443(1)(c) and the court's inherent powers (as recognised in precedent) permit interim orders necessary to prevent abuse of process or to secure ends of justice at the stage of admitting or entertaining a winding up petition. Rule 9 of the Companies (Court) Rules, 1959 preserves inherent judicial power. Applying these provisions and authorities to the admitted petition and the present facts, an interlocutory order permitting public tender and sale of assets, with sale proceeds deposited in court for payment to creditors, is an appropriate exercise of jurisdiction to mitigate loss and protect guarantors and creditors.

Conclusion: The application for interim sale of the company's assets is allowed; the petitioner is permitted to call for tenders by public advertisement, place tenders before the court, deposit sale proceeds in court for payment to the State Bank of India, and recover advertisement and sale expenses from the respondent-company.

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