Company court control in winding up limits secured creditor remedies and requires leave before separate enforcement or continuation of suits.

Once winding up has commenced, the company court retains control over the company's assets, claims, priorities and sale of assets, and a secured financial institution cannot enforce Section 29 of the State Financial Corporations Act, 1951 independently of that jurisdiction. Section 29 operates subject to the Companies Act, 1956, so leave and supervision of the company court are required before realisation of assets in liquidation. Leave under Section 446(1) is also necessary for pending proceedings to continue against the company, and automatic leave is inappropriate where it would bypass the statutory scheme for workmen's dues and secured creditors' priorities; the proper course is transfer to the company court.

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Issues: (i) Whether a secured financial institution could realise the assets of a company in liquidation under Section 29 of the State Financial Corporations Act, 1951 without leave of the company court; (ii) whether leave to prosecute pending suits by secured creditors should be granted as a matter of course.

Issue (i): Whether a secured financial institution could realise the assets of a company in liquidation under Section 29 of the State Financial Corporations Act, 1951 without leave of the company court.

Analysis: The winding-up provisions place the assets of the company under the control of the company court, and Sections 446, 529 and 529A of the Companies Act, 1956 preserve the court's jurisdiction over claims, priorities and distribution. Section 29 of the State Financial Corporations Act, 1951 must operate subject to the Companies Act when liquidation has commenced, because the secured creditor's option to stand outside winding up does not exclude judicial supervision over sale and appropriation of assets.

Conclusion: A financial institution cannot, as of right, proceed under Section 29 of the State Financial Corporations Act, 1951 without the leave and supervision of the company court.

Issue (ii): Whether leave to prosecute pending suits by secured creditors should be granted as a matter of course.

Analysis: Leave under Section 446(1) of the Companies Act, 1956 is necessary before pending proceedings can continue against the company. In view of the scheme of Sections 446(2), 529 and 529A, automatic grant of leave would defeat the statutory mechanism for working out workmen's dues and secured creditors' rights and would encourage multiplicity of proceedings. The proper course is transfer of appropriate proceedings to the company court where the winding up is pending.

Conclusion: Leave to the secured creditors to continue or initiate separate proceedings was not to be granted as a matter of course, and the pending suits were directed to be transferred to the company court.

Final Conclusion: The decision affirms the primacy of the company court in liquidation matters and permits only those creditor remedies that remain subject to the winding-up jurisdiction and statutory priorities.

Ratio Decidendi: Once winding up has commenced, the company court retains control over the company's assets and over questions of claims, priorities and sale of assets, so secured creditors may not enforce separate remedies independently of that jurisdiction.

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