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Issues: Whether RIICO, as a secured creditor, was entitled to remain outside the winding-up proceedings and realise the secured assets under section 29 of the State Financial Corporations Act, 1951, without leave of court, despite the winding-up order and the proceedings before the BIFR.
Analysis: RIICO had taken possession of the company's assets before the winding-up order was passed. The Court found that RIICO was acting within its statutory powers under section 29 of the State Financial Corporations Act, 1951, and that section 46B gave the Act overriding effect over inconsistent laws. The Court further held that no leave of court was required for the secured creditor to proceed with sale, unless the sale was later challenged as not bona fide or supported by extraneous considerations. The Court also took note of the need to protect workmen's dues in terms of section 529A of the Companies Act, 1956, and accepted the arrangement for valuation, publicity, and keeping the workmen's share ready.
Conclusion: RIICO was held entitled to proceed under section 29 of the State Financial Corporations Act, 1951, without leave of court, and its application to remain outside the winding-up proceedings was allowed.
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